SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
- ---- OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
- ---- OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11955
GUEST SUPPLY, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2320483
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4301 U.S. Highway One
Monmouth Junction, New Jersey 08852-0902
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (609) 514-9696
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, without par value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
NONE
---------------
(Title of class)
Indicate by a 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 as the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers,
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
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State the aggregate market value of the voting
stock held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60
days prior to the date of filing.
Aggregate market value as of
November 21, 1997 . . . . . . . . . . . . . $89,902,902
Indicate the number of shares outstanding of each
of the issuer's classes of capital stock, as of the latest
practicable date.
Common Stock, without par value, as of
November 21, 1997. . . . . . . . . . . . 6,227,807
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents, all or portions of
which are incorporated by reference herein and the Part of
the Form 10-K into which the document is incorporated: Part
III incorporates information by reference from portions of
the Registrant's Proxy Statement for the 1998 Annual Meeting
of Shareholders to be held on January 15, 1998.
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PART I
ITEM 1. BUSINESS.
General
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The Company operates principally as a
manufacturer, packager and distributor of personal care
guest amenities, housekeeping supplies, room accessories and
textiles to the lodging industry. The Company also
manufactures and packages personal care products for major
consumer products and retail companies. Personal care guest
amenity items include shampoo, hair conditioner, soap, bath
gel, hand and body lotion, mouthwash, shoe care and sewing
kits, shower caps, soap dishes and decorative containers and
trays. The Company makes available more than 20 amenity
items in a variety of brands in Company-designed packaging
options. Housekeeping supplies for the lodging industry
consist primarily of paper products, cleaning chemicals and
cleaning implements. Room accessories include such items as
wastebaskets, glassware, stationery, laundry bags, pens,
shower curtains and signs. Textiles include sheets, towels
and bedding. In total, the Company distributes more than
100 different product categories. The products manufactured
and packaged for its consumer products and retail customers
include health and beauty aid items such as shampoo, hair
conditioner, hand and body lotions, liquid soaps and bath
additives.
The Company has pursued a strategy designed to
enhance its leadership position in the lodging supply
industry by becoming a full-service company with a
nationwide network of Company-operated distribution centers
which provide prompt delivery to hotel properties. Each
center consists of a warehouse and sales office and is
staffed by sales personnel who call on customers to obtain
orders and provide customer service.
The Company's amenity product lines consist of
customized amenity programs designed by the Company for
hotel chains ("customized corporate amenity programs") or
for individual lodging establishments ("customized
individual amenity programs") and uncustomized amenities and
accessories.
Customized corporate amenity programs consist of
one or more items which are presented in Company-designed
packaging. This packaging displays the corporate name or
logo of the hotel chain or lodging establishment for which
the program is designed.
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Customized corporate amenity programs are designed
for hotel chains, such as Choice International, The Four
Seasons, Holiday Inns, Howard Johnson, Hyatt Hotels,
Marriott Corporation, Ramada and Wyndham Hotels and may
consist of up to 20 amenity and accessory items. In some
cases, purchasing decisions for these programs are made by
the central buying organization for the chain, and in other
cases, such decisions are made by individual members or
franchisees of the chain.
Customized individual amenity programs typically
consist of six to 12 amenity and accessory items.
Individual programs generally involve more elaborate
designing and packaging, in an attempt to accent the guest
room decor and the marketing image of the particular lodging
establishment. The Company has designed individual amenity
programs for such lodging establishments as Scottsdale
Princess in Scottsdale, Arizona, Boston Harbor Hotel in
Boston, Massachusetts, Nikko Hotels International in New
York, New York, and The Registry Hotels in Dallas, Texas,
and for cruiseship lines such as Holland America and Royal
Caribbean.
The Company sells amenities in uncustomized color
coordinated packaging under such brand names as Jhirmack ,
Jergens , Bath and Body Works and Neutrogena . Some of
these brand name products are also sold as part of
customized amenity programs. In addition, the Company
markets its own lines of guest amenity lines under the
"Heritage Collection ," "Botanicals " and "Nautic " labels.
The Company's lodging industry customers consist
of hotel chains (including supply divisions), individual
members or franchisees of hotel chains, independent hotel
properties, management companies and cruise ship lines. The
Company distributes its products to approximately 14,000
customers worldwide. The Company has supply agreements with
each of the 10 largest lodging chains in the United States.
The Company's strategy is to increase its
penetration of the lodging industry at all levels and to
become a "one-stop shopping" supplier to lodging
establishments. In order to increase operating efficiencies
and responsiveness to customer needs, the Company has become
a more vertically integrated supplier of customized and
uncustomized amenity programs by enhancing its design
capability, expanding its distribution network and
increasing its manufacturing capabilities. In addition, the
Company sells disposable housekeeping products, room
accessories and textiles in order to provide a complete
range of products to the lodging industry.
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As part of this strategy, the Company, through its
manufacturing subsidiary Guest Packaging, Inc., manufactures
and packages substantially all of its liquid products such
as shampoos, hair conditioners, hand and body lotions and
bath gels, as well as a portion of its bar soap
requirements. The Company's manufacturing operations allow
the Company to provide both the service and wide variety of
products required by the lodging industry. In fiscal 1997,
the Company completed a program to expand its manufacturing
facility and to increase its production capability and
capacity. See "Manufacturing, Packaging and Shipping"
below.
The Company's Breckenridge-Remy Co.
("Breckenridge") subsidiary (doing business as Guest
Distribution) also contributes to the Company's strategy of
vertical integration through an improved and expanded
product line and national distribution capability. In
addition to personal care products and room accessories,
Breckenridge markets a line of paper products, cleaning
chemicals, glassware, housekeeping items and textiles.
Breckenridge's business includes a direct sales force and a
network of 12 distribution centers. This distribution
network provides the Company with the ability to warehouse
products in close proximity to the lodging properties served
by the Company. In addition, each distribution center is
staffed with a direct sales force who call on customers to
obtain sales orders and provide direct customer service.
The Company currently has approximately 110 sales
consultants. Management believes that the Company's product
line and distribution capability has provided improved
service to all of its customer groups.
Products
--------
The Company markets and sells a broad range of
personal care, housekeeping and disposable products for use
in lodging establishments. The Company's amenity product
line consists of more than 20 different products, including
shampoo, hair conditioner, soap, bath gel, hand and body
lotion, mouthwash, shower caps, soap dishes, shoe shine and
sewing kits and decorative containers and trays. Six
amenity products account for a substantial majority of the
Company's sales of customized and uncustomized packaging
options. The Company's housekeeping, room accessory and
textile product lines include paper products, cleaning
chemicals, cleaning implements, sheets, towels and other bed
linens, and other housekeeping items and accessories such as
wastebaskets, glassware, stationery, laundry bags, pens,
shower curtains and signs. The Company believes that its
range of products for the lodging industry is one of the
most extensive available from a single source in the United
States.
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Customized amenity programs consist of one or more
items which are packaged and presented in Company designed
bottles, boxes, tubes and wrappings. The packaging and
wrappings display the corporate name or logo of the hotel
chain or lodging establishment for which the program is
designed. Customized corporate amenity programs are
designed for hotel chains. Customized individual amenity
programs typically consist of six to 12 amenity and
accessory items. These programs generally involve more
elaborate design and packaging, in an attempt to accent the
guest room decor and the marketing image of the particular
lodging establishment.
The sales price per room stay for an amenity
program varies with the number of items selected by the
customer. A customized individual amenity program typically
contains several items and is priced from $1.50 and up per
room stay. Because customized corporate amenity programs
and uncustomized amenity programs also vary widely in number
of items, the cost of such programs also vary widely.
The Company sells national brand name products, as
well as generic and the Company's own private label products
and accessories. During the fiscal year ended September 30,
1997, less than 10% of the Company's sales were attributable
to sales of national brand name products which include Bath
and Body Works , Jhirmack , Jergens and Neutrogena .
Guest Supply also markets guest amenity programs
under the "Institute Swiss " label and under Guest Supply's
"Botanicals ," "Nautic ," "Heritage Jefferson Floral ,"
"Heritage American Country " and "Heritage Yankee Stripes ".
These programs were designed by the Company as an
alternative to customized amenity programs with inventory
available for immediate delivery.
The Company has entered into arrangements with
certain manufacturers of national brand name products
pursuant to which the Company has been granted the exclusive
right to market certain products to the lodging industry in
the United States. Certain of these manufacturers have
reserved the right to approve the design of the packaging of
their products and to monitor quality control with respect
to the manufacturing and packaging processes. None of such
exclusivity arrangements obligates the Company to purchase
products from any one supplier or to market any brand
exclusively.
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The Company believes that there are adequate
alternative sources of supply available for all products it
currently distributes. Moreover, the Company believes that
its competitive success is dependent more on the quality of
the Company's services, design capability and the selection
and availability of products, than on the availability of
any one particular brand name product or group of products.
Design, Marketing and Sales
---------------------------
In the view of the Company, an important aspect of
its marketing approach and competitive position is the
capability of its professional design staff to assist
customers in designing customized packaging and in the
coordination and presentation of their amenity programs. In
addition, the Company believes that its position in the
industry is in part attributable to the Company's ability,
on a single source basis, to design, manufacture, package
and distribute complete customized amenity programs for its
customers which meet the customers' corporate image, product
and budgetary requirements and which include brand name
products with a reputation for high quality and wide-spread
consumer acceptance.
The design of amenity programs takes into account
five essential elements: packaging components (size, shape
and type of container), packaging graphics (colors and
logos), brand identity (use of national or generic brands),
product mix (which amenity items to present) and
presentation method (tray, placemat, wicker basket or
decorative tin). The Company's design personnel, who
include graphic, industrial and mechanical artists and
packaging engineers, are responsible for creating packages,
selecting colors and applying graphic designs to accent
guest room decor and for the production of finished
engineering drawings and materials specifications. The
Company's design personnel consult directly with the
Company's customers on all aspects of the design of guest
room amenities, at times leading to unique and proprietary
packaging and presentations of amenity programs. The
Company's design process can vary in length, depending on
the customer's needs and complexity of the program. Once a
design is accepted by the customer and a purchase order is
received, the initial shipment is typically made within ten
to 14 weeks and the balance of the shipment is generally
delivered over the next 12 to 24 months.
The Company employs direct sales personnel who
consult regularly with the Company's existing customers and
solicit new customers. In addition, the Company employs
in-house sales people responsible for telemarketing sales
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and customer service. Further, the senior management of the
Company devotes a substantial amount of time to sales
activities, as well as to the overall coordination of
customers' amenity programs and the development of new
concepts to enhance the effectiveness of the programs. The
Company believes that prompt, professional and responsive
customer service is an important element in attracting new
customers and satisfying existing ones.
In addition, the Company maintains regional
distribution centers throughout the United States. This
distribution network consists of 12 regional warehouses and
a central warehouse and distribution facility in Sayreville,
New Jersey. These distribution centers provide the Company
with the ability to deliver manufactured and purchased
products to the lodging properties served by the Company
throughout the United States. In addition, each regional
distribution center is staffed with route salespersons who
call on customers to obtain sales orders and provide direct
customer service. See "Item 2. Properties."
The Company attends most major trade conventions
and exhibits its product lines at such events.
At September 30, 1997 and 1996, one customer
accounted for 20.1% and 22.2%, respectively, of the
Company's total accounts receivable, and 13.2% and 11.1%,
respectively, of the Company's total sales in 1997 and 1996.
For the year ended September 30, 1995, sales to two
customers totaled 11.3% and 10.8% of the Company's total
sales and accounted for approximately 36% of the Company's
total accounts receivable.
The Company's consolidated sales included
approximately $5,789,000, $5,750,000 and $4,882,000,
respectively, by foreign subsidiaries for the fiscal years
ended September 30, 1997, September 30, 1996 and
September 30, 1995. The Company currently has subsidiaries
located in England, New Zealand and Canada.
At September 30, 1997 and September 30, 1996,
the Company had unfilled orders for its products which
aggregated approximately $11,215,000 and $12,500,000,
respectively. Most of the amount for fiscal 1997 is
expected to be shipped by September 30, 1998. Unfilled
orders are not necessarily an important indicator of total
future sales, since a substantial portion of the Company's
revenues are attributable to sales of disposable house-
keeping products and accessories, uncustomized amenity
products and corporate amenity programs which are ordered
for delivery on a current basis and for which no significant
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unfilled orders exist. In addition, certain orders are
subject to further confirmation.
Substantially all of the Company's sales are to
customers to whom the Company extends credit. The Company's
credit policy generally requires payment in full within 30
days and allows discounts in certain cases for early
payment.
Manufacturing, Packaging and Shipping
-------------------------------------
Most of the amenity products marketed and
distributed by the Company are sold in packaging and
wrappings designed to customer specifications by the Company
and are customized with the name of the particular hotel, in
the case of customized individual amenity programs, or the
corporate logo of the lodging chain in the case of
customized corporate amenity programs, and also display the
brand name of the product, where appropriate. In some
cases, the shapes of the containers are also designed
specifically to the customer's requirements. Packaging
components include bottles, boxes, bags, packets, tubes and
various other containers that come in a wide range of sizes
and shapes.
The Company's manufacturing facility is located in
Rahway, New Jersey. This facility has approximately 68,000
square feet of production space. The plant has 21 filling
lines including 10 highly automated lines which the Company
believes incorporate the most efficient technology presently
available. Each line is equipped to apply front, back, and
full wrap labels, and video jets for batch and date coding
of each container. A variety of reactors or compounding
vessels with capacities ranging from 100 to 6,000 gallons
are located at this facility as well as 249,000 gallons of
liquid bulk storage vessels. The facility also includes an
analytical and development laboratory.
In fiscal 1997, the Company completed a program to
expand its manufacturing facility and to increase its
production capability and capacity. As part of this
expansion project, 18,000 square feet of manufacturing space
was added to the Company's facility in Rahway, New Jersey.
Additional mixing and storage tanks were installed
increasing compounding capacity by more than 350%. The
Company installed four new high-speed filling lines which
are highly automated and provide the Company with the
capacity and capability to manufacture retail size health
and beauty aid products in high volume.
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In December 1996, the Company occupied a new,
leased 226,000 square foot warehouse facility in Sayreville,
New Jersey, which consolidated all of the Company's New
Jersey warehousing facilities. The new facility was fully
operational by April 1, 1997. The Company believes that
with the new equipment and systems, it will be in a position
to improve efficiency in the production of high-quality
health and beauty aid products thereby providing the Company
with what it believes will be a competitive advantage. See
"Item 2. Properties" below and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results
of Operations" below.
Currently, the Company compounds and fills
substantially all of its liquid products. Compounding
involves the batch mixing of components such as detergents,
conditioners, dyes and fragrances in accordance with
proprietary formulas. Filling entails the transfer of
finished products from bulk to the unit of use containers in
which they are distributed.
In addition, the Company utilizes its
manufacturing facility to compound, fill and package a
variety of products used by consumer product companies and
retailers. These are principally health and beauty aid
items such as shampoo, hair conditioner, hand and body
lotions, liquid soaps and bath additives. In some instances
the Company also formulates products for its customers. The
Company believes that these services, among others, are
attractive to these companies since most lack production
expertise or the costs of providing these functions in-house
could be prohibitive.
The Company's other products such as soaps, shower
caps, soap dishes, shoe shine and sewing kits, toothpaste,
toothbrushes, razors, shaving creams, paper products,
cleaning chemicals, cleaning implements, glassware and other
accessories are produced by independent manufacturers.
Soaps are manufactured in accordance with the Company's
specifications, including colors and fragrances, from
materials furnished by suppliers selected by the Company.
Additionally, the Company manufactures a portion of its bar
soap requirements, which it sells to the lodging industry,
at its facility in Rahway, New Jersey.
The bottles and other packaging components for the
Company's products are manufactured by independent suppliers
in accordance with the Company's or the Company's customers'
specifications. In certain instances, these independent
suppliers utilize equipment and molds owned by the Company.
In certain instances, the Company also utilizes the services
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of companies which decorate the bottles and other packaging
components prior to delivery to the Company or to its
contract packagers.
The Company usually orders the component materials
for its products in bulk quantities directly from the
manufacturers of such products for delivery to its
manufacturing facilities or to the facilities of the
Company's contract packagers. This procedure permits the
Company to assure adequate supplies of product components
and to benefit from quantity discounts and other economies
of scale.
Substantially all of the Company's finished
products are shipped to the Company's warehouse facilities
for later shipment to its customers. See "Item 2.
Properties" below. In the view of the Company, an important
aspect of its marketing approach and competitive position is
its capacity for localized distribution. The ability to
store and distribute both manufactured and purchased
products in close proximity to the lodging properties served
by the Company is a service which the Company believes will
assist in providing improved service to its existing
customer groups and in attracting new customers.
Quality Control
---------------
The Company believes that maintaining the highest
standards of quality in all aspects of its operations is an
important aspect of its ability to generate customer
confidence and to maintain its competitive position. To
that end, the Company carries and markets only products that
have a reputation for quality and that meet the Company's
own quality standards.
The Company sends its representatives from time to
time to the facilities of its suppliers to inspect and
approve the manufacturing and packaging of all products
prior to acceptance by the Company for delivery to
customers. In addition, certain suppliers of materials to
the Company also approve the Company's manufacturing
procedures and inspect the packaged products to insure
compliance with their own quality standards.
The Company has adopted strict quality assurance
systems and procedures which it regularly reviews and
revises with a view to maintaining the consistency of the
quality of its products. The Company adheres to all
applicable filling and packaging regulations of the U.S.
Food and Drug Administration, as well as others which are
not technically applicable to the Company's operations.
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Proprietary Rights
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Although the Company follows a policy of
protecting its proprietary rights to its products and
designs to the full extent legally permissible, it does not
believe that its business as a whole is materially dependent
upon such protection. Such protection has significance
primarily in the Company's marketing efforts. The Company
has received protection under federal trademark and
copyright laws for certain names used in its business,
including Guest Supply , L'avenie , Guest Design ,
Whispermint , Alliance , Evergreen , Botanicals , Nautic
and the Heritage Collection . The Company, from time to
time, applies for copyright and design patent protection for
the designs of certain bottles and other packaging
components designed by the Company.
In addition, pursuant to arrangements with the
producers of its packaging components, the Company has
obtained title to the molds which it has developed for the
production of certain bottles and other packaging
components. Many of these arrangements restrict these
companies from using the Company's molds for anyone other
than the Company without the Company's consent. The
aggregate net book value of all molds owned by the Company
at September 30, 1997 was approximately $1,583,000.
Competition
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The business of supplying disposable products,
amenities and accessories to the lodging industry and of
manufacturing and packaging personal care products for
consumer product and retail companies is highly competitive.
Important competitive factors include price, product range,
distribution capability and product quality and design. The
Company competes with companies which offer customized
amenity programs and broad lines of customized and
uncustomized amenity and personal care products, as well as
large distributors of housekeeping and related products.
The Company believes that it can compete
effectively with these companies in view of the variety and
quality of products it offers, the scope and efficiency of
customer services, its distribution capability and price.
In addition, the Company believes that its ability to offer
professional and sophisticated design assistance in
formulating customized amenity programs and products for
customers enhances its competitive position and
distinguishes the Company from most of its competitors.
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Personnel
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As of September 30, 1997, the Company had
approximately 880 employees. None of the Company's
employees is covered by a collective bargaining agreement,
and the Company considers its relationship with its
employees to be excellent.
Executive Officers
------------------
The current executive officers of the Company are
as follows:
Age at
Name Position with the Company September 30, 1997
------------------- --------------------------- ------------------
Clifford W. Stanley President, Chief Executive 51
Officer and Chairman of
the Board of Directors
R. Eugene Biber Vice President - Operations 49
Teri E. Unsworth Vice President - Market 46
Development and Director
Paul T. Xenis Vice President - Finance 37
and Secretary
Clifford W. Stanley has been President and Chief
Executive Officer of the Company since January 1988, a
director of the Company since January 1987 and Chairman of
the Board of Directors since August 1997. From April 1986
to January 1988, he was Executive Vice President and Chief
Financial Officer of the Company. Mr. Stanley joined the
Company in August 1985 as Vice President - Finance. From
1984 until joining the Company, Mr. Stanley was Vice
President and Chief Operating Officer for Transfer Print
Foils, Inc. (hot stamping foils). During the period from
1982 to 1984, he was Vice President of Finance for the
Permacel Division of Avery International. From 1979 through
1982, Mr. Stanley was a Vice President of Johnson & Johnson.
R. Eugene Biber has been Vice President -
Operations of the Company since 1997. Prior to joining the
Company, Mr. Biber was Senior Vice President at Dep
Corporation from 1988 to 1995. Prior to 1988, Mr. Biber
worked for Richardson-Vicks and Procter & Gamble, where he
was Director of Manufacturing and Distribution for a hair-
care division.
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Teri E. Unsworth has been Vice President - Market
Development since joining the Company in May 1985 and a
director of the Company since November 1989. Prior thereto,
Ms. Unsworth was employed by Vidal Sassoon, Inc. as Director
of Sales from 1979 to 1981, as Product Director from 1981 to
1983 and as Group Product Director from 1983 to 1985.
Paul T. Xenis has been Vice President - Finance
since May 1994. From April 1984 to May 1994, he was
Corporate Controller of the Company. Prior to joining the
Company, Mr. Xenis was a senior accountant with KMG Main
Hurdman (now part of KPMG Peat Marwick LLP) from 1981 to
1984. Mr. Xenis also serves as Secretary of the Company.
ITEM 2. PROPERTIES.
The Company's executive offices and principal
operating facilities are located in Monmouth Junction, New
Jersey, where the Company leases approximately 21,900 square
feet of space in an office building. The lease expires on
December 15, 2006 and provides for three five-year renewal
options.
In connection with its manufacturing and packaging
operations, the Company currently leases a manufacturing
facility in Rahway, New Jersey. The manufacturing facility
consists of approximately 68,000 square feet of space. The
lease for this facility expires in 2010. See "Item 1.
Business - Manufacturing, Packaging and Shipping" above.
This lease may be cancelled by the Company on 90 days'
notice.
During fiscal 1997, the Company moved into a newly
constructed 226,000 square foot distribution and warehouse
facility designed to its specifications in Sayreville, New
Jersey. This new facility consolidated all of the Company's
then existing New Jersey warehousing facilities. The lease
for the facility expires in November 2006.
As part of its regional distribution strategy, the
Company currently also leases 12 regional warehouses. The
warehouses range in size from 12,000 square feet to 60,000
square feet and are located in Ohio (three), Michigan,
Indiana, Texas, Florida, Illinois, Maryland, California,
Georgia and North Carolina. The leases for these warehouses
have expiration dates through 2003.
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ITEM 3. LEGAL PROCEEDINGS.
In July 1994, Valley Products Co., Inc. ("Valley")
commenced an action in the United States District Court for
the Western District of Tennessee against Hospitality
Franchise Systems, Inc. ("HFS") and certain of its
subsidiaries (including those that franchise Days Inn,
Howard Johnson, Ramada, Super 8 and Park Inn hotels and
motels), and against the Company and Marietta Corporation
("Marietta").
The complaint arose from HFS's decision to
terminate Valley's authority to sell guest room amenities to
HFS franchisees, and to enter into "preferred vendor
agreements" with the company and Marietta for guest room
amenities. The complaint alleged claims under federal and
state antitrust laws for tying, exclusive dealing and
monopolization, and related common law and federal trademark
law claims.
On December 22, 1994, the District Court issued an
order dismissing the Valley complaint as to all defendants
and denying Valley's motion to amend its complaint. Valley
appealed that order to the United States Court of Appeals in
May 1996.
On October 22, 1997, the Court of Appeals issued a
decision affirming the order of dismissal by the District
Court. Valley has not filed a petition for certiorari to
the United States Supreme Court, and its time to do so will
expire at approximately the end of January 1998.
From time to time, the Company is party to certain
other claims, suits and complaints which arise in the
ordinary course of business. Currently, there are no such
claims, suits or complains which, in the opinion of
management, would have a material adverse effect on the
Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's common stock trades on the New York
Stock Exchange, Inc. ("NYSE") under the symbol GSY. Prior
to August 6, 1996, the Company's common stock was traded on
the NASDAQ National Market System under the symbol GEST.
The table below sets forth the high and low closing prices
during each of the last two fiscal years on the NYSE and the
NASDAQ National Market System, as applicable. The
approximate number of holders of the Company's common stock
at September 30, 1997 was 500. No cash dividends have been
declared on the common stock since the Company was
organized.
Market Price Range
------------------
Year Ended September 30, 1997
-----------------------------
High Low
------- -------
First Quarter $17.625 $11.875
Second Quarter 17.375 13.875
Third Quarter 14.500 8.750
Fourth Quarter 15.500 9.375
Year Ended September 30, 1996
-----------------------------
High Low
------- -------
First Quarter $23.125 $18.000
Second Quarter 23.250 11.250
Third Quarter 17.250 11.875
Fourth Quarter 16.750 12.375
On November 21, 1997, the closing sales price for
the Company's common stock was $14.625 per share.
<PAGE>
PAGE 17
ITEM 6. SELECTED FINANCIAL DATA.
Years Ended September 30,
In thousands except per share amounts
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Sales $200,917 $179,042 $159,450 $116,325 $ 97,851
Gross Profit 42,825 37,998 37,365 30,751 26,804
Selling, General and
Administrative Expenses 34,043 30,919 28,409 24,858 22,865
Operating Income 8,782 7,079 8,956 5,893 3,939
Income Before
Extraordinary Item1 3,816 3,151 5,090 4,117 1,412
Net Income 3,816 3,151 5,090 4,117 2,243
Working Capital 39,626 35,223 27,475 22,689 21,810
Total Assets 112,669 102,888 95,607 72,967 55,621
Total Long-term
Liabilities 32,642 28,292 22,866 16,778 13,793
Total Liabilities 66,072 60,485 56,498 39,722 26,960
Total Equity 46,597 42,403 39,109 33,245 28,661
Common Share Data
- -----------------
Weighted Average Shares
and Share Equivalents
Outstanding 6,990 7,074 7,293 7,041 6,470
Earnings Per Share
Before Extraordinary Item1 $0.55 $0.45 $0.70 $0.58 $0.22
Earnings Per Share $0.55 $0.45 $0.70 $0.58 $0.35
Book Value Per Share $7.53 $6.89 $6.36 $5.50 $4.82
1 Extraordinary item results from the utilization of net operating
loss carryforwards.
<PAGE>
PAGE 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Fiscal 1997 Compared to Fiscal 1996
- -----------------------------------
Sales for the year ended September 30, 1997 increased by 12.2% or
$21.9 million to $200.9 million from $179.0 million for the year ended
September 30, 1996. Revenues from hotel customers increased $19.5 million
or 12.7% to $172.5 million. This increase in sales to hotels is the result
of the addition of new customers, the sale of additional products to
existing customers and the continued expansion of the Company's product
line. New customers were added by the direct sales force in existing sales
territories and by new salespeople and territories that were established
during fiscal 1997. In February 1997, a sales and distribution center was
opened in Greensboro, North Carolina, increasing market share in that
geographic area. Hotel customers were also added through new or expanded
agreements with hotel management companies and hotel corporations. In
August 1997, the Company signed an agreement with Marriott International,
which increased the number of properties serviced from 225 to 950 and
expanded the product line to include room accessories in addition to
personal care amenities.
Sales of additional products to existing hotel customers were achieved
by the direct sales force at individual properties and by national account
managers at hotel corporations. This increased penetration at existing
accounts can be attributed to sales management, sales training, territory
realignment and the use of the Company's catalog.
Sales to consumer product companies and retailers were $28.4 million
compared to $26.0 million for the year ended September 30, 1996. The
increase of $2.4 million or 9.3%, which the Company attributes to the
service and capabilities it provides, came from an existing customer.
The Company discontinued manufacturing Proctor & Gamble body wash
products during fiscal 1997, rather than during our 1998 second fiscal
quarter as originally anticipated. These products are now produced by
Proctor & Gamble at their own facility. At present, one long-term customer
accounts for substantially all of contract manufacturing revenue.
Gross profit for the year ended September 30, 1997 was $42.8 million
or 21.3% of sales compared to $38.0 million or 21.2% for the year ended
September 30, 1996. The most significant single factor affecting gross
profit in fiscal 1997 was a charge to cost of sales in the amount of $2.2
million in the second quarter ended March 31, 1997. This charge was
primarily the result of damaged, obsolete and below-standard inventory
identified during the recent consolidation of the Company's seven New
Jersey warehouses to its new central distribution facility and an increase
to the Company's obsolescence reserve. Excluding the effects of this
charge, gross profit as a percentage of sales for the year ended September
30, 1997 totaled 22.4%. In addition, an increase in textile sales also
contributed to the decrease in gross profit as a percentage of sales as a
result of a lower gross profit associated with textiles compared to the
Company's other products. Also, the full year effect in fiscal 1997 of a
pricing concession made to a major contract manufacturing customer in late
fiscal 1996 further reduced gross margin percent. Offsetting all of these
factors were improved manufacturing efficiencies, lower warehousing cost in
the new facilities and increased volume.
<PAGE>
PAGE 19
Selling, general and administrative expenses were $34.0 million or
16.9% of sales for the year ended September 30, 1997 compared to $30.9
million or 17.3% for the prior year. The increase of $3.1 million was due
primarily to increased payroll and payroll related costs. The decrease in
selling, general and administrative costs as a percentage of sales was the
result of increased sales volume combined with the Company's cost
containment program.
The effective tax rate increased to 43.2% in fiscal 1997 from 41.3% in
fiscal 1996. The increase is primarily due to taxes incurred in foreign
jurisdictions.
Fiscal 1996 Compared to Fiscal 1995
- -----------------------------------
Sales for the year ended September 30, 1996 increased by 12.3% or
$19.6 million to $179.0 million from $159.4 million for the year ended
September 30, 1995. Revenues from hotel customers increased $16.7 million
or 12.2% to $153.0 million. This increase is the result of sales of
additional products to existing customers, the addition of new customers,
an increase in the sales of textiles and the continued introduction of new
items to the Company's product line.
Sales to consumer product companies and retailers were $26.0 million
compared to $23.1 million for the year ended September 30, 1995. The
increase of $2.9 million or 12.7% was due to increased sales to existing
customers. The Company attributes this increase to the service and
capabilities it provides to its customers.
Gross profit for the year ended September 30, 1996 was $38.0 million
or 21.2% of sales compared to $37.4 million or 23.4% for the year ended
September 30, 1995. The decrease in gross profit as a percentage of sales
was due to a number of factors. In the Company's second fiscal quarter, a
major retail customer temporarily reduced its orders with the Company.
Both the temporary nature and timing of this decrease in orders limited the
Company's ability to reduce operating costs or seek replacement business.
Gross profit as a percentage of sales was also reduced by a pricing
concession to a customer which the Company believes was necessary to gain
incremental volume in the future. In the fourth fiscal quarter, the
Company experienced higher than anticipated waste factors over standard,
and as a result recorded an inventory adjustment of approximately $0.6
million. Manufacturing inefficiencies also contributed to the decline in
gross profit rate as a result of the expansion project which is now
essentially completed. The increase in textiles product sales also
contributed to a decline in gross profit as a percentage of sales as a
result of a lower gross profit rate associated with textiles when compared
with the Company's other products.
Selling, general and administrative expenses were $30.9 million or
17.3% of sales for the year ended September 30, 1996 compared to $28.4
million or 17.8% for the prior year. The increase of $2.5 million was due
primarily to increased payroll and payroll related costs. The decrease in
selling, general and administrative costs as a percentage of sales was the
result of increased sales volume combined with the Company's cost
containment program.
The effective tax rate increased to 41.3% in fiscal 1996 from 35.2% in
fiscal 1995. The increase in tax rate is the result of a reduction in the
utilization of net operating loss carryforwards
<PAGE>
PAGE 20
Liquidity and Capital Resources
- -------------------------------
The Company had $39.6 million of working capital at September 30, 1997
compared to $35.2 million at September 30, 1996. This increase of $4.4
million was due primarily to a reclassification of current maturities as a
result of the refinancing of the Company's revolving credit agreement and
term loans in December 1997.
At September 30, 1997, the Company had a $22.0 million secured
revolving credit facility. This credit facility bears interest at a rate
equal to LIBOR plus 1.5%, the bank's prime rate or a fixed rate, as
selected by the Company. In addition, the Company had outstanding term
loans in the amount of $10.9 million payable in equal monthly installments
with maturities from February 1999 through November 2002. At September 30,
1997, the Company had outstanding $17.6 million under its revolving credit
facility at an interest rate ranging from 6.97% to 8.5% and had an unused
amount available of $4.4 million.
On December 3, 1997, the Company completed a Private Placement in the
amount of $25.0 million of unsecured senior notes with fixed interest rates
ranging from 6.70% to 7.06%. These notes have maturities ranging from 2003
to 2009. Concurrently with the issuance of the notes, the Company entered
into a credit agreement with two banks for a five-year $15.0 million
unsecured revolving credit facility. Availability under the new facility
is based upon agreed levels of eligible accounts receivable and bears
interest at a rate equal to LIBOR plus .85% or the bank's prime rate, as
selected by the Company. These loans are subject to certain financial
covenants. The proceeds from the notes and new credit facility were used
to repay the outstanding balance under the existing credit facility and
term notes.
The Company believes that the amount available under its new revolving
credit facility together with the cash flow from operations will be
sufficient to meet the Company's short-term working capital requirements
and its identifiable long-term capital needs. The Company also believes
that, if necessary, additional financing will be available to it on
commercially reasonable terms.
Recently Issued Accounting Standards
- ------------------------------------
In June 1997, the Financial Accounting Standards Board released
Statement No. 130, "Reporting Comprehensive Income" and Statement No. 131,
"Disclosures About Segments of an Enterprise and Related Information."
Both statements become effective for fiscal years beginning after December
15, 1997 with early adoption permitted. These statements require
disclosure of certain components of changes in equity and certain
information about operating segments and geographic areas of operation.
Management believes that these statements will not have any effect on the
results of operations or financial position of the Company.
<PAGE>
PAGE 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
GUEST SUPPLY, INC. AND SUBSIDIARIES
Consolidated Financial Statements
September 30, 1997, 1996 and 1995
<PAGE>
PAGE 22
Index to Financial Statements
Page
Number
------
1. Financial Statements:
Independent Auditors' Report. . . . . . . . . . . . 23
Consolidated Balance Sheets -- September 30, 1997
and 1996. . . . . . . . . . . . . . . . . . . . . . 24
Consolidated Statements of Operations --
Years Ended September 30, 1997, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . .25
Consolidated Statements of Cash Flows
-- Years Ended September 30, 1997, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . .26
Consolidated Statements of Shareholders'
Equity -- Years Ended September 30,
1997, 1996 and 1995 . . . . . . . . . . . . . . . . .28
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . .29
2. Financial Statement Schedule:
II - Valuation and Qualifying Accounts. . . . . . . .36
All other schedules have been omitted because they are
inapplicable or the information is provided in the financial
statements, including the notes thereto.
<PAGE>
PAGE 23
Independent Auditors' Report
----------------------------
The Board of Directors and Shareholders
Guest Supply, Inc.:
We have audited the consolidated financial
statements of Guest Supply, Inc. and subsidiaries as listed
in the accompanying index. In connection with our audits of
the consolidated financial statements, we also have audited
the financial statement schedule listed in the accompanying
index. These consolidated financial statements and
financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Guest Supply, Inc. and
subsidiaries as of September 30, 1997 and 1996, and the
results of their operations and their cash flows for each of
the years in the three-year period ended September 30, 1997
in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement
schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.
KPMG Peat Marwick LLP
Short Hills, New Jersey
November 18, 1997, except
as to the note on Long Term
Debt which is as of
December 3, 1997
<PAGE>
PAGE 24
CONSOLIDATED BALANCE SHEETS
Guest Supply, Inc. and Subsidiaries
September 30,
Dollars In Thousands except per share amounts 1997 1996
- ---------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 4,152 $ 2,591
Accounts receivable, net of allowance
for doubtful accounts of
$1,032 - 1997 and $898 - 1996 30,429 28,084
Inventories 34,676 33,362
Deferred income taxes 2,067 1,557
Prepaid expenses and other current assets 1,732 1,822
- ---------------------------------------------------------------------------
Total current assets 73,056 67,416
Property and equipment, net of accumulated
depreciation and amortization 33,141 29,810
Other assets 1,312 134
Excess of cost over net assets acquired, net
of accumulated amortization of $4,257 - 1997
and $3,889 - 1996 5,160 5,528
- ---------------------------------------------------------------------------
$112,669 $102,888
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 32,493 $ 28,320
Current maturities of long-term debt 937 3,873
- ---------------------------------------------------------------------------
Total current liabilities 33,430 32,193
- ---------------------------------------------------------------------------
Long-term debt 27,617 24,972
Deferred income taxes 5,025 3,320
- ---------------------------------------------------------------------------
Total long-term liabilities 32,642 28,292
- ---------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity:
Preferred stock - without par value; authorized
1,000,000 shares, outstanding none
Common stock - without par value; stated value
$0.10; authorized 20,000,000 shares, issued
and outstanding 6,190,307 shares - 1997 and
6,156,075 shares - 1996 546 543
Additional paid-in capital 35,336 35,042
Retained earnings 10,745 6,929
Cumulative foreign currency translation
adjustments (30) (111)
- ---------------------------------------------------------------------------
Total shareholders' equity 46,597 42,403
- ---------------------------------------------------------------------------
$112,669 $102,888
===========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PAGE 25
CONSOLIDATED STATEMENTS OF OPERATIONS
Guest Supply, Inc. and Subsidiaries
Years Ended September 30,
Dollars In Thousands except per share amounts 1997 1996 1995
- ---------------------------------------------------------------------------
Sales $200,917 $179,042 $159,450
Cost of sales 158,092 141,044 122,085
- ---------------------------------------------------------------------------
Gross profit 42,825 37,998 37,365
Selling, general and administrative expenses 34,043 30,919 28,409
- ---------------------------------------------------------------------------
Operating income 8,782 7,079 8,956
Interest and other income 45 53 10
Interest expense (2,110) (1,764) (1,109)
- ---------------------------------------------------------------------------
Income before income taxes 6,717 5,368 7,857
Income tax expense 2,901 2,217 2,767
- ---------------------------------------------------------------------------
Net income $ 3,816 $ 3,151 $ 5,090
===========================================================================
Earnings per common share:
Primary $0.55 $0.45 $0.70
===========================================================================
Fully diluted $0.54 $0.45 $0.68
===========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE>
PAGE 26
CONSOLIDATED STATEMENTS OF CASH FLOWS
Guest Supply, Inc. and Subsidiaries
Years Ended September 30,
Dollars in Thousands 1997 1996 1995
- ------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 3,816 $ 3,151 $ 5,090
- ------------------------------------------------------------------------------
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 3,888 3,345 2,800
Provision for losses on
accounts receivable 880 316 223
Gain on sale of fixed assets (172)
Deferred income tax expense 1,195 1,321 442
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (3,225) 263 (9,636)
Increase in inventories (1,314) (5,093) (6,137)
Decrease (increase) in prepaid
expenses and other current assets 90 (906) (183)
Increase in other assets (178) (37) (13)
Increase (decrease) in accounts
payable and accrued expenses 4,217 (2,906) 10,315
- ------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 9,197 (546) 2,901
- ------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (6,881) (4,280) (9,953)
Increase in other assets (1,000)
Proceeds from sale of fixed assets 202
- ------------------------------------------------------------------------------
Net cash used in investing
activities (7,679) (4,280) (9,953)
- ------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from revolving credit agreement 52,528 55,685 58,247
Repayment on revolving credit agreement (48,945) (57,081) (49,492)
Proceeds from issuance of long-term debt 10,500
Repayment of long-term debt (3,874) (3,655) (1,909)
Proceeds from issuance of common stock 253 121 308
- ------------------------------------------------------------------------------
Net cash (used in) provided by financing
activities (38) 5,570 7,154
- ------------------------------------------------------------------------------
Foreign currency translation adjustments 81 22 (59)
- ------------------------------------------------------------------------------
Net increase in cash and cash equivalents 1,561 766 43
Cash and cash equivalents at beginning of year 2,591 1,825 1,782
- ------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 4,152 $ 2,591 $ 1,825
==============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PAGE 27
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
Years Ended September 30,
Dollars in Thousands
1997 1996 1995
- ---------------------------------------------------------------------------
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest, net of capitalized interest $2,099 $1,674 $1,082
Income taxes, net of refunds $ 928 $1,739 $1,909
Supplemental schedule of non-cash financing and investing activities:
The Company received an income tax benefit on the exercise of certain
of its stock options in the amount of $44 in 1997 and $125 in 1995 which
benefit was credited to additional paid-in capital.
In June 1995, the $400 convertible subordinated note was converted
into 38,709 shares of the Company's stock.
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Guest Supply, Inc. and Subsidiaries
Dollars in Thousands
Cumulative
Retained Foreign
Additional Earnings Currency
Number Paid-in (Accumulated Translation
of Shares Amount Capital Deficit) Adjustment
- -----------------------------------------------------------------------------
Balance,
September 30, 1994 6,044,592 $532 $34,099 $(1,312) $(74)
Net Income 5,090
Sales through employee
stock option and
purchase plans 40,534 4 188
Common stock warrants
exercised 22,500 2 114
Conversion of
convertible debt 38,709 4 396
Tax benefit associated
with exercise of stock
options 125
Equity adjustments
from foreign currency
translation (59)
- -----------------------------------------------------------------------------
Balance,
September 30, 1995 6,146,335 542 34,922 3,778 (133)
Net income 3,151
Sales through employee
stock option and
purchase plans 9,740 1 120
Equity adjustments from
foreign currency
translation 22
- -----------------------------------------------------------------------------
Balance,
September 30, 1996 6,156,075 543 35,042 6,929 (111)
Net income 3,816
Sales through employee
stock option and
purchase plans 34,232 3 250
Tax benefit associated
with exercise of stock
options 44
Equity adjustments
from foreign currency
translation 81
- -----------------------------------------------------------------------------
Balance,
September 30, 1997 6,190,307 $546 $35,336 $10,745 $(30)
=============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PAGE 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Guest Supply, Inc. and Subsidiaries
Dollars in Thousands except per share amount
BUSINESS DESCRIPTION The Company operates principally as a
manufacturer, packager and distributor of personal care guest amenities,
housekeeping supplies, room accessories and textiles to the lodging
industry. The Company also manufactures and packages products for major
consumer products and retail companies.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation -
The consolidated financial statements include the accounts of Guest Supply,
Inc. and all of its subsidiaries ("the Company"), each of which is wholly
owned. All significant intercompany transactions and balances are
eliminated in consolidation.
Risks and uncertainties - The Company's revenues are dependent on the
continued operation of its manufacturing facility and its various
distribution centers. The operation of these facilities involves many
risks, including the breakdown, failure or substandard performance of
equipment, natural disasters and the need to comply with directives of
governmental agencies. The occurrence of material operational problems,
including but not limited to the above events, may have a material adverse
effect on the productivity and profitability of a particular facility or
with respect to certain facilities, the Company as a whole, during the
period of such operational difficulty.
In addition, other factors may cause the Company's results to differ
materially from historically levels. Some of the most significant factors
include a down-turn in the lodging industry resulting in lower demand for
the Company's products, the unanticipated loss of, or decline in sales to a
major customer, pricing pressures and unforeseen inefficiencies at the
Company's manufacturing facility.
Foreign Currency Translation - Foreign currency transactions and financial
statements are translated into US dollars at current exchange rates except
revenues, costs and expenses which are translated at average exchange rates
during each reporting period. Exchange gains and losses resulting from
foreign currency transactions are included in the Consolidated Statements
of Operations currently, whereas, adjustments resulting from translations
of financial statements are reflected as a separate component of
shareholders' equity.
Use of Estimates - In conformity with generally accepted accounting
principles, the preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Inventories - Inventories are stated at the lower of cost or market. Cost
is determined by using the weighted-average and first-in, first-out
methods.
Property and equipment - Property and equipment are carried at cost.
Depreciation and amortization is calculated for financial reporting
purposes using the straight-line method based on the estimated useful lives
of the assets as follows: buildings, 40 years; machinery and equipment, 3
to 15 years; furniture and fixtures, 3 to 8 years; computers, 3 to 10 years
and leasehold improvements, the shorter of the life of the lease or the
life of the asset. When assets are retired or otherwise disposed of, the
cost and accumulated depreciation are removed from the accounts and any
resulting gain or loss is recognized in income for the period. The cost of
maintenance and repairs is charged to income as incurred; significant
renewals and betterments are capitalized.
Excess of cost over net assets acquired - Excess of cost over net assets
acquired is being amortized using the straight-line method over 25 years.
The Company continually evaluates the amortization period of its intangible
assets. Estimates of useful lives are revised when circumstances or events
indicate that the original estimate is no longer appropriate.
Revenue - Revenues are recognized at the time goods are shipped and title
has passed. Credit is generally extended to customers within these
industries on an uncollateralized basis.
Concentration of Credit Risk - Concentration of credit risk consists
principally of accounts receivable. At September 30, 1997 and 1996, one
customer accounted for 20.1% and 22.2%, respectively, of the Company's
total accounts receivable, and 13.2% and 11.1%, respectively, of the
Company's total sales in 1997 and 1996. For the year ended September 30,
1995, sales to two customers totaled 11.3% and 10.8% of the Company's total
sales and accounted for approximately 36% of the Company's total accounts
receivable.
Income taxes - The provision for income taxes is based on earnings reported
in the financial statements under the asset and liability approach in
accordance with SFAS No. 109 "Accounting for Income Taxes." Deferred tax
assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Statements of Cash Flows - For purposes of reporting cash flows, cash and
cash equivalents include cash on hand and certificates of deposit with a
maturity at time of purchase of three months or less.
<PAGE>
PAGE 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of -
The Company adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," as of October 1, 1996. This Statement requires that long-lived assets
and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of the assets to the
future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds
the fair value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less the cost to sell. Adoption
of this Statement did not have an impact on the Company's financial
position or results of operations as the Company previously followed the
basic tenets of this Statement.
Stock-Based Compensation - Effective as of October 1, 1996, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting For Stock-Based Compensation." SFAS No. 123 encourages, but
does not require, companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess,
if any, of the quoted market price at the date of the grant over the amount
an employee must pay to acquire the stock. Because the Company grants
options at a price equal to the market price of the stock at the date of
grant, no compensation expense is recorded. The Company, as required, has
provided pro forma disclosures of compensation expense as determined under
the provisions of SFAS No. 123.
Stock Split - On October 24, 1995, the Company effected a three-for-two
stock split of its common stock in the form of a stock dividend. All share
and per share data included in this annual report have been restated to
reflect the stock split.
Inventories
1997 1996
- ---------------------------------------------------------------------------
Raw material $ 7,706 $ 10,441
Finished goods 26,970 22,921
- ---------------------------------------------------------------------------
$ 34,676 $ 33,362
===========================================================================
Costs included in inventories are comprised of raw materials, direct labor
and overhead related to the manufacturing process.
Property and Equipment
1997 1996
- ---------------------------------------------------------------------------
Building, land and leasehold improvements $ 5,880 $ 3,608
Machinery and equipment 44,103 39,309
Furniture and fixtures 2,047 1,580
Computers 2,249 2,032
Construction in progress 726 1,774
- ---------------------------------------------------------------------------
55,005 48,303
Less accumulated depreciation and amortization 21,864 18,493
- ---------------------------------------------------------------------------
$ 33,141 $ 29,810
===========================================================================
Depreciation and amortization of equipment and leasehold improvements
charged to income was $3,520, $2,977 and $2,432 for the years ended
September 30, 1997, 1996 and 1995, respectively.
<PAGE>
PAGE 30
Income Taxes
Income tax expense is comprised of the following:
1997 1996 1995
- ---------------------------------------------------------------------------
Federal - Current $1,229 $ 828 $1,981
- Deferred 1,133 960 356
- ---------------------------------------------------------------------------
Total Federal income taxes 2,362 1,788 2,337
- ---------------------------------------------------------------------------
State - Current 297 245 344
- Deferred 158 184 86
- ---------------------------------------------------------------------------
Total State income taxes 455 429 430
Foreign 84
- ---------------------------------------------------------------------------
Total income tax provision $2,901 $2,217 $2,767
===========================================================================
The following is a reconciliation of Federal income tax expense computed
using the statutory rate of 34% to the Company's effective income tax rate:
1997 1996
- ---------------------------------------------------------------------------
Computed "expected" income tax expense $2,284 $1,825
Increase (reduction) in tax expense resulting from:
State income taxes, net of Federal income
tax benefit 300 283
Amortization of goodwill 125 125
Foreign 84
Other, net 108 (16)
- ---------------------------------------------------------------------------
$2,901 $2,217
===========================================================================
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at September 30, 1997
and 1996 are as follows:
1997 1996
- ---------------------------------------------------------------------------
Deferred tax assets:
Allowance for doubtful accounts $ 409 $ 350
Inventory obsolescence reserve and
uniform capitalization 1,206 1,040
Net operating loss carryforwards - states 260 137
Alternative minimum tax credit carryforwards 163 500
Other 192 167
- ---------------------------------------------------------------------------
Net deferred tax asset 2,230 2,194
Deferred tax liability - principally excess
of tax over financial statement depreciation (5,188) (3,957)
- ---------------------------------------------------------------------------
Net deferred taxes $(2,958) $(1,763)
===========================================================================
At September 30, 1997, the Company has net operating loss carryforwards for
state income tax purposes of approximately $4,328 which are available to
reduce future state income taxes, if any, through the year 2004. In
addition, the Company has alternative minimum tax credit carryforwards of
approximately $163 which are available to reduce future Federal regular
income taxes, if any, over an indefinite period.
<PAGE>
PAGE 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
LONG TERM DEBT At September 30, 1997, the Company had a $22,000 revolving
credit facility which bears interest at a rate equal to LIBOR plus 1.5%,
the bank's prime rate or a fixed rate, as selected by the Company. At
September 30, 1997, the revolving credit facility carried an interest rate
ranging from 6.97% to 8.5%. The unused amount available to the Company at
September 30, 1997 was $4,384.
1997 1996
- ---------------------------------------------------------------------------
Revolving credit facility $17,616 $14,034
$5,000 five-year term note payable, due
in equal monthly payments of $83
through February 1999, interest at 6.45% 1,417 2,417
$5,000 four-year term note payable, due in
equal monthly payments of $104
through February 1999, interest at 8.25% 1,771 3,021
$10,500 seven-year term note payable, due in
equal monthly payments of $125
through November 2002, interest at 7.0% 7,750 9,250
Capital lease obligations 123
- ---------------------------------------------------------------------------
28,554 28,845
Less: Current maturities 937 3,873
- ---------------------------------------------------------------------------
$27,617 $24,972
===========================================================================
All of the Company's loans with the banks are secured by substantially
all of its assets and are subject to certain financial covenants.
On December 3, 1997, the Company completed a Private Placement in the
amount of $25.0 million of unsecured senior notes with fixed interest rates
ranging from 6.70% to 7.06%. These notes have maturities ranging from 2003
to 2009. Concurrently with the issuance of the notes, the Company entered
into a credit agreement with two banks for a five-year $15.0 million
unsecured revolving credit facility. Availability under the new facility
is based upon agreed levels of eligible accounts receivable and bears
interest at a rate equal to LIBOR plus .85% or the bank's prime rate, as
selected by the Company. These loans are subject to certain financial
covenants. The proceeds from the notes and credit facility were used to
repay the outstanding balance under the existing credit facility and term
notes.
After giving effect to the new financing arrangement, long-term debt
at September 30, 1997 matures as follows:
1998 $ 937
1999 -
2000 1,111
2001 1,486
2002 3,376
Thereafter 21,644
==========================================================================
<PAGE>
PAGE 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
LEASES The Company leases its office, warehouse facilities and vehicles
under long-term lease agreements. These leases are classified as operating
leases and expire in various years through fiscal 2007.
Future minimum lease payments under non-cancelable operating leases as
of September 30, 1997 are:
September 30, Operating
Leases
- ---------------------------------------------------------------------------
1998 $ 3,666
1999 2,973
2000 2,440
2001 1,860
2002 1,681
Thereafter 6,226
- ---------------------------------------------------------------------------
Total minimum lease payments $ 18,846
- ---------------------------------------------------------------------------
Rent expense under operating leases was $4,820, $4,079 and $3,421 for
the years ended September 30, 1997, 1996 and 1995, respectively.
LITIGATION From time to time, the Company is a party to legal actions
arising in the ordinary course of business. Management believes that such
litigation and claims will be resolved without material effects on the
Company's financial statements taken as a whole.
EARNINGS PER COMMON SHARE Primary and fully diluted earnings per common
share are based on the weighted average number of common and common share
equivalents outstanding during each year. When stock options and warrants
are dilutive, they are included as share equivalents using the modified
treasury stock method. Where the effect of the assumed exercise on net
income would be anti-dilutive, primary and fully diluted earnings per
common share are stated the same. Weighted average shares for computing
primary earnings per share were 6,990,000, 7,074,000 and 7,293,000 for the
years ended September 30, 1997, 1996 and 1995, respectively. Weighted
average shares for computing fully diluted earnings per share were
7,049,000, 7,074,000 and 7,433,000 for the years ended September 30, 1997,
1996 and 1995, respectively.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share," which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements, primary earnings per share is
replaced by a new measure called basic earnings per share which excludes
common stock equivalents. The impact of the new statement would result in
a basic earnings per share which is $.07, $.06 and $.14 higher than primary
earnings per share for the years ended September 30, 1997, 1996 and 1995,
respectively. The impact of SFAS No. 128 on the calculation of fully
diluted earnings per share is not material.
<PAGE>
PAGE 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
STOCK INCENTIVE PLANS Under the stock option plans approved by the
Company's stockholders, key employees may be granted options to purchase
shares of common stock exercisable at prices not less than fair market
value at the date of grant. Options generally become exercisable 20% one
year from the date of grant, with an additional 20% exercisable each
succeeding year. The options generally expire ten years from the date of
grant.
In March 1996, the shareholders of the Company adopted the 1996
Long-Term Incentive Plan. Under the plan, 400,000 shares of Common Stock
will be available for issuance of awards. The Stock Option Committee is
authorized to grant a wide range of awards, including options, stock
appreciation rights, restricted stock, performance awards and other
stock-based awards to any employee or director.
Transactions relating to these stock option plans are summarized as
follows:
1997 1996 1995
------------------ ---------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------------ ---------------- ----------------
Outstanding at
beginning of year 1,171,300 $ 7.25 934,800 $5.26 967,425 $5.20
Granted 48,000 11.38 241,000 15.03
Exercised (21,300) 6.27 (1,500) 2.67 (32,625) 3.44
Forfeited (155,700) 14.95 (3,000) 15.25
- ---------------------------------------------------------------------------
Outstanding at
end of year 1,042,300 $ 6.31 1,171,300 $7.25 934,800 $5.26
- ---------------------------------------------------------------------------
Options exercisable
at year end 798,530 $5.06 742,380 $4.86 382,500 $5.83
===========================================================================
Weighted average
fair value of
options granted
during the year $6.51 $8.60
===== =====
The fair value of each stock option granted during 1997 and 1996 is
estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions for 1997 and 1996: expected
life of 7.0 years; expected volatility of 45%; expected dividend yield of
0% and risk-free interest rate of 6.5%.
Options Outstanding Options Exercisable
------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Number Contractual Exercise Number Exercise
Outstanding Life Price Exercisable Price
- ---------------------------------------------------------------------------
$ 2.67 - $ 3.75 407,550 2.04 years $ 2.99 407,550 $ 2.99
4.67 - 5.75 269,250 5.37 years 4.68 214,800 4.68
9.75 - 11.50 279,500 7.08 years 9.91 161,580 9.86
15.25 - 16.25 86,000 8.69 years 15.36 14,600 15.29
- ---------------------------------------------------------------------------
1,042,300 4.80 years $6.31 798,530 $5.06
===========================================================================
The Company maintains an Employee Stock Purchase Plan in which
eligible employees may purchase a limited amount of shares over successive
six-month offering periods at 85% of fair market value on either the first
or last day of each six-month period, whichever is less. During the years
ended September 30, 1997, 1996 and 1995, there were 11,432, 8,240 and 7,910
shares purchased under this plan, respectively. At September 30, 1997,
80,592 shares are reserved for future issuance under this plan.
Under SFAS No. 123, compensation cost is recognized for the fair value
of the employees' purchase rights, which was estimated using the
Black-Scholes model with the following assumptions: an expected life of 6
months; expected volatility of 45%; expected dividend yield of 0% and
risk-free interest rate of 6.5%. The weighted-average fair value of those
purchase rights granted in 1997 and 1996 was $4.34 and $5.89, respectively.
<PAGE>
PAGE 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
The Company has adopted the disclosure-only provisions of SFAS No.
123, "Accounting for Stock-Based Compensation," and applies APB Opinion No.
25 in accounting for its plans and, accordingly, has not recognized
compensation cost for stock option plans and stock purchase plans in its
financial statements. Had the Company determined compensation cost based
on the fair value at the grant date consistent with the provisions of SFAS
No. 123, the Company's net income would have been changed to the pro forma
amounts indicated below:
Years Ended September 30, 1997 1996
- ---------------------------------------------------------------------------
Net income:
As reported $3,816 $3,151
Pro forma 3,678 3,002
Primary earnings per share:
As reported $ 0.55 $ 0.45
Pro forma 0.53 0.42
Fully diluted earnings per share:
As reported $ 0.54 $ 0.45
Pro forma 0.52 0.42
The effects of applying SFAS No. 123 in this pro forma disclosure are
not indicative of future amounts. SFAS No. 123 does not apply for awards
prior to 1996, and the Company anticipates granting additional awards in
future years.
COMMON STOCK WARRANTS The Board of Directors may grant common stock
warrants to directors and officers of the Company at exercise prices not
less than market value at the date of grant. All outstanding warrants
expire during the fiscal years 1998 through 2000.
Transactions relating to common stock warrants as summarized as follows:
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
---------------- ---------------- ----------------
Outstanding at
beginning of year 743,250 $3.11 743,250 $3.11 765,750 $3.17
Exercised (1,500) 3.17 (22,500) 5.17
---------------- ---------------- ----------------
Outstanding at end
of year 741,750 $3.11 743,250 $3.11 743,250 $3.11
---------------- ---------------- ----------------
Options exercisable
at year end 741,750 $3.11 743,250 $3.11 743,250 $3.11
================ ================ ================
EMPLOYEE BENEFIT PLAN The Company has a 401(k) Salary Reduction Plan
under which the Company annually matches a portion of the amount of
contributions made by the employee. All domestic employees with one year
of continuous service are eligible for the plan. Company matching
contributions are 100% vested, as are any contributions made by the
employee. The Company may also make, at its sole discretion, annual
discretionary contributions, which vest over a six-year period. The
Company has not made any discretionary contributions.
