UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): June 6, 1996 Commission file number 1-11802
World Color Press, Inc.
(Exact name of registrant as specified in its charter)
Delaware 37-1167902
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
340 Pemberwick Road,
Greenwich, Connecticut 06831
(Address of principal executive offices) (Zip Code)
203-532-4200
(Registrant's telephone number, including area code)
Page 1 of ____ Pages
Exhibit Index on page ____
<PAGE>
Item 2. Acquisition or Disposition of Assets.
- -------------------------------------------------
On June 6, 1996, World Color Press, Inc., (along with its subsidiaries,
"World Color" or the "Company") acquired from Ringier A.G. all of the issued and
outstanding capital stock of Krueger Acquisition Corporation, including all of
the issued and outstanding capital stock of Ringier Holdings, Inc., Ringier
America, Inc., Krueger Ringier, Inc., Ringier Print U.S., Inc. and W.A. Krueger
Co. Olathe (collectively, "Ringier America"), for approximately $128 million
(the "Acquisition"). In addition, the Company assumed approximately $287 million
of Ringier America's indebtedness, of which approximately $281 million was
liquidated upon consummation of the Acquisition. The Acquisition was accounted
for as a purchase.
The Acquisition and liquidation of indebtedness were funded using proceeds
from acquisition term loans under the Second Amended and Restated Credit
Agreement dated as of June 6, 1996, as amended (the "Credit Agreement"), among
World Color and the lenders and agents party thereto. The Credit Agreement
provides for an additional $566 million of commitments, for aggregate total
commitments of $975 million. The credit facility provides for varying
semi-annual reductions in commitments and matures on December 31, 2002. All
other significant financial provisions of the bank credit facility remain
substantially unchanged.
Ringier America, based in Chicago, Illinois, is a leading diversified
commercial printer whose business includes the printing of catalogs, magazines
and soft-cover books.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ---------------------------------------------------------------------------
(a) Financial Statements of Business Acquired.
------------------------------------------
The following financial statements of Ringier America's consolidated
reporting entity, Krueger Acquisition Corporation, are set forth in
Annex A hereto:
Years Ended December 31, 1995, 1994 and 1993:
Report of Independent Auditors
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholder's Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information.
--------------------------------
The following pro forma financial information is set forth in Annex
B hereto:
Unaudited Pro Forma Combined Condensed Balance Sheet
as of March 31, 1996
Unaudited Pro Forma Combined Condensed Statement of
Operations for the three months ended March 31, 1996
<PAGE>
Unaudited Pro Forma Combined Condensed Statement of
Operations for the fiscal year ended December 31, 1995
Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
(c) Exhibits.
---------
The following exhibits are set forth in Annex C hereto:
10.1 Stock Purchase Agreement by and among Ringier A.G.,
Krueger Acquisition Corporation and World Color Press, Inc.
dated April 24, 1996
10.2 Second Amended and Restated Credit Agreement dated
June 6, 1996
10.3 First Amendment to Second Amended and Restated Credit
Agreement, dated June 10, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORLD COLOR PRESS, INC.
Date: June 21, 1996 By: /S/ MARC L. REISCH
---------------------------
Marc L. Reisch
Executive Vice President, Chief
Operating and Financial Officer
<PAGE>
ANNEX A
<PAGE>
Consolidated Financial Statements
Krueger Acquisition Corporation
Years ended December 31, 1995, 1994, and 1993
with Report of Independent Auditors
<PAGE>
Krueger Acquisition Corporation
Consolidated Financial Statements
Years ended December 31, 1995, 1994, and 1993
CONTENTS
Report of Independent Auditors...............................................1
Consolidated Financial Statements
Consolidated Balance Sheets..................................................2
Consolidated Statements of Operations........................................4
Consolidated Statements of Stockholder's Equity..............................5
Consolidated Statements of Cash Flows........................................6
Notes to Consolidated Financial Statements...................................7
<PAGE>
Report of Independent Auditors
The Board of Directors
Krueger Acquisition Corporation
We have audited the accompanying consolidated balance sheets of Krueger
Acquisition Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Krueger
Acquisition Corporation at December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
February 2, 1996
1
<PAGE>
Krueger Acquisition Corporation
Consolidated Balance Sheets
December 31, 1995 and 1994
(Dollars in Thousands)
<TABLE><CAPTION>
1995 1994
------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14 $ 24
Receivables, less allowance for doubtful accounts of $1,950
and $1,998, respectively 72,466 65,758
Inventories:
Materials and supplies 26,207 17,995
Work in process 13,384 17,369
------------------------------------
Total inventories 39,591 35,364
Less: Progress billings 2,262 4,060
------------------------------------
37,329 31,304
Current portion of deferred income taxes - 235
Prepaid expenses 1,141 888
------------------------------------
Total current assets 110,950 98,209
Property, plant, and equipment (at cost):
Land 5,618 6,628
Buildings 103,665 107,233
Machinery and equipment 358,744 348,477
Construction in progress 4,724 2,809
------------------------------------
472,751 465,147
Less: Accumulated depreciation and amortization 198,857 161,623
------------------------------------
273,894 303,524
Excess of costs over net assets acquired, net of accumulated
amortization of $26,218 and $22,269, respectively 130,986 134,935
Debt issuance costs, net of accumulated amortization of $15,285
and $9,772, respectively 2,699 7,454
Other assets 10,278 6,918
====================================
Total assets $528,807 $551,040
====================================
</TABLE>
2
<PAGE>
<TABLE><CAPTION>
1995 1994
------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 30,687 $ 25,393
Accrued liabilities 17,054 17,791
Income taxes payable 2,723 605
Current portion of long-term debt 19,557 35,796
Current portion of deferred income taxes 525 -
------------------------------------
Total current liabilities 70,546 79,585
Long-term debt 267,162 291,032
Deferred income taxes 70,835 78,920
Other long-term liabilities 6,748 4,441
Stockholder's equity:
Common stock, no par, 3,000 shares authorized, 100 shares
issued and outstanding 55,000 55,000
Additional contributed capital 97,760 97,760
Accumulated deficit (39,244) (55,698)
------------------------------------
Total Stockholder's equity 113,516 97,062
------------------------------------
Total liabilities and Stockholder's equity $528,807 $551,040
====================================
See accompanying notes.
</TABLE>
3
<PAGE>
Krueger Acquisition Corporation
Consolidated Statements of Operations
Years ended December 31, 1995, 1994, and 1993
(Dollars in Thousands)
<TABLE><CAPTION>
1995 1994 1993
------------------------------------------------------
<S> <C> <C> <C>
Net sales $514,809 $462,421 $435,179
Cost of goods sold (403,257) (362,822) (340,200)
Selling, general, and administrative
expense (39,715) (33,495) (33,419)
Depreciation and amortization (43,117) (39,067) (42,473)
Income related to settled customer contract 31,481 8,366 7,998
Plant closure costs - - (2,750)
------------------------------------------------------
(454,608) (427,018) (410,844)
------------------------------------------------------
Operating income from continuing
operations 60,201 35,403 24,335
Interest income 449 284 204
Interest expense (33,858) (34,092) (41,257)
------------------------------------------------------
Income (loss) before income taxes from continuing
operations 26,792 1,595 (16,718)
(Provision) benefit for income taxes (10,338) (1,535) 3,574
------------------------------------------------------
Income (loss) from continuing operations 16,454 60 (13,144)
DISCONTINUED OPERATIONS (NOTE 2)
Loss from operations of discontinued segments
(less applicable income taxes of $176) - - (283)
Loss on disposal of discontinued segments (less
applicable income taxes of $9,907) - - (16,304)
------------------------------------------------------
Loss from discontinued operations - - (16,587)
------------------------------------------------------
Net income (loss) $ 16,454 $ 60 $ (29,731)
======================================================
See accompanying notes.
</TABLE>
4
<PAGE>
Krueger Acquisition Corporation
Consolidated Statements of Stockholder's Equity
Years ended December 31, 1995, 1994, and 1993
(Dollars in Thousands)
<TABLE><CAPTION>
ADDITIONAL TOTAL
COMMON CONTRIBUTED ACCUMULATED STOCKHOLDER'S
STOCK CAPITAL DEFICIT EQUITY
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $55,000 $67,760 $(26,027) $ 96,733
Capital contribution - 10,000 - 10,000
Net loss - - (29,731) (29,731)
----------------------------------------------------------------
Balance at December 31, 1993 55,000 77,760 (55,758) 77,002
Capital contribution - 20,000 - 20,000
Net income - - 60 60
----------------------------------------------------------------
Balance at December 31, 1994 55,000 97,760 (55,698) 97,062
Net income - - 16,454 16,454
----------------------------------------------------------------
Balance at December 31, 1995 $55,000 $97,760 $(39,244) $113,516
================================================================
See accompanying notes.
</TABLE>
5
<PAGE>
Krueger Acquisition Corporation
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994, and 1993
(Dollars in Thousands)
<TABLE><CAPTION>
1995 1994 1993
-------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $16,454 $ 60 $(29,731)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 43,117 39,067 48,218
Accelerated amortization of debt issuance costs and
unamortized discount 4,533 - -
Amortization of debt issuance costs 1,935 1,936 1,935
Amortization of discount on long-term debt 636 636 1,106
(Decrease) in deferred income taxes (7,325) (2,612) (1,447)
Provision for losses on accounts receivable - - 900
Net (gain) loss on disposal of fixed assets (86) (185) 3,359
Loss on disposal of discontinued segments - - 16,304
Other changes in assets and liabilities:
(Increase) decrease in receivables (6,708) (4,072) 12,403
(Increase) decrease in inventories (6,025) 3,045 3,144
(Increase) decrease in prepaid expenses (253) 155 (290)
(Increase) in other assets, net of purchase of
interest rate cap (3,360) (4,867) (1,106)
Increase (decrease) in accounts payable, income
taxes payable, and accrued liabilities
6,675 (4,750) (10,375)
Increase (decrease) in other long-term liabilities 2,307 1,524 (24)
-------------------------------------------
Total adjustments 35,446 29,877 74,127
-------------------------------------------
Net cash provided by operating activities 51,900 29,937 44,396
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (14,756) (29,209) (35,536)
Payments made on reimbursable deposits - - (20,211)
Refunds of reimbursable deposits - 7,801 12,410
Proceeds from sale of fixed assets 5,304 622 7,337
Proceeds from sale of discontinued segments - - 75,443
Costs of disposal of discontinued segments - - (15,988)
-------------------------------------------
Net cash (used in) provided by investing activities (9,452) (20,786) 23,455
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution - 20,000 10,000
Proceeds from issuance of long-term debt - 8,890 2,350
Repayment of long-term debt (41,700) (37,999) (80,179)
Purchase of interest rate cap - (945) -
Payment of debt refinancing costs (758) - -
-------------------------------------------
Net cash used in financing activities (42,458) (10,054) (67,829)
-------------------------------------------
Net increase (decrease) in cash and cash equivalents (10) (903) 22
Cash and cash equivalents at beginning of year 24 927 905
-------------------------------------------
Cash and cash equivalents at end of year $ 14 $ 24 $ 927
===========================================
See accompanying notes.
</TABLE>
6
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements
Years ended December 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Krueger Acquisition Corporation (KAC) and its wholly owned subsidiaries, Ringier
America, Inc. (RAI) and Krueger Ringier, Inc. (KRI) (collectively referred to as
the Company). The Company is a wholly owned subsidiary of Ringier AG, a
Switzerland-based publisher and printer.
All intercompany transactions have been eliminated in the accompanying
consolidated financial statements.
NATURE OF OPERATIONS
The Company is a commercial printer of magazines, catalogs, inserts, and
mass-market paperback books utilizing rotogravure, offset, and flexographic
printing processes. Print production occurs at six printing plants located
throughout the United States. The Company provides a full range of print and
print-related services including prepress, press, bindery, mail preparation, and
distribution. All operations and substantially all customers are located in the
United States.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
CASH EQUIVALENTS
The Company's policy is to classify investments with remaining maturities at
date of purchase of three months or less as cash equivalents, which consisted
principally of money market accounts. The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents approximate fair
value.
7
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost or market. The cost of materials and
work-in-process inventories that are determined on the last in, first out (LIFO)
method totaled $3,583,000 at December 31, 1995, and $6,726,000 at December 31,
1994; all other such inventories are determined on the first in, first out
method. The cost of supplies inventories ($8,648,000 and $8,029,000 at December
31, 1995 and 1994, respectively) is determined on the average cost method.
Inventories stated on the LIFO method were $1,472,000 and $213,000 below
replacement cost at December 31, 1995 and 1994, respectively.
DEPRECIATION AND AMORTIZATION
Property, plant, and equipment are depreciated on the straight-line method over
their estimated useful lives. Costs in excess of net assets acquired are
amortized on the straight-line method over 40 years. Debt issuance costs are
amortized on the straight-line method over the period that the related debt will
be outstanding. In 1994, the Company extended the lives used to depreciate
certain fixed assets. The effect of the change was to reduce depreciation
expense in 1994 by approximately $4,800,000.
2. DISCONTINUED OPERATIONS
In 1993, the Company sold two of its printing facilities which were engaged in
printing "Special Interest Magazines" to an unrelated party and closed one of
its printing facilities which was engaged in the printing of hardcover books.
The Company has accounted for these transactions as discontinued operations in
the accompanying Consolidated Statement of Operations. At December 31, 1994 and
1993, the remaining real property of the hardcover book printing facility had a
book value of $5.0 million.
The loss on disposal in 1993 includes sales proceeds from the discontinued
segments of $80,443,000, including $5,000,000 of estimated future proceeds. By
the terms of its credit agreement, these proceeds of sale required the Company
to prepay $47,973,000 of its term debt in 1993.
8
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
3. DEBT
Long-term debt consists of the following:
<TABLE><CAPTION>
1995 1994
------------------------------------
(In Thousands)
<S> <C> <C>
Term notes:
Maturity on December 31, 1998 $110,000 $110,000
Maturities through December 31, 1997 45,353 64,382
Maturity on December 31, 1998 20,000 20,000
Maturity on December 31, 1998 10,000 10,000
Maturities through December 31, 1997 - 10,350
------------------------------------
185,353 214,732
Revolving credit facility available through 1997 60,000 55,000
Promissory notes:
9.62%, due 1996 (refinanced through 1997) 24,000 36,000
9.67%, due 1996 (refinanced through 1997) 8,000 12,000
Less: Unamortized discount - (1,591)
------------------------------------
32,000 46,409
Other 9,366 10,687
------------------------------------
286,719 326,828
Less: Installments due within one year 19,557 35,796
------------------------------------
$267,162 $291,032
====================================
</TABLE>
On December 21, 1989, the Company entered into a credit agreement under which
amounts previously borrowed included term loan facilities of $170,000,000,
$110,000,000, $30,000,000, $20,000,000, and $10,000,000. The credit agreement
also provides the Company with a revolving credit facility equal to 80% of
eligible receivables and 50% of eligible inventory with a maximum availability
of $80,000,000 at December 31, 1995 ($90,000,000 at December 31, 1994). The
Company is required to pay a quarterly commitment fee of 1/2 of 1% per annum on
the daily average unused amount of the revolving credit facility. Pursuant to
amending the credit agreement in 1992, Ringier AG contributed $10,000,000 of
additional capital in 1993 which was used to repay a portion of borrowings under
the revolving credit facility and $20,000,000 of additional capital in 1994,
which was used to repay a portion of the term notes.
The amended credit agreement provides for interest on the term loan facilities,
except for the $110,000,000 facility, and the revolving credit facility to be
based upon the prime rate or the Euro-Rate, as selected by the Company, plus an
applicable rate margin. The applicable rate margin varies from a minimum of 1
1/4% for the prime rate and 2 1/4% for the Euro-Rate to a maximum of 1 1/2% for
the prime rate and 2 1/2% for the Euro-Rate.
The applicable rate margin is determined by the ratio of consolidated total
9
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
3. DEBT (CONTINUED)
indebtedness to adjusted consolidated net worth and the ratio of cash flow
available for debt service to net interest expense of the Company. The Company
is currently paying an applicable rate margin of 1 1/4% on the prime rate and 2
1/4% on the Euro-Rate option.
On December 15, 1995, the credit agreement was further amended to permit an
assignment of the $110,000,000 facility to another lender and a refinancing of
the $24,000,000 and $8,000,000 promissory notes issued by RAI. The assignment of
the $110,000,000 note was a noncash financing transaction and is not reflected
on the accompanying consolidated statement of cash flows. The amended and
restated $110,000,000 credit agreement provides for interest at the prime rate
plus .50% or the Euro-Rate plus .65% through December 31, 1997, and the
Euro-Rate plus 1.00% thereafter as selected by the Company. Interest prior to
December 15, 1995, had been at the prime rate plus .50% or the Euro-Rate plus
1.50% as selected by the Company. The new $32,000,000 credit agreement provides
for interest at the prime rate plus .50% or the Euro-Rate plus 1.20% as selected
by the Company. Because of notification requirements, the RAI promissory notes
were repaid and the term note issued on January 11, 1996. The $32,000,000 term
note matures on December 31, 1997. Therefore, the $32,000,000 has been excluded
from installments due within one year. In conjunction with these transactions,
the Company was required to pay a fee of .40% of the loan amounts, a prepayment
penalty of $342,000 on the RAI notes and various other expenses. The Company
also accelerated the amortization of the original debt issuance costs and
unamortized discount ($3,578,000 and $955,000, respectively).
The credit agreements require the Company to maintain a minimum net worth (as
defined), a debt service coverage ratio (as defined), a current ratio (as
defined), and a leverage ratio (as defined) at varying and specified amounts or
rates. The agreements limit future indebtedness, rentals, and capital
expenditures and provide for additional mandatory principal repayment if excess
cash flow (as defined) is realized. The term notes and revolving credit facility
are collateralized by the assets of KAC and its wholly owned subsidiaries,
except RAI. RAI's portion of the Company's consolidated total assets is
approximately $124,000,000. The principal and interest on the $110,000,000 term
note is guaranteed by Ringier AG. The interest on the new $32,000,000 note and
on notes issued by KAC is also guaranteed by Ringier AG. The Company has agreed
to pay Ringier AG a fee of $1,000,000 per annum for its guarantee of the
$110,000,000 term note. The payment of the fee is contingent upon achieving a
sufficient excess cash flow level. The fees for 1995, 1994, and 1993 will be
paid based upon the Company achieving a sufficient excess cash flow level in a
future period. The Company has included the fee in interest expense in all
years.
10
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
3. DEBT (CONTINUED)
INTEREST RATE CAP AGREEMENTS
The Company enters into interest rate cap agreements to reduce the impact of
increases in interest rates on its variable rate debt. Such agreements entitle
the Company to receive from a bank the amount, if any, by which the Company's
interest payments exceed the rates specified in the agreements. The Company is
subject to the credit risk that the bank may fail to perform under such
agreements. The cost of the agreements is amortized to interest expense over the
term of the agreements, and the unamortized cost is included in other assets.
Payments received as a result of the agreements, if any, are recorded as a
reduction of interest expense. At December 31, 1995, the Company has one such
interest rate cap agreement in effect. The agreement caps $150,000,000 of the
term notes and borrowings under the revolving credit agreement at a rate of
7.00% for the Euro-Rate, plus the applicable rate margin, and expires on March
10, 1997.
NOTE PAYABLE TO RINGIER AG
At December 31, 1995 and 1994, other long-term debt includes a $5,000,000 demand
note payable to Ringier AG. The note bears interest at 6.00% per annum. Ringier
AG has informed the Company that it does not anticipate demanding repayment of
the note in 1996.
INTEREST
Interest costs incurred and capitalized interest amounted to $33,980,000 and
$122,000, respectively, for 1995, $35,589,000 and $1,497,000, respectively, for
1994, and $43,132,000 and $1,875,000, respectively, for 1993. Interest paid,
including capitalized interest, was $26,907,000, $30,961,000, and $39,663,000
for 1995, 1994, and 1993, respectively.