Employer contributions relating to these plans were $174, $138 and
$130 for the years ended September 30, 1997, 1996 and 1995, respectively.
SHAREHOLDERS' PREFERRED PURCHASE RIGHTS On July 14, 1988, as amended
on August 6, 1997, the Board of Directors of the Company declared a
dividend of one preferred share purchase right for each outstanding share
of Common Stock of the Company. The dividend was payable on July 26, 1988
to the shareholders of record on that date. Each right entitles the
registered holder to purchase from the Company one one-hundredth of a
Preferred Share at a price of $30.00, subject to adjustment.
The rights agreement provides that, until the earlier to occur of (i)
10 days following a public announcement that a person or group of
affiliated or associated persons have acquired beneficial ownership of 20%
or more of the outstanding Common Stock, or (ii) 10 days following the
commencement of, or announcement of an intention to make a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of such outstanding Common
Stock, the rights will be transferred with and only with the Common Stock.
The rights are not exercisable until the earlier of such date described
above and will expire on July 15, 2008, unless the final expiration date is
extended or the rights are earlier redeemed by the Company at $.01 per
right.
<PAGE>
PAGE 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Guest Supply, Inc. and Subsidiaries
QUARTERLY FINANCIAL DATA The following table sets forth certain unaudited
quarterly financial information.
First Second Third Fourth
Year ended September 30, 1997 Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------
Sales $47,656 $44,287 $52,571 $56,403
Gross profit 11,071 6,923 11,744 13,087
Net income (loss) 1,219 (1,319) 1,618 2,298
Earnings (loss) per common share $0.17 $(0.21) $0.23 $0.32
Year ended September 30, 1996
- ---------------------------------------------------------------------------
Sales $41,714 $37,281 $47,863 $52,184
Gross profit 9,495 6,634 10,752 11,117
Net income (loss) 944 (824) 1,440 1,591
Earnings (loss) per common share $0.13 $(0.13) $0.20 $0.22
<PAGE>
PAGE 36
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Guest Supply, Inc. and Subsidiaries
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
-------------------
Balance Charged Charged Balance
at to to at
Beginning Costs and Other End of
Description Period Expenses Accounts Deductions Period
- ----------------------- ---------- ---------- -------- ---------- -----------
Reserves and allowances
deducted from asset
accounts:
Allowance for
Uncollectible Accounts
- -----------------------
Year ended
September 30, 1997 $898,000 $880,000 $0 $746,000 $1,032,000
Year ended
September 30, 1996 $692,000 $316,000 $0 $110,000 $898,000
Year ended
September 30, 1995 $852,000 $223,000 $0 $383,000 $692,000
Allowance for Obsolescence and Inventory Chargebacks
- ----------------------------------------------------
Year ended
September 30, 1997 $1,606,000 $1,858,000 $0 $1,530,000 $1,934,000
Year ended
September 30, 1996 $1,344,000 $828,000 $0 $566,000 $1,606,000
Year ended
September 30, 1995 $1,368,000 $328,000 $0 $352,000 $1,344,000
<PAGE>
PAGE 37
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.<PAGE>
PAGE 38
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
For information concerning this item, see "Item 1. -
Business - Executive Officers" and the table and text under the
caption "Certain Information Concerning Nominees and Directors"
and "Compliance with Section 16(a) of the Securities Exchange Act
of 1934" of the Proxy Statement to be filed with respect to the
1998 Annual Meeting of Shareholders to be held on January 15,
1998 (the "Proxy Statement"), which information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
For information concerning this item, see the table and
text under the captions "Executive Compensation," "Compensation
of Directors," "Personnel and Compensation Committee Interlocks
and Insider Participation" and "Employment Agreements" of the
Proxy Statement, which information is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
For information concerning this item, see the table and
text under the caption "Information Concerning Certain
Shareholders" of the Proxy Statement, which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For information concerning this item, see the text
under the caption "Personnel and Compensation Committee
Interlocks and Insider Participation" of the Proxy Statement,
which information is incorporated herein by reference.
<PAGE>
PAGE 39
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) 1. Financial Statements:
Included in Part II of this report:
Page
Number
Independent Auditors' Report . . . . . . . . . . . . . . 23
Consolidated Balance Sheets -- September 30
1997 and 1996. . . . . . . . . . . . . . . . . . . . . . 24
Consolidated Statements of Operations --
Years Ended September 30, 1997, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 25
Consolidated Statements of Cash Flows
- -- Years Ended September 30, 1997, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Shareholders'
Equity -- Years Ended September 30,
1997, 1996 and 1995. . . . . . . . . . . . . . . . . . . 27
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . 28
2. Financial Statement Schedule:
Included in Part II of this report:
II - Valuation and Qualifying
Accounts. . . . . . . . . . . . . . . . . . . . 36
All other schedules have been omitted because they are
inapplicable or the information is provided in the financial
statements, including the notes thereto.
3. Exhibits:
The exhibits required to be filed as part of this
Annual Report on Form 10-K are listed in the attached Index to
Exhibits.
(b) Current Reports on Form 8-K:
The Company filed a report on Form 8-K on September 8,
1997.
<PAGE>
PAGE 40
POWER OF ATTORNEY
The registrant and each person whose signature appears
below hereby appoint Clifford W. Stanley and Thomas M. Haythe as
attorneys-in-fact with full power of substitution, severally, to
execute in the name and on behalf of the registrant and each such
person, individually and in each capacity stated below, one or
more amendments to the annual report which amendments may make
such changes in the report as the attorney-in-fact acting in the
premises deems appropriate and to file any such amendment to the
report with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: December 5, 1997
GUEST SUPPLY, INC.
By /s/ Clifford W. Stanley
Clifford W. Stanley
President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Dated: December 5, 1997 By /s/ Clifford W. Stanley
-----------------------
Clifford W. Stanley
President, Principal
Executive Officer and
Director
Dated: December 5, 1997 By /s/ Thomas M. Haythe
-----------------------
Thomas M. Haythe
Director
<PAGE>
PAGE 41
Dated: December 5, 1997 By /s/ Peter L. Richard
-----------------------
Peter L. Richard
Director
Dated: December 5, 1997 By /s/ Teri E. Unsworth
-----------------------
Teri E. Unsworth
Vice President -
Market Development and
Director
Dated: December 5, 1997 By /s/ Edward J. Walsh
-----------------------
Edward J. Walsh
Director
Dated: December 5, 1997 By /s/ George S. Zabrycki
-----------------------
George S. Zabrycki
Director
Dated: December 5, 1997 By /s/ Paul T. Xenis
-----------------------
Paul T. Xenis
Vice President -
Finance and
Principal Financial
and Accounting Officer
<PAGE>
PAGE 42
Index to Exhibits
Page
3(a) Amended and Restated Certificate of
Incorporation of the Company
(incorporated by reference to Exhibit 3
to the Company's Quarterly Report on
Form 10-Q for the quarter ended March
31, 1996). --
3(b) Certificate of Amendment of the Amended
and Restated Certificate of
Incorporation of the Company
(incorporated by reference to Exhibit 3
to the Company's Quarterly Report on
Form 10-Q for the quarter ended March
31, 1996). --
3(c) Certificate of Amendment of the
Amended and Restated Certificate of
Incorporation of the Company
(incorporated by reference to Exhibit 3
to the Company's Quarterly Report on
Form 10-Q for the quarter ended March
31, 1996). --
3(d) Certificate of Amendment of the Amended
and Restated Certificate of
Incorporation of the Company
(incorporated by reference to Exhibit 3
to the Company's Quarterly Report on
Form 10-Q for the quarter ended March
31, 1996). --
3(e) Certificate of Correction to the
Certificate of Amendment of the
Amended and Restated Certificate
of Incorporation of the Company,
(incorporated by reference to Exhibit
3(d) to the Company's Annual Report
on Form 10-K for the year ended
September 30, 1993). --
3(f) Certificate of Merger of Miraflores
Designs, Inc. into the Company
(incorporated by reference to Exhibit
3(e) to the Company's Annual Report
on Form 10-K for the year ended
September 30, 1993). --
<PAGE>
PAGE 43
3(g) Amended and Restated By-Laws of
the Company . . . . . . . . . . . . . . . . . . . . 47
4(a) Article THIRD of Certificate of
Incorporation of the Company
(incorporated by reference to Exhibit
3(a) to Registration Statement on
Form S-1 No. 33-7246). --
4(b) Form of Series W Warrant Certificate
to purchase Common Stock of the Company
(incorporated by reference to Exhibit
4(b) to the Company's Annual Report
on Form 10-K for the year ended
September 30, 1994). --
4(c) Form of Series A Warrant Certificate
to purchase Common Stock of the Company
(incorporated by reference to Exhibit
4(c) to the Company's Annual Report
on Form 10-K for the year ended
September 30, 1994). --
4(d) Form of Series B Warrant Certificate to
purchase Common Stock of the Company
(incorporated by reference to Exhibit
4(d) to the Company's Annual Report
on Form 10-K for the year ended
September 30, 1994). --
4(e) Rights Agreement dated as of July 15,
1988 between the Company and First
Fidelity Bank (incorporated by
reference to Exhibit 4(e) to the
Company's Annual Report on Form 10-K
for the year ended September 30, 1993). --
4(f) Amendment No. 1 dated as of August 15,
1997 by and among the Company, First
Fidelity Bank and ChaseMellon
Shareholder Services, L.L.C. to the
Rights Agreement (incorporated by
reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K
dated September 8, 1997). --
10(a) 1983 Stock Option Plan of the Company,
as amended (incorporated by reference
to Exhibit 10(a) to Company's Annual
Report on Form 10-K for the year ended
September 30, 1993). --
<PAGE>
PAGE 44
10(b) 1993 Employee Stock Purchase Plan
(incorporated by reference to Exhibit
4.4 to Registration Statement on
Form S-8 No. 33-63352). --
10(c) 1993 Stock Option Plan of the Company
(incorporated by reference to Exhibit
4.1 to Registration Statement on
Form S-8 No. 33-63352). --
10(d) Lease dated February 28, 1985 between
the Company and The Benenson Capital
Company (incorporated by reference to
Exhibit 10(l) to Registration Statement
on Form S-1 No. 2-98274). --
10(e) Lease dated October 28, 1985 between
the Company and Shore Point
Distributors (incorporated by reference
to Exhibit 10(y) to Registration
Statement on Form S-1 No. 33-7246). --
10(f) Guest Supply, Inc. 401(k) Plan & Trust
(incorporated by reference to Exhibit
10(i) to the Company's Annual Report
on Form 10-K for the year ended
September 30, 1996). --
10(g) Guest Supply, Inc. 1996 Long Term
Incentive Plan (incorporated by
reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K
for the year ended September 30, 1996). --
10(h) Lease dated March 16, 1995 between the
Company and The Morris Company
(incorporated by reference to Exhibit
10(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended
March 31, 1995). --
10(i) Employment Agreement dated as of
August 6, 1997 between the Company
and Clifford W. Stanley. . . . . . . . . . . . . . . . . 82
10(j) Employment Agreement dated as of
August 6, 1997 between the Company
and Teri E. Unsworth . . . . . . . . . . . . . . . . . . 100
10(k) Employment Agreement dated as of
August 6, 1997 between the Company
and Paul T. Xenis. . . . . . . . . . . . . . . . . . . . 118
<PAGE>
PAGE 45
10(l) Employment Agreement dated as of
August 6, 1997 between the Company
and R. Eugene Biber . . . . . . . . . . . . . . . . . . . 136
10(m) General Counsel Agreement dated as of
August 6, 1997 between the Company
and Thomas M. Haythe . . . . . . . . . . . . . . . . . . 153
10(n) Revolving Credit Agreement by and among
the Company, Guest Packaging, Inc.,
Breckenridge-Remy Co., and Guest
Distribution Services, Inc., all as the
Borrower, PNC Bank, National
Association, First Union National Bank,
both as Lenders and PNC Bank, National
Association, as agent, dated as of
December 3, 1997. . . . . . . . . . . . . . . . . . . . . 164
10(o) Revolving Credit Note dated December 3,
1997 made by the Company, Guest
Packaging, Inc., Breckenridge-Remy Co.
and Guest Distribution Services, Inc.,
as joint and several obligors to First
Union National Bank . . . . . . . . . . . . . . . . . . . 242
10(p) Revolving Credit Note dated December 3,
1997 made by the Company, Guest
Packaging, Inc., Breckenridge-Remy Co.
and Guest Distribution Services, Inc.,
as joint and several obligors to PNC
Bank, National Association. . . . . . . . . . . . . . . . 244
10(q) Form of Note Purchase Agreement dated
as of December 3, 1997 by and among the
Company, Breckenridge-Remy Co., Guest
Distribution Services, Inc., Guest
Packaging, Inc. and each of The Mutual
Life Insurance Company of New York,
AUSA Life Insurance Company, Inc.,
Great-West Life & Annuity Insurance
Company and Nationwide Life and Annuity
Insurance Company . . . . . . . . . . . . . . . . . . . . 246
10(r) 7.06% Series A Senior Note due
November 15, 2009 made by the Company,
Guest Packaging, Inc., Breckenridge-
Remy Co. and Guest Distribution
Services, Inc. for the benefit of the
Mutual Life Insurance Company of New
York. . . . . . . . . . . . . . . . . . . . . . . . . . . 359
<PAGE>
PAGE 46
10(s) 7.06% Series A Senior Note due
November 15, 2009 made by the Company,
Guest Packaging, Inc., Breckenridge-
Remy Co. and Guest Distribution
Services, Inc. for the benefit of AUSA
Life Insurance Company, Inc.. . . . . . . . . . . . . . . 362
10(t) 6.95% Series B Senior Note due
November 15, 2007 made by the Company,
Guest Packaging, Inc., Breckenridge-
Remy Co. and Guest Distribution
Services, Inc. for the benefit of
Great-West Life & Annuity Insurance
Company . . . . . . . . . . . . . . . . . . . . . . . . . 365
10(u) 6.70% Series C Senior Note due
November 15, 2003 made by the Company,
Guest Packaging, Inc., Breckenridge-
Remy Co. and Guest Distribution
Services, Inc. for the benefit of
Nationwide Life and Annuity Insurance
Company.. . . . . . . . . . . . . . . . . . . . . . . . . 368
21 Subsidiaries of the Registrant . . . . . . . . . . . . . . . . 371
23 Consent of KPMG Peat Marwick LLP . . . . . . . . . . . . . . . 372
24 Power of Attorney (see "Power of
Attorney" in Form 10-K). . . . . . . . . . . . . . . . . . . . 40
27 Financial Data Schedule. . . . . . . . . . . . . . . . . . . . 373
Copies of the exhibits filed with this Annual Report on Form 10-K
or incorporated by reference herein do not accompany copies
hereof for distribution to shareholders of the Company. The
Company will furnish a copy of any of such exhibits to any
shareholder requesting the same.
<PAGE>
EXHIBIT 3(g)
GUEST SUPPLY, INC.
BY LAWS
As Amended, November 5, 1997
ARTICLE I
Offices
The registered office of the Corporation shall be
located at 4301 U.S. Highway One in the City of Monmouth
Junction, County of Middlesex, State of New Jersey.
The Corporation may also have offices at such
other places, both within and without the State of New
Jersey, as may from time to time be designated by the Board
of Directors.
ARTICLE II
Books
The books and records of the Corporation may be
kept (except as otherwise provided by the laws of the State
of New Jersey) outside of the State of New Jersey and at
such place or places as may from time to time be designated
by the Board of Directors.
ARTICLE III
Shareholders
Section 1. Annual Meetings. The annual meeting
of the shareholders of the Corporation for the election of
Directors and the transaction of such other business as may
properly come before said meeting shall be held at the
principal business office of the Corporation or at such
other place or places either within or without the State of
New Jersey as may be designated by the Board of Directors
and stated in the notice of the meeting, on the third
Thursday of January in each year, if not a legal holiday,
and, if a legal holiday, then on the next day not a legal
holiday, at 10:00 o'clock in the forenoon, or on such other
day as shall be determined by the Board of Directors.
Written notice of the place designated for the
annual meeting of the shareholders of the Corporation shall
be delivered personally or mailed to each shareholder
entitled to vote thereat not less than ten (10) and not more
than sixty (60) days prior to said meeting, but at any
meeting at which all shareholders shall be present, or of
which all shareholders not present have waived notice in
writing, the giving of notice as above described may be
dispensed with. If mailed, said notice shall be directed to
each shareholder at his address as the same appears on the
stock ledger of the Corporation unless he shall have filed
with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in
which case it shall be mailed to the address designated in
such request.
Section 2. Special Meetings. Special meetings of
the shareholders of the Corporation may not be called by the
shareholders without the approval of the Board of Directors,
except as may be required by New Jersey law. Such meetings
shall be held whenever called in the manner required by the
laws of the State of New Jersey for purposes as to which
there are special statutory provisions, and for other
purposes whenever called by resolution of the Board of
Directors, by the Chairman of the Board of Directors, by the
President, or by the holders of a majority of the
outstanding shares of capital stock of the Corporation the
holders of which are entitled to vote on matters that are to
be voted on at such meeting. Any such special meeting of
shareholders may be held at the principal business office of
the Corporation or at such other place or places, either
within or without the State of New Jersey, as may be
specified in the notice thereof. Business transacted at any
special meeting of shareholders of the Corporation shall be
limited to the purposes stated in the notice thereof.
Except as otherwise expressly required by the laws
of the State of New Jersey, written notice of each special
meeting, stating the day, hour and place, and in general
terms the business to be transacted thereat, shall be
delivered personally or mailed to each shareholder entitled
to vote thereat not less than ten (10) and not more than
sixty (60) days before the meeting. If mailed, said notice
shall be directed to each shareholder at his address as the
same appears on the stock ledger of the Corporation unless
he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be mailed to
some other address, in which case it shall be mailed to the
address designated in said request. At any special meeting
at which all shareholders shall be present, or of which all
shareholders not present have waived notice in writing, the
giving of notice as above described may be dispensed with.
Section 3. List of Shareholders. The officer of
the Corporation who shall have charge of the stock ledger of
the Corporation shall prepare and make, at least ten (10)
days before every meeting of shareholders, a complete list
of the shareholders entitled to vote at said meeting,
arranged in alphabetical order and showing the address of
each shareholder and the number of shares registered in the
name of each shareholder. Such list shall be produced and
kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any shareholder who is
present.
Section 4. Quorum. At any meeting of the
shareholders of the Corporation, except as otherwise
expressly provided by the laws of the State of New Jersey,
the Certificate of Incorporation or these By-Laws, there
must be present, either in person or by proxy, in order to
constitute a quorum, shareholders owning a majority of the
issued and outstanding shares of the capital stock of the
Corporation entitled to vote at said meeting. The
shareholders present in person or by proxy at a duly
organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of sufficient
stockholders to leave less than a quorum. At any meeting of
shareholders at which a quorum is not present, the holders
of, or proxies for, a majority of the stock which is
represented at such meeting, shall have power to adjourn the
meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be
transacted which might have been transacted at the meeting
as originally noticed.
Section 5. Organization. The Chairman of the
Board of Directors, or in his absence, the President, or in
their absence any Vice President, shall call to order
meetings of the shareholders and shall act as chairman of
such meetings. The Board of Directors or the shareholders
may appoint any shareholder or any Director or officer of
the Corporation to act as chairman of any meeting in the
absence of the Chairman of the Board of Directors, the
President and all of the Vice Presidents.
The Secretary of the Corporation shall act as
secretary of all meetings of the shareholders, but in the
absence of the Secretary the presiding officer may appoint
any other person to act as secretary of any meeting.
Section 6. Voting. Except as otherwise provided
in the Certificate of Incorporation or these By-Laws, each
shareholder of record of the Corporation shall, at every
meeting of the shareholders of the Corporation, be entitled
to one (1) vote for each share of stock standing in his name
on the books of the Corporation on any matter on which he is
entitled to vote, and such votes may be cast either in
person or by proxy, appointed by an instrument in writing,
subscribed by such shareholder or by his duly authorized
attorney, and filed with the Secretary before being voted
on. No proxy shall be voted after eleven (11) months from
its date, unless said proxy provides for a longer period,
but in no event shall a proxy be valid after three (3) years
from its date. A proxy shall not be revoked by the death or
incapacity of the shareholder who executed the proxy but
shall continue in force until revoked by the personal
representative or guardian of such shareholder.
If the Certificate of Incorporation provides for
more or less than one (1) vote for any share of capital
stock of the Corporation, on any matter, then any and every
reference in these By-Laws to a majority or other proportion
of capital stock shall refer to such majority or other
proportion of the votes of such stock.
The vote on all elections of Directors and on any
other questions before the meeting need not be by ballot,
except upon demand of any shareholder.
When a quorum is present at any meeting of the
shareholders of the Corporation, the vote of the holders of
a majority of the capital stock entitled to vote at such
meeting and present in person or represented by proxy shall
decide any question brought before such meeting, unless the
question is one upon which, under any provision of the laws
of the State of New Jersey or of the Certificate of
Incorporation, a different vote is required in which case
such provision shall govern and control the decision of such
question.
Section 7. Consent. Except as otherwise required
by the laws of the State of New Jersey or in the Certificate
of Incorporation or unless otherwise approved by a vote of
not less than a majority of the Directors then holding
office (or, in the event that the Corporation at the time
has a Related Person [as defined in the Certificate of
Incorporation], then by a vote of not less than a majority
of the Continuing Directors [as defined in the Certificate
of Incorporation]), no action shall be taken by the
shareholders except at an annual or special meeting of the
shareholders actually held, pursuant to Section 1 or 2 of
this Article, upon prior notice and pursuant to a vote.
Except as otherwise provided hereinabove, no action shall be
taken by the shareholders by written consent unless such
consent is in writing, setting forth the action taken, and
is signed by all of the holders of outstanding capital stock
of the Corporation entitled to vote on such matters.
Section 8. Judges. At every meeting of the
shareholders of the Corporation at which a vote by ballot is
taken, the polls shall be opened and closed, the proxies and
ballots shall be received and taken in charge, and all
questions touching the qualifications of voters, the
validity of proxies and the acceptance or rejection of votes
shall be decided by two (2) judges. Said judges shall be
appointed by the Board of Directors before the meeting, or,
if no such appointment shall have been made, by the
presiding officer of the meeting. If for any reason any of
the judges previously appointed shall fail to attend or
refuse or be unable to serve, judges in place of any so
failing to attend, or refusing or unable to serve, shall be
appointed in like manner.
Section 9. Notice of Business. No business may be
transacted at an annual meeting of shareholders, other than
business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the
direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (c) otherwise
properly brought before the annual meeting by any
shareholder of the Corporation (i) who is a shareholder of
record on the date of the giving of the notice provided for
in this Section 9 of this Article III and on the record date
for the determination of shareholders entitled to vote at
such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 9 of this Article III.
In addition to any other applicable requirements,
for business to be properly brought before an annual meeting
by a shareholder, such shareholder must have given timely
notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a shareholder's notice to the
Secretary must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than
sixty days nor more than ninety days prior to the
anniversary date of the immediately preceding annual meeting
of shareholders; provided, however, that in the event that
the annual meeting is called for a date that is not within
thirty days before or after such anniversary date, notice by
the shareholder in order to be timely must be so received
not later than the close of business on the tenth day
following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the
date of the annual meeting was made, whichever first occurs.
To be in proper written form, a shareholder's
notice to the Secretary must set forth as to each matter
such shareholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be
brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the
name and record address of such shareholder, (iii) the class
or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by
such shareholder, (iv) a description of all arrangements or
understandings between such shareholder and any other person
or persons (including their names) in connection with the
proposal of such business by such shareholder and any
material interest of such shareholder in such business and
(v) a representation that such shareholder intends to appear
in person or by proxy at the annual meeting to bring such
business before the meeting.
No business shall be conducted at the annual
meeting of shareholders except business brought before the
annual meeting in accordance with the procedures set forth
in this Section 9 of this Article III; provided, however,
that, once business has been properly brought before the
annual meeting in accordance with such procedures, nothing
in this Section 9 of this Article III shall be deemed to
preclude discussion by any shareholder of any such business.
If the Chairman of an annual meeting determines that business
was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall
declare to the meeting that the business was not properly
brought before the meeting and such business shall not be
transacted.
ARTICLE IV
Directors
Section 1. Number, Election and Term of Office.
The business and affairs of the Corporation shall be managed
by the Board of Directors. The number of Directors which
shall constitute the whole Board shall be not less than
three (3) nor more than nine (9). Within such limits, the
number of Directors may be fixed from time to time by vote
of the Board of Directors, at any regular or special
meeting, subject to the provisions of the Certificate of
Incorporation. Directors need not be stockholders.
Directors shall be elected at the annual meeting of the
stockholders except as provided in Section 2 of this
Article, to serve for terms in accordance with the
Certificate of Incorporation and until their respective
successors are elected and have duly qualified.
In addition to the powers by these By-Laws
expressly conferred upon them, the Board may exercise all
such powers of the Corporation as are not by the laws of the
State of New Jersey, the Certificate of Incorporation or
these By-Laws required to be exercised or done by the
shareholders.
Only persons who are nominated in accordance with
the following procedures shall be eligible for election as
Directors of the Corporation, except as may be otherwise
provided in the Certificate of Incorporation of the
Corporation with respect to the right of holders of
preferred stock of the Corporation to nominate and elect a
specified number of Directors in certain circumstances.
Nominations of persons for election to the Board of
Directors may be made at any annual meeting of shareholders,
or at any special meeting of shareholders called for the
purpose of electing Directors, (a) by or at the direction of
the Board of Directors (or any duly authorized committee
thereof) or (b) by any shareholder of the Corporation (i)
who is a shareholder of record on the date of the giving of
the notice provided for in this Section 1 of this Article IV
and on the record date for the determination of shareholders
entitled to vote at such meeting and (ii) who complies with
the notice procedures set forth in this Section 1 of this
Article IV.
In addition to any other applicable requirements,
for a nomination to be made by a shareholder, such
shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
To be timely, a shareholder's notice to the
Secretary must be delivered to or mailed and received at the
principal executive offices of the Corporation (a) in the
case of an annual meeting, not less than sixty days nor more
than ninety days prior to the anniversary date of the
immediately preceding annual meeting of shareholders;
provided, however, that in the event that the annual meeting
is called for a date that is not within thirty days before
or after such anniversary date, notice by the shareholder in
order to be timely must be so received not later than the
close of business on the tenth day following the day on
which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs; and (b) in the
case of a special meeting of shareholders called for the
purpose of electing Directors, not later than the close of
business on the tenth day following the day on which notice
of the date of the special meeting was mailed or public
disclosure of the date of the special meeting was made,
whichever first occurs.
To be in proper written form, a shareholder's
notice to the Secretary must set forth (a) as to each person
whom the shareholder proposes to nominate for election as a
Director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and
number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and (iv)
any other information relating to the person that would be
required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations
of proxies for election of Directors pursuant to Section 14
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the shareholder giving the notice
(i) the name and record address of such shareholder, (ii)
the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by
such shareholder, (iii) a description of all arrangements or
understandings between such shareholder and each proposed
nominee and any other person or persons (including their
names) pursuant to which the nomination(s) are to be made by
such shareholder, (iv) a representation that such
shareholder intends to appear in person or by proxy at the
meeting to nominate the persons named in its notice and (v)
any other information relating to such shareholder that
would be required to be disclosed in a proxy statement or
other filings required to be made in connection with
solicitations of proxies for election of Directors pursuant
to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to
being named as a nominee and to serve as a Director if
elected.
Subject to Section 2 of this Article IV, no person
shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the
procedures set forth in this Section 1 of this Article IV.
If the Chairman of the meeting determines that a nomination
was not made in accordance with the foregoing procedures,
the Chairman shall declare to the meeting that the
nomination was defective and such defective nomination shall
be disregarded.
Section 2. Vacancies and Newly Created
Directorships. Except as hereinafter provided and subject
to the provisions of the Certificate of Incorporation, any
vacancy in the office of a Director occurring for any reason
other than the removal of a Director pursuant to Section 3
of this Article, and any newly created Directorship
resulting from any increase in the authorized number of
Directors, may be filled by a majority of the Directors then
in office, though less than a quorum, or by the sole
remaining Director. In the event that any vacancy in the
office of a Director occurs as a result of the removal of a
Director pursuant to Section 3 of this Article, or in the
event that vacancies occur contemporaneously in the offices
of all of the Directors, such vacancy or vacancies shall be
filled by a vote of the shareholders of the Corporation at
the next annual or special meeting of the shareholders.
Directors chosen or elected as aforesaid shall hold office
for a term in accordance with the Certificate of
Incorporation and until their respective successors are
elected and duly qualified or until their earlier
resignation or removal. Any Director of any class elected
to fill a vacancy resulting from an increase in the number
of Directors in such class shall hold office for a term that
shall coincide with the remaining term of that class. Any
Director elected to fill a vacancy not resulting from an
increase in the number of Directors shall have the same
remaining term as that of his predecessor.
Section 3. Removals. Directors of the
Corporation may be removed by the shareholders of the
Corporation only for cause and only by the affirmative vote
of a majority of the combined voting power of the then
outstanding shares of voting stock, voting together as a
single class. For the purposes hereof, "cause" shall mean
(i) the willful, continuous and material failure of a
Director to perform such Director's duties to the
Corporation (including any such failure resulting from
incapacity due to physical or mental illness), (ii) the
willful engaging by a Director in gross misconduct or
malfeasance materially and demonstrably injurious to the
Corporation or (iii) a Director's conviction of a crime
involving moral turpitude. The Board of Directors shall
have the power to remove directors for cause and to suspend
directors pending a final determination that cause exists
for removal.
Section 4. Regular Meetings. Regular meetings of
the Board of Directors may be held without notice at such
time and place, either within or without the State of New
Jersey, as shall from time to time be determined by
resolution of the Board.
Section 5. Special Meetings. Special meetings of
the Board of Directors may be called by any three Directors,
by the Chairman of the Board of Directors or, if the office
of the Chairman of the Board of Directors is vacant or if
the Chairman of the Board of Directors is incapacitated,
then by the President or, if the office of the President is
vacant or if the President is incapacitated, then by any
Vice President on notice given to each Director, and such
meetings shall be held at the principal business office of
the Corporation or at such other place or places, either
within or without the State of New Jersey, as shall be
specified in the notices thereof.
Section 6. Annual Meetings. The first meeting of
each newly elected Board of Directors shall be held as soon
as practicable after each annual election of Directors and
on the same day, at the same place at which regular meetings
of the Board of Directors are held, or at such other time
and place as may be provided by resolution of the Board.
Such meeting may be held at any other time or place which
shall be specified in a notice given, as hereinafter
provided, for special meetings of the Board of Directors.
Section 7. Notice. Notice of any meeting of the
Board of Directors requiring notice shall be given to each
Director by mailing the same, addressed to him at his
principal address as it appears on the books and records of
the Corporation, at least forty-eight (48) hours, or shall
be sent to him at such place by facsimile transmission,
courier, telegraph, cable or wireless, or shall be delivered
personally or by telephone, at least twelve (12) hours,
before the time fixed for the meeting. At any meeting at
which every Director shall be present or at which all
Directors not present shall waive notice in writing, any and
all business may be transacted even though no notice shall
have been given.
Section 8. Quorum. At all meetings of the Board
of Directors, the presence of a majority or more of the
Directors constituting the Board (but in no event less than
two Directors) shall constitute a quorum for the transaction
of business. Except as may be otherwise specifically
provided by the laws of the State of New Jersey, the
Certificate of Incorporation or these By-Laws, the
affirmative vote of a majority of the Directors present at
the time of such vote shall be the act of the Board of
Directors if a quorum is present. If a quorum shall not be
present at any meeting of the Board of Directors the
Directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Consent. Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, any
action required or permitted to be taken at any meeting of
the Board of Directors may be taken without a meeting, if
all members of the Board consent thereto in writing, and the
writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 10. Telephonic Meetings. Unless
otherwise restricted by the Certificate of Incorporation or
these By-Laws, members of the Board of Directors may
participate in a meeting of the Board by means of conference
telephone or similar communications equipment by means of
which all persons participating in such meeting can hear
each other, and participation in a meeting pursuant to this
Section 10 shall constitute presence in person at such
meeting.
Section 11. Compensation of Directors.
Directors, as such, shall not receive any stated salary for
their services, but, by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any,
may be allowed for attendance at each regular or special
meeting of the Board of Directors; provided that nothing
herein contained shall be construed to preclude any Director
from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12. Interested Directors. No contract or
other transaction between the Corporation and one or more of
its Directors, or between the Corporation and any other
corporation, firm, association or other entity in which one
or more of the Corporation's Directors are directors or
officers, or are financially interested, shall be either
void or voidable for this reason alone or by reason alone
that such Director or Directors are present at a meeting of
the Board of Directors which approves such contract or
transaction, or that his or their votes are counted for such
purpose:
(a) if the fact of such common directorship,
officership or financial interest is
disclosed or known to the Board of Directors
and the Board of Directors authorizes,
approves or ratifies such contract or
transaction by unanimous written consent,
provided at least one Director so consenting
is disinterested, or by affirmative vote of a
majority of the disinterested Directors, even
though the disinterested Directors are less
than a quorum;
(b) if such common directorship, officership or
financial interest is disclosed or known to
the shareholders, and such contract or
transaction is authorized, approved or
ratified by vote of the shareholders; or
(c) if the contract or transaction is fair and
reasonable as to the Corporation at the time
it is authorized, approved or ratified by the
Board of Directors or the shareholders.
Common or interested Directors may be counted in determining
the presence of a quorum at a meeting of the Board of
Directors which approves such contract or transaction.
Section 13. Resignations. Any Director of the
Corporation may resign at any time by giving written notice
to the Board of Directors, to the Chairman of the Board of
Directors, to the President or to the Secretary of the
Corporation. Any such resignation shall take effect at the
time specified therein, or, if the time be not specified,
upon receipt thereof; and unless otherwise specified
therein, acceptance of such resignation shall not be
necessary to make it effective.
Section 14. Chairman of the Board of Directors.
The Board of Directors shall designate one of their number
to act as Chairman of the Board of Directors of the
Corporation. A Director shall not be deemed to be an
officer as a result of his being designated as Chairman of
the Board of Directors. The Chairman of the Board of
Directors shall preside at all meetings of the Board of
Directors and at all meetings of the shareholders of the
Corporation. He shall cause to be called regular and
special meetings of the shareholders of the Corporation and
of the Board of Directors in accordance with these By-Laws.
In addition to the powers and duties expressly conferred
upon him by these By-Laws, he shall, except as otherwise
specifically provided by the laws of the State of New
Jersey, have such other powers and duties as shall from time
to time be assigned to him by the Board of Directors.
ARTICLE V
Committees
Section 1. Executive Committee. The Board, by
resolution adopted by the affirmative vote of a majority of
all the directors then in office, may designate three (3) or
more of its members to constitute an Executive Committee,
which, during the intervals between the meetings of the
Board, shall have, and may exercise, all the powers of the
Board in the management of the business, affairs and
property of the Company.
At all meetings of the Executive Committee, the
presence of the lesser of a majority or three (3) of the
members thereof shall be necessary to constitute a quorum
and to transact business. Meetings of the Executive
Committee may be called by any member thereof, by the
Chairman of the Board of Directors, by the President or by
the Secretary of the Corporation. Written or oral notice of
each such meeting shall be given to each member of the
Executive Committee not later than the close of the business
day next preceding the date of such meeting.
The Board shall have the power, by resolution
adopted by the affirmative vote of a majority of all of the
directors then in office, at any time to change the members
of the Executive Committee, to fill vacancies thereon, and
to discharge the Executive Committee or any member thereof.
The Board may, by ordinary resolution, designate
one of the members of the Executive Committee as Chairman of
the Executive Committee.
Section 2. Committees Generally. The Board, by
resolution, may from time to time designate members of the
Board to constitute other committees, which shall consist of
such persons and shall have such powers as the Board may
determine and specify in the respective resolutions
effecting such designations. The Board shall have the
power, by resolution, at any time, with respect to any
committee created pursuant to Section 2 to change the
members of any such committee, to fill vacancies on any such
committee and to discharge any such committee.
Section 3. Meetings. A majority of the members
of each committee shall determine its acts. Each committee
may adopt such rules and regulations for the conduct of its
meetings as it deems proper and as are not inconsistent with
any statute or the Certificate of Incorporation or the
By-Laws of this Corporation.
ARTICLE VI
Officers
Section 1. Number, Election and Term of Office .
The officers of the Corporation shall be a President, an
Executive Vice President, one or more Vice Presidents, a
Secretary and a Treasurer, and may at the discretion of the
Board of Directors include one or more Vice Presidents,
Assistant Treasurers and Assistant Secretaries. The
officers of the Corporation shall be elected annually by the
Board of Directors at its meeting held immediately after the
annual meeting of the shareholders, and shall hold their
respective offices until their successors are duly elected
and have qualified. Any number of offices may be held by
the same person but no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such
instrument is required by law to be executed, acknowledged
or verified by two or more officers. The Board of Directors
may from time to time appoint such other officers as the
interest of the Corporation may require and may fix their
duties, subject to the control of the Board of Directors,
and terms of office.
Section 2. President. The President shall be a
Director, and shall be the chief executive officer of the
Corporation and shall have general and active management of
the business of the Corporation, and shall see that all
orders and resolutions of the Board are carried into effect.
He shall ensure that the books, reports, statements,
certificates and other records of the Corporation are kept,
made or filed in accordance with the laws of the State of
New Jersey. He may sign, execute and deliver in the name of
the Corporation all deeds, mortgages, bonds, contracts or
other instruments authorized by the Board of Directors,
except in cases where the signing, execution or delivery
thereof shall be expressly delegated by the Board of
Directors or by these By-Laws to some other officer or agent
of the Corporation or where any of them shall be required by
law otherwise to be signed, executed or delivered. He may
sign, with the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, certificates of stock
of the Corporation. He shall appoint and remove, employ and
discharge, and fix the compensation of all servants, agents,
employees and clerks of the Corporation other than the duly
elected or appointed officers, subject to the approval of
the Board of Directors. In addition to the powers and
duties expressly conferred upon him by these By-Laws, he
shall, except as otherwise specifically provided by the laws
of the State of New Jersey, have such other powers and
duties as shall from time to time be assigned to him by the
Board of Directors. He shall, during the absence or
incapacity of the Chairman of the Board of Directors, assume
his powers and perform his duties.
Section 3. Vice Presidents. The Vice Presidents
shall perform such duties as the President or the Board of
Directors shall require. Any Vice President shall, during
the absence or incapacity of the President, assume and
perform his duties.
Section 4. Secretary. The Secretary may sign all
certificates of stock of the Corporation. He shall record
all the proceedings of the meetings of the Board of
Directors and of the shareholders of the Corporation in
books to be kept for that purpose. He shall have custody of
the seal of the Corporation and may affix the same to any
instrument requiring such seal when authorized by the Board
of Directors, and when so affixed he may attest the same by
his signature. He shall keep the transfer books, in which
all transfers of the capital stock of the Corporation shall
be registered, and the stock books, which shall contain the
names and addresses of all holders of the capital stock of
the Corporation and the number of shares held by each; and
he shall keep such stock and transfer books open daily
during business hours to the inspection of every shareholder
and for transfer of stock. He shall notify the Directors
and shareholders of their respective meetings as required by
law or by these By-Laws, and shall perform such other duties
as may be required by law or by these By-Laws, or which may
be assigned to him from time to time by the Board of
Directors.
Section 5. Assistant Secretaries. The Assistant
Secretaries shall, during the absence or incapacity of the
Secretary, assume and perform all functions and duties which
the Secretary might lawfully do if present and not under any
incapacity.
Section 6. Treasurer. The Treasurer shall have
charge of the funds and securities of the Corporation. He
may sign all certificates of stock. He shall keep full and
accurate accounts of all receipts and disbursements of the
Corporation in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by
the Board, and shall render to the President or the
Directors, whenever they may require it, an account of all
his transactions as Treasurer and an account of the business
and financial position of the Corporation.
Section 7. Assistant Treasurers. The Assistant
Treasurers shall, during the absence or incapacity of the
Treasurer, assume and perform all functions and duties which
the Treasurer might lawfully do if present and not under any
incapacity.
Section 8. Treasurer's Bond. The Treasurer and
Assistant Treasurers shall, if required so to do by the
Board of Directors, each give a bond (which shall be renewed
every six (6) years) in such sum and with such surety or
sureties as the Board of Directors may require.
Section 9. Transfer of Duties. The Board of
Directors in its absolute discretion may transfer the power
and duties, in whole or in part, of any officer to any other
officer, or persons, notwithstanding the provisions of these
By-Laws, except as otherwise provided by the laws of the
State of New Jersey.
Section 10. Vacancies. If the office of
President, Executive Vice President, Vice President,
Secretary or Treasurer, or any other officer or agent
becomes vacant for any reason, the Board of Directors may
choose a successor to hold office for the unexpired term.
Section 11. Removals. Any officer or agent of
the Corporation may be removed from office, with or without
cause, by the affirmative vote of a majority of the entire
Board of Directors.
Section 12. Compensation of Officers. The
officers shall receive such salary or compensation as may be
determined by the Board of Directors.
Section 13. Resignations. Any officer or agent
of the Corporation may resign at any time by giving written
notice to the Board of Directors, to the Chairman of the
Board of Directors, to the President or to the Secretary of
the Corporation. Any such resignation shall take effect at
the time specified therein or, if the time be not specified,
upon receipt thereof; and unless otherwise specified
therein, acceptance of such resignation shall not be
necessary to make it effective.
Section 14. Executive Vice President. The
Executive Vice President shall have such powers and duties
as may be assigned to him by the Board of Directors or the
President, or as may be provided in these By-Laws. The
Executive Vice President shall, during the absence or
incapacity of the President, assume his powers and perform
his duties. The Executive Vice President shall also be the
Chief Financial Officer of the Corporation.
ARTICLE VII
Contracts, Checks and Notes
Section 1. Contracts. Unless the Board of
Directors shall otherwise specifically direct, all contracts
of the Corporation shall be executed in the name of the
Corporation by the President, the Executive Vice President
or a Vice President.
Section 2. Checks and Notes. All checks, drafts,
bills of exchange and promissory notes and other negotiable
instruments of the Corporation shall be signed by such
officers or agents of the Corporation as may be designated
by the Board of Directors.
ARTICLE VIII
Stock
Section 1. Certificates of Stock. The
certificates for shares of the stock of the Corporation
shall state upon the face thereof (1) that the Corporation
is organized under the laws of the State of New Jersey, (2)
the name of the person to whom issued and (3) the number of
shares represented thereby and shall otherwise be in such
form, not inconsistent with the Certificate of
Incorporation, as shall be prepared or approved by the Board
of Directors. Every holder of stock in the Corporation
shall be entitled to have a certificate of stock signed by,
or in the name of the Corporation by, the President, the
Executive Vice President or a Vice President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary certifying the number of shares owned by
him and the date of issue and may be sealed with the seal of
the Corporation or a facsimile thereof; and no certificate
shall be valid unless so signed and sealed. All
certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued.
Where a certificate is countersigned (1) by a
transfer agent other than the Corporation or its employee,
or, (2) by a registrar other than the Corporation or its
employee, any other signature on the certificate may be
facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or
registrar at the date of issue.
All certificates surrendered to the Corporation
shall be cancelled and, except in the case of lost or
destroyed certificates, no new certificates shall be issued
until the former certificates for the same number of shares
of the same class of stock shall have been surrendered and
cancelled.
Section 2. Transfer of Stock. Stock of the
Corporation shall be transferable in the manner prescribed
by the laws of the State of New Jersey. Upon surrender to
the Corporation or the transfer agent of the Corporation of
a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a
new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.
ARTICLE IX
Registered Shareholders
The Corporation shall be entitled (i) to recognize
the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as
such owner, and (ii) to hold liable for calls and
assessments a person registered on its books as the owner of
shares, and the Corporation shall not be bound to recognize
any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE X
Lost Certificates
Any person claiming a certificate of stock to be
lost or destroyed, shall make an affidavit or affirmation of
the fact and advertise the same in such manner as the Board
of Directors may require, and the Board of Directors may, in
its discretion, require the owner of the lost or destroyed
certificate, or his legal representative, to give the
Corporation a bond in a sum sufficient, in the opinion of
the Board of Directors, to indemnify the Corporation against
any claim that may be made against it on account of the
alleged loss of any such certificate. A new certificate of
the same tenor and for the same number of shares as the one
alleged to be lost or destroyed may be issued without
requiring any bond when, in the judgment of the Directors,
it is proper so to do.
ARTICLE XI
Fixing of Record Date
In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or
to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days
before the date of such meeting, nor more than sixty (60)
days prior to any other action. If no record date is fixed,
the record date for the determination of shareholders
entitled to notice of or to vote at any meeting of
shareholders shall be the close of business on the day next
preceding the day on which notice of such meeting is given,
or, if no notice is given, the day next preceding the day on
which the meeting is held, and the record date for
determining shareholders for any other purpose shall be the
close of business on the day on which the resolution of the
Board of Directors relating thereto is adopted. A
determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to
any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE XII
Dividends
Subject to the relevant provisions of the
Certificate of Incorporation, dividends upon the capital
stock of the Corporation may be declared by the Board of
Directors at any regular or special meeting, pursuant to
law. Dividends may be paid in cash, in property, or in
shares of the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation.
Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for
dividends such sums as the Directors from time to time, in
their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends,
or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Directors
shall think conducive to the interest of the Corporation,
and the Directors may modify or abolish any such reserve in
the manner in which it was created.
ARTICLE XIII
Waiver of Notice
Whenever any notice whatever is required to be
given by statute or under the provisions of the Certificate
of Incorporation or these By-Laws, a waiver thereof in
writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein,
shall be equivalent thereto.
ARTICLE XIV
Seal
The corporate seal of the Corporation shall have
inscribed thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal, New Jersey."
ARTICLE XV
Amendments
Subject to the provisions of the Certificate of
Incorporation, these By-Laws may be altered, amended or
repealed or new By-Laws may be adopted by the shareholders
or by the Board of Directors, at any regular meeting of the
shareholders or of the Board of Directors or at any special
meeting of the shareholders or of the Board of Directors.
Any amendment of these By-Laws by the shareholders of the
Corporation shall be made by a vote of the holders of not
less than eighty percent (80%) of the outstanding capital
stock of the Corporation entitled to vote thereon.
<PAGE>
EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT dated the 6th day
of August, 1997, by and between GUEST SUPPLY, INC., a New
Jersey corporation (the "Company"), and CLIFFORD W. STANLEY
(the "Employee").
W I T N E S E T H:
WHEREAS, the parties desire to amend and restate
in its entirety the Employment Agreement dated January 11,
1988 between the Company and the Employee;
WHEREAS, the Company wishes to retain the services
of the Employee, and the Employee wishes to serve in the
employ of the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1. Employment.
1.1 The Company agrees to employ the Employee,
and the Employee agrees to serve in the employ of the
Company, for the term set forth in Section 1.2, in the
position and with the responsibilities, duties and authority
set forth in Section 2 and on the other terms and conditions
set forth in this Agreement.
1.2 The term of the Employee's employment under
this Agreement shall commence as of August 1, 1997 and shall
terminate on July 31, 2000, unless extended or sooner
terminated in accordance with this Agreement.
1.3 As of July 31, 1998 and each subsequent July
31 during the term of this Agreement (each, an "Automatic
Renewal Date"), unless either party shall have given a
notice of non-extension not less than two (2) months prior
to such Automatic Renewal Date, the term of this Agreement
shall be extended automatically for a period of one (1) year
to the first anniversary of the expiration date of the
then-current term of this Agreement. Once a notice of
non-extension shall have been given by either party, there
shall be no further automatic extension of this Agreement.
2. Position, Duties. The Employee shall serve
in the position of Chairman of the Board, President and
Chief Executive Officer of the Company. The Employee shall
perform, faithfully and diligently, such duties, and shall
have such responsibilities, appropriate to said positions,
as shall be assigned to him from time to time by the Board
of Directors of the Company. The Employee shall report
directly to the Board of Directors of the Company. The
Employee shall devote his complete and undivided attention
to the performance of his duties and responsibilities
hereunder during the normal working hours of executive
employees of the Company. Nothing in this Agreement shall
preclude the Employee from devoting reasonable periods
required for serving as a director, officer or member of an
advisory committee of any organization, or from engaging in
charitable or community activities, or from managing his
personal investments, provided that such activities do not
involve a conflict of interest with the Company or interfere
with the performance by the Employee of his duties and
responsibilities under this Agreement.
3. Salary. During the term of this Agreement,
in consideration of the performance by the Employee of the
services set forth in Section 2 and his observance of the
other covenants set forth herein, the Company shall pay the
Employee, and the employee shall accept, a base salary at
the rate of $241,845 per annum, payable in accordance with
the standard payroll practices of the Company. The Employee
shall be entitled to such increases in base salary during
the term hereof as shall be determined by the Board of
Directors of the Company in its sole discretion based on the
performance of the Company, the performance of the Employee
and increases in the cost of living.
4. Expense Reimbursement and Perquisites.
During the term of this Agreement, (a) the Company shall
reimburse the Employee for all reasonable and necessary
out-of-pocket expenses incurred by him in connection with
the performance of his duties hereunder, upon the
presentation of proper accounts therefor in accordance with
the Company's policies; (b) the Employee shall be entitled
to use of a Company automobile which is at least comparable
in value to the Company automobile presently used by the
Employee; (c) the Company shall reimburse the Employee for
annual club dues for one country club selected by the
Employee; and (d) the Employee shall be entitled to such
other perquisites as may be made available from time to time
to senior executive employees of the Company.
5. Benefits. During the term of this Agreement,
the Employee will be eligible to participate in all employee
benefit plans and programs offered by the Company from time
to time to its employees of comparable seniority, including
but not limited to group hospitalization, surgical and major
medical insurance plans, subject to the provisions of such
plans and programs as in effect from time to time.
6. Termination of Employment.
6.1 Death. In the event of the death of the
Employee during the term of this Agreement, the Company
shall continue to pay to the estate or other legal
representative of the Employee the base salary provided for
in Section 3 (at the annual rate then in effect) until the
expiration of a period of three (3) months from the date of
the Employee's death. Rights and benefits of the estate or
other legal representative of the Employee under the benefit
plans and programs of the Company shall be determined in
accordance with the provisions of such plans and programs.
Neither the estate or other legal representative of the
Employee nor the Company shall have any further rights or
obligations under this Agreement.
6.2 Disability. If the Employee shall become
incapacitated by reason of sickness, accident or other
physical or mental disability and shall be unable to perform
his normal duties hereunder for a cumulative period of two
(2) months in any period of four (4) consecutive months, the
employment of the Employee hereunder may be terminated by
the Company or the Employee. In the event of such
termination, the Company shall continue to pay to the
Employee the base salary provided for in Section 3 (at the
annual rate then in effect) until the first to occur of (i)
the expiration of a period of six (6) months from the date
of such termination, (ii) the commencement of payment of
benefits to the Employee under any disability plan or policy
maintained by the Company or (iii) the expiration of a
period of three (3) months from the date of death of the
Employee. The Company shall continue to carry the group
life, hospitalization, surgical and major medical
insurance coverage for the Employee for a one (1) year
period following termination of employment. Rights and
benefits of the Employee under the benefit plans and
programs of the Company shall be determined in accordance
with the provisions of such plans and programs. Neither
the Employee nor the Company shall have any further rights
or obligations under this Agreement, except as provided in
Sections 7, 8, 9 and 10.
6.3 Due Cause. The employment of the Employee
hereunder may be terminated by the Company at any time for
Due Cause (as hereinafter defined). In the event of such
termination, the Company shall pay to the Employee the base
salary provided for in Section 3 (at the annual rate then in
effect) accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. For purposes hereof,
"Due Cause" shall mean (i) willful, gross neglect or
willful, gross misconduct in the Employee's discharge of his
duties and responsibilities under this Agreement, or (ii)
the Employee's commission of (x) a felony or (y) any crime
or offense involving moral turpitude; provided, however,
the Employee shall be given written notice by a majority of
the Board of Directors of the Company that it intends to
terminate the Employee's employment for Due Cause, which
written notice shall specify the act or acts upon the basis
of which the majority of the Board of Directors of the
Company intends so to terminate the Employee's employment,
and the Employee shall then be given the opportunity, within
fifteen (15) days of his receipt of such notice, to have a
meeting with the Board of Directors of the Company to
discuss such act or acts. If the basis of such written
notice is other than an act described in clause (ii), the
Employee shall be given seven (7) days after such meeting
within which to cease or correct the performance (or
nonperformance) giving rise to such written notice and, upon
failure of the Employee within such seven (7) days to cease
or correct such performance (or nonperformance), the
Employee's employment by the Company shall automatically be
terminated hereunder for Due Cause. After the satisfaction
of any claim of the Company against the Employee incidental
to such Due Cause, neither the Employee nor the Company
shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10.
6.4 Other Termination by the Company. The
Company may terminate the Employee's employment at any time
for whatever reason it deems appropriate; provided, however,
that in the event that such termination is not pursuant to
Sections 6.1, 6.2 or 6.3:
(A) The Company shall pay to the Employee within
thirty (30) days of the date of such termination, a lump sum
amount in cash equal to three (3) times the Employee's
average annualized cash compensation (base salary and bonus)
during the most recent five (5) taxable years of the Company
ending before the date of such termination (or during such
portion of such period as the Employee was employed by, or
rendered services for, the Company), less $1,000. The
Employee shall be under no obligation to seek subsequent
employment and upon obtaining subsequent employment shall be
under no obligation to offset any amounts earned from such
subsequent employment (whether as an employee, a consultant
or otherwise) against such lump sum payment.
(B) The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a two (2) year period
following termination of employment.
(C) The Company shall continue to provide the
Employee with the Company automobile theretofore provided to
him, and shall pay the expenses of maintaining such
automobile (other than fuel), for a one (1) year period
following termination of employment.
(D) Other rights and benefits of the Employee
under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans
and programs.
(E) For a period of five years following
termination of the employment of the Employee under Section
6.4 (the "Consulting Period"), the Company shall retain the
Employee to provide such consulting services, on such
projects, at such compensation and at such times as are
mutually agreed to from time to time by the Employee and the
Company. During the Consulting Period, the Employee shall
be deemed an employee of the Company for purposes of the
stock option plans and incentive plans of the Company (the
"Plans"). Any options to purchase common stock, no par
value (the "Common Stock"), of the Company (the "Options")
heretofore or hereafter granted to the Employee pursuant to
the Plans shall become fully exercisable and shall remain
exercisable upon the termination of employment of the
Employee until the first to occur of (a) the expiration of
the term of such Options or (b) the expiration of the
Consulting Period. In the event the Company terminates the
Employee's services as a consultant hereunder prior to the
expiration of the Consulting Period, the Employee shall be
entitled to receive payment from the Company of liquidated
damages in an amount equal to the aggregate Adjusted Option
Spread (as hereinafter defined), it being agreed that the
Employee's damages might be impossible to ascertain and that
such amount constitutes a fair and reasonable amount of
damages under the circumstances and is not a penalty. Any
damages payable to the Employee hereunder shall be paid by
the Company to the Employee within fifteen (15) days
following the original expiration date of the Consulting
Period. For purposes hereof, the Adjusted Option Spread
with respect to each Option held by the Employee on the date
of termination of the Employee's services as a consultant
hereunder shall be equal to the product of (a) the number of
shares of Common Stock which are subject to such Option
multiplied by (b) the excess of (i) the highest Market Price
(as hereinafter defined) of the Common Stock during the
period commencing on the date on which such Option ceases to
be exercisable as a result of the termination of the
Employee's services as a consultant hereunder and
terminating on the original expiration date of the
Consulting Period over (ii) the greater of (x) the option
exercise price per share of Common Stock under such Option
or (y) the highest Market Price of the Common Stock during
the period commencing on the date of termination of the
Employee's services as a consultant hereunder and
terminating on the date on which such Option ceases to be
exercisable as a result of such termination. For purposes
hereof, Market Price on any date shall mean the closing
price per share of Common Stock on the New York Stock
Exchange (or such other national securities exchange on
which the Common Stock may be listed, if not listed on the
New York Stock Exchange, or in the over-the-counter market,
if not listed on a national securities exchange).
Neither the Employee nor the Company shall have any further
rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 10.
6.5 Voluntary Termination. The Employee may
terminate his employment with the Company at any time upon
30 days' prior written notice to the Company. In the event
of such termination, the Company shall pay to the Employee
the base salary provided for in Section 3 (at the annual
rate then in effect) accrued to the date of such termination
and not theretofore paid to the Employee. Rights and
benefits of the Employee under the benefit plans and
programs of the Company shall be determined in accordance
with the provisions of such plans and programs. Neither the
Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Sections 7, 8, 9 and 10.
6.6 Constructive Termination Subsequent to a
Change in Control. Anything herein to the contrary
notwithstanding, if, subsequent to a Change in Control, the
Company:
(A) demotes the Employee to a lesser position than
provided in Section 2;
(B) causes a material change in the nature or
scope of the authorities, powers, functions, duties, or
responsibilities attached to the Employee's position as
described in Section 2;
(C) decreases the Employee's salary below the
level provided for in Section 3 (taking into account
increases made from time to time in accordance with Section
3);
(D) fails to agree in writing (within ten (10)
days of such Change in Control) to employ the Employee for a
period of not less than one year commencing with such Change
in Control on the terms and conditions set forth in this
Agreement;
(E) fails to obtain the agreement of a successor
company to assume the obligation of the Company under this
Agreement as required by Section 11.1; or
(F) requires the Employee to render the services
required under this Agreement at a location other than the
Company's offices located at Monmouth Junction, New Jersey;
then such action (or inaction) by the Company, unless
consented to in writing by the Employee, shall constitute a
termination of the Employee's employment by the Company
pursuant to Section 6.4. Notwithstanding the preceding
sentence, within thirty (30) days after learning of the
action (or inaction) constituting the basis for a
Constructive Termination of Employment, the Employee shall
(unless he gives written consent thereto) advise the Company
in writing that the action (or inaction) constitutes a
termination of his employment pursuant to Section 6.4. In
such event, the Company shall have thirty (30) days in which
to correct such action (or inaction) and if the Company does
so correct such action (or inaction) the Employee shall not
be entitled to terminate his employment under this Section
as a result of such action (or inaction) (the notice
provided by the Employee to the Company of the action or
inaction and the Company's correction of the action or
inaction, being hereinafter referred to as the "Correction
Process"); provided, however, that if the Employee and the
Company engage in the Correction Process three (3) times
subsequent to a Change in Control, the Employee shall not
thereafter be required to engage in the Correction Process
and shall be entitled to treat any such subsequent action or
inaction by the Company as a termination of the Employee's
employment pursuant to Section 6.4.
6.7 Termination of Employment Following Change in
Control. The Employee may terminate his employment with the
Company during the one (1) year period following a Change in
Control, and such termination of employment shall be deemed
to constitute a termination of the Employee's employment by
the Company pursuant to Section 6.4. For purposes of this
Agreement, a Change in Control shall be deemed to have
occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than the Employee or a group including the
Employee), acquires twenty percent (20%) or more of the
combined voting power of the outstanding securities of the
Company having a right to vote in elections of directors; or
(B) Continuing Directors shall for any reason
cease to constitute two-thirds of the Board of Directors of
the Company; or
(C) the business of the Company is disposed of by
the Company to a party or parties other than a subsidiary or
other affiliate of the Company, in which the Company owns
less than a majority of the equity, pursuant to a partial or
complete liquidation of the Company, sale of assets
(including stock of a subsidiary of the Company) or
otherwise.
For purposes of this Agreement, the term
"Continuing Director" shall mean a member of the Board of
Directors of the Company who either was a member of the
Board of Directors on the date hereof or who subsequently
became a Director and whose election, or nomination for
election, was approved by a vote of at least two-thirds of
the Continuing Directors then in office, other than an
approval in connection with an event specified in clauses
(A) or (C) above.
7. Confidential Information.
7.1 The Employee shall, during the Employee's
employment with the Company and thereafter, treat all
confidential material confidentially and, except in
accordance with the terms of this Agreement, shall not,
without the prior written consent of a majority of the Board
of Directors of the Company, disclose such material,
directly or indirectly, to any party not at the time of such
disclosure an employee or agent of the Company, or remove
from the Company's premises any notes or records relating
thereto, copies or facsimiles thereof (whether made by
electronic, electrical, magnetic, optical, laser, acoustic
or other means), or any other property of the Company. The
Employee agrees that all confidential material, together
with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of
the Employee (whether made by the foregoing or other means)
are the exclusive property of the Company. The Employee
shall not in any manner use any confidential material, or
any other property of the Company, in any manner not
specifically directed by the Company or in any way which is
detrimental to the Company, as determined by a majority of
the Board of Directors of the Company in its sole
discretion.
7.2 For the purposes hereof, the term
"confidential material" shall mean all information in any
way concerning the activities, business or affairs of the
Company or the Company's customers and clients, including,
without limitation, information concerning trade secrets and
the preparation of raw material for, manufacture of, and/or
finishing processes utilized in the production of, the
products or projects of the Company and/or any improvements
therein, together with all sales and financial information
concerning the Company and any and all information
concerning projects in research and development or marketing
plans for any such products or projects, and all information
concerning the practices, customers and clients of the
Company, and all information in any way concerning the
activities, business or affairs of any of such customers or
clients, as such, which is furnished to the Employee by the
Company or any of its agents, customers or clients, as such,
or otherwise acquired by the Employee in the course of the
Employee's employment with the Company; provided, however,
that the term "confidential material" shall not include
information which (i) becomes generally available to the
public other than as a result of a disclosure by the
Employee, (ii) was available to the Employee on a
non-confidential basis prior to his employment with the
Company or (iii) becomes available to the Employee on a
non-confidential basis from a source other than the Company
or any of its agents, customers or clients, as such,
provided that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers
or clients.
7.3 Promptly upon the request of the Company, the
Employee shall deliver to the Company all confidential
material in the possession of the Employee without retaining
a copy thereof, unless, in the opinion of counsel for the
Company, either returning such confidential material or
failing to retain a copy thereof would violate any
applicable Federal, state, local or foreign law, in which
event such confidential material shall be returned without
retaining any copies thereof as soon as practicable after
such counsel advises that the same may be lawfully done.
7.4 In the event that the Employee is required,
by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or
similar process, to disclose any confidential material, the
Employee shall provide the Company with prompt notice
thereof so that the Company may seek an appropriate
protective order and/or waive compliance by the Employee
with the provisions hereof; provided, however, that if in
the absence of a protective order or the receipt of such a
waiver, the Employee is, in the opinion of counsel for the
Company, compelled to disclose confidential material not
otherwise disclosable hereunder to any legislative, judicial
or regulatory body, agency or authority, or else be exposed
to liability for contempt, fine or penalty or to other
censure, such confidential material may be so disclosed.
8. Intellectual Property. Any and all
inventions made, developed or created by the Employee
(whether at the request or suggestion of the Company or
otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) (a)
during the term of this Agreement, or (b) within a period of
one (l) year after the date of termination of employment
hereunder, which may be directly or indirectly useful in, or
relate to, the business of or tests being carried out by the
Company, shall be promptly and fully disclosed by the
Employee to the Board of Directors of the Company and shall
be the Company's exclusive property as against the Employee,
and the Employee shall promptly deliver to an appropriate
representative of the Company as designated by the Board of
Directors all papers, drawings, models, data and other
material relating to any invention made, developed or
created by him as aforesaid. The Employee shall, at the
request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion
of the Company's counsel to direct issuance of patents or
copyrights to the Company with respect to such inventions as
are to be the Company's exclusive property as against the
Employee or to vest in the Company title to such inventions
as against the Employee. The expense of securing any such
patent or copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges
that the services to be rendered by him to the Company are
of a special and unique character. The Employee agrees
that, in consideration of his employment hereunder, the
Employee will not (a) during the term of this Agreement and
thereafter for a period of one (l) year commencing on the
date of termination of his employment with the Company (i)
engage, directly or indirectly, whether as principal, agent,
distributor, representative, consultant, stockholder (other
than an investment of not more than 5% of the stock of
equity of any corporation the capital stock of which is
publicly traded), employee or otherwise, in any activity or
business venture which is competitive with the business
conducted or proposed to be conducted by the Company as of
the date of termination of his employment with the Company
or (ii) solicit or entice or endeavor to solicit or entice
away from the Company any person who was an officer,
employee or consultant of the Company, either on his own
account or for any person, firm, corporation or other
organization, whether or not such person would commit any
breach of his contract of employment by reason of leaving
the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an
officer or employee of the Company or who by reason of such
position at any time is or may be likely to be in possession
of any confidential information or trade secrets relating to
the businesses or products of the Company, or (b) at any
time, take any action or make any statement the effect of
which would be, directly or indirectly, to impair the good
will of the Company or the business reputation or good name
of the Company, or be otherwise detrimental to the interests
of the Company, including any action or statement intended,
directly or indirectly, to benefit a competitor of the
Company.
10. Equitable Relief. In the event of a breach
or threatened breach by the Employee of any of the
provisions of Sections 7, 8 or 9 of this Agreement, the
Employee hereby consents and agrees that the Company shall
be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the
Employee from committing or continuing any such breach or
threatened breach or granting specific performance of any
act required to be performed by the Employee under any of
such provisions, without the necessity of showing any actual
damage or that money damages would not afford an adequate
remedy and without the necessity of posting any bond or
other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at
law or in equity which it may have.
11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall
require any successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
As used in this Section, the "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which otherwise becomes
bound by all the terms and provisions of this Agreement by
operation of law and this Agreement shall be binding upon,
and inure to the benefit of, the Company, as so defined.
11.2 Assignment by the Employee. The Employee may
not assign this Agreement or any part thereof without the
prior written consent of a majority of the Board of
Directors of the Company; provided, however, that nothing
herein shall preclude one or more beneficiaries of the
Employee from receiving any amount that may be payable
following the occurrence of his legal incompetency or his
death and shall not preclude the legal representative of his
estate from receiving such amount or from assigning any
right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person
or persons entitled thereto under the laws of intestacy
applicable to his estate. The term "beneficiaries", as used
in this Agreement, shall mean a beneficiary or beneficiaries
so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative
of the Employee (in the event of his incompetency) or the
Employee's estate.
12. Governing Law. This Agreement shall be
deemed a contract made under, and for all purposes shall be
construed in accordance with, the laws of the State of New
Jersey applicable to contracts to be performed entirely
within such State.
13. Entire Agreement. This Agreement contains
all the understandings and representations between the
parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreements, whether oral or
in writing, if any there be, previously entered into by them
with respect thereto.
14. Amendment, Modification, Waiver. No
provision of this Agreement may be amended or modified
unless such amendment or modification is agreed to in
writing and signed by the Employee and by a duly authorized
representative of the Company other than the Employee.
Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of a similar or dissimilar provision or condition at the
same or any prior or subsequent time, nor shall the failure
of or delay by either party hereto in exercising any right,
power or privilege hereunder operate as a waiver thereof to
preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege.
15. Arbitration. Any controversy or claim
arising out of or relating to this Agreement, or any breach
thereof, shall, except as provided in Section 10, be settled
by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment
upon such award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitration
shall be held in the area where the Company then has its
principal place of business.
16. Attorneys' Fees and Costs. All attorneys'
fees, costs and expenses incurred by the prevailing party in
connection with any litigation pursuant to Section 10 or any
arbitration pursuant to Section 15 shall be borne by the
non-prevailing party.
17. Notices. Any notice to be given hereunder
shall be in writing and delivered personally or sent by
certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated
below or at such other address as such party may
subsequently designate by like notice:
If to the Company:
Guest Supply, Inc.
4301 U.S. Highway One South
Post Office Box 902
Monmouth Junction, New Jersey 08852-0902
If to the Employee:
Clifford W. Stanley
One Hart Court
Titusville, New Jersey 08560
18. Severability. Should any provision of this
Agreement be held by a court or arbitration panel of
competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder
of this Agreement, the balance of which shall continue to be
binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set
forth in this Agreement. The parties further agree that any
such court or arbitration panel is expressly authorized to
modify any such unenforceable provision of this Agreement in
lieu of severing such unenforceable provision from this
Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to
carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The
parties expressly agree that this Agreement as so modified
by the court or arbitration panel shall be binding upon and
enforceable against each of them. In any event, should one
or more of the provisions of this Agreement be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or
provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been set forth herein.
19. Withholding. Anything to the contrary
notwithstanding, all payments required to be made by the
Company hereunder to the Employee or his beneficiaries,
including his estate, shall be subject to withholding of
such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, in
whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by
law, provided it is satisfied in its sole discretion that
all requirements of law affecting its responsibilities to
withhold such taxes have been satisfied.
20. Survivorship. The respective rights and
obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
21. Titles. Titles of the sections of this
Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference
to the title of any section.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
GUEST SUPPLY, INC.
By /s/ R. Eugene Biber
Name: R. Eugene Biber
Title: Vice President-Operations
/s/ Clifford W. Stanley
Clifford W. Stanley
<PAGE>
EXHIBIT 10(j)
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT dated the 6th day
of August, 1997, by and between GUEST SUPPLY, INC., a New
Jersey corporation (the "Company"), and TERI E. UNSWORTH
(the "Employee").
W I T N E S S E T H :
WHEREAS, the parties desire to amend and restate
in its entirety the Employment Agreement dated January 11,
1988 between the Company and the Employee;
WHEREAS, the Company wishes to retain the services
of the Employee, and the Employee wishes to serve in the
employ of the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1. Employment.
1.1 The Company agrees to employ the Employee,
and the Employee agrees to serve in the employ of the
Company, for the term set forth in Section 1.2, in the
position and with the responsibilities, duties and authority
set forth in Section 2 and on the other terms and conditions
set forth in this Agreement.
1.2 The term of the Employee's employment under
this Agreement shall commence as of August 1, 1997 and shall
terminate on July 31, 2000, unless extended or sooner
terminated in accordance with this Agreement.
1.3 As of July 31, 1998 and each subsequent
July 31 during the term of this Agreement (each, an
"Automatic Renewal Date"), unless either party shall have
given a notice of non-extension not less than two (2)
months prior to such Automatic Renewal Date, the term of
this Agreement shall be extended automatically for a
period of one (1) year to the first anniversary of the
expiration date of the then-current term of this Agreement.
Once a notice of non-extension shall have been given by
either party, there shall be no further automatic extension
of this Agreement.
2. Position, Duties. The Employee shall serve
in the position of Vice President - Marketing of the
Company. The Employee shall perform, faithfully and
diligently, such duties, and shall have such
responsibilities, appropriate to said position, as shall
be assigned to her from time to time by the President of
the Company. The Employee shall report directly to the
President of the Company. The Employee shall devote her
complete and undivided attention to the performance of her
duties and responsibilities hereunder during the normal
working hours of executive employees of the Company. The
Employee will work from her residence in Los Angeles,
California, and travel to the Company's corporate office and
clients as required to effectively execute her duties and
responsibilities.
3. Salary. During the term of this Agreement,
in consideration of the performance by the Employee of the
services set forth in Section 2 and her observance of the
other covenants set forth herein, the Company shall pay the
Employee, and the Employee shall accept, a base salary at
the rate of $168,729 per annum, payable in accordance with
the standard payroll practices of the Company. The Employee
shall be entitled to such increases in base salary during
the term hereof as shall be determined by the Board of
Directors of the Company in its sole discretion based on the
performance of the Company, the performance of the Employee
and increases in the cost of living.
4. Expense Reimbursement and Perquisites.
During the term of this Agreement, (a) the Company shall
reimburse the Employee for all reasonable and necessary
out-of-pocket expenses incurred by her in connection with
the performance of her duties hereunder, upon the
presentation of proper accounts therefor in accordance with
the Company's policies and (b) the Employee shall be
entitled to such perquisites as may be made available from
time to time to senior executive employees of the Company.
5. Benefits. During the term of this Agreement,
the Employee will be eligible to participate in all employee
benefit plans and programs offered by the Company from time
to time to its employees of comparable seniority, including
but not limited to group hospitalization, surgical and major
medical insurance plans, subject to the provisions of such
plans and programs as in effect from time to time.
6. Termination of Employment.
6.1 Death. In the event of the death of the
Employee during the term of this Agreement, the Company
shall continue to pay to the estate or other legal
representative of the Employee the base salary provided for
in Section 3 (at the annual rate then in effect) until the
expiration of a period of three (3) months from the date of
the Employee's death. Rights and benefits of the estate or
other legal representative of the Employee under the benefit
plans and programs of the Company shall be determined in
accordance with the provisions of such plans and programs.
Neither the estate or other legal representative of the
Employee nor the Company shall have any further rights or
obligations under this Agreement.
6.2 Disability. If the Employee shall become
incapacitated by reason of sickness, accident or other
physical or mental disability and shall be unable to perform
her normal duties hereunder for a cumulative period of two
(2) months in any period of four (4) consecutive months, the
employment of the Employee hereunder may be terminated by
the Company or the Employee. In the event of such
termination, the Company shall continue to pay to the
Employee the base salary provided for in Section 3 (at the
annual rate then in effect) until the first to occur of (i)
the expiration of a period of six (6) months from the date
of such termination, (ii) the commencement of payment of
benefits to the Employee under any disability plan or policy
maintained by the Company or (iii) the expiration of a
period of three (3) months from the date of death of the
Employee. The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a one (1) year period
following termination of employment. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. Neither the Employee
nor the Company shall have any further rights or obligations
under this Agreement, except as provided in Sections 7, 8, 9
and 10.
6.3 Due Cause. The employment of the Employee
hereunder may be terminated by the Company at any time for
Due Cause (as hereinafter defined). In the event of such
termination, the Company shall pay to the Employee the base
salary provided for in Section 3 (at the annual rate then in
effect) accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. For purposes hereof,
"Due Cause" shall mean (i) willful, gross neglect or
willful, gross misconduct in the Employee's discharge of her
duties and responsibilities under this Agreement, or (ii)
the Employee's commission of (x) a felony or (y) any crime
or offense involving moral turpitude; provided, however, the
Employee shall be given written notice by a majority of the
Board of Directors of the Company that it intends to
terminate the Employee's employment for Due Cause, which
written notice shall specify the act or acts upon the basis
of which the majority of the Board of Directors of the
Company intends so to terminate the Employee's employment,
and the Employee shall then be given the opportunity, within
fifteen (15) days of her receipt of such notice, to have a
meeting with the Board of Directors of the Company to
discuss such act or acts. If the basis of such written
notice is other than an act described in clause (ii), the
Employee shall be given seven (7) days after such meeting
within which to cease or correct the performance (or
nonperformance) giving rise to such written notice and, upon
failure of the Employee within such seven (7) days to cease
or correct such performance (or nonperformance), the
Employee's employment by the Company shall automatically be
terminated hereunder for Due Cause. After the satisfaction
of any claim of the Company against the Employee incidental
to such Due Cause, neither the Employee nor the Company
shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10.
6.4 Other Termination by the Company. The
Company may terminate the Employee's employment at any time
for whatever reason it deems appropriate; provided, however,
that in the event that such termination is not pursuant to
Sections 6.1, 6.2 or 6.3:
(A) The Company shall pay to the Employee, within
thirty (30) days of the date of such termination, a lump sum
amount in cash equal to (a) if such termination shall take
place prior to a Change in Control (as hereinafter defined),
the lesser of (i) the product of one (1) month's base salary
(at the highest monthly rate in effect during the six (6)
month period immediately preceding such termination)
multiplied by a fraction, the numerator of which shall be
the Employee's annual base salary at a rate equal to the
highest annual rate in effect, pursuant to Section 3, during
the six (6) month period immediately preceding such
termination, and the denominator of which shall be 10,000,
or (ii) three (3) times the Employee's average annualized
cash compensation (base salary and bonus) during the most
recent five (5) taxable years of the Company ending before
the date of such termination (or during such portion of such
period as the Employee was employed by, or rendered services
for, the Company), less $1,000, or (b) if such termination
shall take place subsequent to a Change in Control, the
lesser of (i) the product of two (2) months' base salary (at
the highest monthly rate in effect during the six (6) month
period immediately preceding such termination) multiplied by
a fraction, the numerator of which shall be the Employee's
annual base salary at a rate equal to the highest annual
rate in effect, pursuant to Section 3, during the six (6)
month period immediately preceding such termination, and the
denominator of which shall be 10,000, or (ii) three (3)
times the Employee's average annualized cash compensation
(base salary and bonus) during the most recent five (5)
taxable years of the Company ending before the date of such
termination (or during such portion of such period as the
Employee was employed by, or rendered services for, the
Company), less $1,000. The Employee shall be under no
obligation to seek subsequent employment and upon obtaining
subsequent employment shall be under no obligation to offset
any amounts earned from such subsequent employment (whether
as an employee, a consultant or otherwise) against such lump
sum payment.
(B) The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a two (2) year period
following termination of employment.
(C) Other rights and benefits of the Employee
under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans
and programs.
(D) For a period of five years following
termination of the employment of the Employee under Section
6.4 (the "Consulting Period"), the Company shall retain the
Employee to provide such consulting services, on such
projects, at such compensation and at such times as are
mutually agreed to from time to time by the Employee and the
Company. During the Consulting Period, the Employee shall
be deemed an employee of the Company for purposes of the
stock option plans and incentive plans of the Company (the
"Plans"). Any options to purchase common stock, no par
value (the "Common Stock"), of the Company (the "Options")
heretofore or hereafter granted to the Employee pursuant to
the Plans shall become fully exercisable and shall remain
exercisable upon the termination of employment of the
Employee until the first to occur of (a) the expiration of
the term of such Options or (b) the expiration of the
Consulting Period. In the event the Company terminates the
Employee's services as a consultant hereunder prior to the
expiration of the Consulting Period, the Employee shall be
entitled to receive payment from the Company of liquidated
damages in an amount equal to the aggregate Adjusted Option
Spread (as hereinafter defined), it being agreed that the
Employee's damages might be impossible to ascertain and that
such amount constitutes a fair and reasonable amount of
damages under the circumstances and is not a penalty. Any
damages payable to the Employee hereunder shall be paid by
the Company to the Employee within fifteen (15) days
following the original expiration date of the Consulting
Period. For purposes hereof, the Adjusted Option Spread
with respect to each Option held by the Employee on the date
of termination of the Employee's services as a consultant
hereunder shall be equal to the product of (a) the number of
shares of Common Stock which are subject to such Option
multiplied by (b) the excess of (i) the highest Market Price
(as hereinafter defined) of the Common Stock during the
period commencing on the date on which such Option ceases to
be exercisable as a result of the termination of the
Employee's services as a consultant hereunder and
terminating on the original expiration date of the
Consulting Period over (ii) the greater of (x) the option
exercise price per share of Common Stock under such Option
or (y) the highest Market Price of the Common Stock during
the period commencing on the date of termination of the
Employee's services as a consultant hereunder and
terminating on the date on which such Option ceases to be
exercisable as a result of such termination. For purposes
hereof, Market Price on any date shall mean the closing
price per share of Common Stock on the New York Stock
Exchange (or such other national securities exchange on
which the Common Stock may be listed, if not listed on the
New York Stock Exchange, or in the over-the-counter market,
if not listed on a national securities exchange).
Neither the Employee nor the Company shall have any further
rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 10.
6.5 Voluntary Termination. The Employee may
terminate her employment with the Company at any time upon
30 days' prior written notice to the Company. In the event
of such termination, the Company shall pay to the Employee
the base salary provided for in Section 3 (at the annual
rate then in effect) accrued to the date of such termination
and not theretofore paid to the Employee. Rights and
benefits of the Employee under the benefit plans and
programs of the Company shall be determined in accordance
with the provisions of such plans and programs. Neither the
Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Sections 7, 8, 9 and 10.
6.6 Constructive Termination Subsequent to a
Change in Control. Anything herein to the contrary
notwithstanding, if, subsequent to a Change in Control, the
Company:
(A) demotes the Employee to a lesser position than
provided in Section 2;
(B) causes a material change in the nature or
scope of the authorities, powers, functions, duties, or
responsibilities attached to the Employee's position as
described in Section 2;
(C) decreases the Employee's salary below the
level provided for in Section 3 (taking into account
increases made from time to time in accordance with Section
3);
(D) fails to agree in writing (within ten (10)
days of such Change in Control) to employ the Employee for a
period of not less than one year commencing with such Change
in Control on the terms and conditions set forth in this
Agreement; or
(E) fails to obtain the agreement of a successor
company to assume the obligation of the Company under this
Agreement as required by Section 11.1;
then such action (or inaction) by the Company, unless
consented to in writing by the Employee, shall constitute a
termination of the Employee's employment by the Company
pursuant to Section 6.4 (subsequent to a change in control
for purposes of Section 6.4(A)). Notwithstanding the
preceding sentence, within thirty (30) days after learning
of the action (or inaction) constituting the basis for a
Constructive Termination of Employment, the Employee shall
(unless she gives written consent thereto) advise the
Company in writing, that the action (or inaction)
constitutes a termination of her employment pursuant to
Section 6.4. In such event, the Company shall have thirty
(30) days in which to correct such action (or inaction) and
if the Company does so correct such action (or inaction) the
Employee shall not be entitled to terminate her employment
under this Section as a result of such action (or inaction)
(the notice provided by the Employee to the Company of the
action or inaction and the Company's correction of the
action or inaction, being hereinafter referred to as the
"Correction Process"); provided, however, that if the
Employee and the Company engage in the Correction Process
three (3) times subsequent to a Change in Control, the
Employee shall not thereafter be required to engage in the
Correction Process and shall be entitled to treat any such
subsequent action or inaction by the Company as a
termination of the Employee's employment pursuant to Section
6.4 (subsequent to a change in control for purposes of
Section 6.4(A)).
6.7 Termination of Employment Following a Change
in Control. The Employee may terminate her employment with
the Company during the one (1) year period following a
Change in Control, and such termination of employment shall
be deemed to constitute a termination of the Employee's
employment by the Company pursuant to Section 6.4
(subsequent to a change in control for purposes of Section
6.4(A)). For purposes of this Agreement, a Change in
Control shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than the Employee or a group including the
Employee) acquires twenty percent (20%) or more of the
combined voting power of the outstanding securities of the
Company having a right to vote in elections of directors and
such acquisition shall not have been approved by a majority
of the Continuing Directors (as hereinafter defined) then in
office not later than sixty (60) days after completion of
such acquisition; or
(B) Continuing Directors shall for any reason
cease to constitute a majority of the Board of Directors of
the Company; or
(C) the business of the Company is disposed of by
the Company to a party or parties other than a subsidiary or
other affiliate of the Company, in which the Company owns
less than a majority of the equity, pursuant to a partial or
complete liquidation of the Company, sale of assets
(including stock of a subsidiary of the Company) or
otherwise, and such disposition shall not have been approved
in advance by a majority of the Continuing Directors then in
office.
For purposes of this Agreement, the term
"Continuing Director" shall mean a member of the Board of
Directors of the Company who either was a member of the
Board of Directors on the date hereof or who subsequently
became a Director and whose election, or nomination for
election, was approved by a vote of at least two-thirds of
the Continuing Directors then in office.
<PAGE>
7. Confidential Information.
7.1 The Employee shall, during the Employee's
employment with the Company and thereafter, treat all
confidential material confidentially and, except in
accordance with the terms of this Agreement, shall not,
without the prior written consent of a majority of the Board
of Directors of the Company, disclose such material,
directly or indirectly, to any party not at the time of such
disclosure an employee or agent of the Company, or remove
from the Company's premises any notes or records relating
thereto, copies or facsimiles thereof (whether made by
electronic, electrical, magnetic, optical, laser, acoustic
or other means), or any other property of the Company. The
Employee agrees that all confidential material, together
with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of
the Employee (whether made by the foregoing or other means)
are the exclusive property of the Company. The Employee
shall not in any manner use any confidential material, or
any other property of the Company, in any manner not
specifically directed by the Company or in any way which is
detrimental to the Company, as determined by a majority of
the Board of Directors of the Company in its sole
discretion.
7.2 For the purposes hereof, the term
"confidential material" shall mean all information in any
way concerning the activities, business or affairs of the
Company or the Company's customers and clients, including,
without limitation, information concerning trade secrets and
the preparation of raw material for, manufacture of, and/or
finishing processes utilized in the production of, the
products or projects of the Company and/or any improvements
therein, together with all sales and financial information
concerning the Company and any and all information
concerning projects in research and development or marketing
plans for any such products or projects, and all information
concerning the practices, customers and clients of the
Company, and all information in any way concerning the
activities, business or affairs of any of such customers or
clients, as such, which is furnished to the Employee by the
Company or any of its agents, customers or clients, as such,
otherwise acquired by the Employee in the course of the
Employees employment with the Company; provided, however,
that the term "confidential material" shall not include
information which (i) becomes generally available to the
public other than as a result of a disclosure by the
Employee, (ii) was available to the Employee on a
non-confidential basis prior to her employment with the
Company or (iii) becomes available to the Employee on a
non-confidential basis from a source other than the Company
or any of its agents, customers or clients, as such,
provided that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers
or clients.
7.3 Promptly upon the request of the Company, the
Employee shall deliver to the Company all confidential
material in the possession of the Employee without retaining
a copy thereof, unless, in the opinion of counsel for the
Company, either returning such confidential material or
failing to retain a copy thereof would violate any
applicable Federal, state, local or foreign law, in which
event such confidential material shall be returned without
retaining any copies thereof as soon as practicable after
such counsel advises that the same may be lawfully done.
7.4 In the event that the Employee is required,
by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or
similar process, to disclose any confidential material, the
Employee shall provide the Company with prompt notice
thereof so that the Company may seek an appropriate
protective order and/or waive compliance by the Employee
with the provisions hereof; provided, however, that if in
the absence of a protective order or the receipt of such a
waiver, the Employee is, in the opinion of counsel for the
Company, compelled to disclose confidential material not
otherwise disclosable hereunder to any legislative, judicial
or regulatory body, agency or authority, or else be exposed
to liability for contempt, fine or penalty or to other
censure, such confidential material may be so disclosed.
8. Intellectual Property. Any and all
inventions made, developed or created by the Employee
(whether at the request or suggestion of the Company or
otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) (a)
during the period of this Agreement, or (b) within a period
of one (1) year after the date of termination of employment
hereunder, which may be directly or indirectly useful in, or
relate to, the business of or tests being carried out by the
Company, shall be promptly and fully disclosed by the
Employee to the Board of Directors of the Company and shall
be the Company's exclusive property as against the Employee,
and the Employee shall promptly deliver to an appropriate
representative of the Company as designated by the Board of
Directors all papers, drawings, models, data and other
material relating to any invention made, developed or
created by her as aforesaid. The Employee shall, at the
request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion
of the Company's counsel to direct issuance of patents or
copyrights to the Company with respect to such inventions as
are to be the Company's exclusive property as against the
Employee or to vest in the Company title to such inventions
as against the Employee. The expense of securing any such
patent or copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges
that the services to be rendered by her to the Company are
of a special and unique character. The Employee agrees
that, in consideration of her employment hereunder, the
Employee will not (a) during the term of this Agreement and
thereafter for a period of one (1) year commencing on the
date of termination of her employment with the Company (i)
engage, directly or indirectly, whether as principal, agent,
distributor, representative, consultant, stockholder (other
than an investment of not more than 5% of the stock of
equity of any corporation the capital stock of which is
publicly traded), employee or otherwise, in any activity or
business venture which is competitive with the business
conducted or proposed to be conducted by the Company as of
the date of termination of her employment with the Company
or (ii) solicit or entice or endeavor to solicit or entice
away from the Company any person who was an officer,
employee or consultant of the Company, either on her own
account or for any person, firm, corporation or other
organization, whether or not such person would commit any
breach of her contract of employment by reason of leaving
the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an
officer or employee of the Company or who by reason of such
position at any time is or may be likely to be in possession
of any confidential information or trade secrets relating to
the businesses or products of the Company, or (b) at any
time, take any action or make any statement the effect of
which would be, directly or indirectly, to impair the good
will of the Company or the business reputation or good name
of the Company, or be otherwise detrimental to the interests
of the Company, including any action or statement intended,
directly or indirectly, to benefit a competitor of the
Company.
10. Equitable Relief. In the event of a breach
or threatened breach by the Employee of any of the
provisions of Sections 7, 8 or 9 of this Agreement, the
Employee hereby consents and agrees that the Company shall
be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the
Employee from committing or continuing any such breach or
threatened breach or granting specific performance of any
act required to be performed by the Employee under any of
such provisions, without the necessity of showing any actual
damage or that money damages would not afford an adequate
remedy and without the necessity of posting any bond or
other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at
law or in equity which it may have.
11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall
require any successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
As used in this Section, the "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which otherwise becomes
bound by all the terms and provisions of this Agreement by
operation of law and this Agreement shall be binding upon,
and inure to the benefit of, the Company, as so defined.
11.2 Assignment by the Employee. The Employee may
not assign this Agreement or any part thereof without the
prior written consent of a majority of the Board of
Directors of the Company; provided, however, that nothing
herein shall preclude one or more beneficiaries of the
Employee from receiving any amount that may be payable
following the occurrence of her legal incompetency or her
death and shall not preclude the legal representative of her
estate from receiving such amount or from assigning any
right hereunder to the person or persons entitled thereto
under her will or, in the case of intestacy, to the person
or persons entitled thereto under the laws of intestacy
applicable to her estate. The term "beneficiaries", as used
in this Agreement, shall mean a beneficiary or beneficiaries
so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative
of the Employee (in the event of her incompetency) or the
Employee's estate.
12. Governing Law. This Agreement shall be
deemed a contract made under, and for all purposes shall be
construed in accordance with, the laws of the State of New
Jersey applicable to contracts to be performed entirely
within such State.
13. Entire Agreement. This Agreement contains
all the understandings and representations between the
parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreements, whether oral or
in writing, if any there be, previously entered into by them
with respect thereto.
14. Amendment, Modification, Waiver. No
provision of this Agreement may be amended or modified
unless such amendment or modification is agreed to in
writing and signed by the Employee and by a duly authorized
representative of the Company other than the Employee.
Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of a similar or dissimilar provision or condition at the
same or any prior or subsequent time, nor shall the failure
of or delay by either party hereto in exercising any right,
power or privilege hereunder operate as a waiver thereof to
preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege.
15. Arbitration. Any controversy or claim
arising out of or relating to this Agreement, or any breach
thereof, shall, except as provided in Section 10, be settled
by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment
upon such award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitration
shall be held in the area where the Company then has its
principal place of business.
16. Attorneys' Fees and Costs. All attorneys'
fees, costs and expenses incurred by the prevailing party in
connection with any litigation pursuant to Section 10 or any
arbitration pursuant to Section 15 shall be borne by the
non-prevailing party.
17. Notices. Any notice to be given hereunder
shall be in writing and delivered personally or sent by
certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated
below or at such other address as such party may
subsequently designate by like notice:
If to the Company:
Guest Supply, Inc.
4301 U.S. Highway One South
Post Office Box 902
Monmouth Junction, New Jersey 08852-0902
If to the Employee:
Teri E. Unsworth
1960 Deermont Road
Glendale, California 91207
18. Severability. Should any provision of this
Agreement be held by a court or arbitration panel of
competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder
of this Agreement, the balance of which shall continue to be
binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set
forth in this Agreement. The parties further agree that any
such court or arbitration panel is expressly authorized to
modify any such unenforceable provision of this Agreement in
lieu of severing such unenforceable provision from this
Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to
carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The
parties expressly agree that this Agreement as so modified
by the court or arbitration panel shall be binding upon
and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to
be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or
provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been set forth herein.
19. Withholding. Anything to the contrary
notwithstanding, all payments required to be made by the
Company hereunder to the Employee or her beneficiaries,
including her estate, shall be subject to withholding of
such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, in
whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by
law, provided it is satisfied in its sole discretion that
all requirements of law affecting its responsibilities to
withhold such taxes have been satisfied.
20. Survivorship. The respective rights and
obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
21. Titles. Titles of the sections of this
Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference
to the title of any section.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
GUEST SUPPLY, INC.
By /s/ Clifford W. Stanley
Name: Clifford W. Stanley
Title: President
/s/ Teri E. Unsworth
Teri E. Unsworth
<PAGE>
EXHIBIT 10(k)
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT dated the 6th day
of August, 1997, by and between GUEST SUPPLY, INC., a New
Jersey corporation (the "Company"), and PAUL T. XENIS (the
"Employee").
W I T N E S S E T H:
WHEREAS, the parties desire to amend and restate
in its entirety the Employment Agreement dated July 29,
1988, as amended on May 18, 1994, between the Company and
the Employee;
WHEREAS, the Company wishes to retain the services
of the Employee, and the Employee wishes to serve in the
employ of the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1. Employment.
1.1 The Company agrees to employ the Employee,
and the Employee agrees to serve in the employ of the
Company, for the term set forth in Section 1.2, in the
position and with the responsibilities, duties and authority
set forth in Section 2 and on the other terms and conditions
set forth in this Agreement.
1.2 The term of the Employee's employment under
this Agreement shall commence as of August 1, 1997 and shall
terminate on July 31, 2000, unless extended or sooner
terminated in accordance with this Agreement.
1.3 As of July 31, 1998 and each subsequent July
31 during the term of this Agreement (each, an "Automatic
Renewal Date"), unless either party shall have given a
notice of non-extension not less than two (2) months prior
to such Automatic Renewal Date, the term of this Agreement
shall be extended automatically for a period of one (1) year
to the first anniversary of the expiration date of the
then-current term of this Agreement. Once a notice of
non-extension shall have been given by either party, there
shall be no further automatic extension of this Agreement.
2. Position, Duties. The Employee shall serve
in the position of Vice President - Finance of the Company.
The Employee shall perform, faithfully and diligently, such
duties, and shall have such responsibilities, appropriate to
said positions, as shall be assigned to him from time to
time by the President of the Company. The Employee shall
report directly to the President of the Company. The
Employee shall devote his complete and undivided attention
to the performance of his duties and responsibilities
hereunder during the normal working hours of executive
employees of the Company.
3. Salary. During the term of this Agreement,
in consideration of the performance by the Employee of the
services set forth in Section 2 and his observance of the
other covenants set forth herein, the Company shall pay the
Employee, and the Employee shall accept, a base salary at
the rate of $137,903 per annum, payable in accordance with
the standard payroll practices of the Company. The Employee
shall be entitled to such increases in base salary during
the term hereof as shall be determined by the Board of
Directors of the Company in its sole discretion based on the
performance of the Company, the performance of the Employee
and increases in the cost of living.
4. Expense Reimbursement and Perquisites.
During the term of this Agreement, (a) the Company shall
reimburse the Employee for all reasonable and necessary
out-of-pocket expenses incurred by him in connection with
the performance of his duties hereunder, upon the
presentation of proper accounts therefor in accordance with
the Company's policies and (b) the Employee shall be
entitled to such perquisites as may be made available from
time to time to senior executive employees of the Company.
5. Benefits. During the term of this Agreement,
the Employee will be eligible to participate in all employee
benefit plans and programs offered by the Company from time
to time to its employees of comparable seniority, including
but not limited to group hospitalization, surgical and major
medical insurance plans, subject to the provisions of such
plans and programs as in effect from time to time.
6. Termination of Employment.
6.1 Death. In the event of the death of the
Employee during the term of this Agreement, the Company
shall continue to pay to the estate or other legal
representative of the Employee the base salary provided for
in Section 3 (at the annual rate then in effect) until the
expiration of a period of three (3) months from the date of
the Employee's death. Rights and benefits of the estate or
other legal representative of the Employee under the benefit
plans and programs of the Company shall be determined in
accordance with the provisions of such plans and programs.
Neither the estate or other legal representative of the
Employee nor the Company shall have any further rights or
obligations under this Agreement.
6.2 Disability. If the Employee shall become
incapacitated by reason of sickness, accident or other
physical or mental disability and shall be unable to perform
his normal duties hereunder for a cumulative period of two
(2) months in any period of four (4) consecutive months, the
employment of the Employee hereunder may be terminated by
the Company or the Employee. In the event of such
termination, the Company shall continue to pay to the
Employee the base salary provided for in Section 3 (at the
annual rate then in effect) until the first to occur of (i)
the expiration of a period of six (6) months from the date
of such termination, (ii) the commencement of payment of
benefits to the Employee under any disability plan or policy
maintained by the Company or (iii) the expiration of a
period of three (3) months from the date of death of the
Employee. The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a one (1) year period
following termination of employment. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. Neither the Employee
nor the Company shall have any further rights or obligations
under this Agreement, except as provided in Sections 7, 8, 9
and 10.
6.3 Due Cause. The employment of the Employee
hereunder may be terminated by the Company at any time for
Due Cause (as hereinafter defined). In the event of such
termination, the Company shall pay to the Employee the base
salary provided for in Section 3 (at the annual rate then in
effect) accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. For purposes hereof,
"Due Cause" shall mean (i) willful, gross neglect or
willful, gross misconduct in the Employee's discharge of his
duties and responsibilities under this Agreement, or (ii)
the Employee's commission of (x) a felony or (y) any crime
or offense involving moral turpitude; provided, however, the
Employee shall be given written notice by a majority of the
Board of Directors of the Company that it intends to
terminate the Employee's employment for Due Cause, which
written notice shall specify the act or acts upon the basis
of which the majority of the Board of Directors of the
Company intends so to terminate the Employee's employment,
and the Employee shall then be given the opportunity, within
fifteen (15) days of his receipt of such notice, to have a
meeting with the Board of Directors of the Company to
discuss such act or acts. If the basis of such written
notice is other than an act described in clause (ii), the
Employee shall be given seven (7) days after such meeting
within which to cease or correct the performance (or
nonperformance) giving rise to such written notice and, upon
failure of the Employee within such seven (7) days to cease
or correct such performance (or nonperformance), the
Employee's employment by the Company shall automatically be
terminated hereunder for Due Cause. After the satisfaction
of any claim of the Company against the Employee incidental
to such Due Cause, neither the Employee nor the Company
shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10.
6.4 Other Termination by the Company. The
Company may terminate the Employee's employment at any time
for whatever reason it deems appropriate; provided, however,
that in the event that such termination is not pursuant to
Sections 6.1, 6.2 or 6.3:
(A) The Company shall pay to the Employee, within
thirty (30) days of the date of such termination, a lump sum
amount in cash equal to (a) if such termination shall take
place prior to a Change in Control (as hereinafter defined),
the lesser of (i) the product of one (1) month's base salary
(at the highest monthly rate in effect during the six (6)
month period immediately preceding such termination)
multiplied by a fraction, the numerator of which shall be
the Employee's annual base salary at a rate equal to the
highest annual rate in effect, pursuant to Section 3, during
the six (6) month period immediately preceding such
termination, and the denominator of which shall be 10,000,
or (ii) three (3) times the Employee's average annualized
cash compensation (base salary and bonus) during the most
recent five (5) taxable years of the Company ending before
the date of such termination (or during such portion of such
period as the Employee was employed by, or rendered services
for, the Company), less $1,000, or (b) if such termination
shall take place subsequent to a Change in Control, the
lesser of (i) the product of two (2) months' base salary (at
the highest monthly rate in effect during the six (6) month
period immediately preceding such termination) multiplied by
a fraction, the numerator of which shall be the Employee's
annual base salary at a rate equal to the highest annual
rate in effect, pursuant to Section 3, during the six (6)
month period immediately preceding such termination, and the
denominator of which shall be 10,000, or (ii) three (3)
times the Employee's average annualized cash compensation
(base salary and bonus) during the most recent five (5)
taxable years of the Company ending before the date of such
termination (or during such portion of such period as the
Employee was employed by, or rendered services for, the
Company), less $1,000. The Employee shall be under no
obligation to seek subsequent employment and upon obtaining
subsequent employment shall be under no obligation to offset
any amounts earned from such subsequent employment (whether
as an employee, a consultant or otherwise) against such lump
sum payment.
(B) The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a two (2) year period
following termination of employment.
(C) Other rights and benefits of the Employee
under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans
and programs.
(D) For a period of five years following
termination of the employment of the Employee under Section
6.4 (the "Consulting Period"), the Company shall retain the
Employee to provide such consulting services, on such
projects, at such compensation and at such times as are
mutually agreed to from time to time by the Employee and the
Company. During the Consulting Period, the Employee shall
be deemed an employee of the Company for purposes of the
stock option plans and incentive plans of the Company (the
"Plans"). Any options to purchase common stock, no par
value (the "Common Stock"), of the Company (the "Options")
heretofore or hereafter granted to the Employee pursuant to
the Plans shall become fully exercisable and shall remain
exercisable upon the termination of employment of the
Employee until the first to occur of (a) the expiration of
the term of such Options or (b) the expiration of the
Consulting Period. In the event the Company terminates the
Employee's services as a consultant hereunder prior to the
expiration of the Consulting Period, the Employee shall be
entitled to receive payment from the Company of liquidated
damages in an amount equal to the aggregate Adjusted Option
Spread (as hereinafter defined), it being agreed that the
Employee's damages might be impossible to ascertain and that
such amount constitutes a fair and reasonable amount of
damages under the circumstances and is not a penalty. Any
damages payable to the Employee hereunder shall be paid by
the Company to the Employee within fifteen (15) days
following the original expiration date of the Consulting
Period. For purposes hereof, the Adjusted Option Spread
with respect to each Option held by the Employee on the date
of termination of the Employee's services as a consultant
hereunder shall be equal to the product of (a) the number of
shares of Common Stock which are subject to such Option
multiplied by (b) the excess of (i) the highest Market Price
(as hereinafter defined) of the Common Stock during the
period commencing on the date on which such Option ceases to
be exercisable as a result of the termination of the
Employee's services as a consultant hereunder and
terminating on the original expiration date of the
Consulting Period over (ii) the greater of (x) the option
exercise price per share of Common Stock under such Option
or (y) the highest Market Price of the Common Stock during
the period commencing on the date of termination of the
Employee's services as a consultant hereunder and
terminating on the date on which such Option ceases to be
exercisable as a result of such termination. For purposes
hereof, Market Price on any date shall mean the closing
price per share of Common Stock on the New York Stock
Exchange (or such other national securities exchange on
which the Common Stock may be listed, if not listed on the
New York Stock Exchange, or in the over-the-counter market,
if not listed on a national securities exchange).
Neither the Employee nor the Company shall have any further
rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 10.
6.5 Voluntary Termination. The Employee may
terminate his employment with the Company at any time upon
30 days' prior written notice to the Company. In the event
of such termination, the Company shall pay to the Employee
the base salary provided for in Section 3 (at the annual
rate then in effect) accrued to the date of such termination
and not theretofore paid to the Employee. Rights and
benefits of the Employee under the benefit plans and
programs of the Company shall be determined in accordance
with the provisions of such plans and programs. Neither the
Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Sections 7, 8, 9 and 10.
6.6 Constructive Termination Subsequent to a
Change in Control. Anything herein to the contrary
notwithstanding, if, subsequent to a Change in Control, the
Company:
(A) demotes the Employee to a lesser
position than provided in Section 2;
(B) causes a material change in the nature
or scope of the authorities, powers, functions, duties, or
responsibilities attached to the Employee's position as
described in Section 2;
(C) decreases the Employee's salary below
the level provided for in Section 3 (taking into account
increases made from time to time in accordance with Section
3);
(D) fails to agree in writing (within ten
(10) days of such Change in Control) to employ the Employee
for a period of not less than one year commencing with such
Change in Control on the terms and conditions set forth in
this Agreement; or
(E) fails to obtain the agreement of a
successor company to assume the obligation of the Company
under this Agreement as required by Section 11.1;
then such action (or inaction) by the Company, unless
consented to in writing by the Employee, shall constitute a
termination of the Employee's employment by the Company
pursuant to Section 6.4 (subsequent to a change in control
for purposes of Section 6.4(A)). Notwithstanding the
preceding sentence, within thirty (30) days after learning
of the action (or inaction) constituting the basis for a
Constructive Termination of Employment, the Employee shall
(unless he gives written consent thereto) advise the Company
in writing, that the action (or inaction) constitutes a
termination of his employment pursuant to Section 6.4. In
such event the Company shall have thirty (30) days in which
to correct such action (or inaction) and if the Company does
so correct such action (or inaction) the Employee shall not
be entitled to terminate his employment under this Section
as a result of such action (or inaction) (the notice
provided by the Employee to the Company of the action or
inaction and the Company's correction of the action or
inaction, being hereinafter referred to as the "Correction
Process"); provided, however, that if the Employee and the
Company engage in the Correction Process three (3) times
subsequent to a Change in Control, the Employee shall not
thereafter be required to engage in the Correction Process
and shall be entitled to treat any such subsequent action or
inaction by the Company as a termination of the Employee's
employment pursuant to Section 6.4 (subsequent to a change
in control for purposes of Section 6.4(A)).
6.7 Termination of Employment Following a Change
in Control. The Employee may terminate his employment with
the Company during the one (1) year period following a
Change in Control, and such termination of employment shall
be deemed to constitute a termination of the Employee's
employment by the Company pursuant to Section 6.4
(subsequent to a change in control for purposes of Section
6.4(A)). For purposes of this Agreement, a Change in
Control shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than the Employee or a group including the
Employee) acquires twenty percent (20%) or more of the
combined voting power of the outstanding securities of the
Company having a right to vote in elections of directors and
such acquisition shall not have been approved by a majority
of the Continuing Directors (as hereinafter defined) then in
office not later than sixty (60) days after completion of
such acquisition; or
(B) Continuing Directors shall for any
reason cease to constitute a majority of the Board of
Directors of the Company; or
(C) the business of the Company is disposed
of by the Company to a party or parties other than a
subsidiary or other affiliate of the Company, in which the
Company owns less than a majority of the equity, pursuant to
a partial or complete liquidation of the Company, sale of
assets (including stock of a subsidiary of the Company) or
otherwise, and such disposition shall not have been approved
in advance by a majority of the Continuing Directors then in
office.
For purposes of this Agreement, the term
"Continuing Director" shall mean a member of the Board of
Directors of the Company who either was a member of the
Board of Directors on the date hereof or who subsequently
became a Director and whose election, or nomination for
election, was approved by a vote of at least two-thirds of
the Continuing Directors then in office.
7. Confidential Information.
7.1 The Employee shall, during the Employee's
employment with the Company and thereafter, treat all
confidential material confidentially and, except in
accordance with the terms of this Agreement, shall not,
without the prior written consent of a majority of the Board
of Directors of the Company, disclose such material,
directly or indirectly, to any party not at the time of such
disclosure an employee or agent of the Company, or remove
from the Company's premises any notes or records relating
thereto, copies or facsimiles thereof (whether made by
electronic, electrical, magnetic, optical, laser, acoustic
or other means), or any other property of the Company. The
Employee agrees that all confidential material, together
with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of
the Employee (whether made by the foregoing or other means)
are the exclusive property of the Company. The Employee
shall not in any manner use any confidential material, or
any other property of the Company, in any manner not
specifically directed by the Company or in any way which is
detrimental to the Company, as determined by a majority of
the Board of Directors of the Company in its sole
discretion.
7.2 For the purposes hereof, the term
"confidential material" shall mean all information in any
way concerning the activities, business or affairs of the
Company or the Company's customers and clients, including,
without limitation, information concerning trade secrets and
the preparation of raw material for, manufacture of, and/or
finishing processes utilized in the production of, the
products or projects of the Company and/or any improvements
therein, together with all sales and financial information
concerning the Company and any and all information
concerning projects in research and development or marketing
plans for any such products or projects, and all information
concerning the practices, customers and clients of the
Company, and all information in any way concerning the
activities, business or affairs of any of such customers or
clients, as such, which is furnished to the Employee by the
Company or any of its agents, customers or clients, as such,
or otherwise acquired by the Employee in the course of the
Employee's employment with the Company; provided, however,
that the term "confidential material" shall not include
information which (i) becomes generally available to the
public other than as a result of a disclosure by the
Employee, (ii) was available to the Employee on a
non-confidential basis prior to his employment with the
Company or (iii) becomes available to the Employee on a
non-confidential basis from a source other than the Company
or any of its agents, customers or clients, as such,
provided that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers
or clients.
7.3 Promptly upon the request of the Company, the
Employee shall deliver to the Company all confidential
material in the possession of the Employee without retaining
a copy thereof, unless, in the opinion of counsel for the
Company, either returning such confidential material or
failing to retain a copy thereof would violate any
applicable Federal, state, local or foreign law, in which
event such confidential material shall be returned without
retaining any copies thereof as soon as practicable after
such counsel advises that the same may be lawfully done.
7.4 In the event that the Employee is required,
by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or
similar process, to disclose any confidential material, the
Employee shall provide the Company with prompt notice
thereof so that the Company may seek an appropriate
protective order and/or waive compliance by the Employee
with the provisions hereof; provided, however, that if in
the absence of a protective order or the receipt of such a
waiver, the Employee is, in the opinion of counsel for the
Company, compelled to disclose confidential material not
otherwise disclosable hereunder to any legislative, judicial
or regulatory body, agency or authority, or else be exposed
to liability for contempt, fine or penalty or to other
censure, such confidential material may be so disclosed.
8. Intellectual Property. Any and all
inventions made, developed or created by the Employee
(whether at the request or suggestion of the Company or
otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) (a)
during the period of this Agreement, or (b) within a period
of one (1) year after the date of termination of employment
hereunder, which may be directly or indirectly useful in, or
relate to, the business of or tests being carried out by the
Company, shall be promptly and fully disclosed by the
Employee to the Board of Directors of the Company and shall
be the Company's exclusive property as against the Employee,
and the Employee shall promptly deliver to an appropriate
representative of the Company as designated by the Board of
Directors all papers, drawings, models, data and other
material relating to any invention made, developed or
created by him as aforesaid. The Employee shall, at the
request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion
of the Company's counsel to direct issuance of patents or
copyrights to the Company with respect to such inventions as
are to be the Company's exclusive property as against the
Employee or to vest in the Company title to such inventions
as against the Employee. The expense of securing any such
patent or copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges
that the services to be rendered by him to the Company are
of a special and unique character. The Employee agrees
that, in consideration of his employment hereunder, the
Employee will not (a) during the term of this Agreement and
thereafter for a period of one (1) year commencing on the
date of termination of his employment with the Company (i)
engage, directly or indirectly, whether as principal, agent,
distributor, representative, consultant, stockholder (other
than an investment of not more than 5% of the stock of
equity of any corporation the capital stock of which is
publicly traded), employee or otherwise, in any activity or
business venture which is competitive with the business
conducted or proposed to be conducted by the Company as of
the date of termination of his employment with the Company
or (ii) solicit or entice or endeavor to solicit or entice
away from the Company any person who was an officer,
employee or consultant of the Company, either on his own
account or for any person, firm, corporation or other
organization, whether or not such person would commit any
breach of his contract of employment by reason of leaving
the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an
officer or employee of the Company or who by reason of such
position at any time is or may be likely to be in possession
of any confidential information or trade secrets relating to
the businesses or products of the Company, or (b) at any
time, take any action or make any statement the effect of
which would be, directly or indirectly, to impair the good
will of the Company or the business reputation or good name
of the Company, or be otherwise detrimental to the interests
of the Company, including any action or statement intended,
directly or indirectly, to benefit a competitor of the
Company.
10. Equitable Relief. In the event of a breach
or threatened breach by the Employee of any of the
provisions of Sections 7, 8 or 9 of this Agreement, the
Employee hereby consents and agrees that the Company shall
be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the
Employee from committing or continuing any such breach or
threatened breach or granting specific performance of any
act required to be performed by the Employee under any of
such provisions, without the necessity of showing any actual
damage or that money damages would not afford an adequate
remedy and without the necessity of posting any bond or
other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at
law or in equity which it may have.
11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall
require any successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
As used in this Section, the "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which otherwise becomes
bound by all the terms and provisions of this Agreement by
operation of law and this Agreement shall be binding upon,
and inure to the benefit of, the Company, as so defined.
11.2 Assignment by the Employee. The Employee may
not assign this Agreement or any part thereof without the
prior written consent of a majority of the Board of
Directors of the Company; provided, however, that nothing
herein shall preclude one or more beneficiaries of the
Employee from receiving any amount that may be payable
following the occurrence of his legal incompetency or his
death and shall not preclude the legal representative of his
estate from receiving such amount or from assigning any
right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person
or persons entitled thereto under the laws of intestacy
applicable to his estate. The term "beneficiaries", as used
in this Agreement, shall mean a beneficiary or beneficiaries
so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative
of the Employee (in the event of his incompetency) or the
Employee's estate.
12. Governing Law. This Agreement shall be
deemed a contract made under, and for all purposes shall be
construed in accordance with, the laws of the State of New
Jersey applicable to contracts to be performed entirely
within such State.
13. Entire Agreement. This Agreement contains
all the understandings and representations between the
parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreements, whether oral or
in writing, if any there be, previously entered into by them
with respect thereto.
14. Amendment, Modification, Waiver. No
provision of this Agreement may be amended or modified
unless such amendment or modification is agreed to in
writing and signed by the Employee and by a duly authorized
representative of the Company other than the Employee.
Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of a similar or dissimilar provision or condition at the
same or any prior or subsequent time, nor shall the failure
of or delay by either party hereto in exercising any right,
power or privilege hereunder operate as a waiver thereof to
preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege.
15. Arbitration. Any controversy or claim
arising out of or relating to this Agreement, or any breach
thereof, shall, except as provided in Section 10, be settled
by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment
upon such award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitration
shall be held in the area where the Company then has its
principal place of business.
16. Attorneys' Fees and Costs. All attorneys'
fees, costs and expenses incurred by the prevailing party in
connection with any litigation pursuant to Section 10 or any
arbitration pursuant to Section 15 shall be borne by the
non-prevailing party.
17. Notices. Any notice to be given hereunder
shall be in writing and delivered personally or sent by
certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated
below or at such other address as such party may
subsequently designate by like notice:
If to the Company:
Guest Supply, Inc.
4301 U.S. Highway One South
Post Office Box 902
Monmouth Junction, New Jersey 08852-0902
If to the Employee:
Mr. Paul T. Xenis
27 Marc Drive
Dayton, New Jersey 08810
18. Severability. Should any provision of this
Agreement be held by a court or arbitration panel of
competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder
of this Agreement, the balance of which shall continue to be
binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set
forth in this Agreement. The parties further agree that any
such court or arbitration panel is expressly authorized to
modify any such unenforceable provision of this Agreement in
lieu of severing such unenforceable provision from this
Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to
carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The
parties expressly agree that this Agreement as so modified
by the court or arbitration panel shall be binding upon and
enforceable against each of them. In any event, should one
or more of the provisions of this Agreement be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or
provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been set forth herein.
19. Withholding. Anything to the contrary
notwithstanding, all payments required to be made by the
Company hereunder to the Employee or his beneficiaries,
including his estate, shall be subject to withholding of
such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, in
whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by
law, provided it is satisfied in its sole discretion that
all requirements of law affecting its responsibilities to
withhold such taxes have been satisfied.
20. Survivorship. The respective rights and
obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
21. Titles. Titles of the sections of this
Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference
to the title of any section.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
GUEST SUPPLY, INC.
By /s/ Clifford W. Stanley
Name: Clifford W. Stanley
Title: President
/s/ Paul T. Xenis
Paul T. Xenis
<PAGE>
EXHIBIT 10(l)
EMPLOYMENT AGREEMENT
AGREEMENT dated the 6th day of August, 1997, by
and between GUEST SUPPLY, INC., a New Jersey corporation
(the "Company"), and R. EUGENE BIBER (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company wishes to retain the services
of the Employee, and the Employee wishes to serve in the
employ of the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1. Employment.
1.1 The Company agrees to employ the Employee,
and the Employee agrees to serve in the employ of the
Company, for the term set forth in Section 1.2, in the
position and with the responsibilities, duties and authority
set forth in Section 2 and on the other terms and conditions
set forth in this Agreement.
1.2 The term of the Employee's employment under
this Agreement shall commence as of August 1, 1997 and shall
terminate on July 31, 2000, unless extended or sooner
terminated in accordance with this Agreement.
1.3 As of July 31, 1998 and each subsequent
July 31 during the term of this Agreement (each, an
"Automatic Renewal Date"), unless either party shall have
given a notice of non-extension not less than two (2)
months prior to such Automatic Renewal Date, the term of
this Agreement shall be extended automatically for a
period of one (1) year to the first anniversary of the
expiration date of the then-current term of this Agreement.
Once a notice of non-extension shall have been given by
either party, there shall be no further automatic extension
of this Agreement.
2. Position, Duties. The Employee shall serve
in the position of Vice President - Operations of the
Company. The Employee shall perform, faithfully and
diligently, such duties, and shall have such
responsibilities, appropriate to said position, as shall
be assigned to him from time to time by the President of
the Company. The Employee shall report directly to the
President of the Company. The Employee shall devote his
complete and undivided attention to the performance of his
duties and responsibilities hereunder during the normal
working hours of executive employees of the Company.
3. Salary. During the term of this Agreement,
in consideration of the performance by the Employee of the
services set forth in Section 2 and his observance of the
other covenants set forth herein, the Company shall pay the
Employee, and the Employee shall accept, a base salary at
the rate of $173,056 per annum, payable in accordance with
the standard payroll practices of the Company. The Employee
shall be entitled to such increases in base salary during
the term hereof as shall be determined by the Board of
Directors of the Company in its sole discretion based on the
performance of the Company, the performance of the Employee
and increases in the cost of living.