Aggregate debt maturities after 1996 are as follows (in thousands):
YEAR AMOUNT
--------------------------------------------------------------------
1997 $120,400
1998 141,082
1999 5,680
====================
$267,162
====================
The carrying amount of the Company's long-term debt approximates fair value.
11
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
4. INCOME TAXES
The provision (benefit) for income taxes is summarized as follows:
<TABLE><CAPTION>
1995 1994 1993
------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Continuing operations:
Current provision (benefit):
Federal $14,932 $3,014 $(1,901)
State 2,731 1,133 (347)
------------------------------------------------------
17,663 4,147 (2,248)
Deferred (benefit) provision:
Federal (6,845) (1,643) (1,122)
State (480) (969) (204)
------------------------------------------------------
(7,325) (2,612) (1,326)
======================================================
Total provision (benefit) $10,338 $1,535 $ (3,574)
======================================================
Discontinued operations:
Current provision:
Federal $ - $ - $ 8,714
State - - 1,589
------------------------------------------------------
- - 10,303
Deferred (benefit):
Federal - - (17,242)
State - - (3,144)
------------------------------------------------------
- - (20,386)
======================================================
Total benefit $ - $ - $10,083
======================================================
</TABLE>
The reconciliation of the expected provision (benefit) for income taxes from
continuing operations to amounts reported is as follows:
<TABLE><CAPTION>
1995 1994 1993
------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Expected provision (benefit) computed at the federal
statutory rate (35%) $ 9,377 $ 558 $ (5,851)
Effect of amortization of excess of costs over net
assets acquired 1,382 1,382 1,382
Effect of increase in federal statutory rate - - 1,281
Other, net (421) (405) (386)
======================================================
$10,338 $1,535 $ (3,574)
======================================================
</TABLE>
12
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
4. INCOME TAXES (CONTINUED)
The net deferred income tax liability relates principally to different carrying
values for property, plant, and equipment, inventories, and certain accrued
liabilities for financial accounting purposes rather than for income tax
purposes. The significant components of the net deferred income tax liability at
December 31, 1995 and 1994, are as follows:
1995 1994
---------------------------------
(In Thousands)
Deferred income tax liabilities:
Property, plant, and equipment $67,432 $72,579
Inventories 2,904 3,149
Other 4,829 6,437
---------------------------------
Total deferred income tax liabilities 75,165 82,165
Deferred income tax assets:
Accrued liabilities (principally vacation
pay, postretirement medical benefits, and
workmen's compensation) 3,603 3,337
Other 202 143
---------------------------------
Total deferred income tax assets 3,805 3,480
=================================
Net deferred income tax liability $71,360 $78,685
=================================
Cash payments for income taxes totaled $15,866,000, $5,987,000,
and $6,284,000 during 1995, 1994, and 1993, respectively.
13
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
5. RETIREMENT PLAN
The Company maintains a combined, noncontributory, trusteed, defined-benefit
retirement Plan, the Ringier America Employees Retirement Plan. The Plan covers
substantially all nonunion employees and certain union employees who are not
covered by union-sponsored retirement plans under the terms of a collective
bargaining agreement. Benefits are based on age, years of service, compensation,
and normal retirement at age 65. The policy of the Company is to fund pension
costs in the minimum amounts required by the Employee Retirement Income Security
Act of 1974. The Plan's assets are invested primarily in marketable securities.
The following table sets forth the Plan's funded status at December 31, 1995 and
1994.
<TABLE><CAPTION>
1995 1994
---------------------------------
Actuarial present value of benefit obligations: (In Thousands)
<S> <C> <C>
Accumulated benefit obligations, including vested benefits of
$42,934,000 and $34,767,000, respectively $47,143 $38,897
=================================
Projected benefit obligation $54,796 $48,337
Plan assets at fair value 47,243 38,900
---------------------------------
Plan assets less than projected benefit obligation (7,553) (9,437)
Unrecognized net loss 11,927 11,219
=================================
Prepaid pension cost at December 31 $ 4,374 $ 1,782
=================================
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------------------
Net pension cost for the year included the (In Thousands)
following components:
<S> <C> <C> <C>
Service cost-benefits earned during the year $ 2,210 $ 2,161 $ 3,464
Interest cost on projected benefit obligation 4,471 4,183 5,710
Actual return on Plan assets (8,828) 2,034 (5,086)
Net amortization and deferral 5,432 (5,506) (655)
-------------------------------------------------
$ 3,285 $ 2,872 $ 3,433
=================================================
</TABLE>
In 1993, in connection with the disposal of the industry segments discussed in
Note 2, the Company agreed to fully vest the affected employees in their
accumulated plan benefits and, in accordance with the Plan's provisions, pay out
such benefits in lump-sum payments to the employees. These transactions resulted
in a settlement and a curtailment of the Plan as defined in Statement of
Financial Accounting Standards No. 88 entitled "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits." The effect of these transactions was to
14
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
5. RETIREMENT PLAN (CONTINUED)
reduce the projected benefit obligation by approximately $13,417,000, to
increase the unrecognized net loss by approximately $5,432,000 and reduce the
Plan assets by approximately $18,435,000 resulting in a net gain from the
settlement and curtailment of approximately $414,000. This amount has been
included in the loss on disposal of discontinued segments in the accompanying
1993 consolidated statement of operations.
In determining the actuarial present value of the projected benefit obligation,
weighted-average discount rates of 7.75%, 9%, and 8.25% were used for 1995,
1994, and 1993, respectively. The expected long-term rate of return on Plan
assets was 9% for 1995 and 9.5% for 1994 and 1993. The rate of increase in
future compensation levels was 3.5%, 4.8%, and 4.0% for 1995, 1994, and 1993,
respectively. It is possible that the Company's assumptions may change in the
near term and the changes may have a material effect on future pension expense
and prepaid pension cost.
The Company contributed $5,876,000 to the Plan during 1995.
The charges to operations for retirement plans under collective bargaining
agreements covering substantially all remaining employees (on a
defined-contribution basis) were $600,000, $577,000, and $630,000 in 1995, 1994,
and 1993, respectively. The Company's contributions to these plans are based on
a percentage of each participant's base wages.
6. POSTRETIREMENT MEDICAL BENEFITS
The Company sponsors a defined-benefit health care plan that provides
postretirement medical benefits to full-time employees who have either 10 years
of credited service under the Company-sponsored retirement plan and attained age
60, or a combination of years of credited service and age (must be at least 55)
equal to 85 while in service with the Company. The plan is contributory, with
retiree contributions adjusted annually, and contains other cost-sharing
features such as deductibles and coinsurance. Employees who retire after January
1, 1994, will only be reimbursed a portion of their Medigap premium after
reaching age 65. The Company's policy is to fund the cost of medical benefits in
amounts determined at the discretion of management.
15
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
6. POSTRETIREMENT MEDICAL BENEFITS (CONTINUED)
The following table presents the plan's funded status reconciled with amounts
recognized in the Company's consolidated balance sheets:
<TABLE><CAPTION>
DECEMBER 31
1995 1994
---------------------------------
(In Thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $(4,891) $(5,598)
Fully eligible active plan participants (567) (350)
Other active plan participants (2,991) (3,155)
---------------------------------
(8,449) (9,103)
Plan assets at fair value - -
---------------------------------
Accumulated postretirement benefit obligation in excess of
plan assets (8,449) (9,103)
Unrecognized prior service cost - -
Unrecognized net (gain) (1,595) (916)
Unrecognized transition obligation 7,973 8,442
=================================
Accrued postretirement benefit cost $(2,071) $(1,577)
=================================
</TABLE>
Net periodic postretirement benefit cost included the following components:
<TABLE><CAPTION>
FOR THE YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Service cost $ 291 $ 320 $ 296
Interest cost 787 749 723
Actual return on plan assets - - -
Amortization of transition obligation over 20
years 469 469 469
=================================================
Net periodic postretirement benefit cost $ 1,547 $ 1,538 $ 1,488
=================================================
</TABLE>
The weighted-average annual assumed rate of increase in the per capita cost of
covered benefits (i.e., health care cost trend rate) is 7% for retirees under 65
and 6% for retirees 65 and over for 1995. These rates are 1% less than the 1994
assumed rates and 2% less than the 1993 assumed rates and are assumed to
decrease gradually to 6% for all retirees for 1998 and remain at that level
thereafter. The health care cost trend rate assumption has a significant effect
on the amounts reported. For example, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
16
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
6. POSTRETIREMENT MEDICAL BENEFITS (CONTINUED)
accumulated postretirement benefit obligation as of December 31, 1995, by
$463,000 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1995 by $43,000.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8%, 9% and 8% at December 31, 1995, 1994,
and 1993, respectively.
7. CUSTOMER CONTRACT SETTLEMENT
In January 1995, the Company received $31,481,000 from one of its customers as
final settlement of the customer's future obligations under a printing services
contract. The contract required the customer to pay an annual amount to the
Company for depreciation and amortization of a plant built principally for the
customer, net of any production for other customers, through 1999. In 1994 and
1993, the net amounts realized by the Company from this arrangement were
$8,366,000 and $7,998,000, respectively. The $31,481,000, $8,366,000, and
$7,998,000 have been reflected as income in the accompanying consolidated
financial statements. The $8,366,000 and the $7,998,000 have been reclassified
from net sales in the 1994 and 1993 consolidated statements of operations.
8. PLANT CLOSURE COSTS
During 1993, the Company sold a printing plant closed in an earlier period. The
sales proceeds were less than anticipated, requiring an additional $2,700,000 to
be recorded as plant closing costs.
17
<PAGE>
Krueger Acquisition Corporation
Notes to Consolidated Financial Statements (continued)
9. COMMITMENTS
The Company leases, under noncancelable operating leases, certain manufacturing
equipment, office facilities, certain computer equipment, and other items. The
following is a schedule by year of the future minimum rental payments required
under operating leases with an original term in excess of one year:
(In Thousands)
YEAR ENDING DECEMBER 31
1996 $ 7,021
1997 6,703
1998 6,294
1999 5,833
2000 5,509
Thereafter 17,342
---------------------------
$48,702
===========================
Total rent expense for the Company was $7,005,000, $6,538,000, and $6,036,000
for the years ended December 31, 1995, 1994, and 1993, respectively.
10. ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1995 and 1994,
respectively:
1995 1994
------------------------------------
(In Thousands)
Accrued vacation pay $ 5,966 $ 5,864
Accrued payroll 4,016 2,340
Accrued interest 2,899 4,882
Accrued real estate taxes 1,948 2,049
Accrued workmen's compensation 1,806 1,519
Other 419 1,137
====================================
$17,054 $17,791
====================================
18
<PAGE>
ANNEX B
<PAGE>
WORLD COLOR PRESS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
On June 6, 1996, World Color acquired all of the issued and outstanding capital
stock of Ringier America for approximately $128,000 (the "Acquisition"). In
addition, World Color assumed approximately $287,000 of Ringier America's
indebtedness. World Color liquidated approximately $281,000 of this indebtedness
upon consummation of the transaction. The Acquisition was accounted for as a
purchase. The excess of cost over the book value of net assets acquired was
$149,099 and is reflected as goodwill in the accompanying unaudited pro forma
combined condensed balance sheet. The Company is in the process of assessing the
operations of Ringier America and finalizing the assignment of fair value to
assets acquired and liabilities assumed. Upon completion of this process, the
Company will finalize the allocation of purchase price. Accordingly, the final
asset and liability fair values may differ significantly from those set forth in
the accompanying unaudited pro forma combined condensed balance sheet.
The accompanying unaudited pro forma combined condensed balance sheet combines
the historical consolidated balances of World Color and Ringier America as of
March 31, 1996 and gives effect to the adjustments described in the notes
hereto. The accompanying unaudited pro forma combined condensed statements of
operations combine the historical consolidated operations of World Color and
Ringier America for the three months ended March 31, 1996 and the fiscal year
ended December 31, 1995 as if the Acquisition and liquidation of certain
indebtedness of Ringier America had occurred at the beginning of the periods
presented and give effect to the adjustments described in the notes hereto.
Certain reclassifications have been made to the historical statements of
operations of Ringier America to conform to the presentation of World Color.
The unaudited pro forma combined condensed financial statements should be read
in conjunction with the audited consolidated financial statements of World Color
in its Annual Report on Form 10-K for the year ended December 31, 1995, and the
unaudited condensed consolidated financial statements in its Quarterly Report on
Form 10-Q for the three months ended March 31, 1996, filed with the Securities
and Exchange Commission. The unaudited pro forma combined condensed financial
statements do not reflect identified cost savings that will result from the
combination of the two businesses, and are not necessarily indicative of the
results that would have occurred had the Acquisition been consummated in
accordance with the assumptions set forth in the notes hereto, or of World
Color's and Ringier America's individual or combined future results. Due to the
seasonal nature of the operations of both World Color and Ringier America, the
unaudited pro forma combined condensed statement of operations for the three
months ended March 31, 1996 is not necessarily indicative of full year results.
<PAGE>
WORLD COLOR PRESS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1996
(Dollars in thousands)
<TABLE><CAPTION>
WORLD COLOR RINGIER PRO FORMA PRO FORMA
PRESS, INC. AMERICA ADJUSTMENTS COMBINED
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 10,911 $ 14 $ - $ 10,925
Accounts receivable - net 216,479 54,729 - 271,208
Inventories 111,651 39,830 - 151,481
Deferred income taxes 29,354 - - 29,354
Other 7,600 1,712 - 9,312
----------- ----------- ------------ ----------
Total current assets 375,995 96,285 - 472,280
----------- ----------- ------------ ----------
NONCURRENT ASSETS:
Property, plant and
equipment, at cost 935,657 475,780 (208,801)(a) 1,202,636
Accumulated depreciation and
amortization (459,479) (208,801) 208,801 (a) (459,479)
----------- ----------- ------------ ----------
Property, plant and
equipment - net 476,178 266,979 - 743,157
Goodwill - net 249,261 129,998 19,101 (b) 398,360
Other 25,799 11,554 - 37,353
----------- ----------- ------------ ----------
Total noncurrent assets 751,238 408,531 19,101 1,178,870
----------- ----------- ------------ ----------
TOTAL ASSETS $ 1,127,233 $ 504,816 $ 19,101 $1,651,150
=========== =========== ============ ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 180,657 $ 31,691 $ - $ 212,348
Current maturities of
long-term debt 41,959 19,777 (18,186)(c) 43,550
----------- ----------- ------------ ----------
Total current liabilities 222,616 51,468 (18,186) 255,898
----------- ----------- ------------ ----------
NONCURRENT LIABILITIES
Long-term debt 425,650 267,815 146,336 (c) 839,801
Deferred income taxes 12,228 69,276 - 81,504
Other long-term liabilities 93,094 7,208 - 100,302
----------- ----------- ------------ ----------
Total noncurrent
liabilities 530,972 344,299 146,336 1,021,607
----------- ----------- ------------ ----------
STOCKHOLDERS' EQUITY:
Common stock 337 55,000 (55,000)(d) 337
Additional paid-in capital 583,756 97,760 (97,760)(d) 583,756
Accumulated deficit (210,448) (43,711) 43,711 (d) (210,448)
----------- ----------- ------------ ----------
Total stockholders' equity 373,645 109,049 (109,049)(d) 373,645
----------- ----------- ------------ ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,127,233 $ 504,816 $ 19,101 $1,651,150
=========== =========== ============ ==========
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
WORLD COLOR PRESS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(Dollars in thousands, except per share data)
<TABLE><CAPTION>
WORLD COLOR RINGIER PRO FORMA PRO FORMA
PRESS, INC. AMERICA ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
NET SALES $ 329,111 $ 110,332 $ - $ 439,443
COST OF SALES 276,825 101,965 - 378,790
---------- --------- --------- ---------
GROSS PROFIT 52,286 8,367 60,653
-
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 32,304 9,645 78 (e) 42,027
---------- --------- --------- ---------
OPERATING INCOME (LOSS) 19,982 (1,278) (78) 18,626
INTEREST EXPENSE 10,084 5,721 1,606 (f) 17,411
---------- --------- --------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 9,898 (6,999) (1,684) 1,215
INCOME TAX PROVISION (BENEFIT) 3,959 (2,701) (642) (g) 616
---------- --------- --------- ---------
NET INCOME (LOSS) $ 5,939 $ (4,298) $ (1,042) $ 599
========== ========= ========= =========
Net income per common and
common equivalent share $ 0.17 $ 0.02
Weighted average common and
common equivalent shares outstanding 34,827,689 34,827,689
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
WORLD COLOR PRESS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(Dollars in thousands, except per share data)
<TABLE><CAPTION>
WORLD COLOR RINGIER PRO FORMA PRO FORMA
PRESS, INC. AMERICA ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
NET SALES $1,295,582 $ 514,809 $ - $ 1,810,391
COST OF SALES 1,074,785 441,812 - 1,516,597
----------- ---------- ----------- ----------
GROSS PROFIT 220,797 72,997 - 293,794
----------- ---------- ----------- ----------
OTHER OPERATING EXPENSES:
Selling, general and administrative
expenses 125,539 44,277 311 (e) 170,127
Streamlining and other special items 40,900 (31,481) - 9,419
----------- ---------- ----------- ----------
Total other operating expenses 166,439 12,796 311 179,546
----------- ---------- ----------- ----------
OPERATING INCOME 54,358 60,201 (311) 114,248
INTEREST EXPENSE 37,897 33,409 (3,888) (f) 67,418
----------- ---------- ----------- ----------
INCOME BEFORE INCOME TAXES 16,461 26,792 3,577 46,830
INCOME TAX PROVISION 6,584 10,338 1,555 (g) 18,477
----------- ---------- ----------- ----------
NET INCOME $ 9,877 $ 16,454 $ 2,022 $ 28,353
========== ========== =========== ==========
Net income per common and
common equivalent share $ 0.29 $ 0.82
Weighted average common and
common equivalent shares outstanding 34,440,867 34,440,867
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS)
The following adjustments are necessary to reflect the transaction, described in
Item 2, as if the transaction was consummated on March 31, 1996 for the purpose
of presenting the unaudited pro forma combined condensed balance sheet, or at
the beginning of the three-month interim period ended March 31, 1996 and the
fiscal year ended December 31, 1995, respectively, for the purpose of presenting
unaudited pro forma combined condensed statements of operations. The Company is
in the process of assessing the operations of Ringier America and finalizing the
assignment of fair value to assets acquired and liabilities assumed. Upon
completion of this process, the Company will finalize the allocation of purchase
price. Accordingly, the final asset and liability fair values may differ
significantly from those set forth in the accompanying unaudited pro forma
combined condensed balance sheet.
(a) Represents the elimination of Ringier's historical accumulated
depreciation.
(b) Represents the excess of cost over book value of net assets acquired
in the Acquisition of $149,099, reduced by the elimination of Ringier
America's historical excess of cost over fair value of net assets
acquired of $129,998.
(c) Represents $409,182 of borrowings by World Color to fund the
Acquisition and the liquidation of Ringier America's indebtedness,
reduced by Ringier America's liquidated indebtedness of $281,032
(including current portion of $18,186).
(d) Represents the elimination of stockholders' equity of Ringier America.
(e) Represents the amortization of excess cost over book value of net
assets acquired, over a period of 35 years, of $1,065 and $4,260 for
the three months ended March 31, 1996 and the fiscal year ended
December 31, 1995, respectively, substantially offset by the
elimination of Ringier's historical goodwill amortization.
(f) Represents the increase (decrease) from the combined effect of
additional interest expense on borrowings by World Color to fund the
Acquisition and liquidation of Ringier America's indebtedness at an
effective rate of 7.1%, along with the reduction of Ringier America's
interest expense for liquidated indebtedness, as discussed above in
note (c). A change in World Color's variable borrowing rate of 0.125%
would result in a change in interest expense of $128 and $511 for the
three months ended March 31, 1996 and the fiscal year ended December
31, 1995, respectively.
(g) Represents the tax effect of the pro forma adjustment related to
interest expense, as described in note (f), at an estimated marginal
rate of 40%.