4. Expense Reimbursement and Perquisites.
During the term of this Agreement, (a) the Company shall
reimburse the Employee for all reasonable and necessary
out-of-pocket expenses incurred by his in connection with
the performance of his duties hereunder, upon the
presentation of proper accounts therefor in accordance with
the Company's policies and (b) the Employee shall be
entitled to such perquisites as may be made available from
time to time to senior executive employees of the Company.
5. Benefits. During the term of this Agreement,
the Employee will be eligible to participate in all employee
benefit plans and programs offered by the Company from time
to time to its employees of comparable seniority, including
but not limited to group hospitalization, surgical and major
medical insurance plans, subject to the provisions of such
plans and programs as in effect from time to time.
6. Termination of Employment.
6.1 Death. In the event of the death of the
Employee during the term of this Agreement, the Company
shall continue to pay to the estate or other legal
representative of the Employee the base salary provided for
in Section 3 (at the annual rate then in effect) until the
expiration of a period of three (3) months from the date of
the Employee's death. Rights and benefits of the estate or
other legal representative of the Employee under the benefit
plans and programs of the Company shall be determined in
accordance with the provisions of such plans and programs.
Neither the estate or other legal representative of the
Employee nor the Company shall have any further rights or
obligations under this Agreement.
6.2 Disability. If the Employee shall become
incapacitated by reason of sickness, accident or other
physical or mental disability and shall be unable to perform
his normal duties hereunder for a cumulative period of two
(2) months in any period of four (4) consecutive months, the
employment of the Employee hereunder may be terminated by
the Company or the Employee. In the event of such
termination, the Company shall continue to pay to the
Employee the base salary provided for in Section 3 (at the
annual rate then in effect) until the first to occur of (i)
the expiration of a period of six (6) months from the date
of such termination, (ii) the commencement of payment of
benefits to the Employee under any disability plan or policy
maintained by the Company or (iii) the expiration of a
period of three (3) months from the date of death of the
Employee. The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a one (1) year period
following termination of employment. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. Neither the Employee
nor the Company shall have any further rights or obligations
under this Agreement, except as provided in Sections 7, 8, 9
and 10.
6.3 Due Cause. The employment of the Employee
hereunder may be terminated by the Company at any time for
Due Cause (as hereinafter defined). In the event of such
termination, the Company shall pay to the Employee the base
salary provided for in Section 3 (at the annual rate then in
effect) accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of
the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the
provisions of such plans and programs. For purposes hereof,
"Due Cause" shall mean (i) willful, gross neglect or
willful, gross misconduct in the Employee's discharge of his
duties and responsibilities under this Agreement, or (ii)
the Employee's commission of (x) a felony or (y) any crime
or offense involving moral turpitude; provided, however, the
Employee shall be given written notice by a majority of the
Board of Directors of the Company that it intends to
terminate the Employee's employment for Due Cause, which
written notice shall specify the act or acts upon the basis
of which the majority of the Board of Directors of the
Company intends so to terminate the Employee's employment,
and the Employee shall then be given the opportunity, within
fifteen (15) days of his receipt of such notice, to have a
meeting with the Board of Directors of the Company to
discuss such act or acts. If the basis of such written
notice is other than an act described in clause (ii), the
Employee shall be given seven (7) days after such meeting
within which to cease or correct the performance (or
nonperformance) giving rise to such written notice and, upon
failure of the Employee within such seven (7) days to cease
or correct such performance (or nonperformance), the
Employee's employment by the Company shall automatically be
terminated hereunder for Due Cause. After the satisfaction
of any claim of the Company against the Employee incidental
to such Due Cause, neither the Employee nor the Company
shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10.
6.4 Other Termination by the Company. The
Company may terminate the Employee's employment at any time
for whatever reason it deems appropriate; provided, however,
that in the event that such termination is not pursuant to
Sections 6.1, 6.2 or 6.3:
(A) The Company shall pay to the Employee, within
thirty (30) days of the date of such termination, a lump sum
amount in cash equal to (a) if such termination shall take
place prior to a Change in Control (as hereinafter defined),
the lesser of (i) the product of one (1) month's base salary
(at the highest monthly rate in effect during the six (6)
month period immediately preceding such termination)
multiplied by a fraction, the numerator of which shall be
the Employee's annual base salary at a rate equal to the
highest annual rate in effect, pursuant to Section 3, during
the six (6) month period immediately preceding such
termination, and the denominator of which shall be 10,000,
or (ii) three (3) times the Employee's average annualized
cash compensation (base salary and bonus) during the most
recent five (5) taxable years of the Company ending before
the date of such termination (or during such portion of such
period as the Employee was employed by, or rendered services
for, the Company), less $1,000, or (b) if such termination
shall take place subsequent to a Change in Control, the
lesser of (i) the product of two (2) months' base salary (at
the highest monthly rate in effect during the six (6) month
period immediately preceding such termination) multiplied by
a fraction, the numerator of which shall be the Employee's
annual base salary at a rate equal to the highest annual
rate in effect, pursuant to Section 3, during the six (6)
month period immediately preceding such termination, and the
denominator of which shall be 10,000, or (ii) three (3)
times the Employee's average annualized cash compensation
(base salary and bonus) during the most recent five (5)
taxable years of the Company ending before the date of such
termination (or during such portion of such period as the
Employee was employed by, or rendered services for, the
Company), less $1,000. The Employee shall be under no
obligation to seek subsequent employment and upon obtaining
subsequent employment shall be under no obligation to offset
any amounts earned from such subsequent employment (whether
as an employee, a consultant or otherwise) against such lump
sum payment.
(B) The Company shall continue to carry the group
life, hospitalization, surgical and major medical insurance
coverage for the Employee for a two (2) year period
following termination of employment.
(C) Other rights and benefits of the Employee
under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans
and programs.
(D) For a period of five years following
termination of the employment of the Employee under Section
6.4 (the "Consulting Period"), the Company shall retain the
Employee to provide such consulting services, on such
projects, at such compensation and at such times as are
mutually agreed to from time to time by the Employee and the
Company. During the Consulting Period, the Employee shall
be deemed an employee of the Company for purposes of the
stock option plans and incentive plans of the Company (the
"Plans"). Any options to purchase common stock, no par
value (the "Common Stock"), of the Company (the "Options")
heretofore or hereafter granted to the Employee pursuant to
the Plans shall become fully exercisable and shall remain
exercisable upon the termination of employment of the
Employee until the first to occur of (a) the expiration of
the term of such Options or (b) the expiration of the
Consulting Period. In the event the Company terminates the
Employee's services as a consultant hereunder prior to the
expiration of the Consulting Period, the Employee shall be
entitled to receive payment from the Company of liquidated
damages in an amount equal to the aggregate Adjusted Option
Spread (as hereinafter defined), it being agreed that the
Employee's damages might be impossible to ascertain and that
such amount constitutes a fair and reasonable amount of
damages under the circumstances and is not a penalty. Any
damages payable to the Employee hereunder shall be paid by
the Company to the Employee within fifteen (15) days
following the original expiration date of the Consulting
Period. For purposes hereof, the Adjusted Option Spread
with respect to each Option held by the Employee on the date
of termination of the Employee's services as a consultant
hereunder shall be equal to the product of (a) the number of
shares of Common Stock which are subject to such Option
multiplied by (b) the excess of (i) the highest Market Price
(as hereinafter defined) of the Common Stock during the
period commencing on the date on which such Option ceases to
be exercisable as a result of the termination of the
Employee's services as a consultant hereunder and
terminating on the original expiration date of the
Consulting Period over (ii) the greater of (x) the option
exercise price per share of Common Stock under such Option
or (y) the highest Market Price of the Common Stock during
the period commencing on the date of termination of the
Employee's services as a consultant hereunder and
terminating on the date on which such Option ceases to be
exercisable as a result of such termination. For purposes
hereof, Market Price on any date shall mean the closing
price per share of Common Stock on the New York Stock
Exchange (or such other national securities exchange on
which the Common Stock may be listed, if not listed on the
New York Stock Exchange, or in the over-the-counter market,
if not listed on a national securities exchange).
Neither the Employee nor the Company shall have any further
rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 10.
6.5 Voluntary Termination. The Employee may
terminate his employment with the Company at any time upon
30 days' prior written notice to the Company. In the event
of such termination, the Company shall pay to the Employee
the base salary provided for in Section 3 (at the annual
rate then in effect) accrued to the date of such termination
and not theretofore paid to the Employee. Rights and
benefits of the Employee under the benefit plans and
programs of the Company shall be determined in accordance
with the provisions of such plans and programs. Neither the
Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in
Sections 7, 8, 9 and 10.
6.6 Constructive Termination Subsequent to a
Change in Control. Anything herein to the contrary
notwithstanding, if, subsequent to a Change in Control, the
Company:
(A) demotes the Employee to a lesser position than
provided in Section 2;
(B) causes a material change in the nature or
scope of the authorities, powers, functions, duties, or
responsibilities attached to the Employee's position as
described in Section 2;
(C) decreases the Employee's salary below the
level provided for in Section 3 (taking into account
increases made from time to time in accordance with Section
3);
(D) fails to agree in writing (within ten (10)
days of such Change in Control) to employ the Employee for a
period of not less than one year commencing with such Change
in Control on the terms and conditions set forth in this
Agreement; or
(E) fails to obtain the agreement of a successor
company to assume the obligation of the Company under this
Agreement as required by Section 11.1;
then such action (or inaction) by the Company, unless
consented to in writing by the Employee, shall constitute a
termination of the Employee's employment by the Company
pursuant to clause of Section 6.4 (subsequent to a change in
control for purposes of Section 6.4(A)). Notwithstanding
the preceding sentence, within thirty (30) days after
learning of the action (or inaction) constituting the basis
for a Constructive Termination of Employment, the Employee
shall (unless he gives written consent thereto) advise the
Company in writing, that the action (or inaction)
constitutes a termination of his employment pursuant to
Section 6.4. In such event, the Company shall have thirty
(30) days in which to correct such action (or inaction) and
if the Company does so correct such action (or inaction) the
Employee shall not be entitled to terminate his employment
under this Section as a result of such action (or inaction)
(the notice provided by the Employee to the Company of the
action or inaction and the Company's correction of the
action or inaction, being hereinafter referred to as the
"Correction Process"); provided, however, that if the
Employee and the Company engage in the Correction Process
three (3) times subsequent to a Change in Control, the
Employee shall not thereafter be required to engage in the
Correction Process and shall be entitled to treat any such
subsequent action or inaction by the Company as a
termination of the Employee's employment pursuant to Section
6.4 (subsequent to a change in control for purposes of
Section 6.4(A)).
6.7 Termination of Employment Following a Change
in Control. The Employee may terminate his employment with
the Company during the one (1) year period following a
Change in Control, and such termination of employment shall
be deemed to constitute a termination of the Employee's
employment by the Company pursuant to Section 6.4
(subsequent to a change in control for purposes for Section
6.4(A)). For purposes of this Agreement, a Change in
Control shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than the Employee or a group including the
Employee) acquires twenty percent (20%) or more of the
combined voting power of the outstanding securities of the
Company having a right to vote in elections of directors and
such acquisition shall not have been approved by a majority
of the Continuing Directors (as hereinafter defined) then in
office not later than sixty (60) days after completion of
such acquisition; or
(B) Continuing Directors shall for any reason
cease to constitute a majority of the Board of Directors of
the Company; or
(C) the business of the Company is disposed of by
the Company to a party or parties other than a subsidiary or
other affiliate of the Company, in which the Company owns
less than a majority of the equity, pursuant to a partial or
complete liquidation of the Company, sale of assets
(including stock of a subsidiary of the Company) or
otherwise, and such disposition shall not have been approved
in advance by a majority of the Continuing Directors then in
office.
For purposes of this Agreement, the term
"Continuing Director" shall mean a member of the Board of
Directors of the Company who either was a member of the
Board of Directors on the date hereof or who subsequently
became a Director and whose election, or nomination for
election, was approved by a vote of at least two-thirds of
the Continuing Directors then in office.
7. Confidential Information.
7.1 The Employee shall, during the Employee's
employment with the Company and thereafter, treat all
confidential material confidentially and, except in
accordance with the terms of this Agreement, shall not,
without the prior written consent of a majority of the Board
of Directors of the Company, disclose such material,
directly or indirectly, to any party not at the time of such
disclosure an employee or agent of the Company, or remove
from the Company's premises any notes or records relating
thereto, copies or facsimiles thereof (whether made by
electronic, electrical, magnetic, optical, laser, acoustic
or other means), or any other property of the Company. The
Employee agrees that all confidential material, together
with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of
the Employee (whether made by the foregoing or other means)
are the exclusive property of the Company. The Employee
shall not in any manner use any confidential material, or
any other property of the Company, in any manner not
specifically directed by the Company or in any way which is
detrimental to the Company, as determined by a majority of
the Board of Directors of the Company in its sole
discretion.
7.2 For the purposes hereof, the term
"confidential material" shall mean all information in any
way concerning the activities, business or affairs of the
Company or the Company's customers and clients, including,
without limitation, information concerning trade secrets and
the preparation of raw material for, manufacture of, and/or
finishing processes utilized in the production of, the
products or projects of the Company and/or any improvements
therein, together with all sales and financial information
concerning the Company and any and all information
concerning projects in research and development or marketing
plans for any such products or projects, and all information
concerning the practices, customers and clients of the
Company, and all information in any way concerning the
activities, business or affairs of any of such customers or
clients, as such, which is furnished to the Employee by the
Company or any of its agents, customers or clients, as such,
otherwise acquired by the Employee in the course of the
Employees employment with the Company; provided, however,
that the term "confidential material" shall not include
information which (i) becomes generally available to the
public other than as a result of a disclosure by the
Employee, (ii) was available to the Employee on a
non-confidential basis prior to his employment with the
Company or (iii) becomes available to the Employee on a
non-confidential basis from a source other than the Company
or any of its agents, customers or clients, as such,
provided that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers
or clients.
7.3 Promptly upon the request of the Company, the
Employee shall deliver to the Company all confidential
material in the possession of the Employee without retaining
a copy thereof, unless, in the opinion of counsel for the
Company, either returning such confidential material or
failing to retain a copy thereof would violate any
applicable Federal, state, local or foreign law, in which
event such confidential material shall be returned without
retaining any copies thereof as soon as practicable after
such counsel advises that the same may be lawfully done.
7.4 In the event that the Employee is required,
by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or
similar process, to disclose any confidential material, the
Employee shall provide the Company with prompt notice
thereof so that the Company may seek an appropriate
protective order and/or waive compliance by the Employee
with the provisions hereof; provided, however, that if in
the absence of a protective order or the receipt of such a
waiver, the Employee is, in the opinion of counsel for the
Company, compelled to disclose confidential material not
otherwise disclosable hereunder to any legislative, judicial
or regulatory body, agency or authority, or else be exposed
to liability for contempt, fine or penalty or to other
censure, such confidential material may be so disclosed.
8. Intellectual Property. Any and all
inventions made, developed or created by the Employee
(whether at the request or suggestion of the Company or
otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) (a)
during the period of this Agreement, or (b) within a period
of one (1) year after the date of termination of employment
hereunder, which may be directly or indirectly useful in, or
relate to, the business of or tests being carried out by the
Company, shall be promptly and fully disclosed by the
Employee to the Board of Directors of the Company and shall
be the Company's exclusive property as against the Employee,
and the Employee shall promptly deliver to an appropriate
representative of the Company as designated by the Board of
Directors all papers, drawings, models, data and other
material relating to any invention made, developed or
created by him as aforesaid. The Employee shall, at the
request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion
of the Company's counsel to direct issuance of patents or
copyrights to the Company with respect to such inventions as
are to be the Company's exclusive property as against the
Employee or to vest in the Company title to such inventions
as against the Employee. The expense of securing any such
patent or copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges
that the services to be rendered by him to the Company are
of a special and unique character. The Employee agrees
that, in consideration of his employment hereunder, the
Employee will not (a) during the term of this Agreement and
thereafter for a period of one (1) year commencing on the
date of termination of his employment with the Company (i)
engage, directly or indirectly, whether as principal, agent,
distributor, representative, consultant, stockholder (other
than an investment of not more than 5% of the stock of
equity of any corporation the capital stock of which is
publicly traded), employee or otherwise, in any activity or
business venture which is competitive with the business
conducted or proposed to be conducted by the Company as of
the date of termination of his employment with the Company
or (ii) solicit or entice or endeavor to solicit or entice
away from the Company any person who was an officer,
employee or consultant of the Company, either on his own
account or for any person, firm, corporation or other
organization, whether or not such person would commit any
breach of his contract of employment by reason of leaving
the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an
officer or employee of the Company or who by reason of such
position at any time is or may be likely to be in possession
of any confidential information or trade secrets relating to
the businesses or products of the Company, or (b) at any
time, take any action or make any statement the effect of
which would be, directly or indirectly, to impair the good
will of the Company or the business reputation or good name
of the Company, or be otherwise detrimental to the interests
of the Company, including any action or statement intended,
directly or indirectly, to benefit a competitor of the
Company.
10. Equitable Relief. In the event of a breach
or threatened breach by the Employee of any of the
provisions of Sections 7, 8 or 9 of this Agreement, the
Employee hereby consents and agrees that the Company shall
be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the
Employee from committing or continuing any such breach or
threatened breach or granting specific performance of any
act required to be performed by the Employee under any of
such provisions, without the necessity of showing any actual
damage or that money damages would not afford an adequate
remedy and without the necessity of posting any bond or
other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at
law or in equity which it may have.
<PAGE>
11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall
require any successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
As used in this Section, the "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which otherwise becomes
bound by all the terms and provisions of this Agreement by
operation of law and this Agreement shall be binding upon,
and inure to the benefit of, the Company, as so defined.
11.2 Assignment by the Employee. The Employee may
not assign this Agreement or any part thereof without the
prior written consent of a majority of the Board of
Directors of the Company; provided, however, that nothing
herein shall preclude one or more beneficiaries of the
Employee from receiving any amount that may be payable
following the occurrence of his legal incompetency or his
death and shall not preclude the legal representative of his
estate from receiving such amount or from assigning any
right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person
or persons entitled thereto under the laws of intestacy
applicable to his estate. The term "beneficiaries", as used
in this Agreement, shall mean a beneficiary or beneficiaries
so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative
of the Employee (in the event of his incompetency) or the
Employee's estate.
12. Governing Law. This Agreement shall be
deemed a contract made under, and for all purposes shall be
construed in accordance with, the laws of the State of New
Jersey applicable to contracts to be performed entirely
within such State.
13. Entire Agreement. This Agreement contains
all the understandings and representations between the
parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreements, whether oral or
in writing, if any there be, previously entered into by them
with respect thereto.
14. Amendment, Modification, Waiver. No
provision of this Agreement may be amended or modified
unless such amendment or modification is agreed to in
writing and signed by the Employee and by a duly authorized
representative of the Company other than the Employee.
Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of a similar or dissimilar provision or condition at the
same or any prior or subsequent time, nor shall the failure
of or delay by either party hereto in exercising any right,
power or privilege hereunder operate as a waiver thereof to
preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege.
15. Arbitration. Any controversy or claim
arising out of or relating to this Agreement, or any breach
thereof, shall, except as provided in Section 10, be settled
by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment
upon such award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitration
shall be held in the area where the Company then has its
principal place of business.
16. Attorneys' Fees and Costs. All attorneys'
fees, costs and expenses incurred by the prevailing party in
connection with any litigation pursuant to Section 10 or any
arbitration pursuant to Section 15 shall be borne by the
non-prevailing party.
17. Notices. Any notice to be given hereunder
shall be in writing and delivered personally or sent by
certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated
below or at such other address as such party may
subsequently designate by like notice:
If to the Company:
Guest Supply, Inc.
4301 U.S. Highway One South
Post Office Box 902
Monmouth Junction, New Jersey 08852-0902
If to the Employee:
R. Eugene Biber
11 Briar Hill Court
Bellemead, New Jersey 08502
18. Severability. Should any provision of this
Agreement be held by a court or arbitration panel of
competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder
of this Agreement, the balance of which shall continue to be
binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set
forth in this Agreement. The parties further agree that any
such court or arbitration panel is expressly authorized to
modify any such unenforceable provision of this Agreement in
lieu of severing such unenforceable provision from this
Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to
carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The
parties expressly agree that this Agreement as so modified
by the court or arbitration panel shall be binding upon
and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to
be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or
provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been set forth herein.
19. Withholding. Anything to the contrary
notwithstanding, all payments required to be made by the
Company hereunder to the Employee or his beneficiaries,
including his estate, shall be subject to withholding of
such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law
or regulation. In lieu of withholding such amounts, in
whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by
law, provided it is satisfied in its sole discretion that
all requirements of law affecting its responsibilities to
withhold such taxes have been satisfied.
20. Survivorship. The respective rights and
obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
21. Titles. Titles of the sections of this
Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference
to the title of any section.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
GUEST SUPPLY, INC.
By /s/ Clifford W. Stanley
Name: Clifford W. Stanley
Title: President
/s/ R. Eugene Biber
-------------------
R. Eugene Biber
<PAGE>
EXHIBIT 10(m)
GENERAL COUNSEL AGREEMENT
AGREEMENT dated the 6th day of August, 1997 by and
between THOMAS M. HAYTHE ("TMH") and GUEST SUPPLY, INC., a
New Jersey corporation (the "Company").
W I T N E S S E T H :
WHEREAS, TMH is engaged in the practice of law and
has served as counsel to the Company since 1982;
WHEREAS, TMH's knowledge and experience in the
business and legal affairs of the Company as well as his
expertise and judgment are a valuable asset to the Company;
and
WHEREAS, the Company desires to retain TMH as
General Counsel to the Company, and TMH desires to serve as
General Counsel to the Company, on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises
and the mutual agreements hereinafter set forth, the parties
hereto hereby agree as follows:
1. Services; Term.
1.1 The Company agrees to retain TMH, and TMH
agrees to serve as General Counsel to the Company, for the
term set forth in Section 1.2, in the position and with the
responsibilities, duties and authority set forth in Section
2 and on the other terms and conditions set forth in this
Agreement.
1.2 The term of this Agreement shall commence as
of August 1, 1997 and shall terminate on July 31, 2000,
unless sooner terminated in accordance with this Agreement.
1.3 As of July 31, 1998 and each subsequent July
31 during the term of this Agreement (each, an "Automatic
Renewal date"), unless either party shall have given a
notice of non-extension not less than two (2) months prior
to such Automatic Renewal Date, the term of this Agreement
shall be extended automatically for a period of one (1) year
to the first anniversary of the expiration date of the then-
current term of this Agreement. Once a notice of non-
extension shall have been given by either party, there shall
be no further automatic extension of this Agreement.
2. Duties; Independent Contractor.
2.1 During the Term, TMH shall serve in the
position of General Counsel of the Company. TMH shall
perform such legal services as shall be required by the
Company. TMH shall provide such services through the law
firm of Haythe & Curley. TMH shall also retain such other
special or local counsel as shall be necessary or
appropriate from time to time. TMH shall report directly to
the Chief Executive Officer of the Company and to the Board
of Directors of the Company.
2.2 In performing services under this Agreement,
TMH shall be acting at all times as an independent
contractor and not as an employee of the Company. Under no
circumstances shall TMH be considered an employee of the
Company, nor is this Agreement intended to, and shall not,
create any type of joint venture or partnership between TMH
and the Company. TMH shall not be entitled to any of the
benefits, including, but not limited to, fringe benefits and
workers' compensation benefits, afforded by the Company to
its employees. The Company shall not exercise any control
or direction over the exercise of professional judgement
used by TMH in providing services under this Agreement. TMH
shall be exclusively responsible for the payment of all
taxes, withholding payments, penalties, fees, fringe
benefits, professional liability insurance premiums,
contributions to insurance and pension or other deferred
compensation plans, including, but not limited to, workers'
compensation and Social Security obligations, licensing
fees, and the like, and the filing of all necessary
documents, forms, and returns pertinent to the services
performed and fees earned pursuant to this Agreement.
3. Compensation. In consideration of the
services to be performed by TMH hereunder, the Company shall
pay to TMH a General Counsel fee of $7,500.00 per month,
payable on or about the 15th day of each month during the
Term. The General Counsel fee shall be credited on a
current basis against the fees of Haythe & Curley for
services rendered to the Company and, to the extent that the
General Counsel fee exceeds the fees of Haythe & Curley on a
current basis, it shall be credited against future fees of
Haythe & Curley for services rendered to the Company.
4. Termination.
4.1 In the event of termination of TMH's services
as General Counsel under this Agreement by the Company at
any time during the term of this Agreement prior to a Change
in Control (as defined in Section 4.3 of this Agreement),
the Company shall pay to TMH the monthly General Counsel fee
set forth in Section 3 of this Agreement payable for the
month in which such termination occurs and not theretofore
paid. Neither TMH nor the Company shall have any further
rights or obligations under this Agreement, except as set
forth in Sections 5, 6 and 13 of this Agreement.
4.2 In the event of termination of TMH's services
as General Counsel under this Agreement by the Company upon
or subsequent to a Change in Control, other than by reason
of (i) the death or permanent disability of TMH or (ii) Due
Cause (as hereinafter defined), the Company shall pay to
TMH, on the date of such termination, a lump sum amount in
cash equal to $270,000. The parties agree that the amount
set forth in the preceding sentence shall constitute
liquidated damages, it being agreed that TMH's damages in
the event of termination of his services as General Counsel
under this Agreement might be impossible to ascertain and
that the amount set forth in the preceding sentence
constitutes a fair and reasonable amount of damages under
the circumstances and is not a penalty. Neither TMH nor the
Company shall have any further rights or obligations under
this Agreement, except as set forth in Sections 5, 6 and 13
of this Agreement. For purposes hereof, "Due Cause" shall
mean (i) gross neglect or gross misconduct in TMH's
discharge of his duties and responsibilities under this
Agreement, or (ii) TMH's commission of (x) a felony or (y)
any crime or offense involving moral turpitude.
4.3 For purposes of this Agreement, a Change in
Control of the Company shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than TMH or a group including TMH), acquires
twenty percent (20%) or more of the combined voting power of
the outstanding securities of the Company having a right to
vote in elections of directors; or
(B) Continuing Directors shall for any
reason cease to constitute two-thirds of the Board of
Directors of the Company; or
(C) the business of the Company is disposed
of by the Company to a party or parties other than a
subsidiary or other affiliate of the Company, in which the
Company owns less than a majority of the equity, pursuant to
a partial or complete liquidation of the Company, sale of
assets (including stock of a subsidiary of the Company) or
otherwise.
For purposes of this Agreement, the term
"Continuing Director" shall mean a member of the Board of
Directors of the Company who either was a member of the
Board of Directors on the date hereof or who subsequently
became a Director and whose election, or nomination for
election, was approved by a vote of at least two-thirds of
the Continuing Directors then in office, other than in
connection with an event specified in clauses (A) or (C)
above.
4.4 For a period of five years following
termination of the services of TMH as General Counsel under
this Agreement pursuant to Section 4.1 or 4.2 (the
"Consulting Period"), the Company shall retain TMH to
provide such consulting services, on such projects, at such
compensation and at such times as are mutually agreed to
from time to time by TMH and the Company. During the
Consulting Period, TMH shall be deemed an employee of the
Company for purposes of the stock option plans and incentive
plans of the Company (the "Plans"). Any options to purchase
common stock, no par value (the "Common Stock"), of the
Company (the "Options") heretofore or hereafter granted to
TMH pursuant to the Plans shall become fully exercisable and
shall remain exercisable upon the termination of TMH's
services as General Counsel under this Agreement until the
first to occur of (a) the expiration of the term of such
Options or (b) the expiration of the Consulting Period. In
the event the Company terminates TMH's services as a
consultant hereunder prior to the expiration of the
Consulting Period, TMH shall be entitled to receive payment
from the Company of liquidated damages in an amount equal to
the aggregate Adjusted Option Spread (as hereinafter
defined), it being agreed that TMH's damages might be
impossible to ascertain and that such amount constitutes a
fair and reasonable amount of damages under the
circumstances and is not a penalty. Any damages payable to
TMH hereunder shall be paid by the Company to TMH within
fifteen (15) days following the original expiration date of
the Consulting Period. For purposes hereof, the Adjusted
Option Spread with respect to each Option held by TMH on the
date of termination of TMH's services as a consultant
hereunder shall be equal to the product of (a) the number of
shares of Common Stock which are subject to such Option
multiplied by (b) the excess of (i) the highest Market Price
(as hereinafter defined) of the Common Stock during the
period commencing on the date on which such Option ceases to
be exercisable as a result of the termination of TMH's
services as a consultant hereunder and terminating on the
original expiration date of the Consulting Period over
(ii) the greater of (x) the option exercise price per share
of Common Stock under such Option or (y) the highest Market
Price of the Common Stock during the period commencing on
the date of termination of TMH's services as a consultant
hereunder and terminating on the date on which such Option
ceases to be exercisable as a result of such termination.
For purposes hereof, Market Price on any date shall mean the
closing price per share of Common Stock on the New York
Stock Exchange (or such other national securities exchange
on which the Common Stock may be listed, if not listed on
the New York Stock Exchange, or in the over-the-counter
market, if not listed on a national securities exchange).
5. Confidential Information.
5.1 TMH shall, during the term of this Agreement
and thereafter, treat all confidential material
confidentially and, except in accordance with the terms of
this Agreement and as required in the performance of his
duties hereunder, shall not, without the prior written
consent of a majority of the Board of Directors of the
Company, disclose such material, directly or indirectly, to
any party not at the time of such disclosure either an
employee or agent of the Company or a partner or employee of
Haythe & Curley. TMH agrees that all confidential material,
together with all notes and records of TMH relating thereto,
and all copies or facsimiles thereof in the possession of
TMH (whether made by the foregoing or other means) are the
exclusive property of the Company. TMH shall not in any
manner use any confidential material, or any other property
of the Company, in any manner not specifically directed by
the Company.
5.2 For the purposes hereof, the term
"confidential material" shall mean all information in any
way concerning the activities, business or affairs of the
Company or the Company's customers and clients, including,
without limitation, information concerning trade secrets and
the preparation of raw material for, manufacture of, and/or
finishing processes utilized in the production of, the
products or projects of the Company and/or any improvements
therein, together with all sales and financial information
concerning the Company and any and all information
concerning projects in research and development or marketing
plans for any such products or projects, and all information
concerning the practices, customers and clients of the
Company, and all information in any way concerning the
activities, business or affairs of any of such customers or
clients, as such, which is furnished to TMH by the Company
or any of its agents, customers or clients, as such, or
otherwise acquired by TMH in the course of his service as
General Counsel to the Company; provided, however, that the
term "confidential material" shall not include information
which (i) becomes generally available to the public other
than as a result of a disclosure by TMH, (ii) was available
to TMH on a non-confidential basis prior to his service as
General Counsel to the Company or (iii) becomes available to
TMH on a non-confidential basis from a source other than the
Company or any of its agents, customers or clients, as such,
provided that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers
or clients.
5.3 The obligations of TMH under this Section 5
are in addition to and not in any way in limitation of the
professional obligations of TMH relating to the
confidentiality of attorney-client communications.
6. Equitable Relief. In the event of a breach
or threatened breach by TMH of any of the provisions of
Section 5 of this Agreement, TMH hereby consents and agrees
that the Company shall be entitled to an injunction or
similar equitable relief from any court of competent
jurisdiction restraining TMH from committing or continuing
any such breach or threatened breach or granting specific
performance of any act required to be performed by TMH under
any of such provisions, without the necessity of showing any
actual damage or that money damages would not afford an
adequate remedy and without the necessity of posting any
bond or other security. Nothing herein shall be construed
as prohibiting the Company from pursuing any other remedies
at law or in equity which it may have.
7. Failure to Make Payments. If the Company
shall fail to pay to TMH the General Counsel fee under
Section 3 of this Agreement or the termination payment under
Section 4 of this Agreement for a period of thirty (30) days
after the same shall become due and payable, such amount
shall bear interest at the rate of eighteen percent (18%)
per annum or, if less, the highest legal rate per annum
permitted under the laws of the State of New Jersey, from
and after the date that such amount shall have become due
and payable to and including the date that such amount shall
have been paid in full.
8. Successors and Assigns.
8.1 This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and
assigns.
8.2 The Company shall require any successors
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume and
agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to
perform if no such succession had taken place. As used in
this Section, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business
and/or assets as aforesaid which otherwise becomes bound by
all the terms and provisions of this Agreement by operation
of law and this Agreement shall be binding upon, and inure
to the benefit of, the Company, as so defined.
9. Governing Law. This Agreement shall be
deemed a contract made under, and for all purposes shall be
construed in accordance with, the laws of the State of New
Jersey applicable to contracts to be performed entirely
within such State. In the event that a court of any
jurisdiction shall hold any of the provisions of this
Agreement to be wholly or partially unenforceable for any
reason, such determination shall not bar or in any way
affect each party's right to relief as provided for herein
in the courts of any other jurisdiction. Such provisions,
as they relate to each jurisdiction, are, for this purpose,
severable into diverse and independent covenants. Service
of process on the parties hereto at the addresses set forth
herein shall be deemed adequate service of such process.
10. Entire Agreement. This Agreement contains
all the understandings and representations between the
parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreements, whether oral or
in writing, if any there be, previously entered into by them
with respect thereto.
11. Amendment, Modification, Waiver. No
provision of this Agreement may be amended or modified
unless such amendment or modification is agreed to in
writing and signed by TMH and by a duly authorized
representative of the Company. Except as otherwise
specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or any prior
or subsequent time, nor shall the failure of or delay by
either party hereto in exercising any right, power or
privilege hereunder operate as a waiver thereof to preclude
any other or further exercise thereof or the exercise of any
other such right, power or privilege.
12. Arbitration. Any controversy or claim
arising out of or relating to this Agreement, or any breach
thereof, shall be settled by binding arbitration in
accordance with the rules of the American Arbitration
Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitration shall be held
in New York, New York.
13. Attorneys' Fees and Costs. All attorneys'
fees, costs and expenses incurred by the prevailing party in
connection with any litigation pursuant to Section 6 or any
arbitration pursuant to Section 12 shall be borne by the
non-prevailing party.
14. Notices. Any notice to be given hereunder
shall be in writing and delivered personally or sent by
certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated
below or at such other address as such party may
subsequently designate by like notice:
If to the Company:
Guest Supply, Inc.
4301 U.S. Highway One
P.O. Box 902
Monmouth Junction, New Jersey 08852-0902
Attention: Mr. Clifford W. Stanley
Chairman and
Chief Executive Officer
If to TMH:
Thomas M. Haythe, Esq.
21 Mayfair Lane
Greenwich, Connecticut 06831
15. Severability. Should any provision of this
Agreement be held by a court or arbitration panel of
competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder
of this Agreement, the balance of which shall continue to be
binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set
forth in this Agreement. The parties further agree that any
such court or arbitration panel is expressly authorized to
modify any such unenforceable provision of this Agreement in
lieu of severing such unenforceable provision from this
Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to
carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The
parties expressly agree that this Agreement as so modified
by the court or arbitration panel shall be binding upon and
enforceable against each of them. In any event, should one
or more of the provisions of this Agreement be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or
provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been set forth herein.
16. Authority. The Company represents and
warrants to TMH that the execution and delivery of this
Agreement by the Company and the performance by the Company
of its covenants and agreements hereunder have been duly
authorized by all necessary corporate action and that this
Agreement has been duly executed and delivered on behalf of
the Company.
17. Survivorship. The respective rights and
obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
18. Titles. Titles of the sections of this
Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference
to the title of any section.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
GUEST SUPPLY, INC.
By /s/ Clifford W. Stanley
-----------------------
Name: Clifford W. Stanley
Title: President
/s/ Thomas M. Haythe
--------------------
Thomas M. Haythe
<PAGE>
REVOLVING CREDIT AGREEMENT
dated December 3, 1997
among
GUEST SUPPLY, INC.,
GUEST PACKAGING, INC.,
BRECKENRIDGE-REMY CO., and
GUEST DISTRIBUTION SERVICES, INC.,
as the Borrower
PNC BANK, NATIONAL ASSOCIATION
FIRST UNION NATIONAL BANK, as Lenders
and
PNC BANK, NATIONAL ASSOCIATION, as Agent
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Other Definitional Provisions.. . . . . . . . . . . . . 19
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . 19
Section 2.1 Revolving Credit Commitments. . . . . . . . . . . . . . 19
Section 2.2 Revolving Credit Note . . . . . . . . . . . . . . . . . 20
Section 2.3 Procedure for Revolving Credit Borrowings . . . . . . . 20
Section 2.4 Commitment Fees . . . . . . . . . . . . . . . . . . . . 21
Section 2.5 Termination or Reduction of Commitments . . . . . . . . 22
Section 2.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.7 Conversion and Continuation Options . . . . . . . . . . 23
Section 2.8 Minimum Amounts of Tranches . . . . . . . . . . . . . . 24
Section 2.9 Interest Rates and Payment Dates. . . . . . . . . . . . 24
Section 2.10 Inability to Determine Interest Rate . . . . . . . . . 26
Section 2.11 Payments/Funding . . . . . . . . . . . . . . . . . . . 26
Section 2.12 Change in Legality . . . . . . . . . . . . . . . . . . 28
Section 2.13 Increased Costs. . . . . . . . . . . . . . . . . . . . 29
Section 2.14 Indemnity. . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.15 Letters of Credit. . . . . . . . . . . . . . . . . . . 33
Section 2.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . 37
ARTICLE 3 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 38
Section 3.1 Financial Condition . . . . . . . . . . . . . . . . . . 38
Section 3.2 No Material Adverse Change. . . . . . . . . . . . . . . 39
Section 3.3 Corporate Existence; Compliance with Law. . . . . . . . 39
Section 3.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.5 No Legal Bar. . . . . . . . . . . . . . . . . . . . . . 40
Section 3.6 No Material Litigation. . . . . . . . . . . . . . . . . 40
Section 3.7 No Default. . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.8 Ownership of Property; Liens. . . . . . . . . . . . . . 41
Section 3.9 Intellectual Property . . . . . . . . . . . . . . . . . 41
Section 3.10 No Burdensome Restrictions . . . . . . . . . . . . . . 41
Section 3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 3.12 Federal Regulations. . . . . . . . . . . . . . . . . . 42
Section 3.13 Investment Company Act; Public Utility Holding
Company Act; Other Regulations. . . . . . . . . . . . . . . . . 42
Section 3.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 42
Section 3.15 Employee Grievances. . . . . . . . . . . . . . . . . . 42
Section 3.16 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 4 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 44
Section 4.1 Conditions to Effective Date. . . . . . . . . . . . . . 44
Section 4.2 Conditions to Each Loan . . . . . . . . . . . . . . . . 45
ARTICLE 5 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 46
Section 5.1 Financial Statements. . . . . . . . . . . . . . . . . . 47
Section 5.2 Certificates; Other Information . . . . . . . . . . . . 48
Section 5.3 Payment of Obligations. . . . . . . . . . . . . . . . . 49
Section 5.4 Conduct of Business and Maintenance of
Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.5 Maintenance of Property; Insurance. . . . . . . . . . . 49
Section 5.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 5.8 ERISA Compliance. . . . . . . . . . . . . . . . . . . . 50
ARTICLE 6 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 51
Section 6.1 Limitation on Indebtedness. . . . . . . . . . . . . . . 51
Section 6.2 Limitation on Liens . . . . . . . . . . . . . . . . . . 52
Section 6.3 Limitation on Contingent Obligations. . . . . . . . . . 54
Section 6.4 Limitations on Fundamental Changes. . . . . . . . . . . 54
Section 6.5 Limitation on Sale of Assets. . . . . . . . . . . . . . 54
Section 6.6 Limitation on Investments, Loans and Advances . . . . . 55
Section 6.7 Limitation on Optional Payments and
Modifications of Debt Instruments . . . . . . . . . . . 56
Section 6.8 Transactions with Affiliates. . . . . . . . . . . . . . 56
Section 6.9 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.10 Limitation on Conduct of Business. . . . . . . . . . . 56
Section 6.11 Tangible Net Worth . . . . . . . . . . . . . . . . . . 57
Section 6.12 Fixed Charge Coverage Ratio. . . . . . . . . . . . . . 57
Section 6.13 Funded Debt to EBITDA. . . . . . . . . . . . . . . . . 57
Section 6.14 Capital Expenditures.. . . . . . . . . . . . . . . . . 57
Section 6.15 Obligor Tangible Assets. . . . . . . . . . . . . . . . 57
Section 6.16 ERISA Obligations. . . . . . . . . . . . . . . . . . . 57
ARTICLE 7 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . . . 57
ARTICLE 8 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.1 Actions . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.3 Successor . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.4 Credit Decisions. . . . . . . . . . . . . . . . . . . . 63
Section 8.5 Notices, etc. from Agent. . . . . . . . . . . . . . . . 64
Section 8.6 Security Documents. . . . . . . . . . . . . . . . . . . 64
ARTICLE 9 PURCHASING LENDER . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.1 Purchasing Lender . . . . . . . . . . . . . . . . . . . 64
Section 9.2 Disclosure of Information . . . . . . . . . . . . . . . 66
Section 9.3 Pledges to Federal Reserve Bank . . . . . . . . . . . . 66
ARTICLE 10 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 66
Section 10.1 Amendments and Waivers . . . . . . . . . . . . . . . . 66
Section 10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . 71
Section 10.4 Survival of Representations and Warranties
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.5 Payment of Expenses and Taxes. . . . . . . . . . . . . 71
Section 10.6 Successors and Assigns . . . . . . . . . . . . . . . . 73
Section 10.7 Set-off/Sharing. . . . . . . . . . . . . . . . . . . . 73
Section 10.8 Original Agreement . . . . . . . . . . . . . . . . . . 74
Section 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . 74
Section 10.10 Severability. . . . . . . . . . . . . . . . . . . . . 74
Section 10.11 Integration . . . . . . . . . . . . . . . . . . . . . 75
Section 10.12 Governing Law . . . . . . . . . . . . . . . . . . . . 75
Section 10.13 Submission To Jurisdiction; Waivers . . . . . . . . . 75
Section 10.14 Acknowledgments . . . . . . . . . . . . . . . . . . . 76
Section 10.15 Waivers of Jury Trial . . . . . . . . . . . . . . . . 76
Exhibits
Exhibit A Revolving Credit Note
Exhibit B Borrowing Base Certificate
Exhibit C Issuance Request
Exhibit D Form of Letter of Credit
Exhibit E Form of Letter of Credit
Exhibit F Opinion of Counsel
Schedules
Schedule I Commitments
Schedule II Consents ( 3.4(b))
Schedule III Litigation ( 3.6)
Schedule IV Intellectual Property
Schedule V Subsidiaries ( 3.14)
Schedule VI Employee Grievances ( 3.15)
Schedule VII ERISA Plans ( 3.16)
Schedule VIII Liens ( 6.2(g))
<PAGE>
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT, dated December 3, 1997
among GUEST SUPPLY, INC. ("GSI"), a New Jersey corporation, Guest
Packaging, Inc., a New Jersey corporation, BRECKENRIDGE-REMY CO.,
a Delaware corporation, and GUEST DISTRIBUTION SERVICES, INC., a
Delaware corporation, jointly and severally as co-obligors
(collectively, the "Borrower"), PNC BANK, NATIONAL ASSOCIATION
and FIRST UNION NATIONAL BANK (each a "Lender" and, collectively,
the "Lenders") and PNC BANK, NATIONAL ASSOCIATION as agent for
the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, GSI, Guest Packaging, Inc. and Breckenridge-
Remy Co., Lenders and Agent entered into a Revolving Credit and
Term Loan (the "Original Agreement") dated October 31, 1995; and
WHEREAS, the Borrower has requested the Lenders to
extend a new credit facility to Borrower; and
WHEREAS, the Lenders have agreed, upon the terms and
conditions set forth herein, to extend such credit facility to
the Borrower; and
WHEREAS, the Borrower and Lenders have agreed that the
Original Agreement will be terminated and amounts outstanding
thereunder will be repaid simultaneously with the making of the
initial loan hereunder.
NOW, THEREFORE, in consideration of the premises, and
for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Lenders, the Agent
and the Borrower hereby agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Affiliate" as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors of
such Person or (b) direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise.
"Agent" (a) PNC Bank, National Association; or (b) such
other bank or financial institution as shall have been
subsequently appointed as successor Agent pursuant to Section 8.3
of this Agreement.
"Agreement" this Revolving Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin" means a rate per annum determined
in accordance with the Pricing Schedule.
"Assignment and Acceptance" as defined in Section 9.1.
"Available Commitment" at any time with respect to
Revolving Credit Loans for each Lender, an amount equal to (i)
the amount of such Lender's Commitment at such time to make
Revolving Credit Loans minus (ii) the sum of (a) the aggregate
principal amount of all then outstanding Revolving Credit Loans
made by such Lender and (b) the amount of such Lender's
Percentage of the Letter of Credit Outstandings at such time.
"Board" the Board of Governors of the Federal Reserve
System of the United States.
"Borrowing Base" an amount equal to the sum of (x) 80%
of the value of Eligible Receivables for the most recent
Calculation Period plus (y) 20% of the aggregate amount of Letter
of Credit Outstandings (less the then aggregate amount of all
unpaid and outstanding Reimbursement Obligations) during such
Calculation Period, provided, however, that if the value of "x"
is less than "y," then the Borrowing Base shall be equal to "x"
only.
"Borrowing Base Certificate" a certificate in the form
of Exhibit B hereto to be delivered by the Borrower for each
Calculation Period.
"Borrowing Date" any Business Day specified in a notice
pursuant to Section 2.3 as a date on which a Borrower requests
the Lenders to make Loans.
"Business Day" a day other than Saturday, Sunday or
other day on which commercial banks in New Jersey are authorized
or required by law to be closed and, in the case of Eurodollar
Loans, a day which is also a Working Day.
"CAPEX" for any period, the cost attributed in
accordance with GAAP consistent with those applied in preparation
of the financial statements referred to in Section 5.1 hereof to
acquisitions during such period by GSI and/or its consolidated
Subsidiaries of any asset, tangible or intangible, or
replacements or substitutes therefor or additions thereto which
are treated as a non current asset on such financial statements,
including, without limitation, the acquisition or construction of
assets having a useful life of more than one year.
"Calculation Period" each successive calendar month,
beginning November 1, 1997.
"Capital Lease Obligations" of any Person for any
period, the obligations of such Person to pay rent and other
amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination
thereof, for such period, which obligations are required to be
classified and accounted for as capital leases on a balance sheet
of such Person under GAAP.
"Capital Stock" any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.
"Change in Control" means the acquisition by any
Person, or two or more Persons acting in concert (other than any
individuals who are members of GSI's senior management on the
Effective Date or any entity, if and so long as, the majority of
equity and voting interests in which is owned by one or more of
such individuals), of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of greater than 50% of the
outstanding shares of voting stock of GSI.
"Closing Date" the date on which the Lenders make the
initial Loan.
"Code" the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" for each Lender at any time from and
including the Effective Date to but excluding the Maturity Date
the lesser of (i) the amount set forth opposite such Lender's
name in Schedule I under the heading "Commitment" as such amount
may be adjusted pursuant to Sections 2.5 or 9.1 and (ii) the
product of such Lender's Percentage and the Borrowing Base for
the then immediately preceding Calculation Period; (subject to an
aggregate sublimit for all Lenders of $1,000,000 for Letters of
Credit).
"Consolidated Current Liabilities" at a particular
date, the sum of all amounts which would, in conformity with
GAAP, be included under current liabilities on a consolidated
balance sheet of GSI as at such date.
"Consolidated EBITDA" means, for any fiscal period, the
sum of (i) Consolidated Net Income (Loss) for such period plus,
(ii) Consolidated Interest Expense, plus (iii) depreciation, plus
(iv) amortization of intangible assets and plus (v) federal,
state and local income taxes; all computed and calculated in
accordance with GAAP.
"Consolidated Intangibles" at a particular date, all
assets of GSI, determined on a consolidated basis at such date,
that would be classified as intangible assets in accordance with
GAAP, but in any event including, without limitation, unamortized
organization and reorganization expense, patents, trade or
service marks, franchises, trade names and goodwill.
"Consolidated Interest Expense" for any period, the
total interest expense for such period (including, without
limitation, that attributable to Capital Lease Obligations in
accordance with GAAP) of GSI and its consolidated Subsidiaries
with respect to all outstanding Indebtedness of GSI and its
consolidated Subsidiaries.
"Consolidated Net Income" for any period, the
consolidated net income (or net loss) of GSI and its consolidated
Subsidiaries for such period, determined in accordance with GAAP.
"Consolidated Obligor Tangible Assets" means, at any
time, Consolidated Tangible Assets at such time, excluding,
however, in the determination thereof any assets for any
Subsidiary of GSI unless such Subsidiary is one of the Persons
constituting the Borrower at such time or has guaranteed payment
of the Obligations pursuant to Section 6.6(f).
"Consolidated Tangible Assets" means, at any time,
(a) the total assets of GSI and its consolidated Subsidiaries as
would be shown on a consolidated balance sheet of GSI and its
Consolidated Subsidiaries as of such time prepared in accordance
with GAAP, minus (b) to the extent included in clause (a), the
net book value of all Consolidated Intangibles deducting any
reserves applicable thereto).
"Consolidated Tangible Net Worth" at a particular date,
(a) the sum of all amounts which would be included under
shareholders' equity on a consolidated balance sheet of GSI and
its consolidated Subsidiaries determined in accordance with GAAP
as at such date minus (b) Consolidated Intangibles as at such
date.
"Contingent Obligation" as to any Person any guarantee
of payment, collection or performance by such Person of any
Indebtedness or other obligation of any other Person, or any
agreement to provide financial assurance with respect to the
financial condition, or the payment of the obligations of, such
other Person (including, without limitation, purchase or
repurchase agreements, reimbursement agreements with respect to
letters of credit or acceptances, indemnity arrangements, grants
of security interests to support the obligations of another
Person, keepwell agreements and take-or-pay or through-put
arrangements) which has the effect of assuring or holding
harmless any third Person against loss with respect to one or
more obligations of such other Person; provided, however, that
the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business or indemnities entered into in the ordinary course of
business in connection with the sale of inventory or licensing of
intellectual property or other proprietary information. The
amount of any Contingent Obligation of any Person shall be deemed
to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which
such Contingent Obligation is made and (b) the maximum amount for
which such contingently liable Person may be liable pursuant to
the terms of the instrument embodying such Contingent Obligation,
unless such primary obligation and the maximum amount for which
such contingently liable Person may be liable are not stated or
determinable, in which case the amount of such Contingent
Obligation shall be such contingently liable Person's maximum
reasonably anticipated liability in respect thereof as determined
by the contingently liable Person in good faith.
"Contractual Obligation" as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound.
"Controlled Group" as set forth in Section 1563(a) of
the Code.
"CPLTD" for any period, the sum of (i) the current
portion of Capital Lease Obligations of GSI and its consolidated
Subsidiaries and any permitted prepayments of Subordinated Debt
of GSI and its consolidated Subsidiaries, and (ii) all other
amounts which were, or would be, in conformity with GAAP included
under current portion of long term debt on the consolidated
balance sheet of GSI for the relevant period then ended; provided
that the calculation of CPLTD shall not include the current
portion of any Loans.
"Default" any of the events specified in Section 7.1,
whether or not any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been
satisfied.
"Dollar" and "$" lawful currency of the United States
of America.
"Effective Date" as set forth in Section 4.1.
"Eligible Receivables" all accounts receivable of each
of the Persons constituting the Borrower other than accounts
receivable (i) which have remained unpaid for more than 90 days
after the date of their creation; (ii) which are owed by any
Person where 50% or more of the receivables owed by such Person
would be excluded by reason of clause (i) of this definition (the
"50% Rule"); (iii) which are owed by any Affiliate of any Person
constituting the Borrower to any Person constituting the Borrower
or another Affiliate; (iv) which are payable by any Person not
incorporated in a jurisdiction which is part of the United States
of America or any state thereof; (v) as to which the goods which
gave rise to the receivable have been or are being returned or as
to which a credit has been claimed; (vi) as to which
(collectively, "Contras") the account party is or may set off
against or net out amounts due such account party by any Person
constituting the Borrower; (vii) as to which there are accrued
and unpaid late charges, to the extent of such late charges
(provided, that this clause (vii) shall not derogate from the
provisions of clause (i) above); (viii) which are payable by any
Person which is the subject of any voluntary or involuntary
bankruptcy or insolvency proceeding (state or federal), which has
made a general assignment for the benefit of creditors or had a
receiver, trustee or other similar official appointed with
respect to all or a substantial portion of its properties or
which has ceased doing business; or (ix) which Lender deems to be
otherwise unacceptable in its reasonable judgement.
"ERISA" means the Employee Retirement Income Security
Act of 1974 (and any sections of the Code amended by it), as the
same from time to time may be amended, supplemented or modified,
and all regulations promulgated thereunder.
"ERISA Affiliate" means each trade or business (whether
or not incorporated) which together with any Person constituting
the Borrower would be deemed to be a single employer under
Section 414 of the Code.
"Eurocurrency Reserve Requirements" for any day as
applied to a Eurodollar Loan, the aggregate (without duplication)
of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves
under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the
Federal Reserve System. Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such
reserve requirements without benefit of or credit for proration,
exceptions or offsets which may be available from time to time to
Lender under Regulation D.
"Eurodollar Base Rate" with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the rate
per annum equal to the rate at which PNC or its Affiliate is
offering Eurodollar deposit-based loans to prime banks at or
about 10:00 a.m., New Jersey time, two Business Days prior to the
beginning of such Interest Period,
(a) in the interbank eurodollar market where the
eurodollar and foreign currency exchange operations in
respect of its Eurodollar Loans then are being
conducted,
(b) for delivery on the first day of such Interest
Period,
(c) for the number of days contained therein and
(d) in an amount comparable to PNC's Percentage of
the Eurodollar Loan to be outstanding during such
Interest Period.
"Eurodollar Loans" Loans whose rate of interest is
based upon the Eurodollar Rate.
"Eurodollar Rate" with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
for such day (rounded upward to the nearest 1/100 of 1%) obtained
by dividing (x) the Eurodollar Base Rate by (y) 1.00 minus the
then current Eurocurrency Reserve Requirement.
"Event of Default" as defined in Section 7.1.
"Federal Funds Rate" for any period, a fluctuating
interest rate per annum (based on a 360 day year) equal for each
day during such period to the average of the rates of interest
charged on overnight federal funds transactions, with member
banks of the Federal Reserve System only, as published for any
day which is a Business Day by the Federal Reserve Bank of New
York (or, in the absence of such publication, as reasonably
determined by the Agent).
"Fixed Charge Coverage Ratio" means, as of the last day
of any fiscal quarter of GSI, the ratio of (i) the sum of
(x) earnings before tax of GSI and its consolidated Subsidiaries,
(y) Consolidated Interest Expense, plus (z) rent expense under
operating leases of GSI and its consolidated Subsidiaries for the
four consecutive fiscal quarters of GSI and its consolidated
Subsidiaries ending on such date to (ii) the sum of
(x) Consolidated Interest Expense, (y) rent expense under
operating leases of GSI and its consolidated Subsidiaries plus
(z) CPLTD for such period.
"Funded Debt" for any Person, at any date of
determination, for GSI and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP);
obligations created, issued or incurred for borrowed money
(whether by loan or the issuance and sale of debt securities or
otherwise).
"GAAP" generally accepted accounting principles in the
United States of America consistent with those utilized in
preparing the audited financial statements referred to in Section
5.1(a).
"Governmental Authority" any nation or government, any
state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Indebtedness" of any Person at any date (without
duplication):
(a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or
services (other than current trade liabilities incurred
in the ordinary course of business and payable in
accordance with customary practices),
(b) any other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar
instrument,
(c) all Capital Lease Obligations of such Person,
(d) all reimbursement and other obligations of such
Person in respect of letters of credit, acceptances and
similar obligations issued or created for the account
of such Person,
(e) all liabilities secured by any Lien on any
property owned by such Person even though such Person
has not assumed or otherwise become liable for the
payment thereof,
(f) net liabilities of such Person under interest
rate cap agreements, interest rate swap agreements,
foreign currency exchange agreements and other hedging
agreements or arrangements,
(g) all Contingent Obligations of such Person, and
(h) withdrawal liabilities of such Person or any
Commonly Controlled Entity under a Plan.
The Indebtedness of any Person shall include any Indebtedness of
any partnership in which such Person is a general partner.
"indemnified liabilities" as defined in Section 10.5.
"Intellectual Property" has the meaning ascribed
thereto in Section 3.9.
"Interest Payment Date" (a) as to any Loan, the first
day of each calendar month to occur while such Loan is
outstanding, beginning on the first day of the first full
calendar month occurring after the date of such Loan, and (b) in
addition, as to any Eurodollar Loan the last day of each Interest
Period with respect thereto. Interest shall accrue from and
including the first day of an Interest Period to but excluding
the last day of such Interest Period.
"Interest Period" with respect to any Eurodollar Loan:
(a) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two,
three, six or twelve months thereafter, as selected by
the Borrower in its notice of borrowing or notice of
conversion, given with respect thereto, subject to
availability; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three, six or
twelve months thereafter, as selected by the Borrower
by irrevocable notice to the Agent given not less than
three Business Days prior to the last day of the then
current Interest Period with respect thereto, subject
to availability;
provided that, the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would end on a day other
than a Business Day such Interest Period shall be
extended to the next Business Day unless, in the case
of a Eurodollar Loan, such next succeeding Business Day
would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding
Business Day;
(2) in the case of a Eurodollar Loan, if an
Interest Period commences on the last day in a calendar
month that is a Business Day, such Interest Period
shall end on the last day that is a Business Day in the
month that is the specified number of months after the
month in which such Interest Period commenced; and
(3) an Interest Period that otherwise would extend
beyond the Maturity Date shall end on the Maturity
Date.
"Issuance Request" a certificate duly executed by a
Responsible Officer of any Person constituting the Borrower in
substantially the form of Exhibit C hereto, and delivered to the
Issuer (with a copy to the Agent) requesting the issuance of a
Letter of Credit described therein.
"Issuer" PNC.
"Letter of Credit" has the meaning set forth in Section
2.15(a) hereof.
"Letter of Credit Availability" at any time, the lesser
of (a) $1,000,000 minus any Letter of Credit Outstanding(s) and
(b) the then Available Commitment for Revolving Credit Loans and
Letters of Credit.
"Letter of Credit Outstandings" at any time, an amount
equal to the sum of (a) the aggregate undrawn, available amount
at such time of all Letters of Credit then outstanding plus (b)
the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"Lien" any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other),
other charge or security interest; or any preference, priority or
other agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale
or other title retention agreement, any Capital Lease Obligations
having substantially the same economic effect as any of the
foregoing). A precautionary filing of a financing statement by a
lessor of property (other than with respect to a Capital Lease
Obligation) covering only such property shall not constitute a
Lien.