<PAGE>
ANNEX C
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
10.1 Stock Purchase Agreement by and among
Ringier A.G., Krueger Acquisition Corporation
and World Color Press, Inc. dated April 24, 1996
10.2 Second Amended and Restated Credit Agreement
dated June 6, 1996
10.3 First Amendment to Second Amended and Restated
Credit Agreement, dated June 10, 1996
EXHIBIT 10.1
EXECUTION COPY
================================================================================
STOCK PURCHASE AGREEMENT
by and among
RINGIER A.G.
a corporation organized under the laws of Switzerland
as Seller
KRUEGER ACQUISITION CORPORATION
a Delaware corporation
as the Company
and
WORLD COLOR PRESS, INC.
a Delaware corporation
as Buyer
Dated: April 24, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I -- DEFINITIONS . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . 1
1.2 Other Defined Terms . . . . . . . . . . . . . . 7
ARTICLE II -- PURCHASE AND SALE OF THE SHARES . . . . . . 9
2.1 Closing . . . . . . . . . . . . . . . . . . . . 9
2.2 Transfer of the Shares . . . . . . . . . . . . . 9
2.3 Consideration for the Shares . . . . . . . . . . 9
2.4 Deliveries at Closing . . . . . . . . . . . . . 9
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Ownership of the Shares . . . . . . . . . . . . 10
3.2 Organization and Authorization of
Seller . . . . . . . . . . . . . . . . . . . . . 10
3.3 Organization and Capitalization of
the Company . . . . . . . . . . . . . . . . . . 11
3.4 Authorization . . . . . . . . . . . . . . . . . 11
3.5 Subsidiaries . . . . . . . . . . . . . . . . . . 12
3.6 Absence of Certain Changes or
Events . . . . . . . . . . . . . . . . . . . . . 13
3.7 Title to Assets; Absence of Liens
and Encumbrances, Leases. . . . . . . . . . . . 15
3.8 Contracts and Commitments . . . . . . . . . . . 17
3.9 Permits . . . . . . . . . . . . . . . . . . . . 20
3.10 No Conflict or Violation . . . . . . . . . . . . 20
3.11 Consents and Approvals . . . . . . . . . . . . . 20
3.12 Financial Statements, etc . . . . . . . . . . . 21
3.13 Undisclosed Liabilities . . . . . . . . . . . . 21
3.14 Corporate Records . . . . . . . . . . . . . . . 21
3.15 Litigation . . . . . . . . . . . . . . . . . . . 21
3.16 Labor Matters . . . . . . . . . . . . . . . . . 22
3.17 Compliance with Law . . . . . . . . . . . . . . 22
3.18 No Brokers . . . . . . . . . . . . . . . . . . . 22
3.19 Proprietary Rights . . . . . . . . . . . . . . . 23
3.20 Employee Plans . . . . . . . . . . . . . . . . . 23
3.21 Transactions with Certain Persons . . . . . . . 28
3.22 Tax Matters . . . . . . . . . . . . . . . . . . 28
3.23 Insurance . . . . . . . . . . . . . . . . . . . 30
3.24 Purchase Commitments and Outstanding
Bids . . . . . . . . . . . . . . . . . . . . . . 30
3.25 Customers and Suppliers . . . . . . . . . . . . 31
3.26 Compliance with Environmental Laws . . . . . . . 31
3.27 Banking Relationships . . . . . . . . . . . . . 32
<PAGE>
3.28 No Other Agreements to Sell the
Assets or Stock of the Company . . . . . . . . . 33
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.1 Organization . . . . . . . . . . . . . . . . . . 33
4.2 Authorization . . . . . . . . . . . . . . . . . 33
4.3 Consents and Approvals . . . . . . . . . . . . . 33
4.4 No Brokers . . . . . . . . . . . . . . . . . . . 33
4.5 No Conflict or Violation . . . . . . . . . . . . 33
4.6 Litigation . . . . . . . . . . . . . . . . . . . 33
4.7 Investment Representation . . . . . . . . . . . 34
4.8 Securities and Exchange Commission
Documents . . . . . . . . . . . . . . . . . . . 34
ARTICLE V -- COVENANTS OF SELLER, BUYER AND
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . 34
5.1 Maintenance of Business Prior to
Closing . . . . . . . . . . . . . . . . . . . . 34
5.2 Investigation by Buyer . . . . . . . . . . . . . 38
5.3 Environmental Investigation . . . . . . . . . . 38
5.4 Consents and Best Efforts . . . . . . . . . . . 39
5.5 Financial Statements, etc . . . . . . . . . . . 39
5.6 Notification of Certain Matters . . . . . . . . 39
5.7 No Solicitation; Notification . . . . . . . . . 40
5.8 Delivery of Funds for Contribution . . . . . . . 40
5.9 Performance Bonds, etc. . . . . . . . . . . . . 40
5.10 Corporate Name . . . . . . . . . . . . . . . . . 41
5.11 Tax Elections . . . . . . . . . . . . . . . . . 41
5.12 Payments under Nytko Employment
Agreement . . . . . . . . . . . . . . . . . . . 41
5.13 Accountants' Opinions and Consents . . . . . . . 41
ARTICLE VI -- CONDITIONS TO SELLER'S AND THE
COMPANY'S OBLIGATIONS . . . . . . . . . . . . . . . . . . 41
6.1 Representations, Warranties and
Covenants . . . . . . . . . . . . . . . . . . . 41
6.2 No Proceedings or Litigation . . . . . . . . . . 42
6.3 Opinion of Counsel . . . . . . . . . . . . . . . 42
6.4 Closing Deliveries . . . . . . . . . . . . . . . 42
6.5 Consents . . . . . . . . . . . . . . . . . . . . 43
6.6 HSR Act . . . . . . . . . . . . . . . . . . . . 43
6.7 Delivery of Funds for Contribution . . . . . . . 43
ARTICLE VII -- CONDITIONS TO BUYER'S
OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . 43
7.1 Representations, Warranties and
Covenants . . . . . . . . . . . . . . . . . . . 43
7.2 Consents . . . . . . . . . . . . . . . . . . . . 43
7.3 No Proceedings or Litigation . . . . . . . . . . 43
<PAGE>
7.4 Opinions of Counsel . . . . . . . . . . . . . . 44
7.5 Closing Deliveries . . . . . . . . . . . . . . . 44
7.6 Material Changes . . . . . . . . . . . . . . . . 44
7.7 Financing . . . . . . . . . . . . . . . . . . . 45
7.8 HSR Act . . . . . . . . . . . . . . . . . . . . 45
7.9 Lender Releases . . . . . . . . . . . . . . . . 46
7.10 Escrow Agreement . . . . . . . . . . . . . . . . 46
7.11 Resignations . . . . . . . . . . . . . . . . . . 46
7.12 Agreement Not to Compete . . . . . . . . . . . . 46
ARTICLE VIII -- ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING . . . . . . . . . . . . . . . . . . . . 46
8.1 Books and Records . . . . . . . . . . . . . . . 46
8.2 Survival of Representations, etc . . . . . . . . 46
8.3 Further Assurances . . . . . . . . . . . . . . . 46
8.4 Litigation Support . . . . . . . . . . . . . . . 47
ARTICLE IX -- INDEMNIFICATION . . . . . . . . . . . . . . 47
9.1 General Indemnification . . . . . . . . . . . . 47
9.2 Limitations on Indemnity . . . . . . . . . . . . 54
9.3 Tax Indemnification . . . . . . . . . . . . . . 57
ARTICLE X -- MISCELLANEOUS . . . . . . . . . . . . . . . . 58
10.1 Termination . . . . . . . . . . . . . . . . . . 58
10.2 Assignment . . . . . . . . . . . . . . . . . . . 59
10.3 Notices; Transfer of Funds . . . . . . . . . . . 59
10.4 Choice of Law . . . . . . . . . . . . . . . . . 61
10.5 Entire Agreement; Amendments and
Waivers . . . . . . . . . . . . . . . . . . . . 61
10.6 Multiple Counterparts . . . . . . . . . . . . . 61
10.7 Invalidity . . . . . . . . . . . . . . . . . . . 61
10.8 Titles . . . . . . . . . . . . . . . . . . . . . 62
10.9 Publicity . . . . . . . . . . . . . . . . . . . 62
10.10 Confidential Information . . . . . . . . . . . . 62
10.11 Fees and Expenses . . . . . . . . . . . . . . . 62
10.12 Cumulative Remedies. . . . . . . . . . . . . . . 63
10.13 Representation of Counsel; Mutual
Negotiation . . . . . . . . . . . . . . . . . . 63
10.14 Interpretive Provisions. . . . . . . . . . . . . 63
<PAGE>
EXHIBITS
Exhibit
-------
Form of Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . A
Form of Opinion of Latham & Watkins . . . . . . . . . . . . . . . . . B
Form of Opinion of Fried, Frank, Harris, Shriver & Jacobson. . . . . C
Form of Opinion of Nobel & Hug . . . . . . . . . . . . . . . . . . . D
<PAGE>
SCHEDULES
Schedule 3.5(a) Capital Stock of Subsidiaries
Schedule 3.5(b) Jurisdictions of Qualification - Subsidiaries
Schedule 3.6 Absence of Certain Changes and Events
Schedule 3.7(a) Permitted Encumbrances
Schedule 3.7(b)(i) Owned Facilities
Schedule 3.7(b)(ii) Leased Facilities
Schedule 3.7(c) Personal Property
Schedule 3.7(c)(ii) Leased Personal Property
Schedule 3.8 Contracts and Commitments
Schedule 3.8(b) Absence of Breaches or Defaults
Schedule 3.9 Permits
Schedule 3.10 No Conflict or Violation
Schedule 3.12 Financial Statements
Schedule 3.13 Undisclosed Liabilities
Schedule 3.15 Litigation
Schedule 3.16 Labor Matters
Schedule 3.17 Compliance with Law
Schedule 3.19 Proprietary Rights
Schedule 3.20 Employee Plans
Schedule 3.21 Transactions with Certain Persons
Schedule 3.22 Tax Matters
Schedule 3.23 Insurance
Schedule 3.24 Purchase Commitments and Outstanding Bids
Schedule 3.25 Customers and Suppliers
Schedule 3.26 Compliance with Environmental Laws
Schedule 3.27 Banking Relationships
Schedule 5.8 Debt Instruments
Schedule 9.1(a)(i)(d)(3) Environmental Matter
Schedule 9.3 Tax Reserve
Schedule 10.14(a) Knowledge
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
This Stock Purchase Agreement (this "Agreement"), dated April 24,
---------
1996, is by and among Ringier A.G., a corporation organized under the laws of
Switzerland ("Seller"), Krueger Acquisition Corporation, a Delaware corporation
------
(the "Company"), and World Color Press, Inc., a Delaware corporation ("Buyer").
------- -----
RECITALS
A. The Company's authorized capital stock consists of 100 shares of
common stock, no par value per share (the "Common Stock"), all of which shares
------------
(the "Shares") are currently issued and outstanding.
------
B. Seller owns all of the Shares.
C. The Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of Ringier Holdings, Inc., a Delaware
corporation, Ringier America, Inc., a Wisconsin corporation, Krueger Ringier,
Inc., a Delaware corporation, Ringier Print U.S., Inc., a Delaware corporation
and W.A. Krueger Co. Olathe, a Missouri corporation (collectively, the
"Subsidiaries").
------------
B. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, all of the Shares, upon the terms and subject to the conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings:
"Affiliate" shall mean, with respect to any person or entity, any
---------
person or entity which controls such person or entity, which such person or
entity controls, or which is under common control with such person or entity.
For purposes of the preceding sentence, the term "control" shall mean the power,
direct or indirect, to direct or cause the direction of the management and
policies of a person or entity through voting securities, by contract or
otherwise.
<PAGE>
"Ancillary Agreements" shall mean the Disclosure Schedule, any exhibit
--------------------
to this Agreement (including, without limitation, the Escrow Agreement) and any
certificate or other document executed at or prior to the Closing in connection
with this Agreement, including, but not limited to, pursuant to Section 2.4
and/or Article VI or VII of this Agreement.
"Assets" shall mean all of the Company's right, title and interest in
------
and to all properties, assets and rights of any kind, whether tangible or
intangible, real or personal, owned by the Company and the Subsidiaries or in
which the Company or any Subsidiary has any interest whatsoever.
"Audited Financial Statements" shall mean the audited consolidated
----------------------------
balance sheets of the Company as of December 31 in each of 1993, 1994 and 1995
and the related statements of operations, changes in stockholders' equity and
cash flows for each of the twelve month periods ending on such dates, in each
case together with the related reports of Ernst & Young LLP.
"Balance Sheet" shall mean the audited consolidated balance sheet of
-------------
the Company dated the Balance Sheet Date, together with the notes thereto.
"Balance Sheet Date" shall mean December 31, 1995.
------------------
"Benefit Arrangement" shall mean any employment, consulting, severance
-------------------
or other similar contract, arrangement or policy (written or oral) and each
plan, arrangement, program, agreement or commitment (written or oral) providing
for insurance coverage (including, without limitation, any self-insured
arrangements), workers' compensation, disability benefits, supplemental unem-
ployment benefits, vacation benefits, retirement benefits, life, health or
accident benefits (including, without limitation, any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code providing
for the same or other benefits) or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights, stock purchases or other
forms of incentive compensation or post-retirement insurance, compensation or
benefits which (a) is not a Welfare Plan, Pension Plan or Multiemployer Plan,
(b) is entered into, maintained, contributed to or required to be contributed
to, as the case may be, by the Company, any Subsidiary or any ERISA Affiliate or
under which the Company, any Subsidiary or any ERISA Affiliate may incur any
liability, and (c) covers any employee or former employee of the Company, any
Subsidiary or any ERISA Affiliate (with respect to their relationship with such
any entity).
"Books and Records" shall mean all books, records, lists, ledgers,
-----------------
files, reports, plans, drawings and operating records of the Company or the
Subsidiaries including, without limitation, (a) all corporate books and records
of the Company and the Subsidiaries, disk or tape files, printouts, runs or
other computer-prepared information and the Company's and each Subsidiary's
interest in all computer programs required to access, and the equipment
containing, all such computer-based information, (b) all product, business and
marketing plans, (c) all environmental control records and (d) all sales,
maintenance and production records. "Books and Records" shall not include
records of Seller that are not the property of the Company or any Subsidiary.
2
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Commitment Letter" shall mean the commitment letter between Buyer and
-----------------
Bankers Trust Company, substantially in the form previously delivered to Seller,
or such other commitment letter entered into by Buyer that is in form and
substance reasonably satisfactory to Seller.
"Contract" shall mean any agreement, contract, lease, note, loan,
--------
evidence of indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation, commitment or purchase and sales order to which the Company or any
Subsidiary is a party or which relates to the Company's or any Subsidiary's
business or any of the Assets, whether oral or written, express or implied, and
which pursuant to its terms has not expired, terminated or been fully performed
by the parties thereto.
"Employee Plans" shall mean all Benefit Arrangements, Multiemployer
--------------
Plans, Pension Plans and Welfare Plans.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
-----------
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, conditional sales agreement, encumbrance or other right of third
parties, whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent sale or other title retention agreement or lease in
the nature thereof.
"Environmental Claims" shall mean all written allegations, notices of
--------------------
violation, liens, claims, demands, suits, or causes of action for damages,
including personal injury and property damage but excluding consequential
damages (except as to third parties) relating to Environmental Conditions or
Environmental Laws. By way of example only, Environmental Claims include
(i) damages to natural resources, (ii) claims for nuisance, (iii) claims for the
recovery of response costs, or administrative or judicial orders directing the
performance of investigations, responses or remedial actions under any
Environmental Laws, (iv) requirements to implement "corrective action" pursuant
to any order or permit issued pursuant to the Resource Conservation and Recovery
Act, as amended, or similar provisions of applicable state law, (v) claims
related to Environmental Laws or Environmental Conditions for restitution,
contribution, or indemnity, (vi) fines, penalties or liens of any kind against
property related to Environmental Laws or Environmental Conditions, (vii) claims
related to Environmental Laws or Environmental Conditions for injunctive relief
or other orders or notices of violation from federal, state or local agencies or
courts, and (viii) with regard to any present or former employees, claims
relating to exposure to or injury from Environmental Conditions.
"Environmental Conditions" shall mean the state of the environment,
------------------------
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, drinking water supply, subsurface strata or ambient air, relating to or
arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of
3
<PAGE>
Hazardous Substances by the Company or any Subsidiary, or by its agents,
representatives, employees or independent contractors acting on behalf of the
Company or any Subsidiary. With respect to Environmental Claims by third
parties, Environmental Conditions also include the exposure of persons to
Hazardous Substances at the work place or the exposure of persons or property to
Hazardous Substances migrating from or otherwise emanating from or located on
property owned or occupied by the Company or any Subsidiary.
"Environmental Laws" shall mean all applicable federal, state,
------------------
district, local and foreign laws, all rules or regulations promulgated
thereunder, and all orders, consent orders, judgments, notices, permits or
demand letters issued, promulgated or entered pursuant thereto, relating to
pollution or protection of the environment (including, without limitation,
ambient air, surface water, ground water, land surface, or subsurface strata),
including, without limitation, (i) laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
industrial materials, wastes or other substances into the environment and (ii)
laws relating to the identification, generation, manufacture, processing,
distribution, use, treatment, storage, disposal, recovery, transport or other
handling of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances, in each case as in effect on the Closing Date. By way of
example only, Environmental Laws include the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Toxic Substances Control Act, as amended, the Hazardous Materials Transportation
Act, as amended, the Resource Conservation and Recovery Act, as amended
("RCRA"), the Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, the Occupational Safety and Health Act, as amended, and all analogous
laws promulgated or issued by any state or other governmental authority.
"Environmental Reports" shall mean (i) the seven draft reports
---------------------
prepared by ICF Kaiser Engineers, Inc. in connection with their Phase I
investigations of the Facilities performed in March 1996 and (ii) the Tenera
Report prepared in May 1989.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"ERISA Affiliate" shall mean any entity which is (or at any relevant
---------------
time was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group" with, or otherwise
required to be aggregated with, the Company or any Subsidiary as set forth in
Section 414(b), (c), (m) or (o) of the Code.
"Equity Securities" shall mean (i) shares of capital stock or other
-----------------
equity securities, (ii) subscriptions, calls, warrants, options or commitments
of any kind or character relating to, or entitling any person or entity to
purchase or otherwise acquire, any capital stock or other equity securities and
(iii) securities convertible into or exercisable or exchangeable for shares of
capital stock or other equity securities.
"Escrow Agreement" shall mean the escrow agreement, dated as of the
----------------
Closing Date, between Seller and a trust company or commercial bank selected by
Seller and acceptable
4
<PAGE>
to Buyer, as escrow agent (the "Escrow Agent"), substantially in the form of
------------
Exhibit A hereto.
- ------- -
"Facilities" shall mean all plants, offices, manufacturing facilities,
----------
stores, warehouses, administration buildings and all real property owned or
leased by the Company or any Subsidiary on the Closing Date.
"Financial Statements" shall mean the Audited Financial Statements and
--------------------
the Interim Financial Statements.
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
----------------------
furnishings, machinery, equipment, spare parts, supplies, appliances, vehicles
and other tangible personal property owned by the Company and the Subsidiaries.
"Former Properties" shall mean all plants, offices, manufacturing
-----------------
facilities, stores, warehouses, administration buildings and all real property
owned, leased or operated by the Company or any Subsidiary prior to the Closing
Date but not owned, leased or operated by the Company or any Subsidiary on or
after the Closing Date.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America, as in effect from time to time, consistently applied.
"Hazardous Substances" shall mean all pollutants, contaminants,
--------------------
chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials (whether solids, liquids or
gases) subject to regulation, control or remediation under Environmental Laws.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Interim Balance Sheet" shall mean each unaudited consolidated balance
---------------------
sheet of the Company dated each Interim Balance Sheet Date.
"Interim Balance Sheet Date" shall initially mean February 3, 1996 and
--------------------------
March 2, 1996, and from and after the date of Seller's delivery to Buyer of
subsequent Interim Financial Statements pursuant to Section 5.5, the Interim
Balance Sheet Date shall also mean the date of the latest such monthly balance
sheet so delivered to Buyer.