"Loan" any loan made by the Lenders pursuant to this
Agreement (whether denominated as a Prime Rate Loan, Eurodollar
Loan or otherwise).
"Loan Documents" this Agreement, the Notes and the
Security Documents.
"Material Adverse Effect" a material adverse effect on
(a) the business, operations, property or condition (financial or
otherwise) of GSI and the Subsidiary Borrowers, taken as a whole,
or (b) the validity or enforceability of (i) this Agreement, any
of the Notes or the other Loan Documents or (ii) the rights or
remedies of the Lender hereunder or thereunder.
"Maturity Date" December 3, 2002.
"Multiemployer Plan" a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Notes" the collective reference to the Revolving
Credit Notes.
"Note Purchase Agreements" the collective reference to
the Note Purchase Agreement dated as of December 3, 1997 among
Borrower and the Mutual Life Insurance Company of New York, the
Note Purchase Agreement dated as of December 3, 1997 among
Borrower and Great West Life & Annuity Insurance Company, the
Note Purchase Agreement dated as of December 3, 1997 among
Borrower and AUSA Life Insurance Company, Inc. and the Note
Purchase Agreement dated as of December 3, 1997 among Borrower
and Nationwide Life and Annuity Insurance Company; pursuant to
which the Borrower is issuing the Senior Notes in the Private
Placement, as the same may be amended, modified or supplemented,
from time to time.
"Obligations" all obligations (monetary or otherwise)
of the Borrower to the Lenders and/or the Agent arising under or
in connection with this Agreement (including, without limitation,
the Reimbursement Obligations and the Letters of Credit), the
Notes and the other Loan Documents.
"Obligor Fixed Charge Coverage Ratio" means, as of the
last day of any fiscal quarter of GSI, the ratio of (i) the sum
of (x) earnings before tax of the Borrower and each Subsidiary
which has guaranteed the Obligations pursuant to Section 6.6,
(y) Consolidated Interest Expense of the Borrower and each
Subsidiary which has guaranteed the Obligations pursuant to
Section 6.6, plus (z) rent expense under operating leases of the
Borrower and each Subsidiary which has guaranteed the Obligations
pursuant to Section 6.6 for the four consecutive fiscal quarters
of GSI ending on such date to (ii) the sum of (x) Consolidated
Interest Expense (but excluding Consolidated Interest Expense of
any Subsidiary of GSI which is not a Person constituting the
Borrower or which has not guaranteed the Obligations pursuant to
Section 6.6), (y) rent expense under operating leases of the
Borrower and each Subsidiary which has guaranteed the Obligations
pursuant to Section 6.6 plus (z) CPLTD for such period (but
excluding Consolidated Interest Expense of any Subsidiary of GSI
which is not a Person constituting the Borrower or which has not
guaranteed the Obligations pursuant to Section 6.6).
"Payment Office" as specified in Section 2.14.
"PBGC" the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, and any
entity succeeding to any or all of its functions under ERISA.
"Percentage" of any Lender means, at any time, with
respect to Revolving Credit Loans, the percentage set forth
opposite such Lender's name on Schedule I hereto under the
heading "Revolving Credit Loans."
"Permitted Investments"
(a) marketable direct obligations issued or
unconditionally guaranteed by the United States of
America or issued by any agency thereof and backed by
the full faith and credit of the United States of
America, in each case maturing within six months from
the date of acquisition thereof;
(b) marketable general obligations issued by any
state of the United States of America or any political
subdivision of any such state or any public
instrumentality thereof maturing within six months from
the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings
generally obtainable from either Standard & Poor's
Corporation or Moody's Investors Service, Inc.;
(c) without limiting the provisions of subsection
(d) of this definition, commercial paper maturing no
more than six months from the date of acquisition
thereof and, at the time of acquisition, having a
rating of A-1 (or the equivalent) or higher from
Standard & Poor's Corporation and P-1 (or the
equivalent) or higher from Moody's Investors Service,
Inc.;
(d) commercial paper maturing no more than six
months from the date of acquisition thereof and issued
by (i) the holding company of any Lender or (ii) the
holding company of any other bank that has (A) combined
capital, surplus and undivided profits (less any
undivided losses) of not less than $250 million, (B) a
Keefe Bank Watch Rating of C or better and (C)
commercial paper having a rating of A-2 (or the
equivalent) from Standard & Poor's Corporation or P-2
(or the equivalent) or higher from Moody's Investors
Service, Inc.;
(e) domestic and Eurodollar certificates of
deposit, time or demand deposits or bankers'
acceptances maturing within six months from the date of
acquisition issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by:
(i) any Lender,
(ii) any other commercial bank organized under
the laws of the United States of America or any
state thereof or the District of Columbia
having combined capital, surplus and undivided
profits (less any undivided losses) of not less
than $500 million,
(iii) any branch located in the United States
of America of a commercial bank organized under
the laws of the United Kingdom or Canada having
combined capital, surplus and undivided profits
(less any undivided losses) of not less than
$500 million or
(iv) any domestic commercial bank the deposits
of which are guaranteed by the Federal Deposit
Insurance Corporation, provided that (A) the
full amount of the deposits of the Person
making such Permitted Investment are so
guaranteed and (B) the aggregate amount of all
Permitted Investments under this clause (iv)
does not exceed $500,000; and
(f) fully collateralized repurchase agreements
with a term of not more than 30 days for underlying
securities of the type described in subsections (a) and
(b) of this definition, entered into with any
institution meeting the qualifications specified in
clause (d) or subclauses (i) through (iii) of clause
(e) of this definition; provided, in each case, that
such obligations are payable in Dollars.
"Person" an individual, partnership, corporation,
limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Plan" any employee benefit plan which is subject to
ERISA and which covers the employees or former employees of any
Person constituting the Borrower or an ERISA Affiliate, under
which any Person constituting the Borrower or an ERISA Affiliate
has any obligation or liability or under which such Person or an
ERISA Affiliate has made contributions within the preceding five
years. References herein to a Plan shall include any
Multiemployer Plan.
"PNC" PNC Bank, National Association.
"Pricing Schedule" means the Schedule identified as
such, attached hereto and made a part hereof.
"Prime Rate" means the rate of interest per annum
publicly announced from time to time by PNC as its prime rate in
effect at its principal office in Moorestown, New Jersey. The
Prime Rate is not intended to be the lowest rate of interest
charged by PNC in connection with extensions of credit to
debtors.
"Prime Rate Loans" Loans whose interest rate is based
on the Prime Rate.
"Private Placement" means the issuance of an aggregate
of $25,000,000 in original face amount of Series A Senior Notes
due November 15, 2009, Series B Senior Notes due November 15,
2007 and Series C Senior Notes due November 15, 2003 pursuant to
the Note Purchase Agreements.
"Purchasing Lender" as defined in Section 9.1.
"Regulation U" Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.
"Reimbursement Obligation" as defined in Section
2.15(h) hereof.
"Reportable Event" any event set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Required Lenders" each of PNC and First Union National
Bank, so long as they are the only Lenders, and at any time when
such institutions are not the sole Lenders, the Lenders holding
66 2/3% of the aggregate Commitments, if no Loans are
outstanding, and, otherwise, Lenders holding 66 2/3% of
outstanding Loans and Letter of Credit Outstandings.
"Requirement of Law" as to any Person, the 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.
"Responsible Officer" in such Person's capacity as
such, the chief executive officer of any Person constituting the
Borrower and the president of such Person (if not the chief
executive officer) and, with respect to financial matters, the
chief financial officer or corporate controller of such Person.
"Revolving Credit Loans" as defined in Section 2.1(a).
"Revolving Credit Note" as defined in Section 2.2.
"Revolving Loan Commitment" as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the
Borrower hereunder.
"Security Documents" the collective reference to any
guarantee(s) delivered pursuant to Section 6.6(f).
"Senior Notes" the collective reference to the
$15,000,000 7.06% Series A Senior Notes due November 15, 2009,
the $5,000,000 6.95% Series B Senior Notes due November 15, 2007
and $5,000,000 6.70% Series C Senior Notes due November 15, 2003
as the same may be amended, modified or supplemented from time to
time.
"Subordinated Debt" any unsecured Indebtedness of any
Person constituting the Borrower (a) no part of the principal of
which is stated to be payable or is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to October 31, 2002, and the
payment of the principal of and interest on which and other
obligations of the Borrower in respect thereof are subordinated
to the prior payment in full of the principal of and interest
(including post-petition interest) on the Notes and all other
Obligations hereunder on terms and conditions approved in writing
by the Required Lenders and (b) otherwise containing terms,
covenants and conditions satisfactory in form and substance to
the Required Lenders, as evidenced by their prior written
approval thereof.
"Subsidiary" as to any Person (a "Parent") (a) any
other Person in which the Parent owns or controls, directly or
indirectly, more than 50% of the Capital Stock of such Person,
(b) any other Person of which such percentage of Capital Stock
shall at the time be owned or controlled by the Parent or one or
more of its Subsidiaries as defined in clause (a) or by one or
more such Subsidiaries, or (c) any other Person of which Capital
Stock having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of
directors or other managers of such Person are at the time owned,
or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such
Parent.
"Subsidiary Borrower" Guest Packaging, Inc.,
Breckenridge-Remy Co. or Guest Distribution Services, Inc., as
the case may be, and, collectively, the "Subsidiary Borrowers."
"Taxes" for any period, the amount of taxes on income
which would, in conformity with GAAP, be set forth on the income
statements of GSI and its consolidated Subsidiaries net of the
amount of any net operating losses used in determining the amount
of such Taxes.
"Tranche" the collective reference to Eurodollar Loans
whose Interest Periods begin on the same date and end on the same
later date (whether or not such Loans originally were made on the
same day).
"Type" as to any Loan, its nature as a Prime Rate Loan
or a Eurodollar Loan.
"Working Day" any Business Day on which dealings in
foreign currencies and exchange between banks may be carried on
in London, England.
Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when
used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any
certificate or other document made or delivered pursuant hereto,
accounting terms relating to GSI and its Subsidiaries not defined
in Section 1.1 and accounting terms partly defined in Section
1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms
of such terms.
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS
Section 2.1 Revolving Credit Commitments.
(a) Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make revolving credit
loans ("Revolving Credit Loans") to the Borrower from time to
time from the date hereof to but excluding the Maturity Date in
an aggregate principal amount at any one time outstanding for the
Borrower not to exceed the then Available Commitment of such
Lender. The Borrower may borrow and prepay the Revolving Credit
Loans in whole or in part, and reborrow Revolving Credit Loans,
all in accordance with the terms and conditions hereof. All
Revolving Credit Loans shall be paid in full on the Maturity
Date.
(b) The Revolving Credit Loans may from time to
time be Eurodollar Loans, Prime Rate Loans or a combination
thereof, as determined by the Borrower and notified to the Agent
in accordance with Section 2.3 and Section 2.10, provided that no
Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Maturity Date.
Section 2.2 Revolving Credit Note. The Revolving
Credit Loans made by each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of
Exhibit A, with appropriate insertions as to date and principal
amount (each a "Revolving Credit Note"), payable to the order of
such Lender and in a principal amount equal to such Lender's
Revolving Loan Commitment. Each Lender is hereby authorized to
record the date, Type and amount of each Revolving Credit Loan,
each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or
prepayment of principal thereof and, in the case of Eurodollar
Loans, the length of each Interest Period with respect thereto,
on the schedule annexed to and constituting a part of each
Revolving Credit Note, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so
recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Maturity Date and
(z) provide for the payment of interest in accordance with
Section 2.12.
Section 2.3 Procedure for Revolving Credit Borrowings.
(a) The Borrower may borrow under the Commitment
for Revolving Credit Loans prior to the Maturity Date on any
Business Day. The Borrower shall give the Agent irrevocable
notice (which notice must be received by the Agent prior to 10:00
a.m., New Jersey time, three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving
Credit Loans are to be initially Eurodollar Loans and one
Business Day prior to the requested Borrowing Date in the case of
the initial Prime Rate Loan and otherwise by 12:00 noon on the
date of the requested Prime Rate Loan), specifying (1) the amount
to be borrowed, (2) the requested Borrowing Date, (3) whether the
borrowing is to be of Eurodollar Loans or Prime Rate Loans or a
combination thereof and (4) if the borrowing is to be entirely or
partly of Eurodollar Loans, the amount of such Loans and the
length of the initial Interest Period therefor. Each Revolving
Credit Loan shall be in an amount equal to (x) in the case of
Prime Rate Loans, $50,000 or a whole multiple thereof (or, if
less, the then Available Commitment) and (y) in the case of
Eurodollar Loans $500,000 or a whole multiple of $10,000 in
excess thereof. The Agent shall promptly notify the Lenders of
its receipt of any such irrevocable notice of borrowing from the
Borrower.
(b) On or before 12:00 noon New Jersey time on the
Business Day specified in the Borrower's notice of borrowing,
each Lender shall provide the Agent with funds at the Payment
Office in an amount equal to such Lender's Percentage of the
requested borrowing. The proceeds of each borrowing shall be
made available by the Agent to the Borrower pursuant to Section
2.14(c). No Lender's obligation to make any Loan shall be
affected by any other Lender's failure to make any Loan. Neither
the Agent nor any Lender shall have any liability for the failure
of any Lender (other than itself) to fund a Loan.
(c) With respect to any Loan, unless the Agent
shall have been notified in writing by any Lender prior to the
date of making such Loan that such Lender does not intend to make
available to the Agent such Lender's portion of the Loan to be
made on such date, the Agent may (but shall not be obligated to)
assume that such Lender has made such amount available to the
Agent on that date and, in reliance on such assumption, the Agent
may make available to the Borrower a corresponding amount. If
such amount is not made available by such Lender to the Agent on
the date of making such Loan, such Lender shall be obligated to
pay such amount to the Agent and shall pay to the Agent on demand
interest on such amount at the Federal Funds Rate for the number
of days from and including the date of making such Loan to the
date on which such Lender's portion of the Loan becomes
immediately available to the Agent. The Agent shall also be
entitled to recover such amount, with interest thereon at the
rate per annum then applicable to the Loans comprising such
borrowing, upon demand, from the Borrower. A statement of the
Agent submitted to any Lender with respect to any amounts owing
under this Section 2.3(c) shall be conclusive and binding in the
absence of demonstrable error. Nothing in this Section 2.3(c)
shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder.
Section 2.4 Commitment Fees. The Borrower agrees to
pay to the Agent for the benefit of and disbursement to the
Lenders a commitment fee in respect of the Commitments to make
Revolving Credit Loans, for the period from and including the
date hereof to the Maturity Date, computed at the rate of .125%
per annum, calculated on the basis of a 360-day year for the
actual days elapsed, on the average daily amount of the aggregate
Available Commitments during the period for which payment is
made, payable quarterly in arrears on the last day of each March,
June, September and December and on the Maturity Date or such
earlier date as the Commitments shall terminate as provided
herein, commencing on the first of such dates to occur after the
date hereof.
Section 2.5 Termination or Reduction of Commitments.
(a) GSI shall have the right, upon not less than
five Business Days' written notice to the Agent, to terminate the
Revolving Loan Commitments or, from time to time, to reduce the
amount of such Commitments, provided that at no time may the
Revolving Loan Commitments be reduced by the Borrower to an
amount less than the sum of the outstanding principal amount of
Revolving Credit Loans and Letter of Credit Outstandings. Any
such reduction shall be in an amount equal to $500,000 or a whole
multiple thereof and shall reduce permanently the Revolving Loan
Commitments then in effect. Any such reduction in the Revolving
Loan Commitment shall be binding on the Subsidiary Borrowers
whether or not they have notice thereof.
(b) Each reduction in the Revolving Loan
Commitments, whether voluntary or automatic, shall be permanent
and irrevocable. All reductions in the Revolving Loan
Commitments shall be made pro rata to the Revolving Loan
Commitments of the Lenders. The Agent shall promptly notify each
Lender of the amount of any reduction of its Revolving Loan
Commitment.
Section 2.6 Prepayments.
(a) From time to time the Borrower may prepay the
Loans, in whole or in part, subject to the provisions of Section
2.14 but otherwise without premium or penalty, upon at least two
Business Days' irrevocable notice to the Agent (except in the
case of prepayments required pursuant to Section 2.6(c) for which
no notice is required), specifying the date and amount of
prepayment. Prepayments of Eurodollar Loans shall be subject to
the provisions of Section 2.14. Partial prepayments shall be in
an aggregate principal amount of $100,000 or a whole multiple of
$10,000 in excess thereof in the case of Prime Rate Loans and
$500,000 or a whole multiple thereof in the case of Eurodollar
Loans or if such prepayment would reduce the principal amount of
such Eurodollar Tranche below $500,000, in an aggregate principal
amount equal to the outstanding principal amount of such Tranche.
All prepayments shall be allocated to the Lenders based on their
respective Percentages.
(b) If any notice of prepayment is given, the
amount specified in such notice shall be due and payable on the
date specified therein. Prepayments of the Loans shall be
accompanied by payment of accrued interest to the payment date on
the principal amount prepaid.
(c) In the event (i) the aggregate outstanding
principal amount of the Revolving Credit Loans and Reimbursement
Obligations and (ii) Letter of Credit Outstandings (excluding
Reimbursement Obligations) exceeds the Revolving Loan Commitments
at the end of any Calculation Period, the Borrower shall, on or
before 3:00 p.m. on the first Business Day after such excess is
established by the Agent in writing, prepay the Revolving Credit
Loans and Reimbursement Obligations in an amount equal to such
excess (together with interest on the amount prepaid to the date
of prepayment). If such excess is greater than the outstanding
principal amount of Revolving Credit Loans and Reimbursement
Obligations, the Borrower shall, in addition, post cash
collateral with the Agent to secure repayment of the Letter of
Credit Outstandings in an amount equal to the balance of such
excess. Any such prepayments shall be made on or before 3:00
p.m. on the first Business Day after any excess is established
pursuant to this Section 2.6(c) and shall be subject to the
provisions of Section 2.14.
(d) The Agent shall disburse all prepayments of
the Loans to the Lenders on a pro rata basis.
Section 2.7 Conversion and Continuation Options. The
Borrower shall have the right at any time upon prior irrevocable
notice to the Agent (i) not later than 12:00 noon, New Jersey
time, on any Business Day, to convert any Eurodollar Loan to a
Prime Rate Loan, (ii) not later than 10:00 a.m., New Jersey time,
three Business Days prior to conversion or continuation, to
convert any Prime Rate Loan into a Eurodollar Loan or to continue
any Eurodollar Loan as a Eurodollar Loan for any additional
Interest Period, and (iii) not later than 10:00 a.m., New Jersey
time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Loan to another
permissible Interest Period, subject in each case to the
following:
(a) a Eurodollar Loan may not be converted at a
time other than the last day of the Interest Period applicable
thereto;
(b) any portion of a Loan maturing or required to
be repaid in less than one month may not be converted into or
continued as a Eurodollar Loan;
(c) No Eurodollar Loan may be continued as such
and no Prime Rate Loan may be converted to a Eurodollar Loan when
any Event of Default has occurred and is continuing;
(d) any portion of a Eurodollar Loan that cannot
be converted into or continued as a Eurodollar Loan by reason of
Section 2.7(b) or 2.7(c) or otherwise automatically shall be
converted at the end of the Interest Period in effect for such
Loan to a Prime Rate Loan;
(e) on the last day of any Interest Period for
Eurodollar Loans, if the Borrower has failed to give notice of
conversion or continuation as described in this subsection or if
such conversion or continuation is not permitted pursuant to
Section 2.7(d) or otherwise, such Loans shall be converted to
Prime Rate Loans on the last day of such then expiring Interest
Period;
(f) accrued interest on a Loan (or portion
thereof) being converted shall be paid by the Borrower at the
time of conversion.
Section 2.8 Minimum Amounts of Tranches. All
borrowings, conversions and continuations of Loans hereunder and
all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections that, after giving
effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $500,000 or
a whole multiple of $10,000 in excess thereof.
Section 2.9 Interest Rates and Payment Dates.
(a) Subject to the provisions of Section 2.9(c),
each Prime Rate Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over
a year of 360 days and twelve 30-day months) equal to the Prime
Rate less the Applicable Margin.
(b) Subject to the provisions of Section 2.9(c),
each Eurodollar Loan shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at
a rate per annum equal to the Eurodollar Rate for the Interest
Period in effect for such Eurodollar Loan plus the Applicable
Margin in effect for such Interest Period.
(c) If all or a portion of (A) the principal
amount of any Loan, (B) any interest payable thereon or (C) any
commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall, upon notice to the
Borrower from the Agent, bear interest at a rate per annum which
is
(1) in the case of overdue principal, the rate
that otherwise would be applicable thereto pursuant
to the foregoing provisions of this subsection plus
3% per annum, or
(2) in the case of overdue interest or fees or
other amounts, the Prime Rate plus 3%,
in each case from the date of such nonpayment until such amount
is paid in full (as well as after, to the extent permitted by
law, as before judgment). In no event shall any interest to be
paid pursuant to this Agreement exceed the maximum rate permitted
by law.
(d) Interest shall be payable in arrears on each
Interest Payment Date, provided that interest accruing on overdue
amounts pursuant to Section 2.9(c) shall be payable on demand.
(e) As soon as practicable the Agent shall notify
the Borrower and the Lenders of (A) each determination of a
Eurodollar Rate and Applicable Margin and (B) the effective date
and the amount of each change in the interest rate on a Loan.
Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding
on the Borrower and the Lenders in the absence of clearly
demonstrable error. At the request of the Borrower, the Agent
shall deliver to the Borrower a statement showing the quotations
used by the Agent in determining any interest rate pursuant to
Sections 2.9(a), (b) or (c).
Section 2.10 Inability to Determine Interest Rate. If
prior to the first day of any Interest Period:
(a) the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower)
that adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, or
(b) a Lender notifies the Agent and Borrower that
the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost
to such Lender of making or maintaining the Eurodollar Loans
during such Interest Period, or
(c) The Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower)
that Dollar deposits in the principal amounts of the Eurodollars
Loans to which such Interest Period is to be applicable are not
generally available in the London Interbank Market,
the Agent shall give notice thereof to the Borrower by fax or
telephone as soon as practicable thereafter. If such notice is
given (A) any Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Prime Rate Loans,
and (B) any Loans that were to have been converted to or
continued as Eurodollar Loans on the first day of such Interest
Period shall be converted to or continued as Prime Rate Loans.
Until such notice has been withdrawn by the Agent, no Loans shall
be made as or converted to or continued as Eurodollar Loans.
Section 2.11 Payments/Funding.
(a) All payments (including prepayments) made by
the Borrower hereunder and under the Notes, whether on account of
principal, interest, fees, Reimbursement Obligations or
otherwise, shall be made without set off or counterclaim and
shall be made prior to 12:00 noon, New Jersey time, on the due
date thereof to the Agent, for the account of the Lenders in
Dollars and in immediately available funds to the Agent's account
at such address as the Agent shall give notice to the Borrower
and the Lenders (the "Payment Office"). Except for payments
received by the Agent for the account of the Agent in its
capacity as such, or for the account of a specific Lender in
accordance with the provisions of this Agreement, the Agent
shall, within one Business Day of funds collection, distribute
like funds relating to the payment of principal, interest or fees
pro rata to the Lenders (based on their Percentages) to which
such payment is due and payable for their accounts and at the
addresses as each such Lender shall specify in its notice to the
Agent made in accordance with Section 10.2 of this Agreement. If
the Agent fails to so distribute funds within the time set forth
in the preceding sentence, the Agent shall pay interest on the
amount to be distributed at a rate equal to the Federal Funds
Rate from the date such funds were to be distributed to the date
of distribution.
Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in
full, the Agent may (but shall not be obligated to) assume that
the Borrower has made such payment in full to the Agent on such
date, and the Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal
to the amount then due such Lender. If and to the extent the
Borrower shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand
the amount distributed to such Lender together with interest
thereon, at the rate equal to the Federal Funds Rate, for each
day from the date such amount is distributed to such Lender until
the date such Lender repays such amount to the Agent.
(b) If any principal payment hereunder (other than
payments on Eurodollar Loans) becomes due and payable on a day
other than a Business Day, such payment date shall be extended to
the next succeeding Business Day, and interest thereon shall be
payable at the then applicable rate during such extension. If any
payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day (and interest shall accrue
during such extension of time) unless the result of such
extension would be to extend such payment into another calendar
month, in which event such payment shall be made on the
immediately preceding Business Day.
(c) If on any date a payment is due hereunder, the
Borrower shall pay less than the amount stated to be due or on
any date the Agent shall receive any payment under any Security
Document or pursuant to any proceeding to enforce the Obligations
of any Person constituting the Borrower, such proceeds shall be
distributed to the Lenders pro rata based on their respective
Percentages and shall be applied first to costs of collection
incurred by each Lender, second to accrued and unpaid interest,
third to principal and then to the payment of any other amounts
due hereunder or the other Loan Documents.
(d) The Agent shall fund each Loan by depositing
the amount thereof in the joint account (the "Account") of GSI
and the Subsidiary Borrowers (account no. 8002751648) at the
Agent's office at Two Tower Center Boulevard, East Brunswick, New
Jersey 08817; provided that the proceeds of each Loan shall first
be applied to principal prepayments or payments due on the date
of such Loan (without derogating from the Borrower's obligation
to repay) and proceeds of any conversion or continuation of a
Loan to or as a particular Type shall be applied by the Agent
solely to effect such conversion or continuation. Each Lender is
hereby authorized to debit the accounts of each Person
constituting the Borrower for all payments due hereunder;
provided the foregoing shall not derogate from the Borrower's
obligation to pay or restrict any Lender's recourse to any
particular fund or source of monies; and provided further, each
Lender agrees not to debit such accounts for amounts payable
pursuant to Sections 2.13, 2.14 or 10.5 unless an Event of
Default has occurred and is continuing. The Borrower agrees to
maintain its primary depository accounts with PNC's office at Two
Tower Center Boulevard, East Brunswick, New Jersey 08817.
Section 2.12 Change in Legality. Notwithstanding any
other provision herein, if any change in any Requirement of Law
or in the interpretation or application thereof by a Governmental
Authority shall make it unlawful for a Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the
Commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert Loans to Eurodollar
Loans forthwith shall be canceled and (b) such Loans then
outstanding as Eurodollar Loans, if any, automatically shall be
converted to Prime Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the
last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 2.14.
Section 2.13 Increased Costs.
(a) If the adoption of, or any change in, any
Requirement of Law or in the interpretation or application
thereof by a Governmental Authority or compliance by any Lender
with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(1) shall subject any Lender to any tax of any
kind whatsoever with respect to this Agreement, any
Note or any Eurodollar Loan made by it, or change
the basis of taxation of payments to such Lender in
respect thereof (except for the imposition of and
changes in the rate of tax on the overall net
income of the Lender);
(2) shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or
similar requirement against assets held by,
deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any
office of a Lender which is not otherwise included
in the determination of the Eurodollar Rate
hereunder, including, without limitation, the
imposition of any reserves with respect to
Eurocurrency Liabilities under Regulation D of the
Board; or
(3) shall impose on a Lender any other
condition;
and the result of any of the foregoing is to increase the cost to
such Lender, by an amount which such Lender deems to be material,
of making, converting into, continuing or maintaining Eurodollar
Loans hereunder or to reduce any amount receivable hereunder in
respect thereof then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or
reduced amount receivable. If a Lender becomes entitled to claim
any additional amounts pursuant to this subsection, it shall
promptly notify the Agent and the Borrower of the event by reason
of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted
by a Lender to the Borrower and Agent shall be conclusive in the
absence of clearly demonstrable error. This covenant shall
survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
(b) In the event that a Lender shall have
determined that any change in any Requirement of Law regarding
capital adequacy or in the interpretation or application thereof
or compliance by such Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender's or
such corporation's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such
corporation could have achieved but for such change or compliance
(taking into consideration Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the
Agent) of a written request therefore, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
(c) In the event that by reason of any change in
any Requirement of Law (including, without limitation, the lapse
or termination of any treaty) or in the interpretation thereof,
or the adoption of any new law, regulation or requirement by any
Governmental Authority, or the imposition of any requirement of
any central bank whether or not having the force of law, (i) the
Agent or any Lender shall, with respect to this Agreement, the
Loans, the Letters of Credit (or risk participations therein),
the Reimbursement Obligations (or risk participations therein),
the Notes or its obligation to make Loans or issue and/or own
risk participations in Letters of Credit under this Agreement, be
subjected to any withholding or other tax, levy, impost, charge,
fee, duty or deduction of any kind whatsoever (other than
franchise taxes imposed by the jurisdiction in which the Agent or
such Lender is domiciled and other than any tax generally imposed
or based upon the net income or branch profits of the Agent or
such Lender) (collectively, "Taxes") or (ii) any change shall
occur in the taxation of the Agent or such Lender with respect to
any Loan, any Reimbursement Obligation (or any risk participation
therein), the interest payable thereon or any fees payable
hereunder or referred to herein (other than franchise taxes
imposed by the jurisdiction in which the Agent or such Lender is
domiciled and other than any change which affects, and to the
extent that it affects, the taxation of the net income or branch
profits of the Agent or such Lender), and if any such measures or
any other similar measure shall result in an increase in the cost
to the Agent or such Lender of making or maintaining any Loan or
any Letter of Credit or a reduction in the amount of principal,
interest or fees receivable by the Agent or such Lender in
respect thereof, the Agent or such Lender promptly after learning
of the imposition of such cost or reduction in any amount shall
notify the Borrower and the Agent (if applicable) stating the
reasons therefor. The Borrower shall thereafter pay to the Agent
or such Lender, upon demand from time to time, as additional
consideration hereunder, such additional amounts as will fully
compensate the Agent or such Lender for such increased costs or
reduced amounts and shall promptly provide the Agent or such
Lender, as the case may be, with official tax receipts or other
evidence of the payment of any taxes paid by the Borrower. A
certificate as to the increased costs or reduced amounts setting
forth the calculations therefor, shall be submitted promptly by
the Agent or such Lender to the Borrower and the Agent (if
applicable) and, in the absence of demonstrable error, shall be
conclusive and binding as to the amount thereof. If the Agent or
Lender receives any additional amounts from the Borrower pursuant
to this subsection (c) if requested by Borrower, the Agent or
such Lender shall (at the Borrower's expense) use its best
efforts to obtain a refund, reduction, deduction or credit for
any Taxes with respect to the additional amounts paid under this
subsection (c). If the Agent or such Lender actually receives or
enjoys the benefit of any such refund, reduction, deduction or
credit for any such Taxes, the Agent or such Lender shall
reimburse the Borrower if and to the extent, but only the extent,
that the Agent or such Lender determines that it has actually
received (i) a refund of taxes or other amounts (together with
any interest actually received thereon from the respective
Governmental Authority) which refund is attributable to the Taxes
with respect to which such additional amounts were paid; or (ii)
an effective net reduction (through a reduction, deduction,
credit or otherwise) in any taxes or other amounts otherwise
payable by the Agent or such Lender (including any taxes imposed
on or measured by the net income of the Agent or such Lender),
which reduction is attributable to the Taxes with respect to such
additional amounts were paid. If, at any time after the Agent or
such Lender makes a payment to the Borrower pursuant to the
preceding sentence, the Agent or such Lender determines that it
was not entitled to the full amount of any refund (together with
the interest thereon) reimbursed to the Borrower as aforesaid or
that its taxes are not reduced by a credit or deduction for the
full amount of Taxes reimbursed to the Borrower as aforesaid, the
Borrower upon the demand of the Agent or such Lender will
promptly pay to the Agent or such Lender the amounts so refunded
to which the Agent or such Lender was not so entitled, or the
amount by which the taxes of the Agent or such Lender were not so
reduced, as the case may be.
Section 2.14 Indemnity.
(a) The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which
such Lender may sustain or incur as a consequence of
(1) default by the Borrower in payment when
due of any portion of the principal amount of or
interest on any Eurodollar Loan,
(2) default by Borrower in making a borrowing
of, conversion into or continuation of Eurodollar
Loans after Borrower has given a notice requesting
the same in accordance with the provisions of this
Agreement,
(3) default by Borrower in making any
prepayment after Borrower has given a notice
thereof in accordance with the provisions of this
Agreement, or
(4) the making of a payment (other than
scheduled repayments) or a prepayment of Eurodollar
Loans on a day which is not the last day of an
Interest Period with respect thereto,
including, without limitation, in each case, any such loss or
expense arising from the reemployment of funds obtained by such
Lender or from fees payable to terminate the deposits from which
such funds were obtained. If the Borrower prepays all or any
part of any advance which is accruing interest at a fixed rate on
other than the last day of the applicable interest period, the
Borrower shall also pay to the Lender, on demand therefor, the
Cost of Prepayment. "Cost of Prepayment" means an amount equal
to the present value, if positive, of the product of (a) the
difference between (i) the yield, on the beginning date of the
applicable interest period minus (ii) the yield, on the
prepayment date, of a U.S. Treasury obligation with a maturity
similar to the remaining maturity of the applicable interest
period, and (b) the principal amount to be prepaid, and (c) the
number of years, including fractional years from the prepayment
date to the end of the applicable interest period. The yield on
any U.S. Treasury obligation shall be determined by reference to
Federal Reserve Statistical Release H.15(519) "Selected Interest
Rates." For purposes of making present value calculations, the
yield to maturity of a similar maturity U.S. Treasury obligation
on the prepayment date shall be deemed the discount rate. The
Cost of Prepayment shall also apply to any payments made after
acceleration of the maturity of any Note.
(b) For the purpose of calculation of all amounts
payable to a Lender under this subsection such Lender shall be
deemed to have actually funded its relevant Eurodollar Loan
through the purchase of a deposit bearing interest at the
Eurodollar Rate in an amount equal to the amount of that
Eurodollar Loan and having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund
each of its Eurodollar Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation
of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
Section 2.15 Letters of Credit.
(a) By delivering to the Agent an Issuance Request
on a Business Day, prior to the Maturity Date and not less than
three Business Days prior to the requested date of issuance,
Borrower may request that the Issuer issue an irrevocable letter
of credit or a documentary letter of credit each in substantially
the form of Exhibits D and E, respectively, attached hereto, with
such insertions with respect to required presentation of
documentation or certifications upon a draw as may be requested
by the Borrower and approved by the Issuer, or in such other form
as may be requested by the Borrower and approved by the Issuer
and the Required Lenders (each a "Letter of Credit"), in support
of financial obligations of the Borrower incurred in the ordinary
course of business and which are described in such Issuance
Request. Upon receipt of each Issuance Request, the Agent shall
promptly notify the Lenders thereof. The stated amount of any
Letter of Credit requested to be issued pursuant to an Issuance
Request shall be denominated in Dollars.
(b) Each Letter of Credit shall by its terms: (i)
be issued in a stated amount which (A) is at least $10,000, and
(B) when added to the Letter of Credit Outstandings does not
exceed (or would not exceed) the then Letter of Credit
Availability and (C) when added to all Revolving Credit Loans and
Letter of Credit Outstandings does not exceed the amount of the
then Revolving Loan Commitment; (ii) be stated to expire on a
date (its "Stated Expiry Date") no later than the earlier of 12
months from its date of issuance or the then Maturity Date,
whichever occurs first; and (iii) on or prior to its Stated
Expiry Date (A) terminate immediately upon notice to the Issuer
from the beneficiary thereunder that all obligations covered
thereby have been terminated, paid, or otherwise satisfied in
full, or (B) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Issuer that the
obligations covered thereby have been paid or otherwise satisfied
in part.
(c) Subject to the terms and conditions of this
Agreement, the Issuer shall issue Letters of Credit in accordance
with the Issuance Requests made therefor. The Issuer will make
available the original of each Letter of Credit which it issues
in accordance with the Issuance Request therefor to the
beneficiary thereof.
(d) The Borrower agrees to pay to the Agent for
the account of the Issuer, with respect to each Letter of Credit,
the following fees: (i) an issuance fee of $75 for manual
Letters of Credit and $45 for automated Letters of Credit; (ii)
$45 for each amendment to a Letter of Credit; (iii) an amount
equal to 1/4 of 1% ($50 minimum) of the amount of each draw under a
Letter of Credit; (iv) a processing fee of $30 and (v) $75 in the
case of each draw which the Borrower authorizes the Issuer to
honor notwithstanding the failure of the beneficiary of a Letter
of Credit to present any or all documents required by such Letter
of Credit (it being agreed that the Borrower shall be required to
reimburse the Issuer for any draws so authorized). It is
understood that the foregoing charges are currently the Issuer's
standard charges relating to Letters of Credit of the type
contemplated hereby and that such charges may be changed by the
Issuer from time to time. Any changes in such fees and charges
shall be binding on the Borrower on the date each change therein
is established by the Issuer.
(e) To the extent of its Percentage, each Lender
agrees to and shall be deemed to have irrevocably purchased a
participation in each Letter of Credit on the date of issuance
thereof. Each Lender shall make available to the Issuer,
regardless of whether any Default or Event of Default shall have
occurred and is continuing, an amount equal to its respective
Percentage of each drawing on each Letter of Credit in same day
or immediately available funds not later than 4:00 p.m. New
Jersey time on each Disbursement Date (as hereinafter defined)
for each such drawing provided such Lender has received notice
pursuant to Section 2.15(g) by 11:00 a.m. New Jersey time; and by
10:00 a.m. on the next Business Day if such notice is not
received by 11:00 a.m. In the event that any Lender fails to
make available to the Issuer the amount of such Lender's
Percentage of any drawing on a Letter of Credit as provided
herein, the Issuer shall be entitled to recover such amount on
demand from such Lender together with interest at the daily
average Federal Funds Rate for the first three Business Days
after the Disbursement Date (together with such other
compensatory amounts as may be required to be paid by such Lender
to the Issuer pursuant to the Rules for Interbank Compensation of
the Council on International Lending or of the New York Clearing
House Compensation Committee, as the case may be, as in effect
from time to time) and thereafter at the Prime Rate.
(f) The Agent shall distribute to each Lender that
has paid all amounts payable by it under this Section 2.15 with
respect to any Letter of Credit issued by Issuer such Lender's
Percentage of all payments received by the Agent from the
Borrower in reimbursement of drawings honored by Issuer under
such Letter of Credit promptly after such payments are received.
(g) The Issuer will notify the Borrower and the
Agent promptly of the presentment for payment of any Letter of
Credit (on the date of presentment, if possible, and otherwise on
the next Business Day, it being agreed that such notice may be
made by phone), together with notice of the date (the
"Disbursement Date") such payment shall be made and the Agent
will promptly notify the Lenders of such matters. Subject to the
terms and provisions of such Letter of Credit, the Issuer shall
make such payment to the beneficiary (or its designee) of such
Letter of Credit. Prior to 3:00 p.m. New Jersey time on the
Disbursement Date, the Borrower shall (by payment to the Payment
Office for distribution by the Agent) reimburse the Issuer for
all amounts which have been disbursed under such Letter of
Credit. To the extent the Issuer and the Lenders are not
reimbursed in full in accordance with this Section 2.18(g), the
Reimbursement Obligation shall accrue interest at a rate per
annum equal to the Prime Rate, payable on demand.
(h) The Borrower's obligation (a "Reimbursement
Obligation") under Section 2.15(g) to reimburse the Lenders with
respect to each drawing under each Letter of Credit (including
interest thereon), and each Lender's obligation to fund each
drawing, shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or
defense to payment which any Person constituting the Borrower or
any Lender may have or have had against any Lender or any
beneficiary of a Letter of Credit, including, without limitation,
any defense based upon the occurrence of any Default or Event of
Default, any draft, demand or certificate or other document
presented under a Letter of Credit proving to be forged,
fraudulent, invalid or insufficient, or any failure to apply or
misapplication by the beneficiary of the proceeds of any
disbursement, or the legality, validity, form, regularity, or
enforceability of such Letter of Credit.
(i) The Borrower assumes all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary
thereof. Except to the extent of its own gross negligence or
willful misconduct, the Issuer shall not be responsible for:
(1) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any Letter of
Credit or any document submitted by any party in
connection with the application for and issuance of
a Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;
(2) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any instrument
transferring or assigning or purporting to transfer
or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof in whole or
in part;
(3) failure of the beneficiary to comply fully
with conditions required in order to demand payment
under a Letter of Credit;
(4) errors, omissions, interruptions or delays
in transmission or delivery of any information or
messages, by mail, cable, telegraph, telex or
otherwise;
(5) any loss or delay in the transmission or
otherwise of any document or draft required in
order to make a disbursement under a Letter of
Credit or of the proceeds thereof;
(6) errors in interpretation of technical
terms;
(7) any misapplication by a beneficiary of the
proceeds of any disbursement under any Letter of
Credit; and
(8) any consequences arising from causes
beyond the control of the Issuer including, without
limitation, acts of any Governmental Authority.
None of the foregoing shall affect, impair or
prevent the vesting of any of the rights or powers granted to the
Issuer hereunder.
(j) In addition to amounts payable as elsewhere
provided in this Section 2.15, the Borrower hereby agrees to
protect, indemnify, pay and save the Issuer harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) which the Issuer may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of the
Letters of Credit, other than as a result of the gross negligence
or wilful misconduct of the Issuer as determined by a court of
proper jurisdiction, or (ii) the failure of the Issuer to honor a
drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future
de jure or de facto Governmental Authority.
Section 2.16 Purpose of Loans. The proceeds of the
Revolving Credit Loans shall be used first to repay all amounts
outstanding under the Original Agreement. After repayment of all
such amounts, proceeds of Revolving Credit Loans may be used to
finance working capital needs of the Borrower (including, without
limitation, payment of Reimbursement Obligations) and for general
corporate purposes.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents
and warrants to the Agent and the Lenders that as of the
Effective Date:
Section 3.1 Financial Condition.
(a) The consolidated balance sheets of GSI and its
consolidated Subsidiaries as at June 30, 1997 and the related
consolidated statements of income and of cash flows for the
fiscal period ended on each such date, copies of which have
heretofore been furnished to Lender, and present fairly in all
material respects the consolidated financial condition of GSI and
its consolidated Subsidiaries as at such dates, and the
consolidated results of their operations and their consolidated
cash flows for the fiscal years then ended.
(b) All such financial statements, including the
related schedules, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as
approved by such accountants and as disclosed therein).
(c) Neither GSI nor any of its consolidated
Subsidiaries had, at the date of the most recent balance sheet
delivered to the Agent pursuant to Section 5.1 hereof, any
material Contingent Obligation, material contingent liability or
material liability for taxes, or any material long-term lease or
material unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or
exchange transaction or other financial derivative, except as
reflected in the foregoing statements or in the notes thereto or
would not reasonably be expected to have a Material Adverse
Effect.
(d) During the period from June 30, 1997, to and
including the Effective Date hereof there has been no sale,
transfer or other disposition by GSI or any of its consolidated
Subsidiaries of any material part of its business or property
(other than in the ordinary course of business) and no purchase
or other acquisition of any business or property (including any
Capital Stock of any other Person, in any case, other than in the
ordinary course of business) material in relation to the
consolidated financial condition of the Borrower and its
consolidated Subsidiaries at June 30, 1997.
Section 3.2 No Material Adverse Change. Since June
30, 1997, there has been no development or event which has had or
could reasonably be expected to have a Material Adverse Effect.
Section 3.3 Corporate Existence; Compliance with Law.
Each of GSI and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its organization, (b) has the corporate power and authority,
and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property
or the conduct of its business requires such qualification except
where the failure to so qualify or be in good standing therewith
would not have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law except where the failure to comply
therewith would not, in the aggregate, have a Material Adverse
Effect.
Section 3.4 Corporate Power; Authorization;
Enforceable Obligations.
(a) Each Person constituting the Borrower has the
corporate power and authority, and the legal right, to make,
deliver and perform this Agreement, the Notes and each other Loan
Document to which it is a party and to borrow hereunder and has
taken all necessary corporate action to authorize the borrowings
on the terms and conditions of this Agreement, the Notes and each
other Loan Document to which it is a party and to authorize the
execution, delivery and performance of this Agreement, the Notes
and each other Loan Document to which it is a party.
(b) Except for consents, authorizations,
approvals, notices and filings described on Schedule II, all of
which have been obtained, made or waived, no consent or
authorization of, approval by, notice to, filing with or other
act by or in respect of, any Governmental Authority or any other
Person is required in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or
enforceability of this Agreement or the Notes or any other Loan
Document.
(c) This Agreement has been, and each Note and
each other Loan Document to which it is a party will be, duly
executed and delivered on behalf of each Person constituting the
Borrower.
(d) This Agreement constitutes, and each Note and
each other Loan Document when executed and delivered will
constitute, a legal, valid and binding obligation of each Person
constituting the Borrower enforceable against each such Person in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at
law).
Section 3.5 No Legal Bar. The execution, delivery and
performance of this Agreement and the Notes, the borrowings
hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or Contractual Obligation of any Person
constituting the Borrower or of any of their respective
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
Section 3.6 No Material Litigation. Except as set
forth on Schedule III, no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the any Person constituting the Borrower,
threatened by or against any Person constituting the Borrower or
any of their respective Subsidiaries or against any of its or
their respective properties or revenues (a) with respect to this
Agreement or the Notes or any of the transactions contemplated
hereby, or (b) which if adversely determined would have a
Material Adverse Effect.
Section 3.7 No Default. No Person constituting the
Borrower nor any of their respective Subsidiaries is in default
under or with respect to any of their respective Contractual
Obligations in any respect which would reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default
has occurred and is continuing.
Section 3.8 Ownership of Property; Liens. Each Person
constituting the Borrower and their respective Subsidiaries has
good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to,
or a valid leasehold interest in, all its other property, and
none of such property is subject to any Lien except as permitted
by Section 6.2.
Section 3.9 Intellectual Property. Each Person
constituting the Borrower and each of their respective
Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents, technology, know-how and
processes necessary for the conduct of its business as currently
conducted (collectively, the "Intellectual Property") except
where the failure to own or license any such Intellectual
Property would not have a Material Adverse Effect. Except as set
forth on Schedule IV, no claim has been asserted in writing and
is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness
of any such Intellectual Property which would have a Material
Adverse Effect, nor does any Person constituting the Borrower
know of any valid basis for any such claim which, if asserted,
would have a Material Adverse Effect. To the best of the
knowledge of the Borrower, the use of such Intellectual Property
by each Person constituting the Borrower and their respective
Subsidiaries does not infringe the rights of any Person.
Section 3.10 No Burdensome Restrictions. No
Requirement of Law or Contractual Obligation of any Person
constituting the Borrower or any of their respective Subsidiaries
has a Material Adverse Effect.
Section 3.11 Taxes. Each Person constituting the
Borrower and their respective Subsidiaries has filed or caused to
be filed all tax returns which, to the knowledge of such Person,
are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it
or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person constituting
the Borrower or its respective Subsidiaries, as the case may be);
no tax Lien has been filed, and, to the knowledge of such Person,
no claim is being asserted, with respect to any such tax, fee or
other charge in any case which would have a Material Adverse
Effect.
Section 3.12 Federal Regulations. No part of the
proceeds of any Loans will be used for "purchasing" or "carrying"
any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board as now and from time
to time hereafter in effect or for any purpose which violates the
provisions of any Regulations of the Board. If requested by any
Lender at any time, each Person constituting the Borrower will
furnish to such Lender a statement in conformity with the
requirements of FR Form U-1 referred to in Regulation U.
Section 3.13 Investment Company Act; Public Utility
Holding Company Act; Other Regulations. No Person constituting
the Borrower is (a) an "investment company," or a company
"controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended, or (b) a "holding
company" as defined in, or otherwise subject to regulation under,
the Public Utility Holding Company Act of 1935. No Person
constituting the Borrower is subject to regulation under any
federal or state statute or regulation which limits its ability
to incur Indebtedness.
Section 3.14 Subsidiaries. All the Subsidiaries of
GSI as of the Effective Date are listed on Schedule V to this
Agreement. None of the Capital Stock of any such Subsidiary is
subject to a Lien in favor of any Person (except Liens permitted
by Section 6.2(b) and (i)).
Section 3.15 Employee Grievances. Except as set forth
on Schedule VI hereof, as of the Effective Date no Person
constituting the Borrower nor any of their Subsidiaries is a
party to any collective bargaining agreement or, to the best
knowledge of such Person, subject to any current effort to
organize, and there are no actions or proceedings pending or, to
the best of the knowledge of such Person, threatened against it
or its Subsidiaries, by or on behalf of, or with, its employees,
other than employee grievances arising in the ordinary course of
business which are not, in the aggregate, material.
Section 3.16 ERISA.
(a) Except as set forth in Schedule VII hereof, as
of the Effective Date no Person constituting the Borrower nor any
of their Subsidiaries have any Plan (including without limitation
any Multiemployer Plan) or have made or make any payments to any
Plan.
(b) Each Person constituting the Borrower and each
Subsidiary of such Person is and has at all times been in
substantial compliance with all applicable provisions of ERISA,
except where a failure to be in such compliance would not have a
Material Adverse Effect.
(c) No Person constituting the Borrower has
engaged in a transaction in connection with which such Person or
any ERISA Affiliate could be subject to a material liability for
either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code.
(d) There has been no termination of a Plan or
trust created under any Plan that would give rise to a material
liability to the PBGC on the part of any Person constituting the
Borrower or any ERISA Affiliate. No material liability to the
PBGC has been or is expected to be incurred with respect to any
Plan by any Person constituting the Borrower or any ERISA
Affiliate. The PBGC has not instituted proceedings to terminate
any Plan. There exists no condition or set of circumstances
which presents a material risk of termination or partial
termination of any Plan by the PBGC. Each Person constituting
the Borrower and each ERISA Affiliate have paid all premiums to
the PBGC when due.
(e) Full payment has been made of all amounts
which are required under the terms of each Plan to have been paid
as contributions to such Plan as of the last day of the most
recent fiscal year of such Plan ended on or before the date of
this Agreement, and no accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or
not waived, exists with respect to any Plan. No Person
constituting the Borrower nor any ERISA Affiliate has failed to
make a required installment under Section 412(m) of the Code or
any other payment required under Section 412 of the Code on or
before the due date.
(f) The value of the benefit liabilities (as
defined in Section 4001(a)(16) of ERISA) of each Plan (based on
the actuarial assumptions contained in Title IV of ERISA) does
not exceed the fair market value of the assets of such Plan. No
Person constituting the Borrower nor any ERISA Affiliate is
required to provide security to a Plan under Section 401(a)(29)
of the Code.
(g) No Person constituting the Borrower nor any
ERISA Affiliate has made a complete or partial withdrawal from a
Multiemployer Plan. To the best knowledge of each Person
constituting the Borrower the liability to which such Person or
any ERISA Affiliate would become subject under ERISA if such
Person and all ERISA Affiliates were to withdraw completely from
all Multiemployer Plans as of the most recent valuation date,
together with any secondary liability for withdrawal liability
such Person and any ERISA Affiliate may have as of the date
hereof, would not have a Material Adverse Effect. To the best
knowledge of each Person constituting the Borrower no such
Multiemployer Plan is in reorganization (as such term is defined
in Section 4241 of ERISA) or is insolvent (as such term is
defined in Section 4245 of ERISA).
ARTICLE 4 CONDITIONS PRECEDENT
Section 4.1 Conditions to Effective Date. This
Agreement shall become effective on the date (the "Effective
Date") on which each condition listed in Section 4.2 is satisfied
and each of the following shall have occurred:
(a) The Agent shall have received counterparts of
this Agreement, executed and delivered by a duly authorized
officer of each Person constituting the Borrower and each Lender.
Each Lender shall have received a Revolving Credit Note
conforming to the requirements hereof and executed by a duly
authorized officer of each Person constituting the Borrower.
(b) The Agent shall have received a certificate of
the Secretary or an Assistant Secretary of each Person
constituting the Borrower dated as of the Effective Date and
certifying (1) that attached thereto is a true, complete and
correct copy of resolutions duly adopted by the Board of
Directors of such Person authorizing (x) the execution, delivery
and performance of this Agreement and the Notes and the other
Loan Documents and (y) the borrowings contemplated hereunder and
that such resolutions have not been amended, modified, revoked or
rescinded and (2) as to the incumbency and specimen signature of
each officer executing any Loan Documents on behalf of such
Person constituting the Borrower; and such certificate and the
resolutions attached thereto shall be in form and substance
satisfactory to the Agent.
(c) The Agent shall have received the executed
legal opinion of Haythe & Curley and Jameson Moore Peskin &
Spicer, counsel to the Persons constituting the Borrower,
substantially in the form of Exhibit F. Such legal opinion shall
cover such matters incident to the transactions contemplated by
this Agreement as the Agent and the Lenders reasonably may
require.
(d) The Borrower shall have paid to the Agent, for
distribution to the Lenders, a non-refundable facility fee of
$37,500. Such fee shall be distributed as follows: $14,062.50
to First Union National Bank and $23,437.50 to PNC Bank, National
Association.
(e) The Borrower shall have paid to the Agent, for
its account, the annual fee payable to the Agent pursuant to the
letter agreement between the Agent and the Borrower dated
December 3, 1997.
(f) The Borrower shall have paid all fees of
counsel to the Agent submitted on the date hereof. This
condition precedent does not derogate from the Borrower's
continuing obligations under Section 10.5.
(g) All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with
the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and
substance to the Lenders, and the Agent and the Lenders shall
have received such other documents and legal opinions in respect
of any aspect or consequence of the transactions contemplated
hereby or thereby as they may reasonably request.
Section 4.2 Conditions to Each Loan. The obligation
of the Lenders to make any Loan requested to be made on any date
(including, without limitation, the initial Loan) or to issue any
Letter of Credit (including, without limitation, the initial
Letter of Credit) is subject to the satisfaction of the following
conditions precedent:
(a) Each of the representations and warranties
made by each Person constituting the Borrower in or pursuant to
the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date
except for representations and warranties which speak as of
another date, in which case such representations and warranties
shall have been true in all material respects as of such date.
(b) No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to
the Loans or Letters of Credit requested to be made or issued on
such date.
(c) The Agent shall have received a Borrowing Base
Certificate for the then most recently ended Calculation Period.
(d) The Agent and the Lenders shall have received
all fees due and owing pursuant to Sections 2.4.
(e) No notice of, or any other document or
instrument creating, any federal tax Lien or Lien under Section
412 of the Code or Section 4068 of ERISA shall have been issued,
recorded or filed with respect to the assets of the Borrower or
any of its Subsidiaries and no Lender shall have informed the
Agent or the Borrower that such Lender has processed any such
Lien or has notice thereof.
Each borrowing hereunder shall constitute a
representation and warranty by the Borrower as of the date of
such Loan that the conditions contained in subsections (a)
through (e) of this Section 4.2 have been satisfied.
ARTICLE 5 AFFIRMATIVE COVENANTS
Each Person constituting the Borrower hereby agrees
that, so long as the Commitments remain in effect, any Note
remains outstanding and unpaid or any other amount is owing to
the Agent or any Lender hereunder, each Person constituting the
Borrower shall (except the Subsidiary Borrowers in the case of
delivery of financial information, reports and notices, other
than Borrowing Base Certificates):
Section 5.1 Financial Statements. Furnish to the
Agent (with sufficient copies for each Lender):
(a) as soon as available, but in any event within
105 days after the end of each fiscal year of GSI, a copy of the
consolidated balance sheet of GSI and its consolidated
Subsidiaries as at the end of such year and the related
consolidated statements of income and retained earnings and of
cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, certified by
and reported on without a "going concern" or like qualification
or exception, or qualification arising out of the scope of the
audit, by KPMG Peat Marwick & Co. or other independent certified
public accountants of nationally recognized standing reasonably
acceptable to the Required Lenders together with the
consolidating balance sheet of GSI and its consolidated
Subsidiaries as at the end of such year, setting forth in
comparative form the figures for the previous year, certified by
a Responsible Officer as being fairly stated in all material
respects when considered in relation to the consolidated
financial statements of GSI and its consolidated Subsidiaries;
and
(b) as soon as available, but in any event not
later than 50 days after the end of each of the first three
quarterly periods of each fiscal year of GSI, the unaudited
consolidated and consolidating balance sheet of GSI and its
consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and retained
earnings and of cash flows of GSI and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by
a Responsible Officer as being fairly stated in all material
respects when considered in relation to the consolidated
financial statements of GSI and its consolidated Subsidiaries
(subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all
material respects and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by
such accountants or officer, as the case may be, and disclosed
therein).
Section 5.2 Certificates; Other Information. Furnish
to the Agent (with sufficient copies for each Lender):
(a) concurrently with the delivery of the
financial statements referred to in Sections 5.1(a) and 5.1(c),
the following: a certificate of a Responsible Officer of GSI
stating that, to the best of such Officer's knowledge, each
Person constituting the Borrower during such period have observed
or performed all of their respective covenants and other
agreements, and satisfied every condition, contained in this
Agreement and in the Notes and the other Loan Documents to which
they are a party to be observed, performed or satisfied by them,
and that such Officer has obtained no knowledge of any Default or
Event of Default, except as specified in such certificate.
(b) not later than 30 days prior the beginning of
each fiscal year of GSI, a copy of the quarter to quarter
projections by GSI of the operating budget and cash flow budget
of GSI and its Subsidiaries for such fiscal year, such
projections to be accompanied by a certificate of a Responsible
Officer of GSI to the effect that such projections have been
prepared on the basis of assumptions deemed reasonable at the
time of preparation and that such Officer has no reason to
believe they are incorrect or misleading in any material respect;
(c) within five days after the same are sent,
copies of all financial statements and reports which GSI sends to
its stockholders generally, and within five days after the same
are filed, copies of all financial statements and reports which
GSI may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(d) within seven days after the end of each
Calculation Period, a Borrowing Base Certificate for such
Calculation Period which certificate shall include, inter alia,
an accounts receivable aging report for each Person constituting
the Borrower as of the end of the Calculation Period covered by
such certificate; and
(e) promptly, such additional financial and other
information as the Agent from time to time reasonably may
request.
Section 5.3 Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the relevant Person constituting the
Borrower or its Subsidiaries, as the case may be or except for
immaterial amounts incurred in the ordinary course of business.
Section 5.4 Conduct of Business and Maintenance of
Existence. Continue to engage in businesses related to the
businesses now conducted by it and preserve, renew and keep in
full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its
business except as otherwise permitted pursuant to Section 6.4;
comply with all Contractual Obligations and Requirements of Law
(excluding, for purposes of this subsection, Requirements of Law
specifically addressed in other subsections of this Article 5)
except to the extent that failure to comply therewith would not,
in the aggregate, have a Material Adverse Effect.