"Interim Financial Statements" shall mean each Interim Balance Sheet
----------------------------
and the related unaudited consolidated statements of operations, changes in
stockholders' equity and cash flows for the month ended on such Interim Balance
Sheet Date.
"Leases" shall mean all of the leases or subleases for personal or
------
real property to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound, including, without limitation, those Leases
listed on parts (b)(ii) and (c)(ii) of Schedule
5
<PAGE>
3.7.
"Material Adverse Effect" or "Material Adverse Change" shall mean (a)
----------------------- -----------------------
any material adverse effect on or change with respect to (i) the business,
operations, assets, liabilities, condition (financial or otherwise) or results
of operations of the Company and the Subsidiaries, taken as a whole, or (ii) the
right or ability of the Company or any Subsidiary to consummate any of the
transactions contemplated hereby or (b) the occurrence of any event or
development that is reasonably likely to constitute a "Material Adverse Effect"
or "Material Adverse Change."
"Multiemployer Plan" shall mean any "multiemployer plan," as defined
------------------
in Section 4001(a)(3) or 3(37) of ERISA, which (a) the Company, any Subsidiary
or any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, after September 25, 1980, maintained, administered,
contributed to or was required to contribute to, or under which the Company, any
Subsidiary or any ERISA Affiliate may incur any liability and (b) covers any
employee or former employee of the Company, any Subsidiary or any ERISA
Affiliate (with respect to their relationship with any such entity).
"National Geographic Loan Agreement" shall mean Subordinated
----------------------------------
Collateralized Loan Agreement V (Revolving Credit Loan), dated August 30, 1986,
by and among Krueger Ringier, Inc. and National Geographic Society.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Pension Plan" shall mean any "employee pension benefit plan" as
------------
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (a) which the
Company, any Subsidiary or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or, within the five years prior
to the Closing Date, maintained, administered, contributed to or was required to
contribute to, or under which the Company, any Subsidiary or any ERISA Affiliate
may incur any liability (including, without limitation, any contingent
liability) and (b) which covers any employee or former employee of the Company,
any Subsidiary or any ERISA Affiliate (with respect to their relationship with
any such entity).
"Permits" shall mean all licenses, permits, franchises, approvals,
-------
authorizations, consents or orders of, or filings with, or notifications to, any
governmental authority, whether foreign, federal, state or local, relating to
the operation of the business of the Company or any Subsidiary.
"Permitted Encumbrances" shall mean (a) liens for Taxes or
----------------------
governmental charges or claims (i) not yet due and payable, (ii) due and payable
but as to which no interest, fines, penalties or other charges have accrued or
have been imposed, levied or assessed or (iii) being contested in good faith, if
a reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor, (b) statutory liens of landlords, liens of
carriers, warehousepersons, mechanics and materialpersons and other liens
imposed by law incurred in the ordinary course of business for sums (i) not yet
due and payable, (ii) due and payable but as to which no interest, fines,
penalties or other charges have accrued or have been imposed, levied or assessed
or (iii) being contested in good faith, if a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor,
(c) liens
6
<PAGE>
incurred or deposits made in connection with workers' compensation, unemployment
insurance and other types of social security or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return of money bonds and similar
obligations, in each case in the ordinary course of business, consistent with
past practice, (d) purchase money liens incurred in the ordinary course of
business, consistent with past practice, (e) easements, rights-of-way,
restrictions and other charges or encumbrances, in each case, which do not
materially interfere with the ordinary conduct of business of the Company or any
Subsidiary and do not materially detract from the value of the property upon
which such encumbrance exists and (f) the encumbrances set forth on Schedule
3.7(a).
"Personnel" shall mean all directors, officers and employees of the
---------
Company and the Subsidiaries.
"Returns" shall mean any and all returns, reports, declarations and
-------
information statements with respect to taxes required to be filed by or on
behalf of the Company or any Subsidiary with any governmental authority or Tax
authority or agency, whether domestic or foreign, including consolidated,
combined and unitary returns and including all amendments thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Swiss Bank Credit Agreement" shall mean the Credit Agreement, dated
---------------------------
December 21, 1989, by and among the Company, Ringier America, Inc., Krueger
Ringier, Inc., the lenders thereunder and Swiss Bank Corporation, New York
Branch, as agent, as amended.
"Tax(es)" shall mean all taxes, estimated taxes, withholding taxes,
-------
assessments, levies, imposts, fees and other charges, however denominated,
including any interest, penalties, additions to tax or additional amounts that
may become payable in respect thereof, imposed by any foreign, federal, state or
local government or taxing authority, which taxes shall include, without
limitation, all income taxes, payroll and employee withholding taxes,
unemployment insurance, social security, sales and use taxes, value-added taxes,
excise taxes, franchise taxes, gross receipts taxes, occupation taxes, real and
personal property taxes, stamp taxes, transfer taxes, workers' compensation and
other obligations of the same or of a similar nature.
"Value-Added" shall mean gross sales less the cost of materials,
-----------
outside purchases and freight, calculated in a manner consistent with the past
practices of the Company.
"Welfare Plan" shall mean any "employee welfare benefit plan" as
------------
defined in Section 3(1) of ERISA, (a) which the Company, any Subsidiary or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or under which the Company, any Subsidiary or any ERISA Affiliate
may incur any liability and (b) which covers any employee or former employee of
the Company, any Subsidiary or any ERISA Affiliate (with respect to their
relationship with any such entity).
1.2 Other Defined Terms. In addition to the terms defined in the Recitals
-------------------
to this Agreement and Section 1.1, the following terms shall have the meanings
defined for such terms
7
<PAGE>
in the Sections set forth below:
Term Section
---- -------
"Act" . . . . . . . . . . . . . . . . . 5.13
"Actions" . . . . . . . . . . . . . . . 3.15
"Buyer Claim" . . . . . . . . . . . . . 9.1(a)(i)
"Buyer Claim Notice" . . . . . . . . . . 9.1(a)(ii)
"Buyer Deductible" . . . . . . . . . . . 9.2(c)(ii)
"Buyer Party" . . . . . . . . . . . . . 9.1(a)(i)
"Capital Expenditure Plan" . . . . . . . 3.6(d)
"Closing" . . . . . . . . . . . . . . . 2.1
"Closing Date" . . . . . . . . . . . . . 2.1
"Common Stock" . . . . . . . . . . . . . Recitals
"Confidentiality Agreement . . . . . . . 5.2
"Disclosure Schedule" . . . . . . . . . Article III Preamble
"Debt Instruments" . . . . . . . . . . . 5.8
"Environmental Notice" . . . . . . . . . 9.1(c)(i)
"Escrow Agent" . . . . . . . . . . . . . 1.1
"Exchange Act" . . . . . . . . . . . . . 5.13
"Income Taxes" . . . . . . . . . . . . . 9.3(a)
"Indemnified Party" . . . . . . . . . . 9.1(c)(ii)
"Indemnified Environmental Matter . . . 9.1(c)(ii)
"Indemnifying Party" . . . . . . . . . . 9.1(c)(ii)
"Laws" . . . . . . . . . . . . . . . . . 3.17
"Leased Property" . . . . . . . . . . . 3.7(b)
"Losses" . . . . . . . . . . . . . . . . 9.1(a)(i)
"Nytko" . . . . . . . . . . . . . . . . 5.12
"Nytko Agreement" . . . . . . . . . . . 5.12
"Nytko Guarantee" . . . . . . . . . . . 5.12
"Seller Performance Bonds" . . . . . . . 5.9
"Proposed Acquisition Transaction" . . . 5.7(a)
"Proprietary Rights" . . . . . . . . . . 3.19
"Purchase Price" . . . . . . . . . . . . 2.3
"RAI Sales Commission Plan" . . . . . . 3.6(c)(iii)
"SEC" . . . . . . . . . . . . . . . . . 4.8
"SEC Documents" . . . . . . . . . . . . 4.8
"Seller Claim" . . . . . . . . . . . . . 9.1(b)(i)
"Seller Claim Notice" . . . . . . . . . 9.1(b)(ii)
"Seller Deductible" . . . . . . . . . . 9.2(c)(i)(B)
"Seller Party" . . . . . . . . . . . . . 9.1(b)(i)
"Shares" . . . . . . . . . . . . . . . . Recitals
"Subsidiaries" . . . . . . . . . . . . . Recitals
"Third-Party Claim" . . . . . . . . . . 9.1(c)(ii)
8
<PAGE>
ARTICLE II
PURCHASE AND SALE OF THE SHARES
-------------------------------
2.1 Closing. Upon the terms and conditions set forth herein, and subject
-------
to Section 10.1, the closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. on the date which is the fifth business
-------
day after termination or expiration of the applicable waiting period (including
any extension thereof) under the HSR Act (such date, the "Closing Date"), or
------------
such other date as mutually agreed by the parties hereto, at the offices of
Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022.
2.2 Transfer of the Shares. Upon the terms and conditions contained
----------------------
herein, at the Closing Seller shall sell, convey, transfer, assign and deliver
to Buyer, and Buyer shall purchase and accept from Seller, all of the Shares.
2.3 Consideration for the Shares. Upon the terms and conditions contained
----------------------------
herein, as consideration for the purchase of the Shares, at the Closing Buyer
shall pay to Seller $128,150,000 (the "Purchase Price").
--------------
2.4 Deliveries at Closing. To effect the sale and purchase of the Shares
---------------------
referred to in Section 2.2 and the delivery of the Purchase Price referred to in
Section 2.3, Seller and Buyer shall, on the Closing Date, cause the following to
occur:
(a) Share Certificates; Transfer Taxes. Seller shall deliver to
----------------------------------
Buyer stock certificates evidencing the Shares, free and clear of any and all
Encumbrances of any and every nature whatsoever (other than those granted in
connection with the Debt Instruments set forth on part (a) of Schedule 5.8),
duly endorsed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer. Upon the repayment of such Debt Instruments in full
in accordance with Section 5.8 and the release of all Encumbrances granted in
connection therewith, the Shares shall be free and clear of any and all
Encumbrances (other than those created or suffered by Buyer). Buyer and Seller
shall each bear half the cost of any applicable documentary, stamp, sales,
excise, transfer or other similar taxes payable in respect of the sale of the
Shares.
(b) Purchase Price. Buyer shall, against delivery of such
--------------
certificates evidencing the Shares, deliver to Seller the Purchase Price by (i)
transferring by wire transfer immediately available funds in the aggregate
amount of $125,150,000 to Seller's bank account designated by Seller to Buyer at
least one day prior to the Closing Date and (ii) transferring to the escrow
agent under the Escrow Agreement, in accordance therewith, an aggregate amount
of $3,000,000.
(c) Intercompany Accounts. (i) The Company shall pay Seller
---------------------
$3,000,000, representing payment in full of the intercompany account from the
Company and the Subsidiaries to Seller relating to a guarantee fee under certain
of the Debt Instruments and (ii) all intercompany accounts from Seller to the
Company or any Subsidiary shall be repaid.
9
<PAGE>
(d) Certificates of Amendment. Buyer and Seller shall cause each
-------------------------
Subsidiary, if applicable, to amend its certificate or articles of incorporation
to eliminate the word "Ringier" from its name.
(e) Other Documents. Each of Seller, the Company and Buyer shall
---------------
deliver all other documents, certificates, opinions of counsel and other items
required to be delivered on its part pursuant to Articles VI and VII hereof.
All such documents and instruments delivered to any party pursuant hereto shall
be in form and substance, and shall be executed in a manner, reasonably
satisfactory to such party and its counsel.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
--------------------------------------------------------
As an inducement to Buyer to enter into this Agreement, Seller and
the Company hereby make the following representations and warranties to Buyer as
of the date hereof. Such representations and warranties contain exceptions set
forth in a written disclosure schedule (the "Disclosure Schedule") attached
-------------------
hereto, which is numbered to correspond to the various sections of this
Agreement and which sets forth certain exceptions to the representations and
warranties contained in this Article III and certain other information called
for by this Agreement. Unless otherwise specified, (1) each reference in this
Agreement to any numbered schedule is a reference to that numbered schedule
which is included in the Disclosure Schedule and (2) no disclosure made in any
particular numbered schedule of the Disclosure Schedule with respect to any
representation and warranty herein shall be deemed to have been disclosed in any
other numbered schedule of the Disclosure Schedule (and, therefore, no such
disclosure shall be deemed to modify any such other representation and warranty
herein) unless, and only to the extent that, it is apparent on the face of such
disclosure that such disclosure contains information which also modifies another
representation and warranty herein.
3.1 Ownership of the Shares. Seller owns of record and beneficially all
-----------------------
of the Shares, free and clear of any and all Encumbrances other than those
granted in connection with the Debt Instruments.
3.2 Organization and Authorization of Seller. Seller is duly organized
----------------------------------------
and validly existing as a corporation under the laws of Switzerland. Seller has
all necessary corporate power and authority to, and has taken all corporate
action on its part necessary to, execute and deliver this Agreement and each
Ancillary Agreement to which it is or will be a party, consummate the trans-
actions contemplated hereby and thereby and perform its obligations hereunder
and thereunder, and no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or any such Ancillary Agreement and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by Seller and is a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as the
enforceability thereof may be limited by (a) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors' rights generally or (b) general
principles of equity, whether considered in a proceeding at law or in equity.
Each Ancillary Agreement which has been or shall be executed and delivered by
Seller in connection with the transactions contemplated hereby has been (or will
be) duly authorized, executed and delivered by Seller and is (or will be when
authorized, executed and delivered) a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as the
enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors' rights generally or (ii) general
principles of equity, whether
10
<PAGE>
considered in a proceeding at law or in equity.
3.3 Organization and Capitalization of the Company
----------------------------------------------
(a) Organization. The Company is duly organized, validly existing
------------
and in good standing under the laws of the State of Delaware and has all
necessary corporate power and authority to conduct its business as it is pre-
sently being conducted and to own and lease its Assets. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under applicable law
as a result of the conduct of its business or the ownership of its properties
except where the failure to be so qualified and in good standing would not have
a Material Adverse Effect. The Company has delivered or made available to Buyer
true, correct and complete copies of the certificate of incorporation and bylaws
of the Company (in each case, as amended to date). The Company is not in
default under or in violation of any provision of its certificate of
incorporation or bylaws.
(b) Capitalization. The Company's authorized capital stock consists
--------------
solely of 100 shares of Common Stock, all of which 100 shares are issued and
outstanding. All of the Shares have been duly authorized and validly issued and
are fully paid and non-assessable, were issued and sold in compliance with the
federal and applicable state securities laws and were not issued in violation of
any preemptive or other similar rights. Except as set forth in this Section
3.3(b), there are no (i) outstanding Equity Securities of the Company or (ii)
commitments or obligations of any kind or character for (A) the issuance of
Equity Securities of the Company or (B) the repurchase, redemption or other
acquisition of any Equity Securities of the Company.
(c) Voting Trusts, Proxies, Etc. There are no shareholder
----------------------------
agreements, voting trusts, proxies or other agreements or understandings with
respect to or concerning the purchase, sale or voting of the Equity Securities
of the Company.
3.4 Authorization. The Company has all necessary corporate power and
-------------
authority to, and has taken all corporate action necessary on the part of the
Company to, execute and deliver this Agreement and each Ancillary Agreement to
which it is or will be a party, consummate the transactions contemplated hereby
and thereby and perform its obligations hereunder and thereunder, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or any such Ancillary Agreement and the transactions contemplated
hereby or thereby. This Agreement has been duly executed and delivered by the
Company and is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by (a) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in
11
<PAGE>
effect which affect the enforcement of creditors' rights generally or (b)
general principles of equity, whether considered in a proceeding at law or in
equity. Each Ancillary Agreement which has been or shall be executed and
delivered by the Company in connection with the transactions contemplated hereby
has been (or will be) duly authorized, executed and delivered by the Company and
is (or will be when authorized, executed and delivered) a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by (i)
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors'
rights generally or (ii) general principles of equity, whether considered in a
proceeding at law or in equity.
3.5 Subsidiaries
------------
(a) Ownership; Capitalization. Ringier America, Inc., Krueger
-------------------------
Ringier, Inc., Ringier Holdings, Inc., Ringier Print U.S., Inc. and W.A. Krueger
Co. Olathe are the Company's only subsidiaries, and the Company has no
investments in (whether through the acquisition of an equity interest, the
making of a loan or advance or otherwise) any other person. The Company is the
beneficial owner of all of the outstanding shares of capital stock of each of
the Subsidiaries, in each case, free and clear of any and all Encumbrances other
than those granted in connection with the Debt Instruments. The authorized,
issued and outstanding capital stock, and the record ownership of all such
shares of capital stock, of each Subsidiary (other than W.A. Krueger Co. Olathe)
is as set forth on part (a) of Schedule 3.5. All of the shares of capital stock
of each Subsidiary have been duly authorized and validly issued and are fully
paid and non-assessable, were issued and sold in compliance with the federal and
applicable state securities laws and were not issued in violation of any
preemptive or other similar rights. Except as set forth in this Section 3.5(a),
there are no (i) outstanding Equity Securities of any Subsidiary or (ii)
commitments or obligations of any kind or character for (A) the issuance of
Equity Securities by any Subsidiary or (B) the repurchase, redemption or other
acquisition of any Equity Securities of any Subsidiary. There are no
shareholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or voting of the
Equity Securities of any Subsidiary.
(b) Organization. Each Subsidiary is duly organized, validly
------------
existing and in good standing under the laws of its respective state of
incorporation and has all necessary corporate power and authority to conduct its
business as it is presently being conducted and to own and lease its Assets.
Each Subsidiary is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which such qualification is necessary
under applicable law as a result of the conduct of its business or the ownership
of its properties except where the failure to be so qualified and in good
standing would not have a Material Adverse Effect. Each jurisdiction in which
each Subsidiary is qualified to do business as a foreign corporation is listed
on part (b) of Schedule 3.5. The Company has delivered or made available to
Buyer true, correct and complete copies of each Subsidiary's certificate or
articles of incorporation and bylaws (in each case, as amended to date). No
Subsidiary is in default under or in violation of any provision of its
certificate or articles of incorporation or bylaws.
(c) Authorization. Each Subsidiary has all necessary corporate power
-------------
and
12
<PAGE>
authority to, and has taken all corporate action (if any) necessary on its part
to, consummate the transactions contemplated hereby, and no other corporate
proceedings on the part of any Subsidiary are necessary to authorize the
transactions contemplated hereby.
3.6 Absence of Certain Changes or Events. Since the Balance Sheet Date,
------------------------------------
there has been no Material Adverse Change. Except, with respect to the period
of time between the date of this Agreement and the Closing Date, as permitted
pursuant to Section 5.1, and except for the repayment of the Debt Instruments on
the Closing Date in accordance with the provisions hereof, since the Balance
Sheet Date, the Company and the Subsidiaries have been operated in the ordinary
course of business, consistent with past practice. Without limiting the
generality of the foregoing, except, with respect to the period of time between
the date of this Agreement and the Closing Date, as permitted pursuant to
Section 5.1, and except for the repayment of the Debt Instruments on the Closing
Date in accordance with the provisions hereof, since the Balance Sheet Date
neither the Company nor any Subsidiary has:
(a) sold, assigned, leased or transferred any of the Assets, material
singly or in the aggregate, other than Assets sold or disposed of in the
ordinary course of business, consistent with past practice, to persons who are
not Affiliates of the Company or any Subsidiary;
(b) canceled, terminated, amended, modified or waived any material
term of any Contract to which it is a party or by which it or any of the Assets
is bound, which Contract provided for, during the fiscal year ended December 31,
1995, aggregate annual Value-Added in excess of $800,000 to the Company and the
Subsidiaries;
(c) (i) increased the compensation payable or to become payable to
any of its directors or officers, (ii) increased the base compensation payable
or to become payable to any of the Personnel (other than directors or officers),
except for normal periodic increases in such base compensation in the ordinary
course of business, consistent with past practice, (iii) increased the sales
commission rate payable or to become payable to any of the Personnel (other than
directors or officers), other than in accordance with the Ringier America, Inc.
Sales Incentive Compensation Plan, a copy of which has been delivered or made
available to Buyer (the "RAI Sales Commission Plan") (iv) granted, made or
-------------------------
accrued any loan, bonus, fee, incentive compensation (excluding sales
commissions), service award or other like benefit, contingently or otherwise, to
or for the benefit of any of the Personnel, except pursuant to the Employee
Plans described on Schedule 3.20, (v) adopted, amended or caused or suffered any
addition to or modification of any Employee Plan (other than any Employee Plan
referred to in clause (vii) of this paragraph), other than (A) contributions
made in the ordinary course of business, consistent with past practice or (B)
the extension of coverage to any of the Personnel who became eligible after the
date of this Agreement, (vi) granted any additional stock options or performance
unit grants or other interest under any Employee Plan, (vii) entered into any
new (A) employment or (B) consulting agreement providing for annual payments of
$100,000 or more over the life of such consulting agreement, or caused or
suffered any written or oral termination, cancellation or amendment of any such
employment or consulting agreement to which it is a party (except with respect
to any employee at will without a written agreement), (viii) entered into any
collective bargaining agreement or caused or suffered any termination or
13
<PAGE>
amendment of any collective bargaining agreement to which it is a party or (ix)
with respect to any stockholder, any other Affiliate or any Affiliate of any
stockholder, granted, made or accrued any payment or distribution or other like
benefit, contingently or otherwise, or otherwise transferred Assets, including,
but not limited to, any payment of principal of or interest on any debt owed to
any such stockholder or Affiliate, other than (A) any transactions involving
less than $100,000 in the aggregate, (B) any transactions between or among
Seller and any of its subsidiaries, in the ordinary course of business and on an
arms' length basis and (C) any transactions among the Company and the
Subsidiaries;
(d) made any capital expenditure or commitment to make any capital
expenditure except in accordance with the Company's 1995 and 1996 capital
expenditure plans (collectively, the "Capital Expenditure Plan"), true, correct
------------------------
and complete copies of which have been delivered to Buyer;
(e) executed any Lease for real property or any Lease for personal
property involving annual payments in excess of $120,000, or incurred any
liability therefor;
(f) made any payments or given any other consideration to customers
or suppliers, other than (i) payments under, and in accordance with the terms
of, Contracts in effect on the date hereof, (ii) signing bonuses to customers in
the ordinary course of business, consistent with past practice, not to exceed
$50,000 individually and $200,000 in the aggregate and (iii) other payments in
the ordinary course of business, consistent with past practice, not to exceed
$100,000 individually and, together with those payments set forth in clause
(ii), $500,000 in the aggregate;
(g) changed its accounting methods, principles or practices,
including, without limitation, any change in the application or interpretation
of GAAP;
(h) suffered any damage, destruction or casualty loss (whether or not
covered by insurance) affecting its physical properties that exceeded $100,000
in any one instance;
(i) (i) issued or sold, or entered into any agreement obligating it
to issue or sell, (ii) declared, set aside for payment or paid dividends or
distributions in respect of, or (iii) directly or indirectly redeemed, purchased
or otherwise acquired, or split, combined, reclassified or otherwise adjusted,
any Equity Securities;
(j) (i) incurred any indebtedness for borrowed money or entered into
any commitment to borrow money, except pursuant to the Tranche C of the Swiss
Bank Credit Agreement for working capital purposes or the National Geographic
Loan Agreement for capital expenditures or working capital purposes, in each
case, in the ordinary course of business, consistent with past practice, or (ii)
incurred any obligations for any performance bonds, payment bonds, bid bonds,
surety bonds, letters of credit, guarantees or similar instruments, other than
any such obligations that are not material either individually or in the
aggregate, in the ordinary course of business, consistent with past practice;
(k) paid, discharged or satisfied any liability other than (i) the
repayment of
14
<PAGE>
the Debt Instruments on the Closing Date in accordance with provisions hereof
and (ii) any such payment, discharge or satisfaction in the ordinary course of
business, consistent with past practice, of (A) liabilities reflected or
reserved against on the Balance Sheet or on any Interim Balance Sheet or
incurred subsequent thereto in the ordinary course of business, consistent with
past practice, or (B) liabilities under, and in accordance with the terms of,
any Contracts, Permits and other commitments set forth on the Disclosure
Schedule or under Contracts, Permits and other commitments which are not
required to be disclosed on the Disclosure Schedule;
(l) except as provided in Section 2.4(d), changed or amended its
certificate or articles of incorporation or bylaws;
(m) (i) acquired (by merger, consolidation, acquisition of stock,
other securities or assets or otherwise), (ii) made a capital investment
(whether through the acquisition of an equity interest, the making of a loan or
advance or otherwise) in or (iii) guaranteed indebtedness for borrowed money of,
(A) any person or (B) any portion of the assets of any person that constitutes a
division or operating unit of such person;
(n) mortgaged or pledged, or otherwise made or suffered any
Encumbrance (other than any Permitted Encumbrance) on, any material Asset or
group of Assets that are material in the aggregate;
(o) revalued any of the Assets, including, without limitation, any
write-off of notes or accounts receivable or any increase in any reserve,
involving in excess of $100,000 individually or $500,000 in the aggregate (such
amounts to be calculated without netting any decrease);
(p) canceled, waived or released any right or claim (or series of
related rights or claims), other than as set forth in (o), involving in excess
of $100,000 individually or $500,000 in the aggregate; or
(q) entered into any Contract to do any of the foregoing.
3.7 Title to Assets; Absence of Liens and Encumbrances; Leases.
-----------------------------------------------------------
(a) General. The Company and the Subsidiaries own or lease all
-------
Assets, necessary for the conduct of the business of the Company and the
Subsidiaries as presently conducted, and the Assets in the aggregate are in such
operating condition and repair as is necessary for the conduct of the business
of the Company and the Subsidiaries as presently conducted.
(b) Real Property
-------------
(i) Owned Real Property. Part (b)(i) of Schedule 3.7 hereto
-------------------
sets forth all Facilities owned by the Company and the Subsidiaries. With
respect to each parcel of owned real property (A) either the Company or a
Subsidiary has good and marketable title to such parcel of real property,
free and clear of any and all Encumbrances other
15
<PAGE>
than Permitted Encumbrances, (B) there are no leases, subleases, licenses,
options, rights, concessions or other agreements, written or oral, granting
to any party or parties the right of use or occupancy of any portion of
such parcel of real property, (C) there are no outstanding options or
rights of first refusal in favor of any other party to purchase any such
parcel of real property or any portion thereof or interest therein, (D)
there are no parties (other than the Company and the Subsidiaries) who are
in possession of or who are using any such parcel of real property, (E)
each such parcel of real property abuts on or has direct, permanent
vehicular access to a public road and (F) there is no (1) pending or, to
the best knowledge of the Company and Seller, threatened condemnation
proceeding relating to such parcel of real property, (2) pending or, to the
best knowledge of the Company and Seller, threatened Action relating to
such parcel of real property or (3) to the best knowledge of the Company
and Seller, other matter that is reasonably likely to affect the current
use, occupancy or value of such parcel of real property in any material
respect. The Company does not hold any option, right of first refusal or
similar right to purchase any additional parcel of real property or any
portion thereof or interest therein. No representation or warranty is
made in this Section 3.7(a)(i) with respect to the matters covered in
Section 3.26 (Compliance with Environmental Laws).
(ii) Leased Real Property. Part (b)(ii) of Schedule 3.7 sets
--------------------
forth all leases pursuant to which Facilities are leased by the Company or
any Subsidiary (as lessee), true and correct copies of which have been
delivered or made available to Buyer. Such leases constitute all leases,
subleases or other occupancy agreements pursuant to which the Company or
any Subsidiary occupies or uses Facilities. The Company or a Subsidiary
has good and valid leasehold title to, and enjoys peaceful and undisturbed
possession of, all leased property described in such leases (the "Leased
------
Property"), free and clear of any and all Encumbrances other than any
--------
Permitted Encumbrances which would not permit the termination of the lease
therefor by the lessor. With respect to each such parcel of Leased
Property (A) there are no pending or, to the best knowledge of the Company
and Seller, threatened condemnation proceedings relating to, or any pending
or, to the best knowledge of the Company and Seller, threatened Actions
relating to, such Leased Property, (B) none of the Company, any Subsidiary
or Seller or, to the best knowledge of each of them, any third party has
entered into any sublease, license, option, right, concession or other
agreement or arrangement, written or oral, granting to any person (other
than the Company or any Subsidiary) the right to use or occupy such Leased
Property or any portion thereof or interest therein and (C) none of the
Company, any Subsidiary or Seller has received written notice of any
pending or, to the best knowledge of the Company and Seller, threatened
special assessment relating to such Leased Property or otherwise has any
knowledge of any pending or threatened special assessment relating thereto.
(c) Personal Property. Part (c) of Schedule 3.7 identifies all
-----------------
Fixtures and Equipment, vehicles and other similar tangible personal property
Assets with a book value of at least $50,000 owned or leased by the Company or
any Subsidiary as of December 31, 1995.
(i) Owned Personal Property. Each of the Company and each
-----------------------
16
<PAGE>
Subsidiary has good and marketable title to all such personal property
owned by it, free and clear of any and all Encumbrances other than
Permitted Encumbrances. With respect to each such item of personal
property (A) there are no leases, subleases, licenses, options, rights,
concessions or other agreements, written or oral, granting to any party or
parties the right of use of any portion of such item of personal property,
(B) there are no outstanding options or rights of first refusal in favor of
any other party to purchase any such item of personal property or any
portion thereof or interest therein and (C) there are no parties (other
than the Company and the Subsidiaries) who are in possession of or who are
using any such item of personal property;
(ii) Leased Personal Property. Each of the Company and each
------------------------
Subsidiary has good and valid leasehold title to all of such Fixtures and
Equipment, vehicles and other tangible personal property Assets leased by
it from third parties, free and clear of any and all Encumbrances other
than Permitted Encumbrances which would not permit the termination of the
lease therefor by the lessor. Part (ii) of schedule 3.7(c) sets forth all
Leases for personal property involving annual payments in excess of
$120,000, true and correct copies of which have been delivered or made
available to Buyer. With respect to each such Lease (A) there has been no
material default under any such Lease by the Company or any Subsidiary or,
to the best knowledge of the Company and Seller, by any other party, (B)
the execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby will not cause a material default under any such Lease, (C) such
Lease is a valid and binding obligation of the Company and/or the
Subsidiary party thereto, is in full force and effect with respect to the
Company and/or the Subsidiary party thereto and is enforceable against the
Company and/or the Subsidiary party thereto in accordance with its terms,
except as the enforceability thereof may be limited by (1) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance
or similar laws in effect which affect the enforcement of creditors' rights
generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, (D) no action has been taken by the Company
or any Subsidiary and no event has occurred which, with notice or lapse of
time or both, would permit termination, modification or acceleration by a
party thereto other than the Company or any Subsidiary, without the consent
of the Company or any Subsidiary, under any such Lease that is material to
the Company and its Subsidiaries, taken as a whole, (E) no party has
repudiated in writing any term thereof or threatened in writing to
terminate, cancel or not renew any such Lease that is material to the
Company and its Subsidiaries, taken as a whole, (F) neither the Company nor
any Subsidiary has assigned, transferred, conveyed, mortgaged or encumbered
any interest therein or in any leased property subject thereto (or any
portion thereof) and (G) there are no pending or, to the best knowledge of
the Company and Seller, threatened condemnation proceedings or actions
relating to the leased property subject thereto (or any portion thereof).
3.8 Contracts and Commitments
-------------------------
(a) Schedule 3.8 sets forth a complete and accurate list of all
Contracts in the following categories as of the date hereof (except to the
extent that any such category specifies
17
<PAGE>
a different date, in which case such corresponding list is made as of such
specified date):
(i) each Contract (or group of related Contracts) for the
furnishing of services by the Company and/or any Subsidiary which provided
for, during the fiscal year ended December 31, 1995, aggregate Value-Added
of more than $800,000 to the Company and the Subsidiaries;
(ii) each Contract (or group of related Contracts) concerning a
partnership or joint venture with, or any other investment in (whether
through the acquisition of an equity interest, the making of a loan or
advance or otherwise), any other person;
(iii) each Contract (or group of related Contracts) (A) under
which the Company or any Subsidiary has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness for
borrowed money, (B) constituting a capitalized lease obligation, (C) under
which the Company or any Subsidiary has granted (or may grant) a security
interest or lien on any Assets that are material singly or in the aggregate
or (D) under which the Company or any Subsidiary has incurred any
obligations for any performance bonds, payment bonds, bid bonds, surety
bonds, letters of credit, guarantees or similar instruments;
(iv) each Contract (or group of related Contracts) concerning
confidentiality regarding the Proprietary Rights;
(v) other than those Contracts set forth on Schedules 3.16 and
3.20, each Contract (or group of related Contracts) with any stockholder,
director, officer or sales representative, any other Affiliate of the
Company or any Subsidiary or, to the best knowledge of the Company and
Seller, any member of any such person's immediate family, including,
without limitation, (A) Contracts to employ or terminate such officers or
sales representatives and other Contracts with present or former
stockholders, directors or officers or other corporate Personnel or sales
Personnel of the Company or any Subsidiary (except with respect to any
employee at will without a written agreement) or (B) Contracts that will
result in the payment by Buyer, the Company or any Subsidiary of, or the
creation of any commitment or obligation (absolute or contingent) of Buyer,
the Company or any Subsidiary to pay, any severance, termination, "golden
parachute" or other similar payments to any present or former officers or
sales representatives following termination of employment or otherwise as a
result of the consummation of the transactions contemplated hereby;
(vi) each Contract (or group of related Contracts), other than
any Contract set forth on Schedule 3.8 pursuant to any other clause of this
Section 3.8, the consequences of a default or termination under which would
have a Material Adverse Effect;
18
<PAGE>
(vii) each Contract (or group of related Contracts), including,
without limitation, open purchase orders, for the purchase or sale of raw
materials, commodities, supplies, products or other property providing for
payments in excess of $1,000,000 over the life of such Contract (or group
of related contracts), except for open purchase orders for the purchase of
paper and ink that are cancelable on not more than 30 days' notice by the
Company or any Subsidiary without material penalty or material increased
cost;
(viii) each distribution, franchise, license, commission,
consulting agency or advertising Contract related to the Assets or the
business involving annual payments in excess of $100,000, except for such
Contracts that are cancelable on not more than 30 days' notice by the
Company or any Subsidiary without penalty or increased cost;
(ix) each Contract (or group of related Contracts) containing
covenants restraining or limiting the freedom of the Company, any
Subsidiary or any officer, director, stockholder or Affiliate thereof to
engage in any line of business or compete with any person including,
without limitation, by restraining or limiting the right to solicit
customers;
(x) each option with respect to any real property or any
material personal property, whether the Company or a Subsidiary is the
grantor or grantee thereunder;
(xi) each Contract (or group of related Contracts) with the
United States, state or local government or any agency or department
thereof; and
(xii) each other Contract (or group of related Contracts) not
entered into in the ordinary course of business, consistent with past
practice, except for such Contracts involving annual payments of less than
$100,000 individually and $250,000 in the aggregate and except for such
Contracts that are cancelable on not more than 30 days' notice by the
Company or any Subsidiary without material penalty or material increased
cost.
The Company has delivered or made available to Buyer a true and
correct copy of each written Contract listed in Schedule 3.8.
(b) Absence of Breaches or Defaults in General. With respect to each
------------------------------------------
Contract set forth on or described in Schedule 3.8, (i) there has been no
material default under any such Contract by the Company or any Subsidiary or, to
the best knowledge of the Company and Seller, by any other party, (ii) the
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby will not cause a material default under any such Contract; (iii) such
Contract is a valid and binding obligation of the Company and/or the Subsidiary
party thereto, is in full force and effect with respect to the Company and/or
the Subsidiary party thereto and is enforceable against the Company and/or the
Subsidiary party thereto in accordance with its terms, except as the
enforceability thereof may be limited by (A) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of
19
<PAGE>
creditors' rights generally or (B) general principles of equity, whether
considered in a proceeding at law or in equity; (iv) no action has been taken by
the Company or any Subsidiary and no event has occurred which, with notice or
lapse of time or both, would permit termination, modification or acceleration by
a party thereto other than the Company or any Subsidiary (without the consent of
the Company or any Subsidiary) under any such Contract that is material to the
Company and its Subsidiaries, taken as a whole; and (v) no party has repudiated
in writing any term thereof or threatened in writing to terminate, cancel or not
renew any such Contract that is material to the Company and its Subsidiaries,
taken as a whole.
3.9 Permits. The Company and the Subsidiaries have all material Permits
-------
required to own and lease their properties, the Assets and the Facilities and to
conduct their business as currently being conducted. All such Permits are valid
and in full force and effect and are listed on Schedule 3.9. Neither the
Company nor any Subsidiary has violated any such Permits in any material
respect, and each is in compliance with all such Permits in all material
respects. None of the Company, any Subsidiary or Seller has received any
written notice to the effect that, or otherwise has any knowledge that, (a) the
Company or any Subsidiary is not currently in compliance with, or is in
violation of, any such Permits in any material respect or (b) any currently
existing circumstances are likely to result in a failure of the Company or any
Subsidiary to comply with, or in a violation by the Company or any Subsidiary
of, any such Permits in any material respect. No representation or warranty is
made in this Section 3.9 with respect to the matters covered in Section 3.26
(Compliance with Environmental Laws).
3.10 No Conflict or Violation. Neither the execution, delivery and
------------------------
performance of this Agreement and the Ancillary Agreements, nor the consummation
of the transactions contemplated hereby and thereby, by the Company or Seller
will result in (a) a violation of or a conflict with any provision of the
certificate or articles of incorporation or bylaws of the Company or any
Subsidiary, (b) a breach of, or a default under, or the creation of any right of
any party to accelerate, terminate or cancel pursuant to (including, without
limitation, by reason of the failure to obtain a consent or approval under any
such Contract), any term or provision of any Contract, Encumbrance or Permit to
which the Company, any Subsidiary or Seller is a party or by which any of the
Assets are bound, which breach, default or creation of any such right would have
a Material Adverse Effect, (c) a material violation by the Company, any
Subsidiary or Seller of any statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award applicable to the Company, any
Subsidiary or Seller or (d) an imposition of any Encumbrance (other than
Permitted Encumbrances and Encumbrances created or suffered by Buyer) on the
business of the Company or any Subsidiary or on any of the Assets.
3.11 Governmental Consents and Approvals. No consent, waiver, agreement,
-----------------------------------
approval or authorization of, or declaration, filing, notice or registration to
or with, any federal, state, local or foreign governmental or regulatory
authority or body is required to be made or obtained by the Company, any
Subsidiary or Seller in connection with the execution, delivery and performance
of this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby other than (a) filings required in
connection with or in compliance with the provisions of the HSR Act or (b) those
set forth on Schedule 3.11.
20
<PAGE>
3.12 Financial Statements, etc. The Company has heretofore delivered to
-------------------------
Buyer the Financial Statements. The Financial Statements (a) are in accordance
with the books and records of the Company, (b) have been prepared in accordance
with GAAP consistently applied throughout the periods covered thereby (except,
with respect to the Interim Financial Statements, for the absence of footnotes
thereto) and (c) present fairly and accurately in accordance with GAAP (except,
with respect to the Interim Financial Statements, as set forth on Schedule 3.12)
the Assets, liabilities (including, without limitation, all reserves) and
financial condition of the Company and the Subsidiaries as of the respective
dates thereof and the results of operations, stockholders' equity and cash flows
for the periods covered thereby (except, with respect to the Interim Financial
Statements, subject to normal year-end adjustments and the presentation of
general, selling and administrative expenses therein).