Section 5.5 Maintenance of Property; Insurance. Keep
all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted; maintain
with financially sound and reputable insurance companies (rated A
or better by A.M. Best & Co.) insurance on all its property in at
least such amounts and against at least such risks (but including
in any event general liability, product liability and business
interruption) as is maintained by the Borrower on the date
hereof; and furnish to the Agent proof reasonably satisfactory to
the Agent of the annual renewal thereof (within 30 days of such
renewal) and, upon written request, such other information as to
the insurance carried as Agent may reasonably request.
Section 5.6 Inspection of Property; Books and Records;
Discussions. Keep proper books of record and account in which
full, true and correct entries in conformity with prudent
business practices and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and
activities; and permit representatives of the Agent and each
Lender during normal business hours and upon reasonable notice
(unless an Event of Default has occurred and is continuing, in
which case no such notice from the Agent or any Lender shall be
required) to visit and inspect any of its properties, examine and
make abstracts from any of its books and records and conduct
asset/system reviews and/or appraisals (such asset/system reviews
and appraisals to be at the Lenders' expense if no Default or
Event of Default exists and otherwise at the Borrower's sole cost
and expense; provided that the Borrower shall not be required to
pay for more than two appraisals during the term hereof) at any
reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and
other condition of any Person constituting the Borrower and its
Subsidiaries with officers and employees of such Person and its
Subsidiaries and with its independent certified public
accountants.
Section 5.7 Notices. Promptly give notice to the
Agent of:
(a) the occurrence of any Default or Event of
Default of which the Borrower has knowledge;
(b) any (i) default or event of default under any
Contractual Obligation of any Person constituting the Borrower or
any of its Subsidiaries or (ii) litigation, investigation or
proceeding which may exist at any time between any Person
constituting the Borrower or any of its Subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, would have a Material
Adverse Effect;
(c) any litigation or proceeding affecting any
Person constituting the Borrower or any of its Subsidiaries in
which the amount involved is $500,000 or more and not covered by
insurance or in which injunctive or similar relief is sought; and
(d) the occurrence of any event having a Material
Adverse Effect.
Each notice pursuant to this subsection shall be
accompanied by a statement of a Responsible Officer of the
relevant Person constituting the Borrower setting forth details
of the occurrence referred to therein and stating what action
such Person proposes to take with respect thereto.
Section 5.8 ERISA Compliance. Comply with all the
applicable provisions of ERISA now or hereafter in effect with
respect to each of its Plans except where the failure to comply
would not have a Material Adverse Effect. Notify the Lender of
the following events, as soon as possible and in any event within
thirty days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect
to any Plan; (ii) the occurrence of a prohibited transaction (as
defined in Section 406 of ERISA or Section 4975 of the Code) with
respect to any Plan, (iii) the institution of proceedings or the
taking or expected taking of any other action by the PBGC or any
Person constituting the Borrower or any ERISA Affiliate to
terminate or withdraw or partially withdraw from any Plan and,
with respect to a Multiemployer Plan, the Reorganization or
Insolvency of such Plan (as such terms are defined in ERISA),
(iv) the failure of any Person constituting the Borrower or any
ERISA Affiliate to make a required installment under Section 412
(m) of the Code or any other payment required under Section 412
of the Code on or before the due date or (v) the adoption of an
amendment with respect to a Plan so that any Person constituting
the Borrower or any ERISA Affiliate is required to provide
security to the Plan under Section 401(a)(29) of the Code, and in
addition to such notice, deliver to the Lender a certificate
signed by a Responsible Officer setting forth the details
relating thereto, and the action that such Person and the ERISA
Affiliate propose to take with respect thereto and when known,
any action taken or threatened by the Internal Revenue Service or
the PBGC, together wit a copy of any notice to the PBGC or the
Internal Revenue Service or any notice delivered by the PBGC or
the Internal Revenue Service.
ARTICLE 6 NEGATIVE COVENANTS
Each Person constituting the Borrower hereby agrees
that, so long as the Commitments remain in effect, any Note
remains outstanding and unpaid or any other amount is owing to
the Agent or any Lender hereunder, it shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly (except
as to the Subsidiary Borrowers, the covenants set forth in
Sections 6.11, 6.12, 6.13 and 6.14):
Section 6.1 Limitation on Indebtedness. Create,
incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the
Notes and other obligations of such Person constituting the
Borrower under this Agreement;
(b) Indebtedness arising pursuant to the Private
Placement;
(c) Indebtedness of any Person constituting the
Borrower owing to another Person constituting the Borrower or any
Subsidiary of the Borrower and of any Subsidiary of GSI to any
Person constituting the Borrower;
(d) Subordinated Debt;
(e) Indebtedness of a Person which becomes a
Subsidiary after the date hereof, provided that such Indebtedness
existed at the time such Person became a Subsidiary and was not
created in anticipation thereof;
(f) Capital Lease Obligations plus purchase money
indebtedness existing on the Effective Date plus additional
Capital Lease Obligations and purchase money indebtedness
provided the aggregate amount of such additional Capital Lease
Obligations and purchase money indebtedness does not increase in
any fiscal year during the term of this Agreement by more than
$1,000,000 over the amount thereof in the prior fiscal year; and
(g) Contingent Obligations in accordance with
Section 6.3 of this Agreement.
Section 6.2 Limitation on Liens. Create, incur,
assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens securing Indebtedness permitted by
Section 6.1(a), (e) and (f); provided, that, in the case of Liens
securing Indebtedness permitted by Section 6.1(f) such Liens
shall not encumber any property not financed by such
Indebtedness, and in the case of any Liens permitted by Section
6.1(e), such Liens shall not encumber any property not encumbered
by such Lien at the time it was created, such Liens existed at
the time such Person became a Subsidiary and were not created in
anticipation of the acquisition, and any such Lien does not by
its terms secure any Indebtedness other than Indebtedness
existing immediately prior to the time such Person becomes a
Subsidiary;
(b) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the
books of the relevant Person constituting the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(c) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, landlords' or other like Liens
arising in the ordinary course of business which secure amounts
not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(d) pledges or deposits in connection with
workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(e) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary
course of business;
(f) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount
and which do not in any case materially detract from the value of
the property subject thereto or materially interfere with the
ordinary conduct of the business of the relevant Person
constituting the Borrower or such Subsidiary;
(g) Liens listed on Schedule VIII, provided that
no such Lien is amended after the date of this Agreement to cover
any additional property or to secure additional Indebtedness; and
(h) Liens granted to secure Indebtedness evidenced
by the Senior Notes, provided payment of the Obligations is
equally and ratably secured by such Liens and such Liens (in
favor of the holders of the Senior Notes and the Lenders) are
effected pursuant to security documentation from Borrower and/or
any Subsidiary granting such Lien and the holders of the Senior
Notes in form and substance reasonably satisfactory to the
Required Lenders.
Section 6.3 Limitation on Contingent Obligations.
Create, incur, assume or suffer to exist any Contingent
Obligation, except guarantees made in the ordinary course of its
business by any Borrower of obligations of a Borrower or any of
its Subsidiaries and except Letter of Credit Reimbursement
Obligations, provided, in any case those obligations are not
otherwise prohibited under this Agreement.
Section 6.4 Limitations on Fundamental Changes. Enter
into any merger, consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present
method of conducting business, except:
(a) any Subsidiary of GSI may be merged or
consolidated with or into GSI (provided that GSI shall be the
continuing or surviving corporation) or with or into any one or
more wholly owned Subsidiaries of GSI (provided that the wholly
owned Subsidiary or Subsidiaries or the Subsidiary Borrower, if
it is a party to such merger or consolidation, shall be the
continuing or surviving corporation) and after giving effect to
any of such transactions, no Default or Event of Default shall
exist; and
(b) any wholly owned Subsidiary of GSI may sell,
lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to GSI or any wholly-
owned Subsidiary of GSI and GSI may sell, lease, transfer or
otherwise dispose of any or all of its assets to any Person
constituting the Borrower; and
(c) sales of assets in accordance with Section 6.5
of this Agreement.
Section 6.5 Limitation on Sale of Assets. Convey,
sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation,
Capital Stock of any Person constituting the Borrower (other than
GSI), receivables and leasehold interests), whether now owned or
hereafter acquired, except:
(a) obsolete or worn out property disposed of in
the ordinary course of business;
(b) the sale or other disposition of any property
(other than inventory) provided, that, the aggregate book value
of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed 2% of Consolidated Tangible
Assets of GSI as at the beginning of such twelve-month period;
(c) the sale of inventory in the ordinary course
of business;
(d) the sale or discount without recourse of
accounts receivable only in connection with the compromise
thereof or the assignment of past-due accounts receivable for
collection; and
(e) as otherwise contemplated by Section 6.4 of
this Agreement.
Section 6.6 Limitation on Investments, Loans and
Advances. Purchase, hold or acquire beneficially any Capital
Stock, other securities or evidences of indebtedness of, make or
permit to exist any loans or advances to, or make or permit to
exist any investment or acquire any interest whatsoever in, any
other Person, except:
(a) extensions of trade credit to customers in the
ordinary course of business;
(b) Permitted Investments;
(c) capital contributions, loans and advances by
any Person constituting the Borrower or any Subsidiary of the
Borrower to any Person constituting the Borrower or a domestic
Subsidiary of the Borrower and loans and advances by any foreign
Subsidiary of the Borrower to any other foreign Subsidiary of the
Borrower;
(d) loans and advances in the form of cash by any
Person constituting the Borrower to the foreign Subsidiaries of
the Borrower in an aggregate amount not to exceed $500,000 in
outstanding principal amount at any time;
(e) so long as no Default or Event of Default has
occurred and is continuing, GSI or any wholly-owned Subsidiary of
GSI may purchase Capital Stock of any Person not a Subsidiary for
a purchase price not exceeding $4,000,000 in the aggregate for
all such purchases; provided GSI has given the Agent 15 days
prior written notice of the consummation of the proposed
purchase;
(f) GSI may create, or (subject to Section 6.6(e))
acquire any Capital Stock of, a Person not a Subsidiary on the
date hereof (if, in the case of the acquisition of Capital Stock,
such acquisition would constitute such Person a Subsidiary);
provided that simultaneously with such creation or acquisition,
any Person becoming a domestic Subsidiary guarantees payment of
the obligations of the Borrower hereunder pursuant to a written
agreement in favor of, and otherwise in form and substance
satisfactory to, the Lenders; and
(g) loans and advances to employees or directors
of any Person constituting the Borrower not to exceed $100,000 in
aggregate principal amount outstanding at any time.
Section 6.7 Limitation on Optional Payments and
Modifications of Debt Instruments. Make any optional payment or
prepayment on or redemption, defeasance or purchase of any
Subordinated Debt, or amend, modify or change, or consent or
agree to any amendment, modification or change to any of the
terms relating to the payment or prepayment or principal of or
interest on, any such Indebtedness, other than any amendment,
modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would
reduce the rate or extend the date for payment of interest
thereon.
Section 6.8 Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase,
sale, lease or exchange of property or the rendering of any
service, with any Affiliate unless such transaction is (a) not
otherwise prohibited under this Agreement, and (b) upon fair and
reasonable terms no less favorable to the relevant Person
constituting the Borrower, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
Section 6.9 Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than September 30.
Section 6.10 Limitation on Conduct of Business. Enter
into any business either directly or through any Subsidiary
except for businesses in which GSI and its Subsidiaries are
engaged on the date of this Agreement and business related to
such existing businesses.
Section 6.11 Tangible Net Worth. Permit Consolidated
Tangible Net Worth at the end of any fiscal quarter of GSI to be
less than the sum of (i) $35,400,000 plus (ii) 50% of the
aggregate, cumulative Consolidated Net Income (but excluding net
losses for purposes of this calculation), if any, for each fiscal
year end occurring after the Closing Date.
Section 6.12 Fixed Charge Coverage Ratio. Permit the
Fixed Charge Coverage Ratio for the period of four consecutive
fiscal quarters preceding any date of determination to be less
than 1.35 to 1.
Section 6.13 Funded Debt to EBITDA. Permit the ratio
of Funded Debt of GSI and its consolidated Subsidiaries to
Consolidated EBITDA for the period of four consecutive fiscal
quarters preceding any date of determination to be greater than:
3.0 to 1 through September 30, 1999 or 2.50 to 1 thereafter.
Section 6.14 Capital Expenditures. Permit
expenditures of GSI and its consolidated Subsidiaries for CAPEX
in any fiscal year to exceed $7,500,000 for the fiscal year
ending September 30, 1998, or $6,500,000 for any fiscal year of
GSI ending thereafter.
Section 6.15 Obligor Tangible Assets. Permit the
ratio of (a) Consolidated Obligor Tangible Assets to (b)
Consolidated Tangible Assets to be less than 0.9 to 1.0, unless
at such time the Obligor Fixed Charged Coverage Ratio is 1.1 to
1.0
or greater.
Section 6.16 ERISA Obligations. Be or become
obligated to the PBGC, in any material respect, other than in
respect of annual premium payments.
ARTICLE 7 EVENTS OF DEFAULT
Section 7.1 Events of Default. If any of the
following events (each, an "Event of Default") shall occur and be
continuing:
(a) The Borrower shall fail to pay any principal
of any Note or Reimbursement Obligation when due in accordance
with the terms thereof or hereof; or the Borrower shall fail to
pay any interest on any Note or Reimbursement Obligation, or any
other amount payable hereunder, within five days after any such
interest or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed
made by any Person constituting the Borrower or any other party
to a Loan Document herein or in any other Loan Document or which
is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) Any Person constituting the Borrower shall
default in the observance or performance of any agreement
contained in Article 6; or
(d) Any Person constituting the Borrower or any
other Party to a Loan Document shall default in the observance or
performance of any other agreement contained in this Agreement
(other than as provided in Sections 7.1(a), (b) or (c)) or any
other Loan Document, and such default shall continue unremedied
for a period of 30 days; or
(e) GSI or any of its Subsidiaries shall:
(1) default in any payment of principal of or
interest on any Indebtedness (other than the Notes
or Reimbursement Obligations) or in the payment of
any Contingent Obligation in either case in excess
of $500,000, beyond the period of grace, if any,
provided in the instrument or agreement under which
such Indebtedness or Contingent Obligation was
created; or
(2) default in the observance or performance
of any other agreement or condition relating to any
such Indebtedness or Contingent Obligation or
contained in any instrument or agreement
evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the
effect of which default or other event or condition
is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries
of such Contingent Obligation (or a trustee or
agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such
Contingent Obligation to become payable; or
(f) (1) GSI or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or GSI or any of its Subsidiaries
shall make a general assignment for the benefit of its creditors;
or (2) there shall be commenced against GSI or any of its
Subsidiaries any case, proceeding or other action of a nature
referred to in clause (1) above which (A) results in the entry of
an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of
60 days; or (3) there shall be commenced against GSI or any of
its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (4) GSI
or any of its Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (1), (2) or (3) above; or
(5) GSI or any of its Subsidiaries shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) One or more judgments or decrees shall be
entered against GSI or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$500,000 or more and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof; or
(h) (i) Any Reportable Event, which the Required
Lenders determine in good faith (which determination shall be
final and conclusive) constitutes grounds for the termination of
any Plan or Plans by PBGC or for the appointment by the
appropriate United States District Court of a trustee to
administer or liquidate any Plan or Plans, shall have occurred
and be continuing thirty (30) days after written or telegraphic
or telephonic notice to such effect shall have been given to the
Borrower by the Lender; or (ii) a decision shall have been made
by the Board of Directors (or any committee thereof), any
authorized officer or other employee of any Person constituting
the Borrower, or any trustee or trustees of any Plan or Plans to
terminate any Plan or Plans or to file a termination notice with
respect to any Plan or Plans; or (iii) a trustee shall be
appointed by the appropriate United States District Court to
administer any Plan or Plans, or any Plan or Plans shall be
terminated; or (iv) PBGC shall institute proceedings to terminate
any Plan or Plans or to appoint a trustee to administer any Plan
or Plans; or (v) any Person constituting the Borrower or any
ERISA Affiliate shall fail with respect to any Plan or Plans to
meet the minimum funding standards established in the Code, or
shall obtain a waiver of such minimum funding standards; or (vi)
any Person constituting the Borrower or any ERISA Affiliate shall
completely or partially withdraw from a Plan; or (vii) any Person
constituting the Borrower or any ERISA Affiliate shall make a
decision to cease operations at a facility or facilities where
such cessation would result in a separation from employment of
more than 20% of the total number of employees who are
participants under a Plan; where in the case of any one or more
of the events described in the preceding clauses (i) through
(vii) the aggregate outstanding amount of unfunded vested
liabilities under such Plan if a single employer plan (including
unfunded vested liabilities which arise or might arise as a
result of the termination of or withdrawal from such Plan) or the
allocable portion of such outstanding unfunded vested liabilities
under a Multiemployer Plan shall exceed (either singly or in the
aggregate in the case of any such liability arising out of one or
more of the events described in the preceding clauses (i) through
(vii) under more than one such Plan) 2% of the Consolidated
Tangible Net Worth of GSI and shall in good faith be determined
by the Required Lenders (which determination shall be final and
conclusive) to have a Material Adverse Effect; or
(i) a Change in Control shall occur;
then, and in any such event, (A) if such event is an Event of
Default specified in clause (1) or (2) of Section 7.1(f) above
with respect to any Person constituting the Borrower,
automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes shall
immediately become due and payable, and (B) if such event is any
other Event of Default, any one or more of the following actions
may be taken: (i) the Agent may (with the consent of the
Required Lenders) and shall (upon the request of the Required
Lenders), by written notice to the Borrower, declare the
Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; (ii) the Agent may (with the consent
of the Required Lenders) and shall (upon the request of the
Required Lenders), by written notice to the Borrower, declare the
Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and
payable forthwith, whereupon the same shall immediately become
due and payable and (iii) the Agent may (with the consent of the
Required Lenders) and shall (upon the request of the Required
Lenders but subject to the provisions of Article 8), proceed to
enforce the rights and remedies of the Secured Party under the
Security Documents. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.
ARTICLE 8 THE AGENT
Section 8.1 Actions. Each Lender authorizes the Agent
to act on behalf of such Lender under this Agreement, the other
Loan Documents and any other related instruments and, in the
absence of other written instructions from the Lenders received
from time to time by the Agent (with respect to which the Agent
agrees that it will, subject to the last two sentences of this
Section 8.1, comply in good faith except as otherwise advised by
counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms
hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender agrees (which
agreement shall survive any termination of this Agreement) to
indemnify the Agent, pro rata according to such Lender's
Percentage, from and against any and all liabilities,
obligations, damages, penalties, actions, judgements, suits,
costs, expenses or disbursements of any kind or nature whatsoever
which may at any time be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this
Agreement, the Revolving Notes, the Letters of Credit, any of the
other Loan Documents and any other related instruments,
including, without limitation, the reimbursement of the Agent for
all reasonable out-of-pocket expenses (including, without
limitation, syndication costs and attorneys' fees) incurred by
the Agent hereunder or in connection herewith or in enforcing the
obligations of the Borrower or any Lender under this Agreement,
under any of the other Loan Documents or any other related
instruments, in all cases as to which the Agent is not reimbursed
by the Borrower; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, damages,
penalties, actions, judgements, suits, costs, expenses or
disbursements determined by a court of proper jurisdiction in a
final proceeding to have resulted solely from the Agent's gross
negligence or willful misconduct. The Agent shall not be
required to take any action hereunder or under any other related
instruments, or to prosecute or defend any suit in respect of
this Agreement or any such instrument, unless indemnified to its
satisfaction by the Lenders against costs, liability, and
expense. If any indemnity in favor of the Agent shall become
impaired, it may call for additional indemnity and cease to do
the acts indemnified against until such additional indemnity is
given. The Agent may delegate its duties hereunder to
affiliates, agents or attorneys-in-fact selected in good faith by
the Agent. Each Lender's obligation to indemnify the Agent as
set forth above shall be unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or
defense to payment which such Lender may have or have had against
the Agent, any other Lender, the Borrower, any Subsidiary or any
other Person.
Section 8.2 Exculpation. The Agent shall have no
duties or responsibilities except those expressly set forth in
this Agreement. Neither the Agent nor any of its directors,
officers, employees, or agents (collectively, the "Related
Parties") shall be liable to any Lender for any action taken or
omitted to be taken by it under this Agreement, the other Loan
Documents or any other related instrument, or in connection
herewith or therewith, except for its own willful misconduct or
gross negligence, nor shall the Agent or any Related Parties be
responsible for any recitals or representations or warranties
herein or therein, or for the effectiveness, enforceability,
validity or due execution of this Agreement, the other Loan
Documents or any other related instruments, nor shall the Agent
or any Related Parties be obligated to make any inquiry
respecting the performance by the Borrower of its obligations
hereunder or thereunder. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which it
believes to be genuine and to have been presented by a proper
Person. The Agent may at any time request instructions from the
Lenders with respect to any actions or approvals which, by the
terms of this Agreement, the Agent is permitted or required to
take or grant, and the Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and
shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval
under this Agreement or any of the other Loan Documents until it
has received instructions from the Required Lenders. No Lender
shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder or
under any of the other Loan Documents in accordance with
instructions from the (i) Required Lenders, or (ii) all of the
Lenders to the extent required hereunder.
Section 8.3 Successor. The Agent may resign as such
at any time upon at least ten days' prior notice to the Borrower
and all Lenders, and the Agent may be removed at any time by
written notice from the Required Lenders. If the Agent at any
time shall resign or be removed, the Required Lenders may appoint
another Lender as a successor Agent. If the Required Lenders do
not make such appointment within thirty days, the resigning or
removed Agent shall appoint a new Agent from among the Lenders
or, if no Lender accepts such appointment, from among commercial
banking institutions or trust institutions generally; provided
such successor agent shall be a domestic commercial bank having a
combined capital and surplus in excess of $500,000,000. Upon the
acceptance of any appointment as Agent by a successor Agent, such
successor Agent shall thereupon become the Agent hereunder and
shall be entitled to receive from the prior Agent such documents
of transfer and assignment as such successor Agent may reasonably
request, and the resigning or removed Agent shall (i) be
discharged from its duties and obligations under this Agreement
and the other related instruments and (ii) entitled to the
continued benefit of this Article 8 with respect to all actions
taken by it prior to its removal or resignation.
Section 8.4 Credit Decisions. Each Lender represents
and acknowledges to the Agent that it has, independently of the
Agent and each other Lender, and based on the financial
information referred to in this Agreement and the other Loan
Documents and such other documents, information and
investigations as it has deemed appropriate, made its own credit
decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently of the Agent and each
Lender, and based on such documents, information and
investigations as it shall deem appropriate at any time, continue
to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available
to it under this Agreement, the Loan Documents or any other
related instruments.
Section 8.5 Notices, etc. from Agent. The Agent shall
give prompt notice to each Lender of each notice or request given
to the Agent by the Borrower or by the Agent to the Borrower
pursuant to the terms of this Agreement. The Agent will promptly
distribute to each Lender each instrument received for its
account and copies of all other communications received by the
Agent from the Borrower for distribution to the Lenders by the
Agent in accordance with the terms of this Agreement.
Section 8.6 Security Documents. Each Lender hereby
authorizes the Agent to enter into the Security Documents and to
take all action contemplated thereby. Each Lender agrees that no
Lender shall have any right individually to seek to realize upon
the collateral granted for the benefit of the Lenders pursuant to
any of the Security Documents, it being understood and agreed
that such rights and remedies may be exercised by the Agent for
the benefit of the Agent and the Lenders upon the terms of the
Security Documents.
ARTICLE 9 PURCHASING LENDER
Section 9.1 Purchasing Lender. (a) Each Lender, in
the ordinary course of its commercial banking business and in
accordance with applicable law, at any time may sell, assign and
delegate to any Affiliate of such Lender and/or, with the consent
of the Agent and the Borrower (which in each case shall not be
unreasonably withheld), to one or more additional banks or
financial institutions (each, a "Purchasing Lender") all or any
part of such Lender's rights and obligations under this
Agreement, the Notes and the other Loan Documents (provided, that
any such sale, assignment and delegation shall be made with
respect to each Loan and Commitment of such Lender hereunder)
pursuant to an agreement ("Assignment and Acceptance"), executed
by the Purchasing Lender, and such Lender. Such Assignment and
Acceptance shall specify an effective date which is not less than
five Business Days after the date of execution thereof. Upon such
execution, delivery, and acceptance, from and after the effective
date determined pursuant to such Assignment and Acceptance, (A)
the Purchasing Lender thereunder shall be a party hereto and, to
the extent of the Commitments assigned and Loans sold pursuant to
such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder with a Commitment as set forth therein, and
(B) the assigning Lender thereunder shall, to the extent of the
Commitments assigned pursuant to such Assignment and Acceptance,
be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a
party hereto). Such Assignment and Acceptance shall be deemed to
amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender as a
Lender and the resulting adjustment of Commitments arising from
the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such assigning Lender under this
Agreement and the Notes. On or prior to the effective date
determined pursuant to such Assignment and Acceptance, the
Borrower, at its own expense, shall execute and deliver to the
assigning Lender and Purchasing Lender in exchange for the
surrendered Revolving Credit Note, a new Revolving Credit Note to
the order of such Purchasing Lender in an amount equal to the
Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment
hereunder, a new Note to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such
new Note or Notes shall be dated the Closing Date and otherwise
shall be in the form of the Note or Notes replaced thereby. The
Note or Notes surrendered by the assigning Lender shall be
returned to the Borrower marked "replaced." The assigning Lender
shall provide the Agent with a copy of each Assignment and
Acceptance.
(b) If, pursuant to this Agreement, any interest
in this Agreement or any other Loan Documents is assigned to any
transferee which is organized under the laws of any jurisdiction
other than the United States or any State thereof, the transferor
Lender shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the
Agent and the Borrower) that under applicable law and treaties no
taxes will be required to be withheld by the Agent, the Borrower
or the transferor Lender with respect to any payments to be made
to such transferee in respect of the Loans, (ii) to furnish to
the transferor Lender, the Agent and the Borrower either Form
4224 or Form 1001 (Ownership Exemption or Reduced Rate
Certificate) (wherein such transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit
of the transferor Lender, the Agent and the Borrower) to provide
the transferor Lender, the Agent and the Borrower a new Form 4224
or Form 1001 upon the expiration or obsolescence of any
previously delivered form and comparable statements in accordance
with applicable U.S. laws and regulations and amendments duly
executed and completed by such transferee, and to comply from
time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
Section 9.2 Disclosure of Information. Each Person
constituting the Borrower authorizes the Lenders to disclose to
any Purchasing Lender and any prospective Purchasing Lender any
and all information relating to each Person constituting the
Borrower and its Affiliates which has been furnished to the Agent
and the Lenders by or on behalf of each Person constituting the
Borrower; provided that any such Purchasing Lender agrees to keep
any information relating to any Person constituting the Borrower
received hereunder confidential except as may be required by any
Requirement of Law.
Section 9.3 Pledges to Federal Reserve Bank. Nothing
herein shall prohibit any Lender from pledging or assigning any
Note to any Federal Reserve Bank in accordance with applicable
law.
ARTICLE 10 MISCELLANEOUS
Section 10.1 Amendments and Waivers. (a) No amendment
or waiver of any provision of this Agreement, or any of the other
Loan Documents, nor consent to any departure by the Borrower
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,
however, that no amendment, waiver or consent, unless in writing
and signed by all the Lenders, shall do any of the following: (A)
waive any of the conditions specified in Section 4.1 (though the
Agent alone may defer the fulfillment of such conditions until
the date of the applicable borrowing), (B) increase the amount or
extend the term of the Commitments of the Lenders or subject the
Lenders to any additional obligations, (C) reduce the principal
of, or interest on, the Loans, the Reimbursement Obligations or
any of the Notes, or reduce any fees payable hereunder, (D)
postpone any date fixed for any payment in respect of principal
of, or interest on, the Loans, the Reimbursement Obligations or
any of the Notes, as the case may be, or fees payable hereunder,
(E) change any of the components which shall be required for the
Lenders or any Lender to take any action hereunder, (i.e., the
Percentage of the Commitments, or the aggregate unpaid principal
amount of the Loans, or the number of Lenders), (F) amend or
terminate any Security Document, or (G) amend this Section 10.1;
and provided, further, that no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to
the Lenders hereinabove required to take such action, affect the
rights or duties of the Agent under this Agreement. Without
derogating from the foregoing, no amendment to this Agreement
shall be effective unless signed by each Person constituting the
Borrower.
(b) The liability of each Person constituting the
Borrower hereunder shall be absolute and unconditional
irrespective of:
(1) any change in the time, manner, or place
of payment or in any other term of, or any other amendment or
waiver of, or any consent to departure from any of the Loan
Agreement, any of the Loan Documents or any Obligations;
(2) any change in the name, capital stock,
Certificate of Incorporation or by-laws, as the case may be, of
any Person constituting the Borrower;
(3) the insolvency of, or the voluntary or
involuntary bankruptcy, assignment for the benefit of creditors,
reorganization or other similar proceedings affecting any Person
constituting the Borrower or any of their respective assets; or
(4) any other circumstance or claim which
might otherwise constitute a defense available to, or a discharge
of, any Person constituting the Borrower in respect of the
Obligations.
(c) No payment made by any Person constituting the
Borrower, or received or collected by the Agent or any of the
Lenders, from any Person constituting the Borrower by virtue of
any action or proceeding or set-off or application at any time in
reduction of or in payment of the Obligations shall be deemed to
modify, release or otherwise affect the liability of any Person
constituting the Borrower under the Loan Documents.
Notwithstanding any such payments received or collected by the
Agent or any of the Lenders in connection with the Obligations,
each Person constituting the Borrower shall remain liable for the
Obligations until all Obligations are paid in full. The joint
and several obligation of each Person constituting the Borrower
shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Agent or the
Lenders upon the insolvency, bankruptcy or reorganization of any
Person constituting the Borrower or otherwise, all as though such
payment had not been made.
(d) The obligations and liabilities of each Person
constituting the Borrower hereunder shall not be released,
discharged, limited or in any way affected by anything done,
suffered or permitted by the Agent or Lenders in connection with
any monies or credit advanced by the Agent or Lenders to any
Person constituting the Borrower or any security therefor,
including, without limitation, any loss of, or in respect of, any
security received by the Agent or any of the Lenders from any
Person constituting the Borrower. It is agreed that the Lenders
and/or the Agent, without releasing, discharging, limiting or
otherwise affecting in whole or in part the obligations and
liabilities of any Person constituting the Borrower hereunder,
may, without limiting the generality of the foregoing:
(A) grant time, renewals, extensions, indulgences,
releases and discharges to any Person constituting the
Borrower;
(B) take or abstain from taking security or
collateral for the Obligations or from perfecting
security or collateral for the Obligations;
(C) release, discharge, compromise or otherwise
deal with (with or without consideration) any and all
collateral, mortgages, indemnities, guaranties or other
security given by any Person constituting the Borrower
with respect to the Obligations;
(D) accept compromises from any Person
constituting the Borrower;
(E) after an Event of Default, apply all monies
at any time received from any Person constituting the
Borrower or from any guaranties, indemnities or any
collateral upon such part of the Obligations as the
Lenders and/or Agent may see fit or change any such
application in whole or in part from time to time as
the Agent or such Lenders may see fit; or
(F) otherwise deal with each Person constituting
the Borrower and all other Persons and collateral as
the Lenders and/or Agent may see fit;
(e) neither the Agent nor any of the Lenders shall
be bound or obligated to exhaust recourse against any Person
constituting the Borrower or other Persons or any security,
guarantee, indemnity, mortgage or collateral it may hold or take
any other action before being entitled to payment from each
Person constituting the Borrower hereunder and each Person
constituting the Borrower hereby waives any requirement that
would otherwise compel the Agent or the Lenders to do any of the
foregoing.
Section 10.2 Notices. All notices, requests and
demands to or upon the respective parties hereto to be effective
shall be in writing (or by telex, fax or similar electronic
transfer confirmed in writing), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
(a) when delivered by hand or (b) if given by mail, three
Business Days after deposited in the mails by certified mail,
return receipt requested, postage prepaid, or (c) if by telex,
fax or similar electronic transfer, when sent and receipt has
been confirmed, addressed as follows. Notwithstanding the
foregoing, any notice, demand or request to or upon the Agent
pursuant to Section 2.3 or Section 2.7 may be given to the Agent
by telephone, provided that the Borrower immediately follows such
telephone instructions with a delivery of written notice received
by the Agent prior to the extension of Credit requested by one of
the methods of delivery otherwise authorized herein.
If to the Borrower:
Guest Supply, Inc.
4301 U.S. Highway One
Box 902
Monmouth Junction, New Jersey 08852-0902
Attention: Paul Xenis
Phone: 609-514-7373
Fax: 609-514-7377
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Phone: 212-880-6000
Fax: 212-682-0200
If to the Agent:
PNC Bank, National Association
P.O. Box 294
2 Tower Center Boulevard, 16th Floor
East Brunswick, New Jersey 08816-1094
Attention: Gary W. Wessels
Phone: 732-220-4553
Fax: 732-220-3299
If to the Lenders:
PNC Bank, National Association
P.O. Box 294
2 Tower Center Boulevard 16th Floor
East Brunswick, New Jersey 08816-1094
Attention: Gary W. Wessels
Phone: 732-220-4553
Fax: 732-220-3299
and
First Union National Bank
550 Broad Street
Newark, New Jersey 07102
Attention: Robert Cerny
Phone: 973-565-7069
Fax: 973-565-3908
provided that any notice, request or demand to or upon the Agent
pursuant to Section 2.3, Section 2.5, Section 2.8, Section
2.9(a), Section 2.10 or Section 2.18(a) shall not be effective
until received. Any party may change its address for notices by
notice to the other parties hereto in the manner provided in this
subsection. Any notice to the Borrower or given by the Borrower
shall be binding upon, and deemed received or given by, all
Persons constituting the Borrower if given by any Person
constituting the Borrower (in the case of notices from the
Borrower) or delivered to any Person constituting the Borrower at
the address set forth herein (or such other address noticed to
the Lender as provided herein) and no separate notice to or by
any other Person constituting the Borrower shall be necessary for
the binding effect or deemed receipt of a notice to or by the
Borrower.
Section 10.3 No Waiver; Cumulative Remedies.
(a) No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver
thereof.
(b) No single or partial exercise of any right,
remedy, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege.
(c) The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
Section 10.4 Survival of Representations and
Warranties. All representations and warranties made hereunder
and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Notes.
Section 10.5 Payment of Expenses and Taxes. The
Borrower agrees jointly and severally:
(a) to pay or reimburse the Agent for all its
reasonable out-of-pocket costs and expenses incurred in
connection with the negotiation, preparation and execution of,
and any proposed or effective amendment, supplement or
modification to, this Agreement and the Notes and the other Loan
Documents and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements of counsel to the Agent;
(b) to pay or reimburse the Agent and each Lender
for all reasonable out-of-pocket costs and expenses incurred by
each of them in connection with the enforcement or preservation
of any rights under this Agreement, the Notes, the other Loan
Documents and any such other documents, including, without
limitation, reasonable fees and disbursements of counsel to the
Agent and each Lender;
(c) to pay, indemnify, and hold the Agent and each
Lender harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other similar taxes, if any,
which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes, the other Loan Documents and any such
other documents; and
(d) to pay, indemnify, and hold the Agent and each
Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions (whether
sounding in contract, in tort or on any other ground), judgments,
suits, reasonable out-of-pocket costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of, or in
any other way arising out of or relating to, this Agreement, the
Notes, the other Loan Documents or any other documents
contemplated by or referred to herein or therein or any action
taken or omitted to be taken by the Agent or any Lender with
respect to any of the foregoing
(all the foregoing, collectively, the "indemnified liabilities"),
provided, that the Borrower shall have no obligation hereunder to
the Agent or any Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the
Agent or such Lender. The agreements in this subsection shall
survive repayment of the Notes and all other amounts payable
hereunder.
Section 10.6 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the Borrower,
the Agent, the Lenders, all future holders of the Notes and their
respective successors and assigns, except that no Person
constituting the Borrower may assign, transfer or delegate any of
their rights or obligations under this Agreement without the
prior written consent of the Lenders other than pursuant to the
operation of law by reason of a transaction permitted by Section
6.4.
Section 10.7 Set-off/Sharing.
(a) In addition to any rights and remedies of the
Agent and Lenders provided by law, each Lender shall have the
right, without prior notice to any Person constituting the
Borrower, any such notice being expressly waived by each Person
constituting the Borrower to the extent permitted by applicable
law, upon any amount becoming due and payable by any Person
constituting the Borrower hereunder or under the Notes or the
other Loan Documents (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by such Lender or any
branch or agency of such Lender to or for the credit or the
account of any Person constituting the Borrower. Each Lender
agrees promptly to notify the Borrower and Agent after any such
set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such
set-off and application.
(b) Each of the Lenders agree among themselves
that with respect to all amounts received by them which are
applicable to the payment or satisfaction of all or part of the
Loans or Reimbursement Obligations, interest thereon, any fees or
any other amount payable hereunder or under the other Loan
Documents, equitable adjustment will be made so that, in effect,
all such amounts will be shared among the Lenders in proportion
to their respective Percentages, whether received by voluntary
payment, by the exercise of the right of setoff or banker's lien,
by counterclaim or by the enforcement of their rights hereunder
or under the other Loan Documents.
(c) If any Lender shall, through the exercise of
any right of counterclaim, setoff, banker's lien or otherwise,
receive payment or reduction of a proportion of the aggregate
amount of the Loans or interest thereon due to such Lender, or
any other amount payable hereunder, as the case may be, which is
greater than the proportion received by any other Lender or
Lenders in respect to the aggregate amount of any Loan or
Reimbursement Obligation and interest thereon due such Lender, or
with respect to any other amount payable hereunder, that Lender
receiving such proportionately greater payment shall notify the
other Lenders and the Agent of such receipt and purchase
participations (which it shall be deemed to have done
simultaneously upon the receipt of such excess payment) in the
Loans and Reimbursement Obligations held by the other Lender or
Lenders so that all such recoveries of principal and interest
with respect to the Loans shall be proportionate to each Lender's
respective Percentage; provided that if all or part of such
proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender, those purchases
shall be rescinded and the purchase prices paid for such
participations shall be returned to the purchasing Lender to the
extent of such recovery, but without interest.
(d) The Borrower expressly consents to the
arrangement described in this Section 10.7.
Section 10.8 Original Agreement. On the Effective
Date, the commitment of the Lenders under the Original Agreement
to extend credit to the Borrower shall terminate and the Original
Agreement and all security and other agreements entered into
connection therewith shall terminate.
Section 10.9 Counterparts. This Agreement may be
executed by one or more of the parties to this Agreement on any
number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same
instrument.
Section 10.10 Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 10.11 Integration. This Agreement represents
the agreement of the Borrower, the Agent and the Lenders with
respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agent or any
Lender relative to subject matter hereof not expressly set forth
or referred to herein or in the other Loan Documents.
Section 10.12 Governing Law. This Agreement and the
Notes and the rights and obligations of the parties under this
Agreement and the Notes shall be governed by, and construed and
interpreted in accordance with, the law of the State of New
Jersey.
Section 10.13 Submission To Jurisdiction; Waivers.
Each Person constituting the Borrower hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any
legal action or proceeding relating to or arising out of this
Agreement and the other Loan Documents to which it is a party, or
the conduct of any party with respect thereto, or for recognition
and enforcement of any judgement in respect thereof, to the
nonexclusive general jurisdiction of the Courts of the State of
New Jersey, the courts of the United States of America for the
District of New Jersey, and appellate courts from any thereof;
(b) consents that any such action or proceeding
may be brought in such courts and waives to the fullest extent
permitted by law any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to the Borrower at the address set
forth in Section 10.1 or at such other address of which the
Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted
by law or shall limit the right to sue in any other jurisdiction;
and
(e) waives, to the maximum extent permitted by
law, any right it may have to claim or recover in any legal
action or proceeding referred to in this subsection any special,
exemplary, punitive or consequential damages.
Section 10.14 Acknowledgments. Each Person
constituting the Borrower hereby acknowledges that:
(a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the
Notes and the other Loan Documents;
(b) neither the Agent nor any Lender has any
fiduciary relationship to any Person constituting the Borrower,
and the relationship between the Agent and the Lenders, on one
hand, and each Person constituting the Borrower, on the other
hand, is solely that of debtor and creditor; and
(c) no joint venture exists among any Person
constituting the Borrower, the Agent or any Lender.
Section 10.15 Waivers of Jury Trial. EACH PERSON
CONSTITUTING THE BORROWER, THE AGENT AND EACH LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
Borrowers:
GUEST SUPPLY, INC.
By:/s/Paul Xenis
----------------
Name: Paul Xenis
Title: Secretary and Vice President, Finance
GUEST PACKAGING, INC.
By:/s/Paul Xenis
----------------
Name: Paul Xenis
Title: Secretary and Vice President, Finance
BRECKENRIDGE-REMY CO.
By:/s/Paul Xenis
----------------
Name: Paul Xenis
Title: Secretary and Vice President, Finance
GUEST DISTRIBUTION
SERVICES, INC.
By:/s/Paul Xenis
----------------
Name: Paul Xenis
Title: Authorized Signatory
Lenders:
PNC BANK, NATIONAL ASSOCIATION
By:/s/Gary W. Wessels
---------------------
Name: Gary W. Wessels
Title: Vice President
FIRST UNION NATIONAL BANK
By:/s/James T. King
-------------------
Name: James T. King
Title: Vice President
Agent:
PNC BANK, NATIONAL ASSOCIATION
By:/s/Gary W. Wessels
---------------------
Name: Gary W. Wessels
Title: Vice President
<PAGE>
PRICING SCHEDULE
"Applicable Margin" means for any date, the rates set
forth below in the row opposite such term and in the column
corresponding to the "Pricing Level" that applies at such date:
Level I Level II Level III Level IV Level V
Applicable plus .50% plus .60% plus .75% plus .80% plus .85%
Eurodollar
Margin
Applicable minus .75% minus .50% minus .30% minus .20% minus .00%
Prime Rate
Margin
For purposes of this Schedule, the following terms have
the following meanings:
"Level I Pricing" applies at any date if the ratio of
Funded Debt to EBITDA on such date is equal to or less than
1.5:1.
"Level II Pricing" applies at any date if (i) the ratio
of Funded Debt to EBITDA in effect on such date is equal to or
less than 1.75:1 and (ii) Level I Pricing does not apply.
"Level III Pricing: applies at any date if (i) the
ratio of Funded Debt to EBITDA in effect on such date is equal to
or less than 2.00:1 and (ii) neither Level I Pricing nor Level II
Pricing applies.
"Level IV Pricing" applies at any date if (i) the ratio
of Funded Debt to EBITDA in effect on such date is equal to or
less than 2.25:1 and (ii) none of Level I Pricing, Level II
Pricing and Level III Pricing applies.
"Level V Pricing" applies at any date if, on such date,
the ratio of Funded Debt to EBITDA is greater than 2.25:1.00.
<PAGE>
REVOLVING CREDIT NOTE
$5,625,000 East Brunswick, New Jersey
December 3, 1997
FOR VALUE RECEIVED, the undersigned, GUEST SUPPLY, INC., a New Jersey
corporation, GUEST PACKAGING, INC., a New Jersey corporation, and
BRECKENRIDGE-REMY CO., a Delaware corporation, and GUEST DISTRIBUTION
SERVICE, INC., a Delaware corporation, collectively, the "Borrower"), hereby
jointly and severally, unconditionally promise to pay to the order of First
Union National Bank ("FUNB") at the Payment Office, in lawful money of the
United States of America and in immediately available funds, the principal
amount of FIVE MILLION SIX HUNDRED TWENTY FIVE THOUSAND AND 00/1000
($5,625,000) DOLLARS, or, if less, the aggregate unpaid principal amount of all
revolving credit Loans made by FUNB to the Borrower pursuant to Section 2.1 of
the Credit Agreement on the dates and in the amounts specified in the Credit
Agreement. The Borrower further agrees to pay interest on the unpaid principal
amount outstanding hereunder from time to time from and including the date
hereof in like money at such office at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to endorse on the schedule annexed hereto
and made a part hereof or on a continuation thereof which shall be attached
hereto and made a part hereof (the "Grid") the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto,
which endorsement shall constitute rebuttable presumptive evidence of the
accuracy of the information endorsed; provided, however, that the failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Revolving Credit Loan.
This Note is one of the Revolving Credit Notes referred to in the Revolving
Credit Agreement dated the date hereof among the Borrower, PNC Bank, National
Association ("PNC"), FUNB, as Lenders, and PNC, as Agent (as the same may
hereafter be amended, modified or supplemented from time to time, the "Credit
Agreement") is entitled to the benefits thereof, is secured as provided therein
and is subject to optional and mandatory prepayment as set forth therein.
Upon the occurrence and during the continuance of any one or more the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
All parties now and hereafter liable with respect to this Note, whether maker,
principal, surety, guarantor, endorser or otherwise, hereby waive presentment,
demand, protest and all other notices of any kind.
Terms defined in the Credit Agreement are used herein with their defined
meanings unless otherwise defined herein. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
Jersey.
GUEST SUPPLY, INC.
By: s/ Paul Xenis
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST PACKAGING, INC.
By: s/ Paul Xenis
Name: Paul Xenis
Title: Secretary and Vice President-Finance
BRECKENRIDGE-REMY, CO.
By: s/ Paul Xenis
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST DISTRIBUTION SERVICES, INC.
By: s/ Paul Xenis
Name: Paul Xenis
Title: Authorized Signatory
<PAGE>
REVOLVING CREDIT NOTE
$9,375,000 East Brunswick, New Jersey
December 3, 1997
FOR VALUE RECEIVED, the undersigned, GUEST SUPPLY, INC., a New Jersey
corporation, GUEST PACKAGING, INC., a New Jersey corporation, and
BRECKENRIDGE-REMY CO., a Delaware corporation, and Guest Distribution
Service, Inc., a Delaware corporation, collectively, the "Borrower"), hereby
jointly and severally, unconditionally promise to pay to the order of PNC Bank,
National Association ("PNC") at the Payment Office, in lawful money of the
United States of America and in immediately available funds, the principal
amount of NINE MILLION THREE HUNDRED SEVENTY FIVE THOUSAND AND 00/1000
($9,375,000) DOLLARS, or, if less, the aggregate unpaid principal amount of all
revolving credit Loans made by PNC to the Borrower pursuant to Section 2.1 of
the Credit Agreement on the dates and in the amounts specified in the Credit
Agreement. The Borrower further agrees to pay interest on the unpaid principal
amount outstanding hereunder from time to time from and including the date
hereof in like money at such office at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to endorse on the schedule annexed hereto
and made a part hereof or on a continuation thereof which shall be attached
hereto and made a part hereof (the "Grid") the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto,
which endorsement shall constitute rebuttable presumptive evidence of the
accuracy of the information endorsed; provided, however, that the failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Revolving Credit Loan.
This Note is one of the Revolving Credit Notes referred to in the Revolving
Credit Agreement dated the date hereof among the Borrower, PNC, First Union
National Bank, as Lenders, and PNC, as Agent (as the same may hereafter be
amended, modified or supplemented from time to time, the "Credit Agreement")
is entitled to the benefits thereof, is secured as provided therein and is
subject to optional and mandatory prepayment as set forth therein.
Upon the occurrence and during the continuance of any one or more the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
All parties now and hereafter liable with respect to this Note, whether maker,
principal, surety, guarantor, endorser or otherwise, hereby waive presentment,
demand, protest and all other notices of any kind.
Terms defined in the Credit Agreement are used herein with their defined
meanings unless otherwise defined herein. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
Jersey.
GUEST SUPPLY, INC.
By: s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST PACKAGING, INC.
By: s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
BRECKENRIDGE-REMY, CO.
By: s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST DISTRIBUTION SERVICES, INC.
By: s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Authorized Signatory
<PAGE>
EXHIBIT 10(q)
Guest Supply, Inc.
and certain other Obligors
-----------------------
NOTE PURCHASE AGREEMENT
-----------------------
Dated as of December 3, 1997
$15,000,000 7.06% Series A Senior Notes due November 15, 2009
$5,000,000 6.95% Series B Senior Notes due November 15, 2007
$5,000,000 6.70% Series C Senior Notes due November 15, 2003
<PAGE>
TABLE OF CONTENTS
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 . . . . . . . . . . . . . . . . 3
4.2 Performance; No Default. . . . . . . . . . . . . . . . . . . . 3
4.3 Compliance Certificates. . . . . . . . . . . . . . . . . . . . 3
4.4 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . 3
4.5 Purchase Permitted By Applicable Law, etc. . . . . . . . . . . 4
4.6 Sale of Other Notes. . . . . . . . . . . . . . . . . . . . . . 4
4.7 Payment of Special Counsel Fees. . . . . . . . . . . . . . . . 4
4.8 Private Placement Number . . . . . . . . . . . . . . . . . . . 4
4.9 Changes in Corporate Structure . . . . . . . . . . . . . . . . 4
4.10 New Credit Agreement; Lien Release . . . . . . . . . . . . . . 4
4.11 Proceedings and Documents. . . . . . . . . . . . . . . . . . . 5
5. REPRESENTATIONS AND WARRANTIES OF OBLIGORS. . . . . . . . . . . . . 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 . . . . . 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. . . 7
5.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.10 Title to Property; Leases. . . . . . . . . . . . . . . . . . . 8
5.11 Licenses, Permits, etc . . . . . . . . . . . . . . . . . . . . 8
5.12 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . 9
5.13 Private Offering by the Obligors . . . . . . . . . . . . . . . 10
5.14 Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . 10
5.15 Existing Debt; Future Liens. . . . . . . . . . . . . . . . . . 10
5.16 Foreign Assets Control Regulations, etc. . . . . . . . . . . . 11
5.17 Status under Certain Statutes. . . . . . . . . . . . . . . . . 11
5.18 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 11
5.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. REPRESENTATIONS OF THE PURCHASERS . . . . . . . . . . . . . . . . . 12
6.1 Purchase for Investment. . . . . . . . . . . . . . . . . . . . 12
6.2 Source of Funds. . . . . . . . . . . . . . . . . . . . . . . . 12
7. INFORMATION AS TO OBLIGORS, ETC . . . . . . . . . . . . . . . . . . 13
7.1 Financial and Business Information . . . . . . . . . . . . . . 13
7.2 Officer's Certificate. . . . . . . . . . . . . . . . . . . . . 17
7.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8. PREPAYMENT OF THE NOTES.. . . . . . . . . . . . . . . . . . . . . . 18
8.1 Required Prepayments, Payments at Maturity . . . . . . . . . . 18
8.2 Optional Prepayments with Make-Whole Amount. . . . . . . . . . 19
8.3 Limited Optional Prepayments of Series A Notes without
Make-Whole Amount. . . . . . . . . . . . . . . . . . . . . . . 19
8.4 Allocation of Partial Prepayments. . . . . . . . . . . . . . . 20
8.5 Change in Control. . . . . . . . . . . . . . . . . . . . . . . 20
8.6 Maturity; Surrender, etc.. . . . . . . . . . . . . . . . . . . 22
8.7 Offers to Purchase Notes, etc. . . . . . . . . . . . . . . . . 22
8.8 Make-Whole Amount. . . . . . . . . . . . . . . . . . . . . . . 23
9. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . 24
9.2 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.3 Maintenance of Properties. . . . . . . . . . . . . . . . . . . 24
9.4 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . 25
9.5 Corporate Existence, etc.. . . . . . . . . . . . . . . . . . . 25
9.6 Additional Obligors. . . . . . . . . . . . . . . . . . . . . . 25
10. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Tangible Net Worth.. . . . . . . . . . . . . . . . . . . . . . 26
10.2 Obligor Tangible Assets or Cash Flow.. . . . . . . . . . . . . 26
10.3 Fixed Charge Coverage. . . . . . . . . . . . . . . . . . . . . 27
10.4 Leverage Ratio.. . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 27
10.6 Restricted Investments.. . . . . . . . . . . . . . . . . . . . 28
10.7 Restricted Subsidiary Debt.. . . . . . . . . . . . . . . . . . 28
10.8 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.9 Merger, Consolidation, etc.. . . . . . . . . . . . . . . . . . 30
10.10 Asset Dispositions. . . . . . . . . . . . . . . . . . . . . . 32
10.11 Disposal of Ownership of a Restricted Subsidiary. . . . . . . 33
10.12 Transactions with Affiliates. . . . . . . . . . . . . . . . . 33
10.13 Lines of Business.. . . . . . . . . . . . . . . . . . . . . . 33
11. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 34
12. REMEDIES ON DEFAULT, ETC. . . . . . . . . . . . . . . . . . . . . . 36
12.1 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 37
12.3 Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.4 No Waivers or Election of Remedies, Expenses, etc. . . . . . . 37
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES . . . . . . . . . . . 38
13.1 Registration of Notes. . . . . . . . . . . . . . . . . . . . . 38
13.2 Transfer and Exchange of Notes . . . . . . . . . . . . . . . . 38
13.3 Replacement of Notes . . . . . . . . . . . . . . . . . . . . . 38
14. PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.1 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Home Office Payment. . . . . . . . . . . . . . . . . . . . . . 39
15. EXPENSES, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.1 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . 40
15.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. . . . 40
17. AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . . . . . . 40
17.1 Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 40
17.2 Solicitation of Holders of Notes . . . . . . . . . . . . . . . 41
17.3 Binding Effect, etc. . . . . . . . . . . . . . . . . . . . . . 41
17.4 Notes held by Obligors, etc. . . . . . . . . . . . . . . . . . 42
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19. REPRODUCTION OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . 42
20. CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . 43
21. SUBSTITUTION OF PURCHASER . . . . . . . . . . . . . . . . . . . . . 44
22. DESIGNATION OF FOREIGN SUBSIDIARIES . . . . . . . . . . . . . . . . 44
23. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 45
23.2 Payments Due on Non-Business Days; When Payments Deemed
Received . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
23.3 Limitation on Liability of Certain Obligors. . . . . . . . . . 45
23.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 46
23.5 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 46
23.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 46
23.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 46
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 3 -- PAYMENT INSTRUCTIONS AT CLOSING
SCHEDULE 4.9 -- CHANGES IN CORPORATE STRUCTURE
SCHEDULE 5.3 -- DISCLOSURE MATERIALS
SCHEDULE 5.4 -- SUBSIDIARIES, CERTAIN AGREEMENTS
SCHEDULE 5.5 -- FINANCIAL STATEMENTS
SCHEDULE 5.8 -- CERTAIN LITIGATION
SCHEDULE 5.11 -- LICENSES, PERMITS, ETC.
SCHEDULE 5.12 -- CERTAIN ERISA MATTERS
SCHEDULE 5.14 -- USE OF PROCEEDS
SCHEDULE 5.15 -- EXISTING DEBT AND LIENS
SCHEDULE 8.1 -- SCHEDULED PRINCIPAL PAYMENTS ON THE NOTES
SCHEDULE 10.6 -- CERTAIN EXISTING INVESTMENTS
SCHEDULE 18 -- OBLIGOR ADDRESSES FOR NOTICES
EXHIBIT 1A -- FORM OF SERIES A NOTE
EXHIBIT 1B -- FORM OF SERIES B NOTE
EXHIBIT 1C -- FORM OF SERIES C NOTE
EXHIBIT 4.4(a) -- FORM OF OPINION OF COUNSEL FOR THE OBLIGORS
EXHIBIT 4.4(b) -- FORM OF OPINION OF NEW JERSEY COUNSEL FOR
THE OBLIGORS
EXHIBIT 4.4(c) -- FORM OF OPINION OF SPECIAL COUNSEL FOR THE
PURCHASERS
EXHIBIT 9.6(a) -- FORM OF INSTRUMENT OF JOINDER
EXHIBIT 9.6(b) -- FORM OF ALLONGE
<PAGE>
Guest Supply, Inc.
and certain other Obligors
$15,000,000 7.06% Series A Senior Notes due November 15, 2009
$5,000,000 6.95% Series B Senior Notes due November 15, 2007
$5,000,000 6.70% Series C Senior Notes due November 15, 2003
As of December 3, 1997
[To be separately addressed to each
Purchaser listed in Schedule A]
Ladies and Gentlemen:
Each of GUEST SUPPLY, INC., a New Jersey corporation (together with
its successors and assigns, the "Company"), BRECKENRIDGE-REMY CO., a
Delaware corporation (together with its successors and assigns,
"Breckenridge-Remy"), GUEST DISTRIBUTION SERVICES, INC., a Delaware
corporation (together with its successors and assigns, "Guest
Distribution"), and GUEST PACKAGING, INC., a New Jersey corporation
(together with its successors and assigns, "Guest Packaging") (the Company,
Breckenridge-Remy, Guest Distribution and Guest Packaging, together with
any other Person that at any time becomes an Obligor pursuant to Section
9.6, are referred to herein, collectively, as the "Obligors") agrees with
you as follows:
1. AUTHORIZATION OF NOTES.
The Obligors will authorize the issue and sale of:
(a) $15,000,000 aggregate principal amount of their joint and
several 7.06% Series A Senior Notes due November 15, 2009 (as such notes
may be amended, restated, supplemented or otherwise modified from time to
time, the "Series A Notes," such term to include any such notes issued in
substitution therefor pursuant to Section 13 of the Note Purchase
Agreements);
(b) $5,000,000 aggregate principal amount of their joint and
several 6.95% Series B Senior Notes due November 15, 2007 (as such notes
may be amended, restated, supplemented or otherwise modified from time to
time, the "Series B Notes," such term to include any such notes issued in
substitution therefor pursuant to Section 13 of the Note Purchase
Agreements); and
(c) $5,000,000 aggregate principal amount of their joint and
several 6.70% Series C Senior Notes due November 15, 2003 (as such notes
may be amended, restated, supplemented or otherwise modified from time to
time, the "Series C Notes," such term to include any such notes issued in
substitution therefor pursuant to Section 13 of the Note Purchase
Agreements).
The Series A Notes, the Series B Notes and the Series C Notes,
collectively, are referred to herein as the "Notes." The Notes shall be
substantially in the respective forms set out in Exhibit 1A, Exhibit 1B and
Exhibit 1C, with such changes therefrom, if any, as may be approved by the
Purchasers and the Obligors. 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; references to a "Section" are, unless otherwise
specified, to a Section of this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Obligors
will issue and sell to you and you will purchase from the Obligors, at the
Closing provided for in Section 3, Notes of the Series and in the principal
amount specified below your name in Schedule A at the purchase price
of 100% of the principal amount thereof. Contemporaneously with entering
into this Agreement, the Obligors are entering into separate Note Purchase
Agreements (as may be amended, restated, supplemented or otherwise modified
from time to time, the "Other Agreements") identical with this Agreement
with each of the other purchasers named in Schedule A (the "Other
Purchasers"), providing for the sale at such Closing to each of the Other
Purchasers of Notes of the Series and in the principal amount specified
below its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements are several
and not joint obligations and you shall have no obligation under any Other
Agreement and no liability to any Person for the performance or
non-performance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Haythe & Curley, 237 Park
Avenue, New York, New York 10017, at 10:00 a.m., local time, at a closing
(the "Closing") on December 3, 1997. At the Closing, the Obligors
will deliver to you one or more Notes (as set forth below your name in
Schedule A), of the Series and in the denomination(s) indicated in Schedule
A, in the aggregate principal amount of your purchase, dated the date of
the Closing and registered in your name or in the name of your nominee, as
indicated in Schedule A, against payment by federal funds wire transfer in
immediately available funds in the amount of the purchase price therefor as
directed by the Obligors in Schedule 3. If at the Closing the Obligors
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 such Closing, of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Obligors in the Financing
Documents shall be correct when made and at the time of the Closing.