3.13 Undisclosed Liabilities. Neither the Company nor any Subsidiary has
-----------------------
any liabilities, obligations or commitments of any nature (whether known or
unknown, absolute or contingent, liquidated or unliquidated, due or to become
due, accrued or unaccrued, matured or unmatured) other than (a) liabilities
which are reflected and reserved against on the Balance Sheet (in each case
including, without limitation, in the notes thereto) which have not been paid or
discharged since the date thereof, (b) liabilities arising under any Contracts,
Permits, and other commitments disclosed in the Disclosure Schedule (and under
those Contracts, Permits and other commitments which are not required to be
disclosed on the Disclosure Schedule), (c) liabilities incurred since the
Balance Sheet Date in the ordinary course of business, consistent with past
practice (none of which relates to any breach of Contract, breach of warranty,
tort, infringement or violation of law), (d) liabilities specifically disclosed
elsewhere on the Disclosure Schedule, (e) liabilities which would have been
disclosed in the Disclosure Schedule with respect to another representation or
warranty but which were not so disclosed because the terms of such
representation or warranty did not require such disclosure and (f) other
liabilities and obligations which, individually or in the aggregate, do not
exceed $150,000. None of the liabilities described in clause (c) of the
preceding sentence would have, individually or in the aggregate, a Material
Adverse Effect.
3.14 Corporate Records. The corporate records of the Company have been
-----------------
delivered or made available to Buyer.
3.15 Litigation. There is no outstanding order, writ, injunction, judgment
----------
or decree by any court or governmental authority or any action, claim, suit,
litigation, proceeding, labor dispute (other than immaterial grievances) or any
arbitration in any court or before any governmental authority or any audit or
investigation by any governmental authority (collectively, "Actions") pending
-------
or, to the best knowledge of the Company and Seller, threatened (a) against (i)
the Company, any Subsidiary or the Assets (including, without limitation,
relating to the transactions contemplated hereby), (ii) any director, officer or
stockholder of the Company or any Subsidiary in their capacity as such or (iii)
any Employee Plan (other than a Multiemployer Plan) of the Company or any
Subsidiary or (b) in which the Company or any Subsidiary is a plaintiff
(including, without limitation, any derivative suits brought by or on behalf of
the Company or any Subsidiary) where the amount disputed with respect to any
such Action exceeds $50,000, and neither the Company nor Seller has knowledge of
any event or development that is likely to result in any such Action. No
representation or warranty is made in this Section
21
<PAGE>
3.15 with respect to the matters covered in Section 3.26 (Compliance with
Environmental Laws).
3.16 Labor Matters. Neither the Company nor any Subsidiary is a party to
-------------
any labor agreement with respect to any of its employees with any labor
organization, union, group or association and there are no employee unions (nor
any other similar labor or employee organizations) under local statutes, custom
or practice. In the past five years, neither the Company nor any Subsidiary has
been approached by organized labor or its representatives making an effort to
cause the Company or any Subsidiary to conform to demands of organized labor
relating to any of its employees or to enter into a binding agreement with
organized labor that would cover any of the employees of the Company or any
Subsidiary. There is no labor strike, slow-down or other work stoppage or labor
disturbance pending or, to the best knowledge of the Company and Seller,
threatened against the Company or any Subsidiary nor is any material grievance
currently being asserted, and in the past five years neither the Company nor any
Subsidiary has experienced a strike, slow-down or other work stoppage or other
labor disturbance or difficulty. The Company and each Subsidiary is in
compliance in all material respects with all applicable laws respecting
employment practices, employee documentation, terms and conditions of employment
and wages and hours and is not and has not engaged in any unfair labor
practice. There is no unfair labor practice charge or complaint against the
Company or any Subsidiary pending before the National Labor Relations Board or
any other domestic or foreign governmental agency arising out of the conduct of
its business, and there are no facts or information which would give rise
thereto.
3.17 Compliance with Law. Each of the Company and each Subsidiary has not
-------------------
violated and is in compliance with (a) all applicable laws, statutes,
ordinances, regulations, rules and orders of every federal, state, local or
foreign government and every federal, state, local or foreign court or other
governmental agency, department, authority or instrumentality and (b) every
judgment, decision, decree or order of any court or governmental agency, depart-
ment, authority or instrumentality (collectively, "Laws"), relating to the
----
Assets, business or operations of the Company and the Subsidiaries, except to
the extent that any such violation or failure to comply is likely to result in
losses, liabilities, obligations, damages, costs or expenses (including, without
limitation, fines and penalties) of less than $100,000 singly or $500,000 in the
aggregate. None of the Company, any Subsidiary or Seller has received any
written notice to the effect that, or otherwise has any knowledge that, any
currently existing circumstances are reasonably likely to result in a failure of
the Company or any Subsidiary to comply with, or a violation by the Company or
any Subsidiary of, any Laws, which such failure to comply or violation would be
reasonably likely to result in losses, liabilities, obligations, damages, costs
or expenses (including, without limitation, fines and penalties) in excess of
$100,000 singly or $500,000 in the aggregate. No representation or warranty is
made in this Section 3.17 with respect to compliance with Laws relating to the
matters covered in Sections 3.15 (Labor Matters), 3.20 (Employee Plans), 3.22
(Tax Matters) and 3.26 (Compliance with Environmental Laws).
3.18 No Brokers. Other than Allen & Company Incorporated, none of Seller,
----------
the Company, any Subsidiary or any of their respective officers, directors,
employees, stockholders or other Affiliates has employed or made any agreement
with any broker, finder or similar agent or any person or firm to pay any
finder's fee, brokerage fee or commission or similar payment
22
<PAGE>
in connection with the transactions contemplated hereby.
3.19 Proprietary Rights. Schedule 3.19 lists all federal, state and
------------------
foreign registrations of patents, trademarks, trade names or other trade rights
and copyrights and all pending applications for any such registrations that are
owned by the Company or either of its Subsidiaries or in which the Company or
either of its Subsidiaries has any interest, or that are being used in
connection with, or relate to, the business of the Company and its Subsidiaries
(collectively, the "Proprietary Rights"). The Company has delivered or made
------------------
available to Buyer true, correct and complete copies of each registration,
application and other document relating to the Proprietary Rights set forth on
Schedule 3.19. The Company and each Subsidiary owns, or possesses adequate and
enforceable licenses or other rights to use, all Proprietary Rights used in or
necessary for its business as it is currently conducted, except where the
failure to own or possess such licenses or other rights would not, individually
or in the aggregate, have a Material Adverse Effect, and such ownership and
licenses will not cease to be valid and in full force and effect in any material
respect by reason of the execution, delivery and performance of this Agreement
and the Ancillary Agreements or the consummation of the transactions
contemplated hereby and thereby. No other firm, corporation, association or
person (a) has notified the Company or any Subsidiary that it is claiming any
ownership of or right to use such Proprietary Rights or (b) to the best
knowledge of the Company and Seller, has interfered with, infringed upon or
otherwise come into conflict with any such Proprietary Rights in any material
respect. The conduct of the business of the Company and the Subsidiaries as
currently conducted does not conflict with, interfere with, infringe upon or
otherwise violate the rights of any third party in or to valid patents,
trademarks, trade names or copyrights in any material respect, and neither the
Company nor any Subsidiary has received any written notice of any such conflict,
infringement or violation.
3.20 Employee Plans
--------------
(a) Disclosure; Delivery of Copies of Relevant Documents and Other
--------------------------------------------------------------
Information. Schedule 3.20 contains a complete list of Employee Plans. True
- -----------
and complete copies of each of the following documents have been delivered or
made available by Seller and the Company to Buyer: (i) each Employee Plan (and,
if applicable, related trust agreements) which covers or has covered employees
of the Company or any Subsidiary (with respect to their relationship with the
Company or any Subsidiary) and all amendments thereto, all summary plan
descriptions, summary of material modifications (as defined in ERISA), annuity
contracts or other funding instruments, the number of and a general description
of the level of employees covered by each Benefit Arrangement and a complete
description of any Employee Plan which is not in writing, (ii) the most recent
determination letter issued by the Internal Revenue Service and any opinion
letter issued by the Department of Labor with respect to each Pension Plan and
each voluntary employees' beneficiary association as defined under Section
501(c)(9) of the Code (other than a Multiemployer Plan) which covers or has
covered employees of the Company or any Subsidiary (with respect to their
relationship with the Company or any Subsidiary), (iii) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed with
any governmental agency for each Pension Plan or Welfare Plan which covers or
has covered employees of the Company or any Subsidiary (with respect to their
relationship with the Company or any Subsidiary), (iv) all actuarial reports
prepared for the last three plan years for
23
<PAGE>
each Pension Plan which covers or has covered employees of the Company or any
Subsidiary (with respect to their relationship with the Company or any
Subsidiary), and (v) a description setting forth the amount of any liability of
the Company or any Subsidiary as of the Closing Date for payments more than
thirty (30) calendar days past due with respect to each Welfare Plan which
covers or has covered employees or former employees of the Company or any
Subsidiary.
(b) Representations. Seller and the Company represent and warrant as
---------------
follows:
(i) Pension Plans
-------------
(A) No "accumulated funding deficiency" (for which an
excise tax is due or would be due in the absence of a waiver) as
defined in Section 412 of the Code or as defined in Section 302(a)(2)
of ERISA, whichever may apply, has been incurred with respect to any
Pension Plan with respect to any plan year, whether or not waived.
None of the Company, any Subsidiary or any ERISA Affiliate has failed
to pay when due any "required installment," within the meaning of
Section 412(m) of the Code and Section 302(e) of ERISA, whichever may
apply, with respect to any Pension Plan. None of the Company, any
Subsidiary or any ERISA Affiliate is subject to any lien imposed under
Section 412(n) of the Code or Section 302(f) of ERISA, whichever may
apply, with respect to any Pension Plan. None of the Company, any
Subsidiary or any ERISA Affiliate has any liability for unpaid
contributions with respect to any Pension Plan that is not reflected
on the Balance Sheet.
(B) None of the Company, any Subsidiary or any ERISA
Affiliate is required to provide security to a Pension Plan which
covers or has covered employees or former employees of the Company or
any Subsidiary under Section 401(a)(29) of the Code.
(C) The Company, a Subsidiary or an ERISA Affiliate has
paid all premiums (and interest charges and penalties for late
payment, if applicable) due the PBGC with respect to each Pension Plan
for each plan year thereof for which such premiums are required. None
of the Company, any Subsidiary or any ERISA Affiliate has engaged in,
or is a successor or parent corporation to an entity that has engaged
in, a transaction described in Section 4069 of ERISA. There has been
no "reportable event" (as defined in Section 4043(b) of ERISA and the
PBGC regulations under such Section) with respect to any Pension Plan,
other than those events to which the PBGC has waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such events. No filing has been made by the Company,
any Subsidiary or any ERISA Affiliate with the PBGC, and no proceeding
has been commenced by the PBGC, to terminate any Pension Plan. To the
best knowledge of the Company and Seller and except for the
transactions contemplated by this Agreement, no condition exists and
no event has occurred that could constitute grounds for the
termination of any Pension Plan by the PBGC. None of the Company, any
Subsidiary or any
24
<PAGE>
ERISA Affiliate has, at any time, (1) ceased operations at a facility
so as to become subject to the provisions of Section 4062(e) of ERISA,
(2) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, or (3) ceased making
contributions on or before the Closing Date to any Pension Plan
subject to Section 4064(a) of ERISA to which the Company, any
Subsidiary or any ERISA Affiliate made contributions during the six
years prior to the Closing Date.
(D) Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument which covers or has
covered employees or former employees of the Company or any Subsidiary
(with respect to their relationship with the Company or any
Subsidiary) has received a favorable determination letter from the
Internal Revenue Service relating to such Pension Plan's qualified
status and each related trust's tax-exempt status under the provisions
of Code Sections 401(a) and 501(a), respectively, and to the knowledge
of the Company, no event or condition exists or has occurred that
could adversely affect such qualified and tax-exempt status.
(E) Each Pension Plan and each related trust agreement,
annuity contract or other funding instrument which covers or has
covered employees or former employees of the Company or any Subsidiary
(with respect to their relationship with the Company or any
Subsidiary) currently complies in all material respects and has been
maintained in compliance in all material respects with its terms and,
both as to form and in operation, with the requirements prescribed by
any and all statutes, orders, rules and regulations which are
applicable to such plans, including, without limitation, ERISA and the
Code.
(ii) Multiemployer Plans
-------------------
(A) None of the Company, any Subsidiary or any ERISA
Affiliate has, at any time, withdrawn from a Multiemployer Plan in a
"complete withdrawal" or a "partial withdrawal" as defined in Sections
4203 and 4205 of ERISA, respectively, so as to result in a liability,
contingent or otherwise (including without limitation the obligations
pursuant to an agreement entered into in accordance with Section 4204
of ERISA), of the Company, any Subsidiary or any ERISA Affiliate.
None of the Company, any Subsidiary or any ERISA Affiliate has engaged
in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Section 4212(c) of ERISA.
(B) All contributions required to be made by the Company,
any Subsidiary or any ERISA Affiliate to each Multiemployer Plan have
been made when due.
(C) To the best of the Company's knowledge, with respect to
each Multiemployer Plan: (1) no such Multiemployer Plan has been
terminated or, since the first date of the Company or any ERISA
Affiliate's participation in,
25
<PAGE>
or contribution to, such Multiemployer Plan, has been in
reorganization under ERISA so as to result, directly or indirectly, in
any liability, contingent or otherwise, of the Company, any Subsidiary
or any ERISA Affiliate under Title IV of ERISA; (2) no proceeding has
been initiated by any person (including the PBGC) to terminate any
Multiemployer Plan; (3) the Company, all Subsidiaries and the ERISA
Affiliates have no reason to believe that any Multiemployer Plan will
be terminated or will be reorganized under ERISA; and (4) the Company,
the Subsidiaries and the ERISA Affiliates do not expect to withdraw
from any Multiemployer Plan.
(iii) Welfare Plans
-------------
(A) Each Welfare Plan which covers or has covered employees
or former employees of the Company or any Subsidiary (with respect to
their relationship with the Company or any Subsidiary) has been
maintained in compliance in all material respects with its terms and,
both as to form and operation, with the requirements prescribed by any
and all statutes, orders, rules and regulations which are applicable
to such Welfare Plan, including, without limitation, ERISA and the
Code.
(B) Except as required by Section 4980B of the Code or Part
6 of Title 1, Subtitle B of ERISA or under any Employee Plan, none of
the Company, any Subsidiary, any ERISA Affiliate or any Welfare Plan
has any present or future obligation to make any payment to, or with
respect to any present or former employee of the Company, any
Subsidiary or any ERISA Affiliate pursuant to, any retiree medical
benefit plan, or other retiree Welfare Plan, and no condition exists
which would prevent the Company or any Subsidiary from amending or
terminating any such retiree medical benefit plan or other retiree
Welfare Plan.
(C) Each Welfare Plan which covers or has covered employees
or former employees of the Company or any Subsidiary (with respect to
their relationship with the Company or any Subsidiary) and which is a
"group health plan," as defined in Section 607(1) of ERISA, presently
complies in all material respects with and has been operated in
compliance in all material respects with provisions of Part 6 of
Title I, Subtitle B of ERISA and Sections 162(k) and 4980B of the Code
at all times.
(D) None of the Company, any Subsidiary or any ERISA
Affiliate has maintained or contributed to or had any obligation to
maintain or contribute to any Welfare Plan that is a "multiemployer
plan," as defined in Section 3(37) of ERISA.
(E) The insurance policies or other funding instruments,
if any, for each Welfare Plan provide coverage for each employee,
consultant, independent contractor or retiree of the Company or any
Subsidiary (and, if
26
<PAGE>
applicable, their respective dependents) who has been advised by the
Company or any Subsidiary, whether through an Employee Plan or
otherwise, that he or she is covered by such Welfare Plan.
(iv) Benefit Arrangements. Each Benefit Arrangement which covers
--------------------
or has covered employees or former employees of the Company or any
Subsidiary (with respect to their relationship with the Company or any
Subsidiary) has been maintained in compliance in all material respects with
its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such Benefit
Arrangement, including, without limitation, the Code. Except as provided
by law or in any employment agreement set forth on Schedule 3.20, the
employment of all persons presently employed or retained by the Company or
any Subsidiary is terminable at will.
(v) Unrelated Business Taxable Income. No Employee Plan (or
---------------------------------
trust or other funding vehicle pursuant thereto) has incurred any liability
under Code Section 511.
(vi) Deductibility of Payments. There is no contract, agreement,
-------------------------
plan or arrangement covering any employee or former employee of the Company
or any Subsidiary (with respect to its relationship with the Company or any
Subsidiary) that, individually or collectively, requires the payment by the
Company or any Subsidiary of any amount (i) that is not deductible under
Section 162(a)(1) or 404 of the Code or (ii) that is an "excess parachute
payment" pursuant to Section 280G of the Code.
(vii) Fiduciary Duties and Prohibited Transactions. None of
--------------------------------------------
the Company, any Subsidiary or any plan fiduciary of any Welfare Plan or
Pension Plan which covers or has covered employees or former employees of
the Company or any Subsidiary has engaged in, or has any liability in
respect of, any transaction in violation of Sections 404 or 406 of ERISA,
any "prohibited transaction," as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA or Section
4975(c)(2) or (d) of the Code, or any violation of the provisions of Part 4
of Title I, Subtitle B of ERISA. Neither the Company nor any Subsidiary
has been assessed any civil penalty under Section 502(l) of ERISA.
(viii) Litigation. There is no action, order, writ,
----------
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation relating
to or seeking benefits under any Employee Plan that is pending (other than
routine claims for benefits), anticipated or threatened against the
Company, any Subsidiary or any Employee Plan.
(ix) No Amendments. None of the Company, any Subsidiary or any
-------------
ERISA Affiliate has announced to employees, former employees or directors
an intention to create, or otherwise created, a legally binding commitment
to adopt any additional Employee Plans which are intended to cover
employees or former employees of the Company or any Subsidiary (with
respect to their relationship with the Company or any Subsidiary) or to
amend or modify any existing Employee Plan which covers or has
27
<PAGE>
covered employees or former employees of the Company or any Subsidiary
(with respect to their relationship with the Company or any Subsidiary).
(x) Insurance Contracts. None of the Company, any Subsidiary or
-------------------
any Employee Plan (other than a Multiemployer Plan) holds as an asset of
any Employee Plan any interest in any annuity contract, guaranteed
investment contract or any other investment or insurance contract issued by
an insurance company that is the subject of bankruptcy, conservatorship or
rehabilitation proceedings.
(xi) No Acceleration or Creation of Rights. Neither the
-------------------------------------
execution and delivery of this Agreement or other related agreements by
Seller or the Company nor the consummation of the transactions contemplated
hereby or the related transactions will result in the acceleration or
creation of any rights of any person to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any
benefits under any Pension Plan or the acceleration or creation of any
rights under any severance, parachute or change in control agreement).
3.21 Transactions with Certain Persons. (a) No stockholder, director,
---------------------------------
officer or sales representative of the Company or any Subsidiary nor, to the
best knowledge of the Company and Seller, any member of any such person's
immediate family is currently, or within the last three years has been, a party
to any transaction with the Company or any Subsidiary, including, without
limitation, any Contract (i) providing for the furnishing of services by, (ii)
providing for the rental of real or personal property from, or (iii) otherwise
requiring payments to (other than for dividends or distributions to any
stockholder of the Company or any Subsidiary in his or her capacity as such or
for services as officers, directors or employees of the Company or any
Subsidiary), any such person or any corporation, partnership, trust or other
entity in which, to the best knowledge of the Company and Seller, any such
person has an interest as a stockholder, officer, director, trustee or partner,
other than (x) any transactions involving less than $100,000 in the aggregate,
(y) any transactions between or among Seller and any of its subsidiaries, in the
ordinary course of business and on an arms' length basis and (z) any
transactions among the Company and the Subsidiaries.
3.22 Tax Matters
-----------
(a) Filing of Tax Returns. Each of the Company and each Subsidiary
---------------------
has timely filed with the appropriate taxing authorities all Returns in respect
of Taxes required to be filed, taking into account any extensions of due dates.
Neither the Company nor any Subsidiary has requested any extension of time
within which to file Returns in respect of any Taxes. The Company has delivered
or made available to Buyer complete and accurate copies of the federal, state
and local income tax Returns for the years 1990, 1991, 1992, 1993 and 1994.
(b) Payment of Taxes. All substantial Taxes for which the Company or
----------------
any Subsidiary is or may be liable, other than income Taxes, in respect of
periods (or portions
28
<PAGE>
thereof) ending on or before the Closing Date, have been timely paid, or a
reserve adequate in accordance with GAAP has been established therefor on the
books and records of the Company.
All income Taxes for which the Company or any Subsidiary is or may be
liable in respect of periods (or portions thereof) ending on or before the
Balance Sheet Date have been timely paid, or a reserve adequate in all respects
(as of the Balance Sheet Date) has been established therefor, as set forth in
the Financial Statements. Since January 1, 1990, there has been (i) no
transaction which gave rise to a substantial amount of income or gain, the
recognition, reporting or accrual of which is deferred under Code Section 453
using the installment method of accounting (or similar provisions of state or
local statutes or regulations) or under the consolidated return regulations
(including, without limitation, deferral under Regulation Sec. 1.1502-13) or
similar provisions of state or local statutes or regulations and (ii) no
written agreement with any taxing authority which has the effect of deferring
Taxes that would otherwise be attributable to periods (or portions thereof)
before the Closing to periods (or portion thereof) after the Closing. For the
purposes of this Section 3.22 (including, without limitation, subsections (b)
and (c)), the term "substantial" shall refer to any individual item involving
an amount in excess of $20,000.
(c) Audits, Investigations or Claims. No substantial deficiencies
--------------------------------
for Taxes have been claimed, proposed or assessed in writing by any taxing or
other governmental authority against the Company or any Subsidiary which have
not been paid or reserved on the Financial Statements. There are no pending or,
to the best knowledge of the Company and Seller, threatened audits,
investigations or claims for or relating to any substantial liability in respect
of Taxes that in the reasonable judgment of Seller, the Company or their counsel
are likely to result in a substantial additional amount of Taxes, and there are
no other discussions with any taxing or other governmental authorities with
respect to Taxes that in the reasonable judgment of the Company or its counsel
is likely to result in an additional substantial liability for Taxes to the
Company or any Subsidiary. Audits of federal, state, and local returns for
income Taxes by the relevant taxing or other governmental authorities have been
completed for the periods set forth on Schedule 3.22(c) and none of the Company,
any Subsidiary or Seller has been notified in writing that any taxing or other
governmental authority intends to audit a return for income Taxes for any other
period. No extension of a statute of limitations relating to income Taxes is in
effect with respect to Company or any Subsidiary. No power of attorney has been
executed by the Company or any Subsidiary with respect to any matters relating
to income Tax which is currently in force.
(d) Safe Harbor Lease Property. None of the Assets is property that
--------------------------
is required to be treated as being owned by any other person pursuant to the so-
called safe harbor lease provisions of former Section 168(f)(8) of the Code.
(e) Security for Tax-Exempt Obligations. None of the Assets directly
-----------------------------------
or indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the Code.
(f) Tax-Exempt Use Property. None of the Assets is "tax-exempt use
-----------------------
property" within the meaning of Section 168(h) of the Code.
(g) Tax Election. Neither the Company nor any Subsidiary has
------------
consented at
29
<PAGE>
any time to have the provisions of Section 341(f)(2) of the Code (or similar
provisions under state or local law) apply to any disposition of the Assets.
Neither the Company nor any Subsidiary has agreed to make, or is required to
make, any adjustment under Section 481(a) of the Code (or similar provisions
under state or local law) by reason of a change in accounting method or
otherwise.
(h) Tax Sharing Agreements. There are no tax sharing agreements or
----------------------
similar arrangements (whether written or unwritten) with respect to or involving
the Company or any Subsidiary.
(i) Partnerships. Neither the Company nor any Subsidiary is a member
------------
of any entity which (i) is properly classified as a partnership for U.S. federal
income tax purposes but (ii) does not (A) report as such or (B) otherwise pass
through all of its income to its members each year.
(j) Affiliated Group. The Company has not been a member of an
----------------
affiliated group that has filed a consolidated return or any group that has
filed a combined, consolidated or unitary state or local return, other than the
affiliated group for U.S. federal income tax purposes of which it is the common
parent and any combined, consolidated or unitary groups for state or local
purposes of which it is the common parent.
3.23 Insurance. Schedule 3.23 contains a complete and accurate list of all
---------
policies or binders for business interruption, fire, liability, title, worker's
compensation, product liability, errors and omissions and other forms of
insurance (showing as to each policy or binder the carrier and the amount of
coverage) currently maintained by the Company and each Subsidiary. Such
insurance provides, and during its term has provided, coverage to the extent and
in the manner as may be or may have been required by law and by any and all
material Contracts to which the Company or any Subsidiary is or has been a
party. Neither the Company nor any Subsidiary is in material default under any
of such policies or binders, and since January 1, 1993 neither the Company nor
any Subsidiary has failed to give any notice or to present any material claim
under any such policy or binder in a due and timely fashion. Since January 1,
1993 no insurer has refused, denied or disputed coverage of any material claim
made thereunder. No insurer has advised the Company or any Subsidiary in
writing that it intends to reduce coverage or increase any premium in any
material respect or fail to renew any existing policy or binder. To the best
knowledge of the Company and Seller, all such policies and binders are in full
force and effect.
3.24 Purchase Commitments and Outstanding Bids. As of the date of this
-----------------------------------------
Agreement, there are no material claims, individually or in the aggregate,
against the Company or any Subsidiary for "make goods" or other compensation or
penalties by reason of production or distribution errors, alleged undershipments
or otherwise. No outstanding purchase order or commitment of the Company or any
Subsidiary presently is materially in excess of the current requirements of the
business of the Company or such Subsidiary. There are no outstanding bids or
proposals which individually or in the aggregate would, in the Company's
reasonable judgment, if accepted, have a Material Adverse Effect, or would, if
accepted, reasonably be expected to result in a negative marginal contribution
(calculated in a manner consistent with the
30
<PAGE>
Company's past practice) to the Company or such Subsidiary.
3.25 Customers and Suppliers. Schedule 3.25 sets forth a true and correct
-----------------------
list of (a) the 50 largest customers of the Company and the Subsidiaries, on a
consolidated basis, in terms of Value-Added during each of the fiscal years
ended December 31, 1994 and December 31, 1995, setting forth (i) the total sales
to each such customer during such period, (ii) the Value-Added attributable to
each such customer during such period and (iii) the contribution margin
attributable to each such customer during such period and (b) the 25 largest
suppliers of the Company and the Subsidiaries, on a consolidated basis, in terms
of purchases during each of the fiscal years ended December 31, 1994 and
December 31, 1995, setting forth the total purchases from each such supplier
during such period. Neither Seller, the Company nor any Subsidiary has received
(y) notice from any such supplier or customer set forth in items 1 through 20 on
the column in Schedule 3.25 relating to the fiscal year ended December 31, 1995,
or (z) written notice from any such supplier or customer set forth in items 21
through 50 on the column in Schedule 3.25 relating to the fiscal year ended
December 31, 1995, of such customer's or supplier's intention to cease,
materially reduce or otherwise materially alter its business with the Company or
any Subsidiary, other than ordinary monthly non-permanent fluctuations in the
page requirements of any such customers. During each of the fiscal years ended
December 31, 1994 and December 31, 1995 (A) no customer accounted for more than
five percent of the Value-Added of the Company and the Subsidiaries on a
consolidated basis and (B) there was no supplier from whom the Company and the
Subsidiaries purchased more than five percent of the goods or services purchased
by them on a consolidated basis.
3.26 Compliance with Environmental Laws. Except to the extent identified
----------------------------------
in the Environmental Reports or in any schedule attached hereto, and except to
the extent any of the following relates to a Former Property or off-site
facility or location covered by Section 9.1(a)(i)(E):
(a) The Company and the Subsidiaries are currently in material
compliance with all Environmental Laws, including, without limitation, all
Permits required thereunder to conduct their business as currently being
conducted. None of the Company, any Subsidiary or Seller has received any
written notice to the effect that, or otherwise has knowledge that, (i) the
Company or any Subsidiary is not currently in compliance with, or is in
violation of, any such Environmental Laws or Permits or (ii) any currently
existing circumstances are likely to result in a violation by the Company or any
Subsidiary of any such Environmental Laws or Permits, except for any
noncompliance or violation of any such Environmental Laws or Permits under this
clause (ii) that would not have a Material Adverse Effect. In addition, the
Company and each Subsidiary at all times during the previous five years has been
in material compliance with all Environmental Laws.
(b) There are no existing Environmental Claims against the Company or
any Subsidiary, nor has any of them received any notification of any allegation
of any actual, or potential responsibility for, or any inquiry or investigation
regarding, any disposal, release or threatened release at any location of any
Hazardous Substance generated or transported by the Company or any Subsidiary.
31
<PAGE>
(c) (i) No underground tank or other underground storage receptacle
for Hazardous Substances is currently located on the Facilities and there have
been no releases of any Hazardous Substances from any such underground tank or
related piping and (ii) there have been no releases of Hazardous Substances in
quantities exceeding the reportable quantities as defined under applicable
federal or state law by the Company or any Subsidiary on, upon or into the
Facilities other than those authorized by Environmental Laws including, without
limitation, the Permits required thereunder.
(d) There are no PCBs or asbestos-containing materials located at or
on the Facilities.
(e) There are no consent decrees, consent orders, judgments, judicial
or administrative orders or agreements with (other than Permits) or liens by,
any governmental authority relating to any Environmental Law which regulate,
obligate or bind the Company or any Subsidiary.
(f) True and correct copies of the Environmental Reports have been
delivered or made available to Buyer and a list of all such Environmental
Reports is set forth on Schedule 3.26.
(g) The Company and each Subsidiary have submitted on a timely basis
all applications for operating permits required pursuant to Title V of the Clean
Air Act, and to the best knowledge of the Company and Seller based on the
operations of the Company as of the date hereof, no additional capital
expenditures would be required within the next 24 months by the Company or any
Subsidiary in order to comply with the specific regulations in the form proposed
in the Federal Register as of the date hereof pursuant to the Clean Air Act if
such proposed regulations were to be enacted, except for such additional capital
expenditures that will not have a Material Adverse Effect.
3.27 Banking Relationships. Schedule 3.27 sets forth a complete and
---------------------
accurate description in all material respects of all arrangements that the
Company and each Subsidiary has with any banks, savings and loan associations or
other financial institutions providing for any accounts, including, without
limitation, checking accounts, cash contribution accounts, safe deposit boxes,
borrowing arrangements, certificates of deposit or otherwise, indicating in each
case account numbers, if applicable, and the person or persons authorized to act
or sign on behalf of the Company or such Subsidiary in respect of any of the
foregoing. No person holds any power of attorney or similar authority from the
Company or any Subsidiary with respect to any such accounts.
3.28 No Other Agreements to Sell the Assets or Stock of the Company. Other
--------------------------------------------------------------
than sales of inventory or product in the ordinary course of business,
consistent with past practice, neither the Company nor any Subsidiary has any
legal obligation, absolute or contingent, to any other person or firm to (a)
sell or effect a sale of any or all of the Assets, (b) sell or effect a sale of
any capital stock of the Company or any Subsidiary, (c) effect any merger,
consolidation or other reorganization of the Company or any Subsidiary or (d)
enter into any Contract or cause the entering into a Contract with respect to
any of the foregoing.
32
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement, Buyer hereby
makes the following representations and warranties as of the date hereof and as
of the Closing Date to Seller:
4.1 Organization. Buyer is duly organized, validly existing and in good
------------
standing under the laws of the State of Delaware.
4.2 Authorization. Buyer has all necessary corporate power and authority
-------------
to, and has taken all corporate action necessary on its part to, execute and
deliver this Agreement, consummate the transactions contemplated hereby and
perform its obligations hereunder, and no other corporate proceedings on the
part of Buyer are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Buyer and is a valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms, except as the enforceability thereof may be
limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance or similar laws in effect which affect the enforcement of
creditors rights generally or (b) general principles of equity, whether
considered in a proceeding at law or in equity. Each Ancillary Agreement which
has been or shall be executed and delivered by Buyer in connection with the
transactions contemplated hereby has been (or will be) duly authorized, executed
and delivered by Buyer, and is (or will be when authorized, executed and
delivered) a valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as the enforceability thereof may be limited
by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors
rights generally or (ii) general principles of equity, whether considered in a
proceeding at law or in equity.
4.3 Governmental Consents and Approvals. No consent, waiver, agreement,
-----------------------------------
approval or authorization of, or declaration, filing, notice or registration to
or with, any federal, state, local or foreign governmental or regulatory
authority or body is required to be made or obtained by Buyer in connection with
the execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby other than filings required in connection with or in compliance with the
provisions of the HSR Act.
4.4 No Brokers. Other than S.G. Warburg & Co., Inc., none of Buyer or any
----------
of its officers, directors, employees, stockholders or other Affiliates has
employed or made any agreement with any broker, finder or similar agent or any
person or firm to pay any finder's fee, brokerage fee or commission or similar
payment in connection with the transactions contemplated hereby.
4.5 No Conflict or Violation. Neither the execution, delivery and
------------------------
performance of this Agreement and the Ancillary Agreements, nor the consummation
of the transactions
33
<PAGE>
contemplated hereby or thereby, by Buyer will result in (a) a violation of or a
conflict with any provision of the certificate of incorporation or bylaws of
Buyer, (b) a breach of, or a default under, or the creation of any right of any
party to accelerate, terminate or cancel pursuant to (including, without
limitation, by reason of the failure to obtain a consent or approval under any
such Contract), any term or provision of any contract, encumbrance or permit to
which Buyer is a party or by which its assets are bound, which breach, default
or creation of any such right would have a material adverse effect on (i) the
business, operations, assets, liabilities, condition (financial or otherwise) or
results of operations of Buyer and its subsidiaries, taken as a whole or (ii)
the right or ability of Buyer to consummate any of the transactions contemplated
hereby.
4.6 Litigation. There is no Action pending or, to the best knowledge of
----------
Buyer, threatened (a) against Buyer or any of its Affiliates with respect to
which there is a reasonable likelihood of a determination which would have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby or (b) which seeks to enjoin or prevent, or questions the
validity or legality of, the consummation of the transactions contemplated
hereby.
4.7 Investment Representation. Buyer is acquiring the Shares for its own
-------------------------
account for investment purposes and with no present intention of distributing or
reselling such shares or any part thereof in any transaction which would
constitute a "distribution" within the meaning of the Securities Act.
4.8 Securities and Exchange Commission Documents. Buyer has furnished to
--------------------------------------------
Seller a true and complete copy of each statement, report and registration
statement filed by Buyer with the Securities and Exchange Commission (the "SEC")
---
since January 1, 1995 (the "SEC Documents"), which are all of the documents
-------------
(other than preliminary material) that Buyer was required to file with the SEC
during such period. As of their respective filing dates, none of the SEC
Documents contained any untrue statement of a material fact or omitted or failed
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading in any material respect, except to the extent
corrected by a subsequently filed SEC Document.
ARTICLE V
COVENANTS OF SELLER, THE COMPANY AND BUYER
------------------------------------------
Each of Seller, the Company and Buyer covenant and agree with each
other that from the date hereof through the Closing:
5.1 Maintenance of Business Prior to Closing
----------------------------------------
(a) Except as set forth in this Section 5.1(a), the Company shall,
and shall cause each Subsidiary to, operate its business in the ordinary course,
consistent with past practice (including, without limitation, the fulfillment of
its obligations under, and in accordance with the terms of, the Contracts,
Permits and other commitments set forth on the Disclosure Schedule or under
Contracts, Permits and other commitments which are not required to be
34
<PAGE>
disclosed on the Disclosure Schedule), and shall not, and shall cause each
Subsidiary not to, take any action inconsistent therewith or with the
consummation of the transactions contemplated hereby. Without limiting the
generality of the foregoing, the Company shall, and shall cause each Subsidiary
to, (y) maintain the Assets in the aggregate in at least their current state of
repair, excepting normal wear and tear and except for normal retirements,
abandonments and scrappings of Assets and (z) use its reasonable best efforts to
(I) maintain the insurance covering the Assets in effect on the date hereof;
(II) maintain the current business organization of the Company and the
Subsidiaries; (III) keep available the services of the current Personnel; and
(IV) preserve its current business relationships with customers, suppliers,
distributors and others having business dealings with the Company and the
Subsidiaries. Prior to the Closing, without the prior written consent of Buyer,
which consent shall not be unreasonably withheld, neither the Company nor any
Subsidiary shall:
(i) sell, assign, lease or transfer any of the Assets, material
singly or in the aggregate, other Assets sold or disposed of in the
ordinary course of business, consistent with past practice, to persons who
are not Affiliates of the Company or any Subsidiary;
(ii) cancel, terminate, amend, modify or waive any material term
of any Contract to which it is a party or by which it or any of the Assets
is bound, which Contract provided for, during the fiscal year ended
December 31, 1995, aggregate Value-Added in excess of $800,000 to the
Company and the Subsidiaries;
(iii) (A) increase the compensation payable or to become pay-
able to any of its directors or officers, (B) increase the base
compensation payable or to become payable to any of the Personnel (other
than directors or officers), except for normal periodic increases in such
base compensation in the ordinary course of business, consistent with past
practice, (C) increase the sales commission rate payable or to become
payable to any of the Personnel (other than directors or officers), other
than in accordance with the RAI Sales Commission Plan, (D) grant, make or
accrue any loan, bonus, fee, incentive compensation (excluding sales
commissions), service award or other like benefit, contingently or
otherwise, to or for the benefit of any of the Personnel, except pursuant
to the Employee Plans described on Schedule 3.20, (E) adopt, amend or cause
or suffer any addition to or modification of any Employee Plan (other than
any Employee Plan referred to in clause (G) of this paragraph), other than
(1) contributions made in the ordinary course of business, consistent with
past practice or (2) the extension of coverage to any of the Personnel who
became eligible after the date of this Agreement, (F) grant any additional
stock options or performance unit grants or other interest under any
Employee Plan, (G) enter into any new (1) employment or (2) consulting
agreement providing for annual payments of $100,000 or more over the life
of such consulting agreement, or cause or suffer any written or oral
termination, cancellation or amendment of any such employment or consulting
agreement to which it is a party (except with respect to any employee at
will without a written agreement), (H) enter into any collective bargaining
agreement or cause or suffer any termination or amendment of any collective
bargaining agreement to which it is a party or (I) with respect to any
stockholder, any other Affiliate or any Affiliate of any stockholder,
grant,
35
<PAGE>
make or accrue any payment or distribution or other like benefit,
contingently or otherwise, or otherwise transfer Assets, including, but not
limited to, any payment of principal of or interest on any debt owed to any
such stockholder or Affiliate, other than (x) any transactions involving
less than $100,000 in the aggregate, (y) any transactions between or among
Seller and any of its subsidiaries, in the ordinary course of business and
on an arms' length basis and (z) any transactions among the Company and the
Subsidiaries;
(iv) except in accordance with the Capital Expenditure Plan, make
any capital expenditure or commitment to make any capital expenditure;
(v) execute any Lease for real property or any Lease for
personal property involving annual payments in excess of $120,000, or incur
any liability therefor;
(vi) make any payments or give any other consideration to
customers or suppliers, other than (A) payments under, and in accordance
with the terms of, Contracts in effect on the date hereof, (B) signing
bonuses to customers in the ordinary course of business, consistent with
past practice, not to exceed $50,000 individually and $200,000 in the
aggregate and (C) other payments in the ordinary course of business,
consistent with past practice, not to exceed $100,000 individually and,
together with those payments set forth in clause (B), not to exceed
$500,000 in the aggregate;
(vii) change its accounting methods, principles or practices,
including, without limitation, any change in the application or
interpretation of GAAP;
(viii) (A) issue or sell, or enter into any agreement
obligating it to issue or sell, (B) declare, set aside for payment or pay
any dividend or distribution in respect of, or (C) directly or indirectly
redeem, purchase or otherwise acquire, or split, combine, reclassify or
otherwise adjust, any Equity Securities;
(ix) (A) incur any indebtedness for borrowed money or enter into
any commitment to borrow money, except pursuant to the Tranche C of the
Swiss Bank Credit Agreement for working capital purposes or the National
Geographic Loan Agreement for capital expenditures or working capital
purposes, in each case, in the ordinary course of business, consistent with
past practice or (B) incur any obligations for any performance bonds,
payment bonds, bid bonds, surety bonds, letters of credit, guarantees or
similar instruments, other than any such obligations that are not material
either individually or in the aggregate, in the ordinary course of
business, consistent with past practice;
(x) pay, discharge or satisfy any liability other than (A) the
repayment of the Debt Instruments on the Closing Date in accordance with
provisions hereof and (B) any such payment, discharge or satisfaction in
the ordinary course of business, consistent with past practice, of (1)
liabilities reflected or reserved against on the Balance Sheet or on any
Interim Balance Sheet or incurred subsequent thereto in the ordinary course
of business, consistent with past practice or (2) liabilities under, and in
accordance
36
<PAGE>
with the terms of, any Contracts, Permits and other commitments set forth
on the Disclosure Schedule or under Contracts, Permits and other
commitments which are not required to be disclosed on the Disclosure
Schedule;
(xi) change or amend its certificate or articles of incorporation
or bylaws;
(xii) (A) acquire (by merger, consolidation, acquisition of
stock, other securities or assets or otherwise), (B) make any capital
investment in (whether through the acquisition of an equity interest, the
making of a loan or advance or otherwise) or (C) guarantee indebtedness for
borrowed money of, (1) any person or (2) any portion of the assets of any
person that constitutes a division or operating unit of such person;
(xiii) mortgage, pledge or otherwise make or suffer any
Encumbrance (other than Permitted Encumbrances) on any material Asset or
group of Assets that are material in the aggregate;
(xiv) accelerate payments on any indebtedness, other than in
connection with the repayment of the Debt Instruments on the Closing Date
in accordance with the provisions hereof;
(xv) revalue any of the Assets, including, without limitation,
any write-off of notes or accounts receivable or any increase in any
reserve, involving in excess of $100,000 individually or $500,000 in the
aggregate (such amounts to be calculated without netting any decrease);
(xvi) cancel, waive or release any right or claim (or series
of related rights or claims), other than as set forth in (xv), involving in
excess of $100,000 individually or $500,000 in the aggregate;
(xvii) except as otherwise provided in this Section 5.1, enter
into any material transaction other than in the ordinary course of the
Company's business, consistent with past practice; or
(xviii) except as otherwise provided in this Section 5.1, enter
into any Contract with respect to any of the foregoing.