4.2 Performance; No Default.
The Obligors shall have performed and complied with all agreements and
conditions contained in the Financing Documents required to be performed or
complied with by them 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) at the Closing no Default or
Event of Default shall have occurred and be continuing. Neither the
Company nor any Restricted Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been
prohibited by Section 10.5, 10.10, 10.11 or 10.12 had such Sections applied
since such date.
4.3 Compliance Certificates.
(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 and 4.9 have been
fulfilled.
(b) Secretary's Certificate. Each Obligor shall have delivered
to you a certificate, dated the date of the Closing, certifying as to the
resolutions attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of each Financing Document to
which it is or is to be a party.
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 Haythe & Curley, counsel for the Obligors,
substantially in the form of 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 Obligors hereby instruct such counsel to
deliver such opinion to you),
(b) from Jamieson, Moore, Peskin & Spicer, New Jersey counsel
for the Obligors, substantially in the form of Exhibit 4.4(b) and covering
such other matters incident to such transactions as you or your counsel may
reasonably request (and the Obligors hereby instruct such counsel to
deliver such opinion to you), and
(c) from Hebb & Gitlin, 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 (a) 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, (b) 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 (c) 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 of your execution of this
Agreement. 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 Sale of Other Notes.
Contemporaneously with the Closing the Obligors shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at such Closing as specified in Schedule A.
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Obligors shall
have paid on or before the date of the Closing the fees, charges and
disbursements of your special counsel referred to in Section 4.4(c) to the
extent reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to the date of the Closing.
4.8 Private Placement Number.
Prior to the Closing, 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 Series of the Notes.
4.9 Changes in Corporate Structure.
Except as specified in Schedule 4.9, no Obligor shall have changed its
jurisdiction of incorporation or been a party to any merger or
consolidation, nor shall any Obligor 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.
4.10 New Credit Agreement; Lien Releases.
On or before the date of the Closing, the Obligors, PNC Bank, National
Association, and First Union National Bank shall have entered into the New
Credit Agreement, in form and substance reasonably satisfactory to you, and
the Company shall have delivered to you copies of the New Credit Agreement
and each other document executed in connection therewith requested
by you, certified as true and correct by a Responsible Officer. You shall
have received written evidence, in form and substance reasonably
satisfactory to you, that all Liens on property of the Company and the
Subsidiaries in favor of such banks, or in favor of any other lender or
lenders under any term loan or revolving credit facility, or in favor of
any agent or trustee therefor, shall have been released.
4.11 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by the Financing Documents and all documents and
instruments incident to such transactions shall be reasonably 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.
5. REPRESENTATIONS AND WARRANTIES OF OBLIGORS.
Each Obligor represents and warrants to you that as of the date of the
Closing:
5.1 Organization; Power and Authority.
Each Obligor 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. Each Obligor 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,
to execute and deliver each Financing Document to which it is or is to be a
party and to perform the provisions thereof.
5.2 Authorization, etc.
The Financing Documents have been duly authorized by all necessary
corporate action on the part of the Obligors, and each of the Note Purchase
Agreements constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of each
Obligor enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) 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, PNC Capital Markets, Inc., has
delivered to you and the Other Purchasers a copy of a Confidential Private
Placement Memorandum, dated September 1997 (including, without limitation,
all exhibits thereto, 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 the Subsidiaries. Except as disclosed in Schedule 5.3, the
Financing Documents, the Memorandum, the documents, certificates and other
writings delivered to you by or on behalf of any one or more of the
Obligors in connection with the transactions contemplated by the Financing
Documents 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
(provided, that with respect to any projected financial information or
forecasted information contained therein, the Obligors represent and
warrant only that such projections and forecasts have been made in good
faith and are based on reasonable assumptions). Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings delivered to you by or on behalf
of any one or more of the Obligors, or in the financial statements listed
in Schedule 5.5, since September 30, 1996, 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 would not reasonably be expected to have a Material Adverse
Effect. There is no fact known to any Obligor that would 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 any one or more of the
Obligors specifically for use in connection with the transactions
contemplated hereby.
5.4 Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization,
the percentage of shares of each class of its Capital Stock or similar
equity interests outstanding owned by the Company and each other
Subsidiary, whether such Subsidiary is a Domestic Subsidiary or a Foreign
Subsidiary and whether such Subsidiary is a Restricted Subsidiary or an
Unrestricted Subsidiary.
(b) All of the outstanding shares of Capital Stock or similar
equity interests of each Subsidiary have been validly issued, are fully
paid and nonassessable and are owned by the Company or another Subsidiary
free and clear of any Lien.
(c) Each Subsidiary 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 would 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 Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than the Financing Documents, the
agreements listed in Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits
to the Company or any of the Subsidiaries that owns outstanding shares of
Capital Stock or similar equity interests of such Subsidiary.
5.5 Financial Statements.
The Company has delivered to each Purchaser copies of the financial
statements of the Company and the Subsidiaries listed in Schedule 5.5. All
of such 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 the 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 interim financial statements, to the absence of footnotes and
to normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Obligors of the
Financing Documents will not
(a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
the Company or any Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or
any Subsidiary, or
(c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
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 Obligors of the Financing
Documents.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of any Obligor,
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, would 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, would reasonably be expected
to have a Material Adverse Effect.
5.9 Taxes.
The Company and the 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 (a) the amount of which is not individually or in the aggregate
Material or (b) 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 would reasonably be
expected to have a Material Adverse Effect. There is no waiver or
agreement in effect for the extension of time for the assessment of any tax
obligation of the Company or any Subsidiary. With the exception of an
ongoing Internal Revenue Service audit with respect to the Company's 1995
fiscal year, no federal income tax returns of the Company and the
Subsidiaries have been audited by the Internal Revenue Service.
5.10 Title to Property; Leases.
The Company and the 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 such date (except as sold
or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by the Financing Documents. 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.
Except as disclosed in Schedule 5.11, and except where the
circumstances with respect to the failure of any one or more of the
statements in the following clauses (a), (b) and (c) to be true
individually and in the aggregate would not reasonably be expected to have
a Material Adverse Effect:
(a) the Company and the Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, without known
conflict with the rights of others;
(b) to the best knowledge of each Obligor, no product or
practice of the Company or any Subsidiary infringes in any 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 each Obligor, there is no violation
by any Person of any right of the Company or any of the Subsidiaries with
respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of the 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 would 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 would
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.
(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.
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 the 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 the Subsidiaries
is not Material.
(e) Schedule 5.12 sets forth all ERISA Affiliates and all
"employee benefit plans" maintained by the Company (or any "affiliate"
thereof) or in respect of which the Notes could constitute an "employer
security" ("employee benefit plan" has the meaning specified in section 3
of ERISA, "affiliate" has the meaning specified in section 407(d) of ERISA
and section V of PTCE 95-60 and "employer security" has the meaning
specified in section 407(d) of ERISA).
(f) The execution and delivery of the Financing Documents 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 in the first sentence of
this Section 5.12(f) 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.
5.13 Private Offering by the Obligors.
Neither any of the Obligors nor anyone acting on behalf of any of them
has offered the Notes or any similar Securities for sale to, or solicited
any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than the Purchasers
and not more than 45 other Institutional Investors, each of which has been
offered the Notes at a private sale for investment. Neither any of the
Obligors nor anyone acting on behalf of any of them has taken, or will
take, any action that would subject the issuance or sale of the Notes to
the registration requirements of section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Obligors 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 any Obligor in a violation of Regulation X of
such Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of such Board (12 CFR 220). Margin stock does
not constitute more than 2% of the value of the consolidated assets of the
Company and the Subsidiaries and none of the Obligors has any present
intention that margin stock will constitute more than 2% 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
such Regulation G.
5.15 Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and the
Subsidiaries as of September 30, 1997, since which date there has been no
Material change in the amounts, interest rates, sinking funds, instalment
payments or maturities of the Debt of the Company or the Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or interest
on any Debt of the Company or such Subsidiary and no event or condition
exists with respect to any Debt 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 Debt 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 10.8.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Obligors hereunder nor their 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 Transportation Acts, 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 written notice of any claim, and neither the Company nor
any Subsidiary has knowledge of any proceeding that has been instituted
raising any claim against the Company or any of the 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 would
not reasonably be expected to result in a Material Adverse Effect. Except
as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any
facts that 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 would not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of the Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not transported or disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws in each
case in any manner that would 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 the Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply would not
reasonably be expected to result in a Material Adverse Effect.
5.19 Solvency.
The fair saleable value of the business and assets of each Obligor,
after giving effect to the transactions contemplated by the Financing
Documents, will be in excess of the amount that will
be required to pay the probable liabilities of such Obligor (including
subordinated, contingent, unmatured and unliquidated liabilities), on
existing debts as they may become absolute and matured. No Obligor, after
giving effect to the transactions contemplated by the Financing
Documents, will be engaged in any business or transaction, or be about to
engage in any business or transaction, for which such Obligor has
unreasonably small capital, and no Obligor has any intent to hinder, delay
or defraud any entity to which such Obligor is, or will become indebted, or
to incur debts that would be beyond such Obligor's ability to pay as they
mature.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you 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 your or their
property shall at all times be within your or their control. You
understand 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 an exemption
is required by law, and you agree that the Obligors are not required to
register the Notes. You represent that you are, or that you are a nominee
for, a "qualified institutional buyer" (as defined in Rule 144A) or an
"accredited investor" (as defined in Rule 501 under the Securities Act).
6.2 Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(a) you are an insurance company and the Source is an "insurance
company general account," as such term is defined in Department of
Labor Prohibited Transaction Class Exemption 95-60 (issued July 12, 1995)
("PTCE 95-60"), and there is no employee benefit plan, treating as a single
plan all plans maintained by the same employer or same employee
organization or affiliates thereof, with respect to which the amount of the
general account reserves and liabilities for all contracts held by or on
behalf of such plan exceeds 10% of the total reserves and liabilities of
such general account as determined under PTCE 95-60 (exclusive of separate
account liabilities) plus surplus, as set forth in the National Association
of Insurance Commissioners Annual Statement filed with your state of
domicile; or
(b) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other than a
separate account that is maintained solely in connection with your fixed
contractual obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan (including any
annuitant) are not affected in any manner by the investment performance of
the separate account; or
(c) the Source is either (i) an insurance company pooled
separate account, within the meaning of Department of Labor Prohibited
Transaction Class Exemption 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the Department of Labor
Prohibited Transaction Class Exemption 91-38 (issued July 12, 1991) and,
except as you have disclosed to the Company in writing pursuant to this
paragraph (c), 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
(d) the Source constitutes assets of an "investment fund"
(within the meaning of part V of Department of Labor Prohibited Transaction
Class Exemption 84-14 (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, exceed 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 (d); or
(e) the Source is a governmental plan; or
(f) 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 (f); or
(g) the Source does not include assets of any employee benefit
plan, 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 OBLIGORS, ETC.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 50 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) consolidated balance sheets of the Company and its
consolidated subsidiaries, as at the end of such quarter,
(ii) a consolidating balance sheet of the Company and the
Restricted Subsidiaries, as at the end of such quarter,
(iii) consolidated statements of operations and cash
flows of the Company and its consolidated 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, and
(iv) consolidating statements of operations of the Company
and the Restricted 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 the case of such consolidated statements 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;
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of
(i) consolidated balance sheets of the Company and its
consolidated subsidiaries, as at the end of such year,
(ii) a consolidating balance sheet of the Company and the
Restricted Subsidiaries, as at the end of such year,
(iii) consolidated statements of operations, cash flows and
shareholders' equity of the Company and its consolidated subsidiaries, for
such year, and
(iv) consolidating statements of operations of the Company
and the Restricted Subsidiaries for such year, setting forth in the case of
such consolidated statements in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance with
GAAP, and accompanied by
(A) in the case of such consolidated statements with
respect to the Company and its consolidated subsidiaries, 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, and
(B) a certificate of such accountants stating that
they have reviewed Sections 10.1 through 10.10, inclusive, of this
Agreement and stating further whether, in making their audit, they have
become aware of any condition or event under any of such Sections that then
constitutes a Default or an Event of Default, and, if they are aware that
any such condition or event then exists, specifying the nature and period
of the existence thereof (it being understood that such accountants shall
not be liable, directly or indirectly, for any failure to obtain knowledge
of any Default or Event of Default unless such accountants should have
obtained knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an audit);
(c) Audit Reports -- promptly upon receipt thereof, a copy of
each other report submitted to the Company or any Restricted Subsidiary by
independent accountants in connection with any management report, interim
or special audit report or comparable analysis prepared by them with
respect to the books of the Company or any Restricted Subsidiary;
(d) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public Securities
holders generally, and (ii) each regular or periodic report, each
registration statement (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 or
any successor thereto 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;
(e) Notice of Default or Event of Default -- promptly, and in
any event within five Business Days, after a Senior Financial 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 under any Financing Document 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 Obligors are taking or
propose to take with respect thereto;
(f) 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 of the Closing; 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, would reasonably be
expected to have a Material Adverse Effect;
(g) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any written 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 would reasonably be expected to have a Material Adverse Effect;
(h) Actions, Proceedings -- promptly after a Responsible Officer
becomes aware of the commencement thereof, notice of any action or
proceeding relating to the Company or any Subsidiary in any court or before
any Governmental Authority or arbitration board or tribunal as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, would reasonably be expected to have a Material
Adverse Effect;
(i) Rule 144A -- promptly upon request, to any holder of Notes
and any "qualified institutional buyer" (as defined in Rule 144A) to whom
any Note may be offered or sold by such holder, the information required
under paragraph (d)(4) of Rule 144A (or any similar successor provision of
Rule 144A) to permit compliance with Rule 144A in connection with a resale
of such Note; and
(j) 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 the
Subsidiaries or relating to the ability of the Obligors to perform their
obligations under the Financing Documents 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) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including, where
applicable, calculations in reasonable detail) required in order to
establish whether the Obligors were in compliance with the requirements of
Section 10.1 through Section 10.11, inclusive, 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, in his or
her capacity as such, 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 the 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 has not
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 Obligors shall have taken or propose
to take with respect thereto.
7.3 Inspection.
The Company shall permit the representatives of each holder of Notes
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 written notice to
the Company, during normal business hours and without undue interruption,
to visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and the 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 and the other Obligors, 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 Obligors
authorize such accountants to discuss the affairs, finances and accounts of
the Company and the Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
8.1 Required Prepayments, Payments at Maturity.
(a) Series A Notes. On November 15, 2001 and on each May 15 and
November 15 thereafter to and including May 15, 2009, the Obligors
will prepay the principal amount of Series A Notes specified in Schedule
8.1 under the column heading "Principal Amount of Series A Notes Scheduled
to be Paid" with respect to such date (or such lesser principal amount as
shall then be outstanding) at par and without payment of any Make-Whole
Amount or any premium, and the Obligors will pay all of the principal
amount of the Series A Notes remaining outstanding, if any, on November 15,
2009. Each partial prepayment of the Series A Notes pursuant to Section
8.2 or Section 8.3 will be applied, first, to the amount due on the
maturity date of the Series A Notes and, second, to the mandatory
prepayments applicable to the Series A Notes, as set forth in this Section
8.1(a) and Schedule 8.1, in the inverse order of the maturity thereof. In
the event that less than all of the Series A Notes are prepaid, purchased,
redeemed or otherwise acquired by any Obligor or any Affiliate pursuant to
an offer made pursuant to Section 8.5, Section 8.7 or the definition of
Debt Prepayment Application, then each such partial prepayment, purchase,
redemption or other acquisition of the Series A Notes will reduce the
principal amount of each mandatory prepayment applicable to the Series A
Notes, as set forth in this Section 8.1(a) and Schedule 8.1, and the
payment at maturity of the Series A Notes in the same proportion as the
aggregate unpaid principal amount of the Series A Notes is reduced as a
result of such prepayment, purchase, redemption or other acquisition.
(b) Series B Notes. On November 15, 2000 and on each May 15 and
November 15 thereafter to and including May 15, 2007, the Obligors
will prepay the principal amount of Series B Notes specified in Schedule 8.1
under the column heading "Principal Amount of Series B Notes Scheduled to
be Paid" with respect to such date (or such lesser principal amount as
shall then be outstanding) at par and without payment of any Make-Whole
Amount or any premium, and the Obligors will pay all of the principal
amount of the Series B Notes remaining outstanding, if any, on November 15,
2007. Each partial prepayment of the Series B Notes pursuant to Section
8.2 will be applied, first, to the amount due on the maturity date of the
Series B Notes and, second, to the mandatory prepayments applicable to the
Series B Notes, as set forth in this Section 8.1(b) and Schedule 8.1, in
the inverse order of the maturity thereof. In the event that less than all
of the Series B Notes are prepaid, purchased, redeemed or otherwise
acquired by any Obligor or any Affiliate pursuant to an offer made pursuant
to Section 8.5, Section 8.7 or the definition of Debt Prepayment
Application, then each such partial prepayment, purchase, redemption or
other acquisition of the Series B Notes will reduce the principal amount of
each mandatory prepayment applicable to the Series B Notes, as set forth in
this Section 8.1(b) and Schedule 8.1, and the payment at maturity of the
Series B Notes in the same proportion as the aggregate unpaid principal
amount of the Series B Notes is reduced as a result of such prepayment,
purchase, redemption or other acquisition.
(c) Series C Notes. On November 15, 1999 and on each May 15 and
November 15 thereafter to and including May 15, 2003, the Obligors
will prepay the principal amount of Series C Notes specified in Schedule
8.1 under the column heading "Principal Amount of Series C Notes Scheduled
to be Paid" with respect to such date (or such lesser principal amount as
shall then be outstanding) at par and without payment of any Make-Whole
Amount or any premium, and the Obligors will pay all of the principal
amount of the Series C Notes remaining outstanding, if any, on November 15,
2003. Each partial prepayment of the Series C Notes pursuant to Section
8.2 will be applied, first, to the amount due on the maturity date of the
Series C Notes and, second, to the mandatory prepayments applicable to the
Series C Notes, as set forth in this Section 8.1(c) and Schedule 8.1, in
the inverse order of the maturity thereof. In the event that less than all
of the Series C Notes are prepaid, purchased, redeemed or otherwise
acquired by any Obligor or any Affiliate pursuant to an offer made pursuant
to Section 8.5, Section 8.7 or the definition of Debt Prepayment
Application, then each such partial prepayment, purchase, redemption or
other acquisition of the Series C Notes will reduce the principal amount of
each mandatory prepayment applicable to the Series C Notes, as set forth in
this Section 8.1(c) and Schedule 8.1, and the payment at maturity of the
Series C Notes in the same proportion as the aggregate unpaid principal
amount of the Series C Notes is reduced as a result of such prepayment,
purchase, redemption or other acquisition.
8.2 Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time part of, the Notes (but if in part,
in an amount not less than $2,500,000 or such lesser amount as shall then
be outstanding), at 100% of the principal amount so prepaid, plus, with
respect to the principal amount of each Note so prepaid, the applicable
Make-Whole Amount determined for the prepayment date with respect to such
principal amount, together with interest as provided in Section 8.6. The
Company will give each holder of Notes 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 such prepayment date, the aggregate principal amount of 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 8.4), and the interest to be paid on the prepayment date with
respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount 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 Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
8.3 Limited Optional Prepayments of Series A Notes without Make-Whole
Amount.
The Company may, at its option, upon notice as provided below, prepay
pursuant to this Section 8.3, on any date on or after November 15, 2001 on
which a principal amount of Series A Notes is required to be prepaid
pursuant to Section 8.1(a) and Schedule 8.1, an additional principal
amount of the Series A Notes equal to the principal amount of Series A
Notes so required to be prepaid on such date, at 100% of the principal
amount so prepaid, at par and without any Make-Whole Amount or premium,
provided that the aggregate principal amount of Series A Notes prepaid
pursuant to this Section 8.3 on all such dates together shall in no event
exceed $3,750,000. The Company will give each holder of Series A Notes
written notice of each optional prepayment under this Section 8.3 not less
than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such prepayment date, the
aggregate principal amount of the Series A Notes to be prepaid on such date
pursuant to this Section 8.3, the principal amount of each Series A Note
held by such holder to be prepaid pursuant to this Section 8.3 (determined
in accordance with Section 8.4) and a schedule (similar in format to
Schedule 8.1) setting forth the Company's determination of the remaining
required scheduled principal payments on the Series A Notes after giving
effect to the proposed prepayment under this Section 8.3 (which
determination shall be for informational purposes only and shall not be
binding upon any holder of Notes).
8.4 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes pursuant to
Section 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes of each Series (without distinguishing
among the different Series) at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof
not theretofore prepaid. In the case of each partial prepayment of the
Notes of any Series pursuant to Section 8.1 or 8.3, the principal
amount of the Notes of such Series shall be allocated among all of the
Notes of such Series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not
theretofore prepaid.
8.5 Change in Control.
(a) Notice of Change in Control or Control Event. The Company
will, within three Business Days after any Responsible Officer has
knowledge of the occurrence of any Change in Control or Control Event, give
written notice of such Change in Control or Control Event to each holder of
Notes (by telecopy transmission and, simultaneously with the sending of
such telecopied notice, by sending a copy of such notice to each such
holder via an overnight courier of national reputation) unless notice in
respect of such Change in Control (or the Change in Control contemplated by
such Control Event) shall have been given previously pursuant to clause (b)
of this Section 8.5. If a Change in Control has occurred, such notices
shall contain and constitute an offer to prepay Notes as described in
clause (c) of this Section 8.5 and shall be accompanied by the certificate
described in clause (g) of this Section 8.5. In the case of any such
notice containing and constituting such an offer to prepay Notes, if the
Company shall not have received a written response to such first notice
from each holder of Notes within ten days after the transmission of such
telecopy thereof, then the Company will immediately send a second such
written notice via an overnight courier of national reputation to each
holder of Notes who shall have not previously responded to the Company.
(b) Condition to Action. Neither the Company nor any other
Obligor will take any action that consummates or finalizes a Change in
Control unless (i) at least 30 days prior to such action it shall have
given to each holder of Notes written notice containing and constituting an
offer to prepay Notes as described in clause (c) of this Section 8.5,
accompanied by the certificate described in clause (g) of this Section 8.5,
and
(ii) contemporaneously with such action, the Obligors prepay all Notes
required to be prepaid in accordance with this Section 8.5.
(c) Offer to Prepay Notes. The offer to prepay Notes
contemplated by clauses (a) and (b) of this Section 8.5 shall be a written
offer to prepay, in accordance with and subject to this Section 8.5, all,
but not less than all, the Notes held by each holder (in this case only,
"holder" in respect of any Note registered in the name of a nominee for a
disclosed beneficial owner shall mean such beneficial owner) on a date
specified in such offer (the "Proposed Prepayment Date"). If such Proposed
Prepayment Date is in connection with an offer contemplated by clause (a)
of this Section 8.5, such date shall be not less than 30 days and not more
than 60 days after the date of the first notice referred to in clause (a)
of this Section 8.5 (if the Proposed Prepayment Date shall not be specified
in such first notice, the Proposed Prepayment Date shall be the 30th day
after the date of such notice).
(d) Acceptance, Rejection. A holder of Notes may accept the
offer to prepay made pursuant to this Section 8.5 by causing a notice of
such acceptance to be delivered to the Company at least ten days prior to
the Proposed Prepayment Date. A failure by a holder of Notes to respond
(by such time) to an offer to prepay made pursuant to this Section 8.5
shall be deemed to constitute an acceptance of such offer by such holder.
(e) Prepayment. Prepayment of the Notes to be prepaid pursuant
to this Section 8.5 shall be at 100% of the principal amount of such Notes,
at par and without payment of any Make-Whole Amount or any premium,
together with interest on such Notes accrued to the date of prepayment.
The prepayment shall be made on the Proposed Prepayment Date except as
provided in clause (f) of this Section 8.5.
(f) Deferral Pending Change in Control. The obligation of the
Obligors to prepay Notes pursuant to the offers required by clause (b) and
accepted in accordance with clause (d) of this Section 8.5 is subject to
the occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control
does not occur on the Proposed Prepayment Date in respect thereof, the
prepayment shall be deferred until and shall be made on the date on which
such Change in Control occurs. The Company shall keep each holder of
Notes reasonably and timely informed of (i) any such deferral of the date
of prepayment, (ii) the date on which such Change in Control and the
prepayment are expected to occur, and
(iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and
acceptances made pursuant to this Section 8.5 in respect of such Change in
Control shall be deemed rescinded). In the event that such Change in
Control is deferred for 60 or more days after the Proposed Prepayment Date,
the offers and acceptances made pursuant to this Section 8.5 in respect of
such Change in Control shall be deemed rescinded. If any such offers and
acceptances are deemed rescinded pursuant to this clause (f), then all
requirements of this Section 8.5 (including, without limitation, the
requirement to give notice and make offers pursuant to clauses (a) and (b))
with respect to any Change in Control (including, without limitation, with
respect to such deferred Change in Control) occurring after such
rescission shall be reinstated.
(g) Officer's Certificate. Each offer to prepay the Notes
pursuant to this Section 8.5 shall be accompanied by a certificate,
executed by a Senior Financial Officer and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.5; (iii) the principal amount of each Note
offered to be prepaid; (iv) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed Prepayment Date; (v)
that the conditions of this Section 8.5 have been fulfilled; and (vi) in
reasonable detail, the nature and date or proposed date of the Change in
Control.
8.6 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8 or
pursuant to the definition of Debt Prepayment Application, 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 Make-Whole
Amount, if any provided, that no Make-Whole Amount shall be payable in
connection with a prepayment pursuant to Section 8.1, Section 8.3 or
Section 8.5). From and after such date, unless the Obligors shall fail
to pay such principal amount when so due and payable, together with the
interest and Make-Whole 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 cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
8.7 Offers to Purchase Notes, etc.
The Obligors will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of the Notes in
accordance with the terms of the Note Purchase Agreements and the Notes or
(b) pursuant to an offer to purchase made by an Obligor or an
Affiliate pro rata to the holders of all Notes of all Series at the time
outstanding upon the same terms and conditions. Any such offer shall
provide each holder with sufficient information to enable it to make an
informed decision with respect to such offer, and shall remain open for at
least 30 Business Days. If the holders of more than 10% of the principal
amount of the Notes then outstanding accept any such offer, the Company
shall promptly notify the remaining holders of such fact and the expiration
date for the acceptance by holders of Notes of such offer shall be extended
by the number of days necessary to give each such remaining holder at least
10 Business Days from its receipt of such notice to accept such offer. The
Obligors will immediately cancel all Notes acquired by any of them or any
Affiliate pursuant to any payment, prepayment or purchase of Notes
pursuant to any provision of the Note Purchase Agreements and no Notes may
be issued in substitution or exchange for any such Notes.
8.8 Make-Whole Amount.
The term "Make-Whole 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 Make-
Whole Amount may in no event be less than zero. For the purposes of
determining the Make- Whole 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 the
definition of Debt Prepayment Application 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 (x) 0.50% plus (y) 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 (ii) 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 (b) 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 (ii) the sum of the
products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal
by (b) 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
or the definition of Debt Prepayment Application.
"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 the definition of Debt Prepayment Application or has
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
Each Obligor covenants that so long as any of the Notes are
outstanding:
9.1 Compliance with Law.
The Company will and will cause each of the Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which
each of them is subject, 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 would 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 the 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 customary in the case
of entities of established reputations engaged in the same or a similar
business and similarly situated.
9.3 Maintenance of Properties.
The Company will and will cause each of the 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 or
the maintenance of any of its properties (i) if such discontinuance is
desirable in the conduct of its business and the Company has concluded that
such discontinuance would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or (ii) where such properties
are the subject of a Transfer permitted by Section 10.10.
9.4 Payment of Taxes and Claims.
The Company will and will cause each of the 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, assessments, charges or levies 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 claims if (a) 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 (b) the nonpayment of all such taxes, assessments and
claims in the aggregate would not reasonably be expected to
have a Material Adverse Effect.
9.5 Corporate Existence, etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.9, 10.10 and 10.11,
the Company will at all times preserve and keep in full force and effect
the corporate existence of each of the Restricted Subsidiaries (unless
merged into the Company or a Restricted Subsidiary) and all rights and
franchises of the Company and the Restricted 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 would not, individually or in the aggregate, have a Material
Adverse Effect.
9.6 Additional Obligors.
The Company will cause each Domestic Subsidiary to, on and at all
times after the Relevant Date with respect to such Domestic Subsidiary, be
an Obligor under the Financing Documents. The Company will cause each
Subsidiary that becomes a Domestic Subsidiary after the date of the
Closing to, not later than the Relevant Date with respect to such
Subsidiary:
(a) become an Obligor under the Financing Documents by executing
and delivering, to each holder of the Notes, an instrument of joinder, in
the form of Exhibit 9.6(a) (each, an "Instrument of Joinder"), pursuant to
which such Domestic Subsidiary shall become jointly and severally liable as
an Obligor for the due and punctual performance and observance of all of
the covenants and other obligations in the Notes and the Note Purchase
Agreements to be performed or observed by the Obligors; immediately upon
the execution and delivery of an Instrument of Joinder to one or more of
the holders of Notes (and whether or not such Domestic Subsidiary shall, as
required by Section 9.6(b), execute and deliver any Allonges with respect
to the Notes), such Domestic Subsidiary shall be deemed to have become an
Obligor for purposes of all of the Financing Documents, including, without
limitation, for purposes of the definition of "Obligors" set forth in each
Note Purchase Agreement and each Note;
(b) execute and deliver, to each holder of Notes, an allonge
with respect to each of the Notes, in the form of Exhibit 9.6(b) (each, an
"Allonge"), pursuant to which such Domestic Subsidiary shall confirm its
joint and several liability as an Obligor for the due and punctual payment
of the principal of and Make-Whole Amount, if any, and interest on each
of the Notes;
(c) deliver, to each holder of Notes, copies of the constitutive
documents of such Domestic Subsidiary and corporate resolutions (or
equivalent) authorizing such transactions, in each case certified as true
and correct by a Responsible Officer of the Company and an officer of such
Subsidiary; and
(d) cause to be delivered, to each holder of Notes, an opinion
of Haythe & Curley or a nationally recognized independent counsel for such
Domestic Subsidiary, addressed to each holder of Notes and dated the date
of delivery of Instruments of Joinder by such Domestic Subsidiary, covering
substantially the same matters with respect to such Domestic Subsidiary
(recognizing and giving effect to the execution and delivery of such
Instruments of Joinder and Allonges by such Domestic Subsidiary) as
were covered with respect to the Initial Subsidiary Obligors in the
opinions of counsel for the Obligors delivered on the date of the Closing
pursuant to Sections 4.4(a) and 4.4(b), and covering such other matters as
the Required Holders may reasonably request.
The term "Relevant Date" means (i) with respect to each Subsidiary that is
a Domestic Subsidiary as of the date of the Closing, the date of the
Closing, and (ii) with respect to any Subsidiary that becomes a Domestic
Subsidiary after the date of the Closing, the date that is the earlier of
(A) 20 Business Days after such Subsidiary first becomes a Domestic
Subsidiary or (B) the date that such Subsidiary first becomes obligated in
any manner (whether as principal obligor, as guarantor or surety, or
otherwise) in respect of any of the Debt under the New Credit Agreement or
any promissory note, letter of credit, Guaranty or other agreement or
instrument related to the New Credit Agreement.
10. NEGATIVE COVENANTS.
Each Obligor covenants that so long as any of the Notes are
outstanding:
10.1 Tangible Net Worth.
The Company will not, at any time, permit Consolidated Tangible Net
Worth to be less than the sum of (a) $31,000,000, plus (b) an aggregate
amount equal to 50% of Consolidated Net Income (but, in the case of each
fiscal year, only if a positive number) for each completed fiscal year of
the Company ended after September 30, 1996.
10.2 Obligor Tangible Assets or Cash Flow.
The Company will not, at any time, permit the ratio of (a)
Consolidated Obligor Tangible Assets to (b) Consolidated Tangible Assets to
be less than 0.9 to 1.0, unless at such time the Obligor Cash Flow Ratio is
0.9 to 1.0 or greater.
10.3 Fixed Charge Coverage.
The Company will not, at any time, permit the ratio of (a)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters of the Company ended at, or most recently prior
to, such time to (b) Consolidated Fixed Charges for such period, to be less
than 1.25 to 1.0.
10.4 Leverage Ratio.
The Company will not, at any time, permit the ratio of (a)
Consolidated Debt to (b) Consolidated Capitalization to be greater than 0.6
to 1.0.
10.5 Restricted Payments.
(a) Limitation. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, through a Subsidiary or
otherwise, at any time, declare or make, or incur any liability to declare
or make, any Restricted Payment whether in cash or other property) unless:
(i) immediately after giving effect to such action the
aggregate amount of Restricted Payments of the Company and the Restricted
Subsidiaries declared or made during the period commencing on October 1,
1997 and ending on the date such Restricted Payment is declared or made,
inclusive, would not exceed the sum of
(A) $4,000,000, plus
(B) 50% of Consolidated Net Income for such period (or
minus 100% of Consolidated Net Income for such period if Consolidated Net
Income for such period is a loss), plus
(C) the aggregate amount of cash proceeds (net of all
costs and out-of-pocket expenses in connection therewith, including,
without limitation, placement, underwriting and brokerage fees and
expenses) received by the Company during such period from the sale of
Capital Stock (other than Redeemable Capital Stock) of the Company; and
(ii) immediately before, and immediately after giving effect
to, such action, no Default or Event of Default exists or would exist.
(b) Time of Payment. The Company will not, and will not permit
any Restricted Subsidiary to, authorize a Restricted Payment that is not
payable within 60 days of authorization.
10.6 Restricted Investments.
(a) Limitation. The Company will not, and will not permit any
Restricted Subsidiary to, at any time, make or authorize any Restricted
Investment unless immediately after giving effect to such action:
(i) the aggregate value of all Restricted Investments of
the Company and the Restricted Subsidiaries (valued immediately after such
action) would not exceed 10% of Consolidated Tangible Assets (valued
immediately after such action); and
(ii) no Default or Event of Default exists or would exist.
(b) Investments of Restricted Subsidiaries. Each Person that
becomes a Restricted Subsidiary after the date of the Closing will be
deemed to have made, on the date such Person becomes a Restricted
Subsidiary, all Restricted Investments of such Person in existence on such
date. Investments in any Person that ceases to be a Restricted Subsidiary
after the date of the Closing (but in which the Company or another
Restricted Subsidiary continues to maintain an Investment) will be deemed
to have been made on the date on which such Person ceases to be a
Restricted Subsidiary.
10.7 Restricted Subsidiary Debt.
The Company will not permit any Restricted Subsidiary to, at any time,
directly or indirectly create, assume, incur, guaranty or in any other
manner become liable in respect of (collectively, for purposes of this
Section 10.7, "incurrences") any Debt other than:
(a) Debt evidenced by the Notes;
(b) Debt of Restricted Subsidiaries that are Obligors, which
Debt is evidenced by the New Credit Agreement or any promissory note,
letter of credit or Guaranty issued thereunder;
(c) Debt owed to the Company or to a Restricted Subsidiary; and
(d) Debt, other than Debt permitted pursuant to the foregoing
clauses (a), (b) and (c), provided that at the time of incurrence of such
Debt and after giving effect thereto the sum, without duplication, of (A)
the aggregate amount of all Indebtedness of the Company and the Restricted
Subsidiaries secured by Liens other than those permitted pursuant to
clauses (a) through (h), inclusive, of Section 10.8, plus (B) the aggregate
amount of Debt of Restricted Subsidiaries, other than Debt permitted
pursuant to the foregoing clauses (a), (b) and (c), shall not exceed 15% of
Consolidated Tangible Assets.
10.8 Liens.
The Company will not, and will not permit any Restricted Subsidiary
to, at any time, directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien on or
with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits (unless it makes,
or causes to be made, effective provision whereby the Notes will be equally
and ratably secured with any and all other obligations thereby secured,
such security to be pursuant to one or more agreements reasonably
satisfactory to the Required Holders and, in any such case, the Notes shall
have the benefit, to the fullest extent that, and with such priority as,
the holders of the Notes may be entitled under applicable law, of an
equitable Lien on such property), except:
(a) Liens for property taxes and assessments or other
governmental levies or charges, provided, in each case, that the amounts
secured by such Liens are not yet required by Section 9.4 to be paid;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet required by
Section 9.4 to be paid;
(c) Liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Company or a Restricted Subsidiary shall at any
time in good faith be prosecuting an appropriate appeal or proceeding for a
review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured and remains in effect;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory obligations,
surety bonds, appeal bonds, bids, leases (other than Capital Leases),
performance bonds, purchase, construction or sales contracts and other
similar obligations, in each case not incurred or made in connection with
the borrowing of money, the obtaining of advances or credit, the payment of
the deferred purchase price of property or any other incurrence of
Indebtedness and that do not materially impair the use of any property of
the Company or a Restricted Subsidiary in the operation of the business of
the Company and the Restricted Subsidiaries taken as a whole;
(e) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way that are necessary
for the conduct of activities or that customarily exist on properties of
Persons engaged in similar activities and that do not materially impair use
of any property in the operation of the business of the Company or any
Restricted Subsidiary;
(f) Liens on property or assets of any Restricted Subsidiary
securing Indebtedness owing to the Company or to any Restricted Subsidiary;
(g) Liens incurred after the date of the Closing given to secure
the payment, or to secure Indebtedness incurred to provide funds for the
payment, of the purchase price of fixed assets intended to be used in
carrying on the business of the Company or a Restricted Subsidiary,
including Liens existing on such fixed assets at the time of acquisition
thereof by the Company or such Restricted Subsidiary, or at the time of
acquisition by the Company or a Restricted Subsidiary of any business
entity then owning such fixed assets, whether or not such existing Liens
were given to secure the payment of the purchase price of the fixed assets
to which they attach, so long as such Liens were not incurred, extended or
renewed in contemplation of such acquisition, provided that (i) each such
Lien shall attach solely to the fixed assets so acquired, (ii) at
the time of acquisition of such fixed assets by the Company or a Restricted
Subsidiary, the aggregate amount remaining unpaid on all Indebtedness
secured by Liens on such fixed assets, whether or not assumed by the
Company or a Restricted Subsidiary, shall not exceed an amount equal to
100% of the lesser of the total purchase price or the Fair Market
Value at the time of acquisition of such fixed assets, (iii) each such Lien
is created or assumed with respect to the fixed assets to which it attaches
at the time of, or within 180 days immediately after, such acquisition and
(iv) immediately before, and immediately after giving effect to, the
incurrence of such Lien and such Indebtedness, no Default or Event of
Default exists or would exist;
(h) any Lien extending, renewing or replacing any Lien permitted
by clause (g) of this Section 10.8, provided that (i) the principal amount
of Indebtedness secured by such Lien immediately prior to such extension,
renewal or replacement is not increased, (ii) such Lien is not extended to
any property other than the property subject to such Lien immediately prior
to such extension, renewal or replacement, and (iii) immediately before,
and immediately after giving effect to, such extension, renewal or
replacement, no Default or Event of Default exists or would exist; and
(i) Liens, in addition to those described in clauses (a) through
(h), inclusive, of this Section 10.8, provided that the sum, without
duplication, of (A) the aggregate amount of all Indebtedness of the Company
and the Restricted Subsidiaries secured by Liens other than those permitted
pursuant to such clauses (a) through (h), inclusive, of this Section 10.8,
plus (B) the aggregate amount of Debt of Restricted Subsidiaries, other
than Debt permitted pursuant to the clauses (a), (b) and (c) of Section
10.7, shall not exceed 15% of Consolidated Tangible Assets.
10.9 Merger, Consolidation, etc.
(a) Company. The Company will not consolidate, merge or
amalgamate with or into any other Person, or convey, transfer or lease all
or substantially all of its property in a single transaction or series of
transactions to any Person, provided that the foregoing restriction does
not apply to the consolidation, merger or amalgamation of the Company with
or into, or the conveyance, transfer or lease of all or substantially all
of the property of the Company in a single transaction or series of
transactions to, another corporation if:
(i) the successor formed by such consolidation or
amalgamation or the survivor of such merger or the Person that acquires by
conveyance, transfer or lease all or substantially all of the property of
the Company as an entirety, as the case may be (the "Successor
Corporation") shall be a solvent corporation organized and existing under
the laws of the United States of America, any state thereof or the District
of Columbia;
(ii) if the Company is not the Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of the Financing Documents (pursuant to such
agreements and instruments as shall be reasonably satisfactory to the
Required Holders) and the Company shall have caused to be delivered to each
holder of Notes an opinion of Haythe & Curley or a nationally recognized
independent counsel reasonably satisfactory to the Required Holders, to the
effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms of the
Financing Documents; and
(iii) immediately before, and immediately after giving
effect to, such transaction, no Default or Event of Default exists or would
exist.
(b) Restricted Subsidiaries. The Company will not permit any
Restricted Subsidiary to consolidate, merge or amalgamate with or into any
other Person, or convey, transfer or lease all or substantially all of its
property in a single transaction or series of transactions to any Person,
provided that the foregoing restriction does not apply to the following so
long as, in each case, immediately before, and immediately after giving
effect to, such transaction, no Default or Event of Default exists or would
exist:
(i) the consolidation, merger or amalgamation of a
Restricted Subsidiary with or into, or the conveyance, transfer or lease of
all or substantially all of the property of a Restricted Subsidiary in a
single transaction or series of transactions to, the Company so long as the
applicable requirements of Section 10.9(a) are satisfied;
(ii) the consolidation, merger or amalgamation of a
Restricted Subsidiary with or into, or the conveyance, transfer or lease of
all or substantially all of the property of a Restricted Subsidiary in a
single transaction or series of transactions to, a Wholly-Owned Restricted
Subsidiary (provided that if such first-mentioned Restricted Subsidiary is
an Obligor then the requirements of clause (iii) below shall be satisfied);
and
(iii) the consolidation, merger or amalgamation of a
Restricted Subsidiary with or into, or the conveyance, transfer or lease of
all or substantially all of the property of a Restricted Subsidiary in a
single transaction or series of transactions to, another corporation if:
(A) the successor formed by such consolidation or
amalgamation or the survivor of such merger or the Person that acquires
by conveyance, transfer or lease all or substantially all of the property
of such Restricted Subsidiary as an entirety, as the case may be (the
"Successor Restricted Subsidiary") shall be a Restricted Subsidiary and
shall be a solvent corporation organized and existing under the laws of (1)
if such first-mentioned Restricted Subsidiary was a Domestic Subsidiary,
the United States of America, any state thereof or the District of
Columbia or (2) otherwise, the same jurisdiction as the jurisdiction of
organization of such first-mentioned Restricted Subsidiary or the United
States of America, any state thereof or the District of Columbia; and
(B) if such first-mentioned Restricted Subsidiary is
an Obligor and is not the Successor Restricted Subsidiary, such successor
corporation shall have executed and delivered to each holder of Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of the Financing Documents (pursuant to such
agreements and instruments as shall be reasonably satisfactory to the
Required Holders) and the Company shall have caused to be delivered to each
holder of Notes an opinion of Haythe & Curley or a nationally recognized
independent counsel reasonably satisfactory to the Required Holders, to the
effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms of the
Financing Documents.
10.10 Asset Dispositions.
Except as permitted under Section 10.9, the Company will not, and will
not permit any Restricted Subsidiary to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, such Asset
Disposition is in exchange for consideration having a Fair Market Value at
least equal to that of the property exchanged and is in the best interest
of the Company or such Restricted Subsidiary;
(b) immediately before, and immediately after giving effect to,
the Asset Disposition, no Default or Event of Default exists or would
exist; and
(c) immediately after giving effect to such Asset Disposition,
the Disposition Value of all property that was the subject of any Asset
Disposition occurring during the period of 365 consecutive days then ending
would not exceed 10% of Consolidated Tangible Assets determined as of the
end of the most recently ended fiscal year of the Company.
If the Net Proceeds Amount for any Transfer is applied within 365 days
after such Transfer to a Property Reinvestment Application or within 365
days after such Transfer to a Debt Prepayment Application, then such
Transfer, only for the purpose of determining compliance with clause (c) of
this Section 10.10 as of any date on or after the Net Proceeds Amount is so
applied, shall be deemed not to be an Asset Disposition.
10.11 Disposal of Ownership of a Restricted Subsidiary.
The Company will not, and will not permit any Restricted Subsidiary
to, Transfer any shares of Restricted Subsidiary Stock, nor will the
Company permit any Restricted Subsidiary to issue, sell or otherwise
dispose of any shares of its own Restricted Subsidiary Stock, provided that
the foregoing restrictions do not apply to:
(a) the issuance of directors' qualifying shares by any
Restricted Subsidiary;
(b) any such Transfer of Restricted Subsidiary Stock
constituting a Transfer described in clause (a) of the definition of Asset
Disposition; and
(c) the Transfer of all of the Restricted Subsidiary Stock of a
Restricted Subsidiary owned by the Company and the other Restricted
Subsidiaries if:
(i) such Transfer satisfies the requirements of Section
10.10,
(ii) in connection with such Transfer the entire Investment
(whether represented by Capital Stock, Indebtedness, claims or otherwise)
of the Company and the other Restricted Subsidiaries in such Restricted
Subsidiary is sold, transferred or otherwise disposed of to a Person other
than (A) the Company, (B) another Restricted Subsidiary not being
simultaneously disposed of, or (C) an Affiliate, and
(iii) the Restricted Subsidiary being disposed of has no
continuing Investment in any other Restricted Subsidiary not being
simultaneously disposed of or in the Company.
10.12 Transactions with Affiliates.
The Company will not, and will not permit any Restricted 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 Restricted Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements
of the Company's or such Restricted Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
10.13 Lines of Business.
The Company will not, and will not permit any Restricted Subsidiary
to, engage in any business if, as a result, the general nature of the
business in which the Company and the Restricted Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the
general nature of the business in which the Company and the Restricted
Subsidiaries, taken as a whole, are engaged on the date of the Closing as
described in the Memorandum.
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 Obligors default in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Obligors default in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) any Obligor defaults in the performance of or compliance
with any term contained in Section 7.1(e) or Section 10.1 through 10.13,
inclusive; or
(d) any Obligor 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 30 days after the earlier of (i) a Senior Financial Officer
obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note; or
(e) any representation, warranty or other statement made in
writing by or on behalf of any Obligor or by any officer of any Obligor in
any Financing Document or in any certificate or other writing furnished in
connection with the transactions contemplated by, or pursuant to, any
Financing Document 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 Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment when due
(whether by lapse of time, by declaration, by call for redemption or
otherwise) of any principal of or premium or make-whole amount or interest
on any Indebtedness (other than Indebtedness under the Financing Documents)
or Securities beyond any period of grace provided with respect thereto, or
(ii) the Company or any Restricted Subsidiary is in default
in the performance of or compliance with any term of any evidence of any
Indebtedness (other than Indebtedness under the Financing Documents) or
Securities and as a consequence of such default or condition such
Indebtedness has become, or has been declared, due and payable before its
stated maturity or before its regularly scheduled date or dates of payment,
or
(iii) as a consequence of the occurrence or continuation
of any event or condition (other than the right of the holder of
Indebtedness or Securities to convert such Indebtedness or Securities into
equity interests), the Company or any Restricted Subsidiary has become
obligated to purchase or repay Indebtedness or Securities before its or
their regular maturity or before its or their regularly scheduled dates of
payment;
provided that (A) any one or more of the conditions or events
specified in the foregoing clauses (i), (ii) and (iii) of this paragraph
(f) shall constitute an Event of Default at any time only if the aggregate
principal amount of Indebtedness and Securities as to which any one or more
of such conditions or events has occurred and is continuing at
such time is, individually or collectively, at least $1,000,000 (or
equivalent) and (B) in determining such amount of Indebtedness there shall
be excluded the amount of any Indebtedness in respect of accounts payable
for goods and services arising in the ordinary course of business as to
which a good faith dispute exists; or
(g) the Company or any Restricted 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 or other 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
Restricted Subsidiary, 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, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any
Restricted Subsidiary, or any such petition shall be filed against the
Company or any Restricted Subsidiary and such petition shall not be
dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 (or equivalent) (excluding in the
calculation of such amount any final judgment to the extent, but only to
the extent, such judgment will be covered by payments from insurance
maintained by the Company or a Restricted Subsidiary (y) in respect of
which insurance the issuer thereof has agreed, in writing, to make such
payments in respect of such judgment and (z) the issuer of which insurance
is an independent commercial insurer that, in the good faith opinion of the
Company, is capable of discharging its payment obligations in connection
with such insurance) are rendered against one or more of the Company and
the Restricted Subsidiaries or against any of their properties and any one
or more of which judgments is not, within 30 days after entry thereof,
bonded, vacated, discharged or stayed pending appeal or otherwise stayed,
or are not discharged within 30 days after the expiration of any such stay;
or
(j) any Financing Document shall cease to be in full force and
effect (other than in accordance with its terms) or shall be declared by a
court or Governmental Authority of competent jurisdiction to be void,
voidable or unenforceable against any one or more Obligors party thereto,
or any Obligor asserts any of the foregoing in writing or before any court
or Governmental Authority; or
(k) 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 $1,000,000, (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
Restricted 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 Restricted 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, would reasonably be expected to have a Material Adverse Effect.
As used in Section 11(k), 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 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, any holder or holders of 66-2/3% 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 Make-Whole 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 Obligors acknowledge, 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 Obligors (except as herein
specifically provided for) and that the provision for payment of a
Make-Whole Amount by the Obligors 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 Obligors have paid all overdue interest on the
Notes, all principal of and Make-Whole Amount, if any, due and payable on
any Notes other than by reason of such declaration, and all interest on
such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the applicable 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 any Financing Document 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
Obligors under Section 15, the Company or any other Obligor will pay to the
holder of each Note on demand such further amount as shall be sufficient to
cover all reasonable out-of-pocket 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. Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes hereof,
and the Obligors shall not be affected by any notice or knowledge to the
contrary. 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.
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 its attorney duly authorized in writing and accompanied by the
name and address, and telecopy number, if any, for notices of each
transferee of such Note or part thereof), each of the Obligors shall
execute and deliver, at the Obligors' expense (except as provided below),
one or more new Notes (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 1A in the case of a Series A Note, Exhibit 1B in the case
of a Series B Note or Exhibit 1C in the case of a Series C Note. 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
Obligors 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 $100,000,
provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes of a Series, a Note of such Series
may be in a denomination of less than $100,000. 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 the last
sentence of Section 6.1 and the representation set forth in Section 6.2.
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 indemnity
reasonably satisfactory to it (provided that if the holder of such Note is,
or is a nominee for, an original Purchaser or another Person with a net
worth of at least $50,000,000, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Obligors at their own expense shall execute and deliver, in
lieu thereof, a new Note, 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, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in
Monmouth Junction, New Jersey, at the principal office of the Company in
such jurisdiction. The Company may at any time, by notice to each holder
of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in the
United States of America or the principal office of a bank or trust company
in the United States of America.
14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Obligors will pay all sums becoming due on such Note for
principal, Make-Whole 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 at such other 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 or at the place of payment most recently designated by the
Company pursuant to Section 14.1. 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 pursuant to Section 13.2. The
Obligors 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 Obligors will pay all reasonable out-of-pocket 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
Purchaser or any other holder of a Note in connection with such
transactions and in connection with any amendments, waivers or consents
under or in respect of any of the Financing Documents (whether or not such
any amendment, waiver or consent becomes effective), including, without
limitation: (a) the reasonable out-of-pocket costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or
defend) any rights under the Financing Documents or in responding to any
subpoena or other legal process or informal investigative demand issued
in connection with any of the Financing Documents, or by reason of being a
holder of any Note, and (b) reasonable out-of-pocket the costs and
expenses, including, without limitation, 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 by any of the Financing Documents. The Obligors
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 Obligors under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of
any provision of the Financing Documents, and the termination of the
Financing Documents.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of the Financing Documents, 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 any Obligor pursuant to any
of the Financing Documents shall be deemed representations and warranties
of such Obligor under this Agreement. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and understanding
among you and the Obligors 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 Obligors
and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of any of Sections 1, 2, 3, 4, 5, 6 and 21, or any
defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, and (b) no such amendment or waiver may,
without the written consent of the holder of each Note at the time
outstanding affected thereby, (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 reduce the rate or change the
time of payment or method of computation of interest or of the Make-Whole
Amount on, the Notes, (ii) change the definition of Required Holders or 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 8, 11(a), 11(b), 12, 17 and 20.
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 Obligors will not, and will not permit any
Subsidiary or Affiliate to, 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 of any waiver or amendment of any of the terms and provisions of
any of the Financing Documents 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.
(c) Consent in Contemplation of Transfer. Any consent made
pursuant to this Section 17 by a holder of Notes that has transferred or
has agreed to transfer its Notes to any Obligor, any Subsidiary or any
Affiliate and has provided or has agreed to provide such written consent as
a condition to such transfer shall be void and of no force or effect except
solely as to such holder, and any amendments effected or waivers granted or
to be effected or granted that would not have been or would not be so
effected or granted but for such consent (and the consents of all other
holders of Notes that were acquired under the same or similar conditions)
shall be void and of no force or effect except solely as to such holder.
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 Obligors 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 any
Obligor 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, restated, supplemented or otherwise modified.
17.4 Notes held by Obligors, 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 any Financing Document, or have directed the taking of any
action provided in any Financing Document 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 any Obligor
or any Subsidiary or Affiliate 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 (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) 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 any Obligor, to such Obligor at its address
set forth in Schedule 18, or at such other address as such Obligor 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.
The Financing Documents and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing (except
the Notes themselves), and (c) 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. Each Obligor 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 any Obligor 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 any Obligor or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that (unless
such information was obtained by means of the exercise of rights under
Section 7.3) was clearly marked or labeled or otherwise adequately
identified when received by you as being confidential information of such
Obligor 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 any Obligor, any Subsidiary or any director, officer, trustee, employee,
agent, attorney or affiliate of any Obligor 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, trustees,
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 any Obligor (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 (A) to effect compliance with any law,
rule, regulation or order applicable to you, (B) in response to any
subpoena or other legal process, (C) in connection with any litigation to
which you are a party or (D) 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. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by
this Agreement and shall contain a confirmation by such Affiliate of the
accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall be deemed to
refer to such Affiliate in lieu of you. In the event that such Affiliate
is so substituted as a purchaser hereunder and such Affiliate thereafter
transfers to you all of the Notes then held by such Affiliate, upon receipt
by the Company of notice of such transfer, wherever the word "you" is used
in this Agreement (other than in this Section 21), such word shall no
longer be deemed to refer to such Affiliate, but shall refer to you, and
you shall have all the rights of an original holder of the Notes
under this Agreement.
22. DESIGNATION OF FOREIGN SUBSIDIARIES.
(a) Right of Designation. Subject to the satisfaction of the
requirements of Section 22(c), the Company shall have the right to
designate each Foreign Subsidiary as a Restricted Subsidiary or an
Unrestricted Subsidiary by delivering to each holder of Notes a writing,
signed by a Senior Financial Officer, so designating such Foreign
Subsidiary within 30 days of such Person becoming a Foreign Subsidiary.
Any such Foreign Subsidiary not so designated within such 30-day period
shall be deemed, on and after such date and without any further action by
the Company or any holder of Notes, to have been designated by the Company
as a Restricted Subsidiary. Each Foreign Subsidiary designated as a
Restricted Subsidiary in Schedule 5.4 shall, so long as it shall continue
to satisfy the requirements of the definition of Restricted Subsidiary,
be a Restricted Subsidiary on and after the date of the Closing and all
other Foreign Subsidiaries, if any, listed in such Schedule shall, subject
to Section 22(b), be Unrestricted Subsidiaries on and after the date of the
Closing.
(b) Right of Redesignation. Subject to the satisfaction of the
requirements of Section 22(c), the Company may at any time designate any
Foreign Subsidiary that is an Unrestricted Subsidiary as a Restricted
Subsidiary by delivering a written notice to such effect, signed by a
Senior Financial Officer, to each holder of Notes. The Company may not
designate a Restricted Subsidiary as an Unrestricted Subsidiary.
(c) Designation Criteria. No Foreign Subsidiary shall at any
time after the date of the Closing be designated as a Restricted Subsidiary
unless:
(i) such Foreign Subsidiary at such time meets all of the
requirements of a Restricted Subsidiary as set forth in the definition
thereof;
(ii) such Foreign Subsidiary shall not previously have been
designated as (or have been deemed to have been designated as) a Restricted
Subsidiary; and
(iii) immediately before, and after giving effect to,
such designation, and assuming that all obligations and liabilities of, and
all Liens on the property of, such Subsidiary being so designated were
incurred contemporaneously with such designation, no Default or Event of
Default exists or would exist.
(d) Effectiveness. Other than as set forth in the last two
sentences of Section 22(a), any designation under this Section 22 that
satisfies all of the conditions set forth in this Section 22 shall become
effective on the day that notice thereof shall have been sent in one of the
manners specified in Section 18 by the Company to each holder of Notes.
(e) Domestic Subsidiaries Not Subject to Designation. Only
Foreign Subsidiaries may be designated (or deemed designated) pursuant to
this Section 22. All Domestic Subsidiaries shall, in accordance with the
definition of Restricted Subsidiary, constitute Restricted Subsidiaries.
23. MISCELLANEOUS.
23.1 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.
23.2 Payments Due on Non-Business Days; When Payments Deemed
Received.
(a) Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole 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 without including the
additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.
(b) Any payment to be made to the holders of Notes hereunder or
under the Notes shall be deemed to have been made on the Business Day such
payment actually becomes available to such holder at such holder's bank
prior to 12:00 noon (local time of such bank).
23.3 Limitation on Liability of Certain Obligors.
Notwithstanding anything in any Financing Document to the contrary,
the payment obligations of each Obligor (other than the Company) under the
Financing Documents shall at each point in time be limited to an aggregate
amount equal to the greatest amount that would not result in such
obligations being subject to avoidance, or otherwise result in such
obligations being unenforceable, at such time under applicable law
(including, without limitation, to the extent, and only to the extent,
applicable to such Obligor, section 548 of the Bankruptcy Code of the
United States of America and any comparable provisions of the law of any
other jurisdiction, any capital preservation law of any jurisdiction and
any other law of any jurisdiction that at such time limits the
enforceability of the obligations of such Obligor under the Financing
Documents). This Section 23.3 is intended solely to preserve the rights of
each holder of Notes under the Financing Documents to the maximum extent
permitted by applicable law, and neither any Obligor nor any other Person
shall have any rights under this Section 23.3 that it would not otherwise
have under applicable law.
23.4 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.
23.5 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.
23.6 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.
23.7 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF
THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN SUCH STATE.
[Remainder of page intentionally left blank; next page is signature page.]
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it
to the Company, whereupon the foregoing shall become a binding agreement
among you and the Obligors.
Very truly yours,
GUEST SUPPLY, INC.
By /s/Paul Xenis
----------------------------------------
Paul Xenis
Secretary and Vice President - Finance
BRECKENRIDGE-REMY CO.
By /s/Paul Xenis
----------------------------------------
Paul Xenis
Secretary and Vice President - Finance
GUEST DISTRIBUTION SERVICES, INC.
By /s/Paul Xenis
----------------------------------------
Paul Xenis
Authorized Signatory
GUEST PACKAGING, INC.
By /s/Paul Xenis
----------------------------------------
Paul Xenis
Secretary and Vice President - Finance
[Signature page for Note Purchase Agreement of GUEST SUPPLY, INC. and
certain other Obligors with respect to their joint and several 7.06% Series
A Senior Notes due 2009, 6.95% Series B Senior Notes due 2007 and 6.70%
Series C Senior Notes due 2003]
<PAGE>
The foregoing is hereby agreed
to as of the date of the Closing.
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
By /s/Emilia F. Wiener
-------------------
Name: Emilia F. Wiener
Title: Managing Director
[Signature page for Note Purchase Agreement of GUEST SUPPLY, INC. and
certain other Obligors with respect to their joint and several 7.06% Series
A Senior Notes due 2009, 6.95% Series B Senior Notes due 2007 and 6.70%
Series C Senior Notes due 2003]
<PAGE>
The foregoing is hereby agreed
to as of the date of the Closing.
AUSA LIFE INSURANCE COMPANY, INC.
By /s/Gregory W. Theobald
----------------------
Name: Gregory W. Theobald
Title: VP & Asst. Secretary
[Signature page for Note Purchase Agreement of GUEST SUPPLY, INC. and
certain other Obligors with respect to their joint and several 7.06% Series
A Senior Notes due 2009, 6.95% Series B Senior Notes due 2007 and 6.70%
Series C Senior Notes due 2003]
<PAGE>
The foregoing is hereby agreed
to as of the date of the Closing.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By /s/James G. Lowery
-------------------
Name: James G. Lowery
Title: Assistant Vice President
Investments
By /s/Wayne T. Hoffmann
-------------------
Name: Wayne T. Hoffmann
Title: Vice President
Investments
[Signature page for Note Purchase Agreement of GUEST SUPPLY, INC. and
certain other Obligors with respect to their joint and several 7.06% Series
A Senior Notes due 2009, 6.95% Series B Senior Notes due 2007 and 6.70%
Series C Senior Notes due 2003]
<PAGE>
The foregoing is hereby agreed
to as of the date of the Closing.
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By /s/Edwin P. McCausland, Jr.
---------------------------
Name: Edwin P. McCausland, Jr.
Title: Vice President
Fixed Income Securities
[Signature page for Note Purchase Agreement of GUEST SUPPLY, INC. and
certain other Obligors with respect to their joint and several 7.06% Series
A Senior Notes due 2009, 6.95% Series B Senior Notes due 2007 and 6.70%
Series C Senior Notes due 2003]
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Purchaser Name THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK
Name in which to register
Note(s) J. ROMEO & Co.
Series of Notes; Note
registration number(s);
Principal amount(s) Series A; AR-1; $10,000,000
Payment on account of
Note(s)
Method Federal Funds Wire Transfer
Account information Chase Manhattan Bank
ABA #021000021
for credit to Private Income Processing
Account No. 544755102
Accompanying information Issuers: Guest Supply, Inc. and certain
other Obligors
Description
of Security: 7.06% Series A Senior Notes
due November 15, 2009
PPN: 401630 A* 9
Due date and application (as among principal,
Make-Whole Amount and interest) of the
payment being made:
Schedule A-1
<PAGE>
Purchaser Name THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK
Address for notices
related to payments If by Registered Mail, Certified Mail or
Federal Express:
The Chase Manhattan Bank
4 New York Plaza, 13th Floor
New York, NY 10004
Attn: Income Processing -
J. Piperato, 13th Floor
If by Regular Mail:
The Chase Manhattan Bank
Dept. 3492
P.O. Box 50000
Newark, NJ 07101-8006
With a Second Copy to:
Telecopy Confirms and Notices: 201-907-6979
Attention: Securities Custody
Mailing Confirms and Notices:
Glenpointe Marketing & Operations Center -
MONY
Glenpointe Center West
500 Frank W. Burr Blvd.
Teaneck, NJ 07666-6888
Attention: Securities Custody
Address for all other notices The Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019
Attention: MONY Capital Management Unit
Telecopy No.: 212-708-2491
Tax identification number 13-1632487
Schedule A-2
<PAGE>
Purchaser Name AUSA LIFE INSURANCE COMPANY, INC.
Name in which to register
Note(s) AUER & Co.
Series of Notes; Note
registration number(s);
Principal amount(s) Series A; AR-2; $5,000,000
Payment on account of
Note(s)
Method Federal Funds Wire Transfer
Account information Bankers Trust Company
ABA #021001033
for credit to Account No. 99911145 for
further credit to
AUSA Life Insurance Company, Inc.'s
Account No. 98606
Accompanying information Issuers: Guest Supply, Inc. and
certain other Obligors
Description of
Security: 7.06% Series A Senior Notes
due November 15, 2009
PPN: 401630 A* 9
Due date and application (as among principal,
Make-Whole Amount and interest) of the
payment being made:
Address for notices related
to payments If to AUSA Life Insurance Company, Inc.
Telecopy Confirms and Notices 319-398-8695
Attention: Mary Reams
Mailing Confirms and Notices:
AEGON USA Investment Management, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
Attention: Mary Reams
Schedule A-3
<PAGE>
Purchaser Name AUSA LIFE INSURANCE COMPANY, INC.
Address for all
other notices If to AUSA Life Insurance Company, Inc.
AUSA Life Insurance Company, Inc.
c/o The Mutual Life Insurance Company
of New York
1740 Broadway
New York, NY 10019
Attention: MONY Capital Management Unit
Telecopy No.: 212-708-2491
with a second copy to:
Bankers Trust Company
Attn: Private Placement Unit
P.O. Box 998
Bowling Green Station
New York, NY 10274
Tax identification number 36-6071399
Schedule A-4
<PAGE>
Purchaser Name GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Name in which to register
Note(s) Great-West Life & Annuity Insurance Company
Series of Notes; Note
registration number(s);
Principal amount(s) Series B; BR-1; $5,000,000
Payment on account of
Note(s)
Method Federal Funds Wire Transfer
Account information Norwest Bank Minnesota, N.A.
ABA# 091-000-019 NW MPLS/Trust Clearing
Account No. 08-40-245
Attn: Account No. 12468800
Accompanying information Issuers: Guest Supply, Inc. and
certain other Obligors
Description of
Security: 6.95% Series B Senior Notes
due November 15, 2007
PPN: 401630 A@ 7
Due date and application (as among principal,
Make-Whole Amount and interest) of the
payment being made:
Address for notices related
to payments Norwest Bank Minnesota, N.A.
733 Marquette Avenue
Investors Bldg., 5th Floor
Minneapolis, MN 55479-0047
Attention: Income Collections
Fax: 612-667-4187
Address for all other notices Great-West Life & Annuity Insurance Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, CO 80111
Attention: Corporate Finance Investments
Fax: 303-689-6193
Schedule A-5
Purchaser Name GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Tax identification number 84-0467907
Schedule A-6
<PAGE>
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Name in which to
register Note(s) Nationwide Life and Annuity Insurance Company
Series of Notes; Note
registration number(s);
Principal amount(s) Series C; CR-1; $5,000,000
Payment on account of
Note(s)
Method Federal Funds Wire Transfer
Account information The Bank of New York
ABA# 021-000-018
BNF: IOC566
F/A/O Nationwide Life and
Annuity Insurance Company
Attn: P & I Department
Accompanying information Issuers: Guest Supply, Inc. and
certain other Obligors
Description of
Security: 6.70% Series C Senior Notes
due November 15, 2003
PPN: 401630 A# 5
Due date and application (as among principal,
Make-Whole Amount and interest) of the payment
being made:
Address for notices
related to payments Nationwide Life and Annuity Insurance Company
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
with a copy to:
Nationwide Life and Annuity Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, OH 43215-2220
Fax: 614-249-2152
Schedule A-7
<PAGE>
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Address for all other notices Nationwide Life and Annuity Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, OH 43215-2220
Attention: Corporate Fixed-Income Securities
Fax: 614-249-3825
Tax identification number 31-1000740
Schedule A-8
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof indicated following such
term:
"Acceptable Control Persons" means:
(a) any one or more of Clifford Stanley, Paul Xenis, R. Eugene
Biber, or Teri E. Unsworth (each of whom is identified in further detail on
page 42 of the Memorandum); and
(b) any Person more than 50% of the equity interests and voting
interests of which are owned by one or more of the Persons identified in
the foregoing clause (a).
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation or
other Person of which the Company and the Subsidiaries beneficially own or
hold, in the aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. Unless the context otherwise clearly requires,
any reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"Agreement, this" is defined in Section 17.3.
"Allonge" is defined in Section 9.6(b).
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Company or
a Wholly-Owned Restricted Subsidiary;
(ii) Transfer from the Company to a Wholly-Owned Restricted
Subsidiary; and
(iii) Transfer from the Company to a Restricted
Subsidiary (other than a Wholly-Owned Restricted Subsidiary) or from a
Restricted Subsidiary to another Restricted Subsidiary (other than a
Wholly-Owned Restricted Subsidiary), that in either case is for Fair Market
Value, so long as immediately before, and immediately after giving effect
to, the consummation of any such Transfer, no Event of Default exists or
would exist; or
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale, or
components of such inventory, or (ii) equipment, fixtures, supplies or
materials no longer required in the operation of the business of the
Company or any of the Restricted Subsidiaries or that is obsolete.
"Breckenridge-Remy" is defined in the introductory sentence of this
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 Lease" means a lease with respect to which the lessee is
required to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease that would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"Capital Stock" means any class of capital stock, share capital or
similar equity interest of a Person.
"Change in Control" means the following event or circumstance: any
Person or Persons acting in concert (other than Acceptable Control
Persons), together with Affiliates thereof, shall in the aggregate,
directly or indirectly, control or own (beneficially or otherwise) more
than 50% (by number of shares) of the issued and outstanding Voting Stock
of the Company.
"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 introductory sentence of this Agreement.
"Confidential Information" is defined in Section 20.
"Consolidated Capitalization" means, at any time, the sum of (a)
Consolidated Debt at such time, plus (b) Consolidated Tangible Net Worth at
such time.
"Consolidated Cash Flow" means, for any period, the sum of
Consolidated Net Income for such period plus the amount of all depreciation
and amortization allowances and other non-cash expenses of the Company and
the Restricted Subsidiaries but only to the extent deducted in the
determination of Consolidated Net Income for such period.
"Consolidated Debt" means, at any time, the total of all Debt of the
Company and the Restricted Subsidiaries outstanding at such time, after
eliminating all offsetting debits and credits between the Company and the
Restricted Subsidiaries and all other items required to be eliminated
in the course of the preparation of consolidated financial statements of
the Company and the Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" means, for any period, the sum of (a)
Consolidated Interest Expense for such period plus (b) Consolidated
Long-Term Rentals for such period.
"Consolidated Interest Expense" means, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Company and the Restricted
Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the
Company and the Restricted Subsidiaries in accordance with GAAP): (a) all
interest in respect of Debt of the Company and the Restricted Subsidiaries
(including, without limitation, imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such
period, together with all interest capitalized or deferred during such
period and not deducted in determining Consolidated Net Income for such
period, and (b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Income for such period.
"Consolidated Long-Term Rentals" means, with respect to any period,
the sum of the rental and other obligations required to be paid during such
period by the Company or any Restricted Subsidiary as lessee under all
leases of real or personal property (other than Capital Leases) having a
term (including, without limitation, terms of renewal or extension at the
option of the lessor or the lessee, whether or not such option has been
exercised) expiring one year or more after the commencement of the initial
term, excluding any amount required to be paid by the lessee (whether or
not therein designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges.
"Consolidated Income Available for Fixed Charges" means, for any
period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Consolidated Fixed Charges and
(b) taxes imposed on or measured by income or profits.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and the Restricted Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with
GAAP, after eliminating all offsetting debits and credits between the
Company and the Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial
statements of the Company and the Restricted Subsidiaries in accordance
with GAAP and after eliminating income and losses attributable to
Investments in Unrestricted Subsidiaries, provided that there shall be
excluded:
(a) the income of any Person (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest, except to the extent that any such income has been
actually received by the Company or such Restricted Subsidiary in the form
of cash dividends or similar cash distributions, and
(b) the undistributed earnings of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary is not at the time permitted by
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such
Restricted Subsidiary.
"Consolidated Obligor Cash Flow" means, for any period, and for
purposes of determining the Obligor Cash Flow Ratio at any time,
Consolidated Cash Flow for such period, but calculated (including, without
limitation, for the purpose of determining Consolidated Net Income) as
though the only Restricted Subsidiaries during such period were those
Restricted Subsidiaries that are Obligors at the time of such determination
of the Obligor Cash Flow Ratio.
"Consolidated Obligor Tangible Assets" means, at any time,
Consolidated Tangible Assets at such time, excluding, however, in the
determination thereof any assets of any Restricted Subsidiary that is not
an Obligor at such time.
"Consolidated Tangible Assets" means, at any time,
(a) the total assets of the Company and the Restricted
Subsidiaries as would be shown on a consolidated balance sheet of the
Company and the Restricted Subsidiaries as of such time prepared in
accordance with GAAP, minus
(b) to the extent included in clause (a),
(i) the net book value of all Intangible Assets of the
Company and the Restricted Subsidiaries (after deducting any reserves
applicable thereto), and
(ii) all Restricted Investments of the Company and the
Restricted Subsidiaries.
"Consolidated Tangible Net Worth" means, at any time,
(a) the sum of (i) the par value (or value stated on the books
of the corporation) of the Capital Stock (but excluding treasury stock and
Capital Stock subscribed and unissued) of the Company and the Restricted
Subsidiaries plus (ii) the amount of the paid-in capital and retained
earnings of the Company and the Restricted Subsidiaries, in each case as
such amounts would be shown on a consolidated balance sheet of the
Company and the Restricted Subsidiaries as of such time prepared in
accordance with GAAP, minus
(b) to the extent included in clause (a),
(i) the net book value of all Intangible Assets of the
Company and the Restricted Subsidiaries (after deducting any reserves
applicable thereto), and
(ii) all Restricted Investments of the Company and the
Restricted Subsidiaries.
"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.
"Control Event" means:
(a) the execution by the Company or any Subsidiary or Affiliate
of any agreement or letter of intent with respect to any proposed
transaction or event or series of transactions or events that, individually
or in the aggregate, may reasonably be expected to result in a Change in
Control;
(b) the execution of any written agreement that, when fully
performed by the parties thereto, would result in a Change in Control; or
(c) the making of any written offer by any "person" (as such
term is used in section 13(d) and section 14(d)(2) of the Exchange Act as
in effect on the date of the Closing) or related persons constituting a
"group" (as such term is used in Rule 13d-5 under the Exchange Act as in
effect on the date of the Closing) to the holders of the Voting Stock of
the Company, which offer, if accepted by the requisite number of holders,
would result in a Change in Control.
"Debt" means, with respect to any Person, 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 Capital 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) of this definition. 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.
"Debt Prepayment Application" means, with respect to any Transfer of
property that constitutes an Asset Disposition, the application by the
Company of cash in an amount equal to the Net Proceeds Amount with respect
to such Transfer to pay Designated Senior Debt, provided that in the course
of making such application the Company shall offer to prepay each
outstanding Note in accordance with the following paragraph of this
definition in a principal amount that equals the Ratable Portion for such
Note. "Ratable Portion" for any Note means an amount equal to the
product of (x) the Net Proceeds Amount being so applied to the payment of
Designated Senior Debt multiplied by (y) a fraction the numerator of which
is the outstanding principal amount of such Note and the denominator of
which is the aggregate principal amount of Designated Senior Debt.
The following procedure will apply with respect to any such
application of proceeds to a prepayment of the Notes:
(a) The Company shall have irrevocably offered in writing (as
provided in clause
(c) below) to apply funds equal to a portion of the Net Proceeds
Amount with respect to such Transfer to the prepayment of the principal of
each outstanding Note in an amount for such Note equal to the Ratable
Portion for such Note, and, simultaneously with the prepayment of such
principal, to pay any accrued interest in respect thereof as of the date of
such prepayment of principal and the applicable Make-Whole Amount
determined for the prepayment date with respect to such principal amount.
(b) To accept or reject such offer, a holder of Notes shall
cause a written notice of such acceptance or rejection to be delivered to
the Company within ten Business Days of such Person's receipt of such
offer. A failure by a holder of Notes to respond (by such time) to an
offer to prepay made pursuant to this definition shall be deemed to
constitute an acceptance of such offer by such holder. Upon any rejection
of such offer by any such Person, the Ratable Portion that would otherwise
be payable to any such rejecting holder shall, within ten Business Days of
rejection, be offered pro rata to all holders accepting such offer; to
accept or reject such additional offer, a holder of Notes shall cause a
written notice of such acceptance or rejection to be delivered to the
Company within five Business Days of such Person's receipt of such
additional offer. Subject to the provisions of this clause (b), the
Company may retain for its own purposes the Ratable Portion that would
otherwise be payable to any rejecting holder, provided that in no event
shall any portion of any Ratable Portion (however applied) be deemed to
have been applied to a Debt Prepayment Application unless either (i) such
portion shall have been applied to prepay Notes of a holder accepting an
offer in the manner specified under this clause (b) or (ii) the Company
shall have received written rejections from each holder to which such
portion was offered (whether initially or pursuant to an additional offer
under this clause (b)) and shall have applied such portion to other
Designated Senior Debt.
(c) The written offer of the Company referred to in clause (a)
above will be given to each holder of Notes not less than 30 days and not
more than 60 days prior to the date of offered prepayment. Such notice
will set forth:
(i) such date, the aggregate principal amount of the Notes
offered to be prepaid on such date, the principal amount of each Note held
by such holder offered to be prepaid (determined in the same manner as in
Section 8.4), and the interest that would be paid on the prepayment date
with respect to such principal amount offered to be prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount 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 Notes a
certificate of a Senior Financial Officer specifying the calculation of
such Make-Whole Amount as of the specified prepayment date), and
(ii) a statement (A) describing the Transfer with respect to
such Debt Prepayment Application, (B) setting forth a calculation of the
Net Proceeds Amount in respect of such Transfer and (C) specifying the
portion thereof that is to be applied to a Debt Prepayment Application.
"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, with respect to any Note, a rate per annum from
time to time equal to the greater of (a) 9.06% in the case of a Series A
Note, 8.95% in the case of a Series B Note or 8.70% in the case of a Series
C Note or (b) 2.0% over the rate of interest publicly announced by Chase
Manhattan Bank, N.A. (or its successor) from time to time in New York, New
York as its "base" or "prime" rate.
"Designated Senior Debt" means any Debt of the Company constituting a
portion of Consolidated Debt, other than:
(a) any Debt that is in any manner subordinated in right of
payment or security in any respect to the Debt evidenced by the Notes;
(b) any Debt owing to any of the Subsidiaries or any Affiliate;
and
(c) any Debt in respect of any revolving credit or similar
credit facility providing the Company or any of the Subsidiaries with the
right to obtain loans or other extensions of credit from time to time,
except to the extent that in connection with such payment of such Debt in a
Debt Prepayment Application the availability of credit under such credit
facility is permanently reduced by an amount not less than the amount
of such proceeds applied to the payment of such Debt.
"Disposition Value" means, at any time, with respect to any property,
(a) in the case of property that does not constitute Restricted
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Restricted
Subsidiary Stock, an amount equal to that percentage of book value of the
assets of the Restricted Subsidiary that issued such Restricted Subsidiary
Stock as is equal to the percentage that the book value of such Restricted
Subsidiary Stock represents of the book value of all of the outstanding
Capital Stock of such Restricted 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) determined at the
time of the disposition thereof, in good faith by the Company.
"Distribution" means, in respect of any corporation, association or
other business entity:
(a) dividends or other distributions or payments on Capital
Stock or other equity interest of such corporation, association or
other business entity (except distributions in such Capital Stock or
other equity interest); and
(b) the redemption, repurchase, retirement or other acquisition
of such Capital Stock or other equity interests or of warrants, rights
or other options to purchase such Capital Stock or other equity
interests (except when solely in exchange for such Capital Stock or
other equity interests, or when solely given to such corporation,
association or other business entity in payment of all or a portion of
the exercise price of any such warrants, rights or other options)
unless made, contemporaneously, from the net proceeds of a sale of
such Capital Stock or other equity interests;
provided that the redemption by the Company of all but not less than all of
the rights under the Rights Agreement, dated as of July 15, 1988, between
the Company and ChaseMellon Shareholder Services, L.L.C., as amended from
time to time, shall be deemed not to constitute a Distribution so long as
the aggregate redemption price paid by the Company in respect of all such
rights does not exceed $100,000.
"dollars" and the symbol "$" each mean United States of America
dollars. The phrase "(or equivalent)" used in connection with any
reference to a specified amount of dollars means such specified amount of
dollars or an equivalent amount in one or more currencies (one of which
may, but need not, be dollars), with the amount of each such currency other
than dollars being converted to dollars for such purposes in accordance
with the requirements of GAAP and in a manner consistent with the
accounting policies implemented in the most recent annual report of
the Company.
"Domestic Subsidiary" means, at any time, any Subsidiary that is
organized under the laws of the United States of America or any state
thereof or the District of Columbia.
"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
from time to time.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such 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 (neither being under a compulsion to buy or
sell).
"Financing Documents" means the Notes and the Note Purchase
Agreements.
"Foreign Subsidiary" means a Subsidiary that is not a Domestic
Subsidiary.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"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, any Subsidiary
or any other relevant Person conducts all or any part of its business, or
that asserts jurisdiction over any properties of the Company, any
Subsidiary or any such other Person, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"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 guarantying or in
effect guarantying (whether by reason of being a general partner of a
partnership or otherwise) 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:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Indebtedness or obligation, or (ii) 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;
(c) 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
(d) otherwise to assure the owner of such Indebtedness or
obligation or any other creditor of such Person against loss in respect
thereof, including, without limitation, by means of any comfort letter,
operating agreement or take-or-pay contract.
For the purposes of all computations made under this Agreement, a Guaranty
in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for
borrowed money which has been guarantied, and a Guaranty in respect of any
other Indebtedness or obligation or liability or any dividend shall be
deemed to be Indebtedness equal to the maximum aggregate amount of such
obligation, liability or dividend.
"Guest Distribution" is defined in the introductory sentence of this
Agreement.
"Guest Packaging" is defined in the introductory sentence of this
Agreement.
"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.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all Debt of such Person,
(b) all other obligations and liabilities of such Person
classified, or required to be classified, as liabilities of such Person in
accordance with GAAP, and
(c) any Guaranty of such Person with respect to liabilities of a
type described in either of clauses (a) and (b) of this definition.
"Initial Subsidiary Obligors" means Breckenridge-Remy, Guest
Distribution and Guest Packaging.
"Institutional Investor" means (a) any Purchaser, (b) any holder of a
Note holding more than 5% of the aggregate principal amount of the Notes
then outstanding, and (c) any 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.
"Instrument of Joinder" is defined in Section 9.6(a).
"Intangible Assets" means, with respect to any Person, all assets that
would be shown as intangible assets (and in any event including, without
limitation, all goodwill, franchises, licenses, patents, trademarks, trade
names, copyrights, service marks, brand names, organization expense and
unamortized debt discount and expense) on a balance sheet of such Person
prepared in accordance with GAAP.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any Restricted Subsidiary (a) in any Person,
whether by acquisition of Capital Stock, Debt or other obligation or
Security, or by loan, Guaranty, advance, capital contribution or otherwise,
or (b) in any property.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of Capital Stock, stockholder
agreements, voting trust agreements and all similar arrangements). The
precautionary filing of a financing statement covering property leased
by the Company or a Restricted Subsidiary as lessee under an operating
lease (but not a Capital Lease) in the ordinary course of business to
secure performance by the Company or any Restricted Subsidiary of such
operating lease shall not be deemed to constitute a Lien.
"Make-Whole Amount" is defined in Section 8.8.
"Material" means material in relation to the business, operations,
financial condition, assets, properties or prospects of the Company and the
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, financial condition, assets, properties or prospects
of the Company and the Subsidiaries taken as a whole, or (b) the ability of
any Obligor to perform its obligations under any Financing Document, (c)
any of the rights and remedies of the holders of Notes under any Financing
Document, or (d) the validity or enforceability of any Financing Document.
"Memorandum" is defined in Section 5.3.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Net Proceeds Amount" means, with respect to any Transfer of any
property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation of
such Transfer) received by such Person in respect of such Transfer, minus
(b) the sum of
(i) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer, plus
(ii) the amount of any sales tax or capital gains tax (but
not income tax other than capital gains tax) liability actually incurred by
such Person in connection with such Transfer.
"New Credit Agreement" means the Revolving Credit Agreement, dated
December 3, 1997, among the Obligors, PNC Bank, National Association, First
Union National Bank, and PNC Bank, National Association, as agent, as
modified, amended, or supplemented from time to time.
"Note Purchase Agreements" means this Agreement and the Other
Agreements. Each reference to the Note Purchase Agreements shall be deemed
to include any Instruments of Joinder with respect thereto.
"Notes" is defined in Section 1. Each reference to Notes shall be
deemed to include any Allonges with respect thereto.
"Obligor Cash Flow Ratio" means, at any time, the ratio of (a)
Consolidated Obligor Cash Flow for the period of four consecutive fiscal
quarters of the Company most recently ended at such time to (b)
Consolidated Cash Flow for such period.
"Obligors" is defined in the introductory sentence of this Agreement.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"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.
"property" means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.
"Property Reinvestment Application" means, with respect to any
Transfer of property, the application of an amount equal to the Net
Proceeds Amount with respect to such Transfer to (i) the acquisition by the
Company or any Restricted Subsidiary of assets useful and intended to be
used in the business of the Company or any Restricted Subsidiary or (ii)
the acquisition by the Company or any Restricted Subsidiary of Capital
Stock of a Person that concurrently with such acquisition becomes a
Restricted Subsidiary.
"Proposed Prepayment Date" is defined in Section 8.5(c).
"PTCE 95-60" is defined in Section 6.2(a).
"Purchasers" means you and the Other Purchasers.
"QPAM Exemption" is defined in Section 6.2(d).
"Redeemable" means, with respect to the Capital Stock of any Person,
each share of such Person's Capital Stock that is (a) redeemable, payable
or required to be purchased or otherwise retired or extinguished, or
convertible into Debt of such Person (i) at a fixed or determinable date,
whether by operation of sinking fund or otherwise, (ii) at the option of
any Person other than such Person, or (iii) upon the occurrence of a
condition not solely within the control of such Person, or (b) convertible
into other Redeemable Capital Stock of such Person.
"Relevant Date" is defined in Section 9.6.
"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, any Subsidiary or any other Affiliate).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of any Financing Document.
"Restricted Investments" means all Investments of the Company and the
Restricted Subsidiaries other than the following:
(a) Investments existing on the date of the Closing and
disclosed in Schedule 10.6;
(b) Investments in one or more Wholly-Owned Restricted
Subsidiaries, or Investments in any Person that concurrently with such
Investment becomes a Wholly-Owned Restricted Subsidiary, or Investments
that concurrently with such Investment result in any Person becoming a
Wholly-Owned Restricted Subsidiary;
(c) Investments in commercial paper maturing within 270 days or
less from the date of issuance thereof that, at the time of acquisition by
the Company or any Restricted Subsidiary, is rated "A-1" or better by S&P,
"P-1" or better by Moody's or an equivalent rating by another nationally
recognized credit rating agency of similar standing;
(d) Investments in (i) direct obligations of the United States
of America, (ii) obligations that are guaranteed by the full faith and
credit of the United States of America or (iii) obligations of state or
local governments rated "AAA" or better by S&P or "Aaa" or better by
Moody's, in all cases maturing within twelve months or less from the date
of acquisition thereof by the Company or any Restricted Subsidiary;
(e) Investments in time deposits or certificates of deposit,
maturing within one year from the date of issuance thereof, issued by (and
bankers acceptances endorsed by) a bank or trust company, organized under
the laws of the United States of America or any state thereof, having
capital, surplus and undivided profits aggregating at least $100,000,000
and whose long-term certificates of deposit are, at the time of acquisition
thereof by the Company or a Restricted Subsidiary, rated "A-" or better by
S&P or "A3" or better by Moody's (provided that if such bank is PNC Bank,
National Association, or First Union National Bank and such bank is a
lender to the Company under the New Credit Agreement, such bank may be
rated "BBB" or better by S&P or "Baa" or better by Moody's);
(f) Investments in repurchase agreements entered into with a
bank or trust company of the type described in clause (e) above, provided
that each such repurchase agreement has a term not exceeding 30 days, is
collateralized by United States Treasury securities, and requires physical
delivery of the securities securing such repurchase agreement (except those
delivered through the Federal Reserve book entry system);
(g) loans or advances in the usual and ordinary course of
business of the Company or a Restricted Subsidiary to officers, directors
and employees thereof for expenses (including moving expenses related to a
transfer) incidental to carrying on the business of the Company or any
Restricted Subsidiary, in the aggregate at any one time outstanding not to
exceed 1.0% of Consolidated Tangible Assets;
(h) receivables (and chattel paper, notes and other instruments
evidencing such receivables) arising from the sale of goods and services in
the ordinary course of business of the Company and the Restricted
Subsidiaries and in each case maturing within twelve months or less from
the date of creation of such receivable, and property to be used in the
ordinary course of business of the Company and the Restricted Subsidiaries;
and
(i) Investments in money market funds having assets in excess of
$500,000,000 and that are restricted by their respective charters to
investing solely in Investments of the type permitted by clauses (c)
through (f), inclusive, above.
"Restricted Payment" means any Distribution in respect of the Company
or any Restricted Subsidiary (other than on account of Restricted
Subsidiary Stock or other equity interests of a Restricted Subsidiary owned
legally and beneficially by the Company or another Restricted Subsidiary),
including, without limitation, any Distribution resulting in the
acquisition by the Company of Securities that would constitute treasury
stock. For purposes of this Agreement, the amount of any Restricted
Payment made in property shall be the greater of (x) the Fair Market
Value of such property (as determined in good faith by the board of
directors (or equivalent governing body) of the Person making such
Restricted Payment) and (y) the net book value thereof on the books of such
Person, in each case determined as of the date on which such Restricted
Payment is made.
"Restricted Subsidiary" means, at any time, a Subsidiary that at such
time is:
(a) one of the Initial Subsidiary Obligors or a successor
thereto;
(b) a Domestic Subsidiary; or
(c) a Foreign Subsidiary as to which a designation (or deemed
designation) as a Restricted Subsidiary pursuant to Section 22 is then
effective.
"Restricted Subsidiary Stock" means the Capital Stock (or any options
or warrants to purchase Capital Stock or other Securities exchangeable for
or convertible into any Capital Stock) of any Restricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act, as
such rule may be amended from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Security" means any "security" as defined in section 2(1) of the
Securities Act.
"Senior Financial Officer" means the president, the chief executive
officer, the vice president, finance, the principal accounting officer, the
treasurer or the comptroller of the Company.
"Series" means any one or more series of the Notes.
"Series A Notes" is defined in Section 1(a).
"Series B Notes" is defined in Section 1(b).
"Series C Notes" is defined in Section 1(c).
"Source" is defined in Section 6.2.
"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
or joint venture 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.
"Successor Corporation" is defined in Section 10.9(a)(i).
"Successor Restricted Subsidiary" is defined in Section
10.9(b)(iii)(A).
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers, leases (as lessor) or otherwise
disposes of any of its property, including, without limitation, Restricted
Subsidiary Stock (but not including an issuance of Capital Stock of the
Company by the Company), and including, without limitation, any merger,
consolidation, amalgamation or other transaction the direct or indirect
result of which is a disposition of all or a portion of any equity or other
interest in any Person. For purposes of determining the application of the
Net Proceeds Amount in respect of any Transfer, the Company may designate
any Transfer as one or more separate Transfers each yielding a separate Net
Proceeds Amount. In any such case, the Disposition Value of any property
subject to each such separate Transfer attributable to any property subject
to each such separate Transfer shall be determined by ratably allocating
the aggregate Disposition Value of all property subject to all such
separate Transfers to each such separate Transfer on a proportionate basis.
"Unrestricted Subsidiary" means a Subsidiary that is not a Restricted
Subsidiary.
"Voting Stock" means, with respect to any Person, any shares of
Capital Stock of such Person whose holders are entitled under ordinary
circumstances to vote for the election of directors of such Person, or for
the election of Persons performing a similar function (irrespective of
whether at the time shares of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means, at any time, any
Restricted Subsidiary 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 other Wholly-Owned Restricted
Subsidiaries at such time.
<PAGE>
SCHEDULE 3
PAYMENT INSTRUCTIONS AT CLOSING
Re: Guest Supply, Inc. and certain other Obligors --
$15,000,000 7.06% Series A Senior Notes due 2009
$5,000,000 6.95% Series B Senior Notes due 2007
$5,000,000 6.70% Series C Senior Notes due 2003
In accordance with Section 3 of the Note Purchase Agreement, the
Obligors direct you to make payment for the Note or Notes being purchased
by you by payment by federal funds wire transfer in immediately available
funds of the purchase price thereof to:
PNC Bank, New Jersey NA
(Make sure you include "New Jersey" when you give the bank name)
ABA no.: 031-207-607
Account no.: 80-0275-1648
Account name: Guest Supply, Inc., Guest Packaging, Inc.
& Breckenridge-Remy Co.
Contact person at bank: Name: Gary Wessels
Title: Vice President
Phone no.: (908) 220-4553
<PAGE>
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
None
<PAGE>
SCHEDULE 5.3
DISCLOSURE MATERIALS
None
<PAGE>
SCHEDULE 5.4
SUBSIDIARIES, CERTAIN AGREEMENTS
Subsidiaries
Breckenridge-Remy Co., a Delaware Corporation (1) (3)
Guest Packaging, Inc., a New Jersey Corporation (1) (3)
Guest International, Ltd., an English Corporation (1) (3)
Guest International (Canada) Ltd., a Canadian Corporation (1) (3)
Guest International New Zealand Ltd., a New Zealand Corporation (1) (3)
Guest Distribution Services, Inc., a Delaware Corporation (2) (3)
(1) A 100% wholly owned subsidiary of Guest Supply, Inc.
(2) A 100% wholly owned subsidiary of Breckenridge-Remy, Co.
(3) Restricted subsidiary
Agreements
None
<PAGE>
SCHEDULE 5.5
FINANCIAL STATEMENTS
Consolidated Balance Sheets
September 30, 1996, 1995, 1994, 1993 and 1992
Consolidated Statements of Operations
Years Ended September 30, 1996, 1995, 1994, 1993, 1992 and 1991
Consolidated Statements of Cash Flows
Years Ended September 30, 1996, 1995, 1994, 1993, 1992 and 1991
Consolidated Statements of Shareholders' Equity
Years Ended September 30, 1996, 1995, 1994, 1993, 1992 and 1991
Consolidated Balance Sheets
June 30, 1997 and 1996
Consolidated Statements of Operations
Nine Months and Three Months Ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows
Nine Months Ended June 30, 1997, 1996 and 1995
<PAGE>
SCHEDULE 5.8
CERTAIN LITIGATION
None
<PAGE>
SCHEDULE 5.11
LICENSES, PERMITS, ETC.
None
<PAGE>
SCHEDULE 5.12
CERTAIN ERISA MATTERS
Guest Supply, Inc. and Subsidiaries Hospitalization and Major Medical Plan
Guest Supply, Inc. and Subsidiaries Dental Plan
Guest Supply, Inc. and Subsidiaries Long Term Disability Plan
Guest Supply, Inc. and Subsidiaries Life Insurance and Accident Death
and Dismemberment Plan
Guest Supply, Inc. and Subsidiaries 401 (k) Salary Reduction Plan and Trust
The Company and its domestic subsidiaries are ERISA Affiliates.
<PAGE>
SCHEDULE 5.14
USE OF PROCEEDS
Repayment of Term Loans with PNC Bank, NA and First Union National Bank as
follows:
Principal Interest Total
-------------- --------- --------------
$5,000,000 Five-year term note
payable due
February, 1999 $ 1,166,682.00 $ 418.06 $ 1,167,100.06
$5,000,000 Four-year term note
payable due
February, 1999 1,458,322.00 668.40 1,458,990.40
$10,500,000 Seven-year term note
payable due
November, 2002 7,375,017.50 2,868.03 7,377,885.53
-------------- --------- --------------
$10,000,021.50 $3,954.49 $10,003,975.99
Revolving credit
facility 21,150,004.00 12,614.63 21,162,618.63
-------------- ---------- --------------
$31,150,025.50 $16,569.12 $31,166,594.62
============== ========== ==============
<PAGE>
SCHEDULE 5.15
EXISTING DEBT AND LIENS
Debt
- ----
As of September 30, 1997
$5,000,000 Five-year term note payable $ 1,416,681.00
due February, 1999
$5,000,000 Four-year term note payable 1,770,823.00
due February, 1999
$10,500,000 Seven-year term note payable 7,750,014.92
due November, 2002
--------------
10,937,518.92
Revolving credit facility $17,616,526.00
--------------
$28,554,044.92
==============
Liens
- -----
None
<PAGE>
SCHEDULE 8.1
SCHEDULED PRINCIPAL PAYMENTS ON THE NOTES
Principal Principal Principal
Amount of Amount of Amount of
Series A Series B Series C
Notes Notes Notes
Scheduled to Scheduled to Scheduled to
Payment Date be Paid be Paid be Paid Totals
- ----------------- ------------ ------------ ------------ ---------------
November 15, 1999 $ 0.00 $ 0.00 $555,555.56 $ 555,555.56
May 15, 2000 $ 0.00 $ 0.00 $555,555.56 $ 555,555.56
November 15, 2000 $ 0.00 $187,500.00 $555,555.56 $ 743,055.56
May 15, 2001 $ 0.00 $187,500.00 $555,555.56 $ 743,055.56
November 15, 2001 $882,352.94 $250,000.00 $555,555.56 $1,687,908.50
May 15, 2002 $882,352.94 $250,000.00 $555,555.56 $1,687,908.50
November 15, 2002 $882,352.94 $375,000.00 $555,555.56 $1,812,908.50
May 15, 2003 $882,352.94 $375,000.00 $555,555.56 $1,812,908.50
November 15, 2003 $882,352.94 $375,000.00 $555,555.52 $1,812,908.46
May 15, 2004 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
November 15, 2004 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
May 15, 2005 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
November 15, 2005 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
May 15, 2006 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
November 15, 2006 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
May 15, 2007 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
November 15, 2007 $882,352.94 $375,000.00 $ 0.00 $1,257,352.94
May 15, 2008 $882,352.94 $ 0.00 $ 0.00 $ 882,352.94
November 15, 2008 $882,352.94 $ 0.00 $ 0.00 $ 882,352.94
May 15, 2009 $882,352.94 $ 0.00 $ 0.00 $ 882,352.94
November 15, 2009 $882,352.96 $ 0.00 $ 0.00 $ 882,352.96
Totals $15,000,000 $ 5,000,000 $ 5,000,000 $ 25,000,000
<PAGE>
SCHEDULE 10.6
CERTAIN EXISTING INVESTMENTS
Guest Supply, Inc.
- ------------------ Shares FMV*
------ ------
Prime Hospitality Corp. PDQ 34 $22.56
Servico, Inc. SER 21 17.13
Breckenridge-Remy Co.
- ---------------------
Prime Hospitality Corp. PDQ 260 $22.56
Servico, Inc. SER 4,979 17.13
* As of September 30, 1997
<PAGE>
SCHEDULE 18
OBLIGOR ADDRESSES FOR NOTICES
Guest Supply, Inc.
4301 US Highway One
P.O. Box 902
Monmouth Junction, NJ 08852
Attention: Paul Xenis
Guest Packaging, Inc.
4301 US Highway One
P.O. Box 902
Monmouth Junction, NJ 08852
Attention: Paul Xenis
Breckenridge-Remy Co.
4301 US Highway One
P.O. Box 902
Monmouth Junction, NJ 08852
Attention: Paul Xenis
Guest Distribution Services, Inc.
190 West Crowther Avenue, Unit B
Placentia, CA 92670
Attention: Teri Unsworth
<PAGE>
EXHIBIT 9.6(a)
[FORM OF INSTRUMENT OF JOINDER]
INSTRUMENT OF JOINDER
To each holder of one or more of the
Notes referred to below
Date: ____________
Reference is made to the separate Note Purchase Agreements, each dated
as of December 3, 1997 (the "Note Purchase Agreements"), among Guest
Supply, Inc., a New Jersey corporation (the "Company"), Breckenridge-Remy
Co., a Delaware corporation ("Breckenridge-Remy"), Guest Distribution
Services, Inc., a Delaware corporation ("Guest Distribution"), Guest
Packaging, Inc., a New Jersey corporation ("Guest Packaging") (the Company,
Breckenridge- Remy, Guest Distribution and Guest Packaging are referred to
herein, collectively, as the "Original Obligors") and each of the
Purchasers listed in Schedule A thereto, which provide, among other things,
for the issuance and sale by the Original Obligors of their joint and
several (a) 7.06% Series A Senior Notes due November 15, 2009 in the
aggregate principal amount of $15,000,000, (b) 6.95% Series B Senior Notes
due November 15, 2007 in the aggregate principal amount of $5,000,000 and
(c) 6.70% Series C Senior Notes due November 15, 2003 in the aggregate
principal amount of $5,000,000. Reference is also made to the Instruments
of Joinders (if any) identified in Annex 1 hereto, pursuant to which the
Persons (if any) identified on such Annex 1, prior to the execution and
delivery of this Instrument of Joinder, joined and were made joint and
several Obligors with the Original Obligors under the Note Purchase
Agreements and the Notes (such Persons (if any) and the Original Obligors
are herein referred to, collectively, as the "Existing Obligors").
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Purchase Agreements.
1. JOINDER OF ADDITIONAL OBLIGOR.
In accordance with the terms of Section 9.6 of the Note Purchase
Agreements, ________________________, a[n] ____________ corporation (the
"Additional Obligor"), by the execution and delivery of this Instrument of
Joinder, does hereby become jointly and severally liable as an Obligor,
under each of the Notes and each of the Note Purchase Agreements, for the
due and punctual performance and observance of all of the covenants and
other obligations in the Notes and the Note Purchase Agreements to be
performed or observed by the Obligors, including, without limitation, the
due and punctual payment of the principal and Make-Whole Amount, if any,
of, and interest on and all other amounts in respect of, each Note (whether
such principal, Make-Whole Amount, interest or other amounts are currently
outstanding or to be incurred in the future) and (b) for the due and
punctual performance and observance of all the covenants in the Notes and
the Note Purchase Agreements to be performed or observed by the Obligors;
immediately upon the execution and delivery of this Instrument of Joinder
to one or more of the holders of Notes (and whether or not the Additional
Obligor shall, as required by such Section 9.6, execute and deliver any
Allonges with respect to the Notes), the Additional Obligor shall be deemed
to have become an Obligor for purposes of all of the Financing Documents,
including, without limitation, for purposes of the definition of "Obligors"
set forth in each Note Purchase Agreement and each Note.
2. REPRESENTATIONS AND WARRANTIES OF THE ADDITIONAL OBLIGOR.
The Additional Obligor hereby makes and restates, as to itself and as
of the date hereof, each of the representations and warranties set forth in
Section 5 to the Note Purchase Agreements, subject to only the exceptions
in respect thereof set forth in Annex 2 hereto.
3. MISCELLANEOUS.
3.1 Part of Note Purchase Agreements, Future References, etc.
This Instrument of Joinder shall be construed in connection with and
as a part of each of the Note Purchase Agreements and, except as expressly
amended by this Instrument of Joinder, all terms, conditions and covenants
contained in the Note Purchase Agreements and the Notes are hereby ratified
and shall be and remain in full force and effect. Any and all notices,
requests, certificates and other instruments executed and delivered after
the execution and delivery of this Instrument of Joinder may refer to the
Note Purchase Agreements and the Notes without making specific reference to
this Instrument of Joinder, but nevertheless all such references shall
include this Instrument of Joinder unless the context otherwise requires.
3.2 Successors and Assigns.
This Instrument of Joinder shall inure to the benefit of and be
binding upon the successors and assigns of the Additional Obligor and shall
inure to the benefit of each holder from time to time of any Notes.
<PAGE>
3.3 Governing Law.
THIS INSTRUMENT OF JOINDER, THE NOTE PURCHASE AGREEMENTS AND
THE NOTES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF
NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE
THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
[Remainder of page intentionally left blank; next page is signature page.]
<PAGE>
IN WITNESS WHEREOF, each of the Additional Obligor and the Company has
caused this Instrument of Joinder to be executed on its behalf by a duly
authorized officer thereof as of the date first above written.
Very truly yours,
[ADDITIONAL OBLIGOR]
By___________________________________________
Name:
Title:
GUEST SUPPLY, INC.
By___________________________________________
Name:
Title:
[Signature page of Instrument of Joinder with respect to ____________]
<PAGE>
Annex 1
List of Prior Instruments of Joinder
[Identify any prior Instruments of Joinder and related Obligors]
<PAGE>
Annex 2
Exceptions as to Representations and Warranties
<PAGE>
EXHIBIT 9.6(b)
[FORM OF ALLONGE]
ALLONGE
FOR VALUE RECEIVED, the undersigned, ________________________
[ADDITIONAL OBLIGOR], a[n] ____________ corporation, hereby promises to pay
to _______________________ or registered assigns the outstanding principal
balance of the [7.06% Series A Senior Note due November 15, 2009] / [6.95%
Series B Senior Note due November 15, 2007] / [6.70% Series C Senior Note
due November 15, 2003] (the "Note") originally issued jointly
and severally by Guest Supply, Inc. and certain other Obligors, to which
this Allonge is attached, in accordance with the terms of such Note, and as
required by Section 9.6 and other provisions of each of the separate Note
Purchase Agreements, dated as of December 3, 1997 among Guest Supply, Inc.
and certain other Obligors and each of the Purchasers named on Schedule A
thereto. The undersigned agrees that it is and shall be jointly and
severally liable for the payment of the principal, Make-Whole Amount, if
any, and accrued interest on such Note as one of the "Obligors" as such
term is defined in the Note and as if the undersigned had been an original
co-maker of such Note.
[ADDITIONAL OBLIGOR]
By
Name:
Title:
<PAGE>
GUEST SUPPLY, INC.
and certain other Obligors
7.06% Series A Senior Note due November 15, 2009
No. AR-1 December 3, 1997
$10,000,000 PPN: 401630 A* 9
For value received, the undersigned, GUEST SUPPLY, INC., a New Jersey
corporation (herein called the "Company"), BRECKENRIDGE-REMY CO., a
Delaware corporation, GUEST DISTRIBUTION SERVICES, INC., a Delaware
corporation, and GUEST PACKAGING, INC., a New Jersey corporation
(collectively, the "Obligors") hereby jointly and severally promise to pay
to J. ROMEO & Co., or registered assigns, the principal sum of TEN MILLION
DOLLARS ($10,000,000) on November 15, 2009, 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 7.06% per annum from the dale hereof, payable
semiannually, on the 15th day of May and November in each year, commencing
with the May 15 or November 15 next succeeding the date hereof, 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 Make-Whole Amount (as defined in the Note Purchase Agreements 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) 9.06% or (ii) 2.0% over the rate of interest
publicly announced by Chase Manhattan Bank, N.A. (or its successor) from
time to time in New York, New York as its "base" or "prime" rate.
Subject to Section 14.2 of the Note Purchase Agreements, payments of
principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at the
principal office of the Company in Monmouth Junction, New Jersey, or at
such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of joint and several senior notes (together
with the other two series of joint and several senior notes issued pursuant
thereto, as from time to time amended, restated, supplemented or otherwise
modified, herein called the "Notes") issued pursuant to separate Note
Purchase Agreements, dated as of December 3, 1997 (as from time to time
amended, restated, supplemented or otherwise modified, herein called the
"Note Purchase Agreements"), among the Obligors and the respective
Purchasers named therein, and is entitled to the benefits thereof. 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 Agreements and (ii) to have made the representation set forth
in the last sentence of Section 6.1 and the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, 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 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 Obligors 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 Obligors will not be affected
by any notice to the contrary.
The Obligors will make required prepayments of principal on the dates and
in the amounts specified in the Note Purchase Agreements. 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 Agreements, but
not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, 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 Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
THIS NOTE AND THE NOTE PURCHASE AGREEMENTS SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
GUEST SUPPLY, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
BRECKENRIDGE-REMY CO.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST DISTRIBUTION SERVICES, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Authorized Signatory
GUEST PACKAGING, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
<PAGE>
GUEST SUPPLY, INC.
and certain other Obligors
7.06% Series A Senior Note due November 15, 2009
No. AR-2 December 3, 1997
$5,000,000 PPN: 401630 A* 9
For value received, the undersigned, GUEST SUPPLY, INC., a New Jersey
corporation (herein called the "Company"), BRECKENRIDGE-REMY CO., a
Delaware corporation, GUEST DISTRIBUTION SERVICES, INC., a Delaware
corporation, and GUEST PACKAGING, INC., a New Jersey corporation
(collectively, the "Obligors") hereby jointly and severally promise to pay
to AUER & Co., or registered assigns, the principal sum of FIVE MILLION
DOLLARS ($5,000,000) on November 15, 2009, 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 7.06% per annum from the dale hereof, payable
semiannually, on the 15th day of May and November in each year, commencing
with the May 15 or November 15 next succeeding the date hereof, 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 Make-Whole Amount (as defined in the Note Purchase Agreements 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) 9.06% or (ii) 2.0% over the rate of interest
publicly announced by Chase Manhattan Bank, N.A. (or its successor) from
time to time in New York, New York as its "base" or "prime" rate.
Subject to Section 14.2 of the Note Purchase Agreements, payments of
principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at the
principal office of the Company in Monmouth Junction, New Jersey, or at
such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of joint and several senior notes
(together with the other two series of joint and several senior notes
issued pursuant thereto, as from time to time amended, restated,
supplemented or otherwise modified, herein called the "Notes") issued
pursuant to separate Note Purchase Agreements, dated as of December 3, 1997
(as from time to time amended, restated, supplemented or otherwise
modified, herein called the "Note Purchase Agreements"), among the Obligors
and the respective Purchasers named therein, and is entitled to the
benefits thereof. 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 Agreements and (ii) to have made
the representation set forth in the last sentence of Section 6.1 and the
representation set forth in Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, 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 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 Obligors 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 Obligors will not be affected
by any notice to the contrary.
The Obligors will make required prepayments of principal on the dates and
in the amounts specified in the Note Purchase Agreements. 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 Agreements, but
not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, 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 Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
THIS NOTE AND THE NOTE PURCHASE AGREEMENTS SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
GUEST SUPPLY, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
BRECKENRIDGE-REMY CO.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST DISTRIBUTION SERVICES, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Authorized Signatory
GUEST PACKAGING, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
<PAGE>
GUEST SUPPLY, INC.
and certain other Obligors
6.95% Series B Senior Note due November 15, 2007
No. BR-1 December 3, 1997
$5,000,000 PPN: 401630 A@7
For value received, the undersigned, GUEST SUPPLY, INC., a New Jersey
corporation (herein called the "Company"), BRECKENRIDGE-REMY CO., a
Delaware corporation, GUEST DISTRIBUTION SERVICES, INC., a Delaware
corporation, and GUEST PACKAGING, INC., a New Jersey corporation
(collectively, the "Obligors") hereby jointly and severally promise to pay
to GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY, or registered assigns,
the principal sum of FIVE MILLION DOLLARS ($5,000,000) on November 15, 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 6.95% per annum
from the dale hereof, payable semiannually, on the 15th day of May and
November in each year, commencing with the May 15 or November 15 next
succeeding the date hereof, 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 Make-Whole Amount (as
defined in the Note Purchase Agreements 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) 8.95% or (ii) 2.0% over the rate of interest publicly
announced by Chase Manhattan Bank, N.A. (or its successor) from time to
time in New York, New York as its "base" or "prime" rate.
Subject to Section 14.2 of the Note Purchase Agreements, payments of
principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at the
principal office of the Company in Monmouth Junction, New Jersey, or at
such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of joint and several senior notes
(together with the other two series of joint and several senior notes
issued pursuant thereto, as from time to time amended, restated,
supplemented or otherwise modified, herein called the "Notes") issued
pursuant to separate Note Purchase Agreements, dated as of December 3, 1997
(as from time to time amended, restated, supplemented or otherwise
modified, herein called the "Note Purchase Agreements"), among the
Obligors and the respective Purchasers named therein, and is entitled to
the benefits thereof. 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 Agreements and (ii) to have made
the representation set forth in the last sentence of Section 6.1 and the
representation set forth in Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, 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 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 Obligors 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 Obligors will not be affected
by any notice to the contrary.
The Obligors will make required prepayments of principal on the dates and
in the amounts specified in the Note Purchase Agreements. 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 Agreements, but
not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, 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 Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
THIS NOTE AND THE NOTE PURCHASE AGREEMENTS SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
GUEST SUPPLY, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
BRECKENRIDGE-REMY CO.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST DISTRIBUTION SERVICES, INC.
By s/ Paul Xenis
-------------
Paul Xenis
Title: Authorized Signatory
GUEST PACKAGING, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
<PAGE>
GUEST SUPPLY, INC.
and certain other Obligors
6.70% Series C Senior Notes due November 15, 2003
No. CR-1
December 3, 1997
$5,000,000
PPN: 401630 A*9
For value received, the undersigned, GUEST SUPPLY, INC., a New Jersey
corporation (herein called the "Company"), BRECKENRIDGE-REMY CO., a
Delaware corporation, GUEST DISTRIBUTION SERVICES, INC., a Delaware
corporation, and GUEST PACKAGING, INC., a New Jersey corporation
(collectively, the "Obligors") hereby jointly and severally promise to pay
to NATIONWIDE LIFE & ANNUITY INSURANCE COMPANY, or registered assigns,
the principal sum of FIVE MILLION DOLLARS ($5,000,000) on November 15, 2003,
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 6.70% per annum
from the dale hereof, payable semiannually, on the 15th day of May and
November in each year, commencing with the May 15 or November 15 next
succeeding the date hereof, 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 Make-Whole Amount (as
defined in the Note Purchase Agreements 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) 8.70% or (ii) 2.0% over the rate of interest publicly
announced by Chase Manhattan Bank, N.A. (or its successor) from time to
time in New York, New York as its "base" or "prime" rate.
Subject to Section 14.2 of the Note Purchase Agreements, payments of
principal of, interest on and any Make-Whole Amount with respect to this
Note are to be made in lawful money of the United States of America at the
principal office of the Company in Monmouth Junction, New Jersey, or at
such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements
referred to below.
This Note is one of a series of joint and several senior notes
(together with the other two series of joint and several senior notes
issued pursuant thereto, as from time to time amended, restated,
supplemented or otherwise modified, herein called the "Notes") issued
pursuant to separate Note Purchase Agreements, dated as of December 3, 1997
(as from time to time amended, restated, supplemented or otherwise
modified, herein called the "Note Purchase Agreements"), among the Obligors
and the respective Purchasers named therein, and is entitled to the
benefits thereof. 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 Agreements and (ii) to have made
the representation set forth in the last sentence of Section 6.1 and the
representation set forth in Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, 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 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 Obligors 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 Obligors will not be affected
by any notice to the contrary.
The Obligors will make required prepayments of principal on the dates and
in the amounts specified in the Note Purchase Agreements. 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 Agreements, but
not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, 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 Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
THIS NOTE AND THE NOTE PURCHASE AGREEMENTS SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
GUEST SUPPLY, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
BRECKENRIDGE-REMY CO.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
GUEST DISTRIBUTION SERVICES, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Authorized Signatory
GUEST PACKAGING, INC.
By s/ Paul Xenis
-------------
Name: Paul Xenis
Title: Secretary and Vice President-Finance
<PAGE>
EXHIBIT 21
Subsidiaries of Guest Supply, Inc.
Guest Supply, Inc. has the following subsidiaries:
1. Guest International, Ltd., an English corporation.
2. Guest Packaging, Inc., a New Jersey corporation.
3. Breckenridge-Remy Co., a Delaware corporation.
4. Guest International (Canada) Ltd., a Canadian corporation.
5. Guest International New Zealand Limited, a New Zealand
corporation.
6. Guest Distribution Services, Inc., a Delaware corporation.
<PAGE>
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
Guest Supply, Inc.:
We consent to incorporation by reference in the
Registration Statements (File Nos. 2-89233, 2-89234, 33-22872,
33-63352 and 333-26709) on Form S-8 of Guest Supply, Inc. of our
report dated November 18, 1997, except as to the note on Long
Term Debt which is as of December 3, 1997, relating to the
consolidated balance sheets of Guest Supply, Inc. and
subsidiaries as of September 30, 1997 and 1996, and the related
consolidated statements of operations, cash flows, and
shareholders' equity and related schedule for each of the years
in the three-year period ended September 30, 1997, which report
appears in the September 30, 1997 annual report on Form 10-K of
Guest Supply, Inc.
KPMG Peat Marwick LLP
Short Hills, New Jersey
December 9, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,152,000
<SECURITIES> 0
<RECEIVABLES> 31,461,000
<ALLOWANCES> 1,032,000
<INVENTORY> 34,676,000
<CURRENT-ASSETS> 73,056,000
<PP&E> 33,141,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 112,669,000
<CURRENT-LIABILITIES> 33,430,000
<BONDS> 0
0
0
<COMMON> 546,000
<OTHER-SE> 46,051,000
<TOTAL-LIABILITY-AND-EQUITY> 112,669,000
<SALES> 0
<TOTAL-REVENUES> 200,917,000
<CGS> 0
<TOTAL-COSTS> 158,092,000
<OTHER-EXPENSES> 34,043,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,065,000
<INCOME-PRETAX> 6,717,000
<INCOME-TAX> 2,901,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,816,000
<EPS-PRIMARY> .55
<EPS-DILUTED> .54
</TABLE>