In addition, the Company and Seller shall not knowingly engage in
any practice, or take, or fail or omit to take, any action or enter into any
transaction that would (y) impair or prevent the Company or Seller from
consummating the transactions contemplated by this Agreement or (z) cause or
result in any of the representations and warranties set forth in Article III to
be untrue at any time after the date hereof through the Closing Date.
(b) Buyer shall not knowingly engage in any practice, or take, or
fail or omit to take, any action or enter into any transaction that would (i)
impair or prevent Buyer from consummating the transactions contemplated by this
Agreement or (ii) cause or result in any of
37
<PAGE>
Buyer's representations and warranties set forth in Article IV to be untrue at
any time after the date hereof through the Closing Date.
5.2 Investigation by Buyer. The Company shall, and shall cause the
----------------------
Subsidiaries to, allow Buyer, its counsel, accountants and other representatives
and the financial institutions (and their counsel and representatives) providing
or proposed to provide financing in connection with this Agreement and the
transactions contemplated hereby (subject to their entering into a
confidentiality agreement in form and substance reasonably satisfactory to
Seller), during regular business hours upon reasonable notice, to make such
reasonable inspection of the Assets, business and operations of the Company and
the Subsidiaries and to inspect and make copies of Contracts, Books and Records
and all other documents and information reasonably requested by Buyer and
related to the operations and business of the Company and the Subsidiaries,
including, without limitation, historical financial information concerning the
business of the Company and the Subsidiaries. The Company shall furnish to
Buyer promptly upon request (a) all additional documents and information with
respect to the affairs of the Company and the Subsidiaries relating to their
business and (b) access during regular business hours to the Personnel and to
the Company's accountants and counsel as Buyer, or its counsel or accountants,
may from time to time reasonably request and the Company shall instruct its
Personnel, accountants and counsel to cooperate with Buyer, and to provide such
documents and information as Buyer and its representatives may reasonably
request. Notwithstanding the foregoing, Seller shall not be obligated to
provide Buyer with any information (i) which would violate any law, rule or
regulation or term of any Contract or (ii) if the provision thereof would
adversely affect the ability of Seller or any of its Affiliates (including the
Company and the Subsidiaries) to assert attorney-client, attorney work product
or other similar legal privilege, provided that, with respect to all information
not provided because of any such privilege under this clause (ii), Seller shall
provide to Buyer a reasonable summary thereof to the extent consistent with such
privilege. Any disclosure whatsoever during such investigation by Buyer, its
counsel, accountants and other representatives and the financial institutions
(and their counsel and representatives) providing or proposed to provide
financing to Buyer in connection with this Agreement, shall not constitute an
enlargement of, or additional, representations or warranties of Seller or the
Company beyond those specifically set forth in this Agreement. All such
information and access shall be subject to the terms and conditions of the
letter agreement dated January 19, 1996 between Buyer and Seller (the
"Confidentiality Agreement").
-------------------------
5.3 Environmental Investigation. Buyer shall have the right, at its sole
---------------------------
cost and expense, to (a) inspect records, reports, permits, applications,
monitoring results, studies, correspondence data and any other information or
documents relevant to Environmental Conditions at the Facilities, (b) inspect
all buildings and equipment at the Facilities including, without limitation, the
visual inspection of the physical plants for asbestos-containing construction
materials, and (c) if, other than by the performance of any tests of the soil
surface or subsurface waters and air quality at, in, on, beneath or about the
Facilities, Buyer shall become aware of any Environmental Conditions at the
Facilities which is not disclosed in any of the Environmental Reports or any
Schedule hereto, Buyer may conduct such tests of the soil surface or subsurface
waters and air quality at, in, on, beneath or about the Facilities as may be
recommended by an environmental consultant reasonably acceptable to Seller
engaged by Buyer based on its professional judgment, in a manner consistent with
good engineering practice;
38
<PAGE>
provided that in each case, such tests and inspections shall be conducted only
(i) during regular business hours and upon reasonable notice and (ii) in a
manner that will not unduly disrupt or interfere with the operation of the
business of the Company and the Subsidiaries.
5.4 Consents and Best Efforts. Each of the parties hereto covenants and
-------------------------
agrees, upon the terms and conditions contained herein, to cooperate with the
other parties and to pursue diligently and in good faith and use all of its
commercially reasonable efforts to consummate the transactions contemplated
hereby, including, without limitation, (a) to obtain at the earliest practicable
date all consents, approvals, Permits, authorizations, exemptions and waivers
from third parties, including, without limitation, pursuant to the HSR Act, and
(b) to defend and cooperate with each other in any defending of legal
proceedings, whether judicial or administrative and whether brought derivatively
or on behalf of third parties, challenging this Agreement or the consummation of
the transactions contemplated hereby. Notwithstanding the foregoing, nothing
contained herein shall require Buyer to enter into any agreement or other
arrangement for the financing of the transactions contemplated hereby on terms
that are not satisfactory to Buyer, in its sole discretion. Buyer acknowledges
that, for purposes of the foregoing, the terms and conditions of the Commitment
Letter are satisfactory to Buyer, subject to negotiation and execution of
definitive documentation.
5.5 Financial Statements, etc. The Company has delivered to Buyer Interim
-------------------------
Financial Statements relating to the fiscal months of January and February.
After the date hereof, within 20 days after the end of each fiscal month, the
Company shall provide Buyer with the Interim Financial Statements relating to
such fiscal month. Such Interim Financial Statements shall (a) be in accordance
with the books and records of the Company, (b) be prepared in accordance with
GAAP consistently applied throughout the periods covered thereby (except for the
absence of footnotes) and (c) present fairly and accurately, in accordance with
GAAP except to the extent set forth on Schedule 3.12 (subject to normal year-end
adjustments and the presentation of general, selling and administrative expenses
therein), the Assets, liabilities (including, without limitation, all reserves)
and financial condition of the Company and the Subsidiaries as of the respective
dates thereof and the results of operations, stockholders' equity and cash flows
for the periods covered thereby.
5.6 Notification of Certain Matters. Seller and the Company shall give
-------------------------------
prompt notice to Buyer if any of Edward Nytko, LaVerne Schmidt, Jeffrey Danek,
Ronald Covelli and Michael Conroy becomes aware of, (a) the occurrence, or
failure to occur, of any event, which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement or in any
exhibit or schedule hereto to be untrue or inaccurate in any material respect,
(b) any Material Adverse Change and (c) any failure of Seller, the Company, any
Subsidiary or any of their respective Affiliates, stockholders or
representatives to comply with, perform or satisfy, in any material respect, any
covenant, condition or agreement to be complied with, performed by or satisfied
by it under this Agreement or any exhibit or schedule hereto; provided that,
subject to Section 9.2(e), such disclosure shall not be deemed to cure, or to
relieve Seller of any liability or obligation with respect to, any breach of or
failure to satisfy any representation, warranty, covenant, condition or
agreement hereunder.
39
<PAGE>
5.7 No Solicitation; Notification
-----------------------------
(a) No Solicitation. Each of Seller and the Company shall not, and
---------------
shall cause their representatives (including, without limitation, investment
bankers, attorneys and accountants) and the Subsidiaries not to, directly or
indirectly, enter into, solicit, initiate, participate in or continue any
discussions or negotiations with, or encourage or respond to any inquiries or
proposals by, or provide any information to, or otherwise cooperate in any other
way with, any corporation, partnership, person or other entity or group, other
than Buyer and its representatives, concerning any sale of all or any portion of
the Assets (other than as expressly permitted by this Agreement) or the business
of, or of any shares of capital stock of, the Company or any Subsidiary, or any
merger, consolidation, liquidation, dissolution or similar transaction involving
the Company or any Subsidiary (each such transaction being referred to herein as
a "Proposed Acquisition Transaction"). The Company hereby represents that it is
--------------------------------
not now engaged in discussions or negotiations with any party other than Buyer
with respect to any of the foregoing. The Company agrees not to, and agrees to
cause each Subsidiary not to, release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Company
or any Subsidiary is a party.
(b) Notification. Seller and the Company will (i) immediately notify
------------
Buyer (orally and in writing) if any written offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal or contact is
made or any information is requested with respect to any Proposed Acquisition
Transaction and (ii) keep Buyer informed of the status of any such offer.
5.8 Delivery of Funds for Contribution. At the Closing, Buyer shall
----------------------------------
contribute to the capital of the Company and the Subsidiaries, as applicable,
funds adequate to repay all amounts due under certain outstanding indebtedness
of the Company and the Subsidiaries, including, without limitation, promissory
notes, security agreements and other documentation related thereto
(collectively, the "Debt Instruments"), as set forth on Schedule 5.8, and Buyer,
----------------
Seller and the Company shall cause the Company and each Subsidiary, as
applicable, immediately upon receipt of such funds, to repay such Debt
Instruments.
5.9 Performance Bonds, etc. Buyer shall use its reasonable best efforts
-----------------------
to deliver to Seller replacement (or, if the beneficiary thereof will not permit
replacement, back-up) performance bonds, payment bonds, bid bonds, letters of
credit, guarantees and similar instruments, to replace (or, to the extent
required as described above, to collateralize) all performance bonds, payment
bonds, bid bonds, letters of credit, guarantees and similar instruments with
respect to the Company or any Subsidiary, or portions thereof, remaining
outstanding on the Closing Date, with respect to which Seller or any Affiliate
of Seller (other than the Company and the Subsidiaries) would (or will, to the
extent required as described above) have any liability after the Closing (each,
a "Seller Performance Bond"). In the event Buyer is unable to obtain a
replacement or back-up performance bond, bid bond, letter of credit, guarantee
or similar instrument with respect to any Seller Performance Bond, then Buyer
shall indemnify Seller and its Affiliates and hold them harmless against any and
all losses incurred or suffered by them arising out of or resulting from such
Seller Performance Bond after the Closing.
40
<PAGE>
5.10 Corporate Name. Subsequent to the Closing, Buyer will not use, and
--------------
will cause the Company and the Subsidiaries to cease use of as soon as
practicable (and in any event not later than six months after the Closing Date),
all Proprietary Rights incorporating the name "Ringier" in connection with the
sale of any products or services or otherwise in the conduct of the business of
the Company and the Subsidiaries. Buyer shall indemnify Seller and its
Affiliates and hold them harmless against any and all Losses incurred or
suffered by any of them arising out of or resulting from the use of the name
"Ringier" by Buyer in the conduct of the business of the Company and/or the
Subsidiaries after the Closing.
5.11 Tax Elections. No new elections with respect to material Taxes, or
-------------
changes in current elections with respect to material Taxes, except to the
extent required by law, affecting the Company or the Subsidiaries shall have
been made after the date of this Agreement without the prior written consent of
Buyer, which consent shall not be unreasonably withheld.
5.12 Payments under Nytko Employment Agreement. The parties hereto hereby
-----------------------------------------
acknowledge that pursuant to the terms of (a) the Employment Agreement, dated
January 8, 1990, among Edward C. Nytko ("Nytko"), Krueger Ringier, Inc., Ringier
-----
America, Inc. and Seller, as amended on April 22, 1996 (the "Nytko Agreement"),
---------------
Nytko is entitled to certain payments from the Company, and that Seller has
guaranteed such payments pursuant to a guarantee (the "Nytko Guarantee"). The
---------------
parties hereto agree that (i) the Company shall continue to make all payments
owed to Nytko pursuant to the terms of the Nytko Agreement and (ii) Seller shall
reimburse the Company for all amounts in excess of $5,400,000 paid by the
Company to Nytko under the Nytko Agreement. Buyer and the Company shall
indemnify and hold Seller harmless with respect to any and all amounts due and
payable to Nytko by Seller, pursuant to this Section 5.12 and the Nytko
Guarantee, up to $5,400,000, and Seller will indemnify and hold Buyer harmless
with respect to any and all amounts due and payable to Nytko over $5,400,000.
The amount of any indemnification payment pursuant to this Section 5.12 shall be
calculated giving effect to actual Tax savings, if any, to the indemnified party
resulting from such payments to Nytko. Each party seeking indemnification under
this Section 5.12 shall provide to the other party such information and
documentation as the indemnifying party shall reasonably request as necessary to
verify the amount of any indemnification payment requested to be made by such
indemnifying party.
5.13 Accountants' Opinions and Consents. From the date of this Agreement,
----------------------------------
Seller shall use its reasonable best efforts to cause Ernst & Young to provide
Buyer, at Buyer's expense, with all opinions and consents (including reports)
with respect to the financial statements of the Company and the Subsidiaries
necessary for the completion of Buyer's filings with the Securities Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), and the
---
Securities Exchange Act of 1934, as amended (the "Exchange Act"), until such
------------
time as such financial statements, opinions and consents are no longer required
to be included in such filings by the Act, the Exchange Act or the rules and
regulations promulgated thereunder.
41
<PAGE>
ARTICLE VI
CONDITIONS TO SELLER'S AND THE COMPANY'S OBLIGATIONS
----------------------------------------------------
The obligations of Seller and the Company to consummate the
transactions contemplated hereby on the Closing Date are subject, in the
discretion of Seller, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by Seller in
accordance with Section 10.5:
6.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date as if such representations and
warranties were made at and as of the Closing Date (except to the extent that
any such representations and warranties were made as of a specified date and as
to such representations and warranties the same shall continue on the Closing
Date to have been true in all material respects as of such specified date) and
Buyer shall have performed in all material respects all obligations arising
under the agreements and covenants required hereby to be performed by it prior
to or at the Closing Date.
6.2 No Proceedings or Litigation. No Actions by any governmental
----------------------------
authority or any other entity or person shall have been instituted or threatened
for the purpose of enjoining or preventing, or which question the validity or
legality of, the transactions contemplated hereby and which could reasonably be
expected to damage Seller materially if the transactions contemplated hereby are
consummated, except for any Action by any person other than a governmental
authority the basis of which represents a breach by Seller of any representation
and warranty contained herein.
6.3 Opinion of Counsel. Buyer shall have delivered to the Company and
------------------
Seller an opinion of Latham & Watkins, counsel to Buyer, dated as of the Closing
Date, substantially with respect to the matters set forth in Exhibit B hereto.
------- -
6.4 Closing Deliveries. Seller and the Company shall have received, at or
------------------
prior to Closing, the following:
(a) a certificate executed by the Secretary or an Assistant Secretary
of Buyer certifying as of the Closing Date (i) a true and correct copy of the
certificate of incorporation of Buyer, (ii) a true and correct copy of the
bylaws of Buyer, (iii) a true and correct copy of the resolutions of the board
of directors of Buyer authorizing the execution, delivery and performance of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby and (iv) incumbency matters;
(b) a certificate executed by the Chief Financial Officer and any
Vice President of Buyer certifying that, as of the Closing Date, the conditions
set forth in Sections 6.1 and 6.2 have been satisfied;
(c) a copy of the certificate of incorporation of Buyer and all
amendments thereto, certified as of a recent date by the Secretary of State of
the State of Delaware; and
42
<PAGE>
(d) a certificate of the Secretary of State of the State of Delaware
certifying as of a recent date the good standing of Buyer in such State.
6.5 Consents. All consents, approvals, waivers and Permits (other than
--------
consents or filings that may need to made with respect to transfer of
environmental or similar Permits) from governmental and regulatory authorities
(other than those required under the HSR Act) required to consummate the
transactions set forth herein or contemplated hereby hereto shall have been
obtained.
6.6 HSR Act. All filings to be made under the HSR Act with respect to
-------
this Agreement and the transactions contemplated hereby shall have been made and
the applicable waiting period, including all extensions thereof, under the HSR
Act shall have expired or been terminated.
6.7 Delivery of Funds for Contribution. At the Closing, (i) Buyer shall
----------------------------------
have contributed to the capital of the Company and the Subsidiaries, as
applicable, funds adequate to repay the Debt Instruments, (ii) the outstanding
principal amount of, and accrued unpaid interest on, the Debt Instruments shall
have been repaid and (iii) all guarantees granted by Seller in favor of the
lenders under the Debt Instruments shall have been released.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions contemplated
hereby are subject, in the discretion of to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which may be waived by
Buyer in accordance with Section 10.5:
7.1 Representations, Warranties and Covenants.
-----------------------------------------
(a) All representations and warranties of Seller and the Company
contained in this Agreement and in any Ancillary Agreement shall be true and
correct at and as of the Closing Date as if such representations and warranties
were made at and as of the Closing Date (except as set forth in clause (b)
below), except where the untruth or incorrectness of such representations and
warranties would not, singly or in the aggregate, have a Material Adverse
Effect. For purposes of this Section 7.1(a), the representations and warranties
of Seller and the Company contained in this Agreement shall be deemed to have
been made without any qualification as to knowledge or materiality and,
accordingly, all references in such representations and warranties to
"material," "Material Adverse Effect," "in all material respects," "Material
Adverse Change," "knowledge," "best knowledge" and similar terms and phrases
(including, without limitation, references to the dollar thresholds therein)
shall be deemed to be deleted therefrom; provided that the foregoing clause
shall not apply solely for the purpose of determining the truth and correctness
of the lists set forth in certain informational representations and warranties
that require disclosure of lists of items of a material nature or above a
specified threshold.
43
<PAGE>
(b) For purposes of the foregoing clause (a):
(i) to the extent that any such representations and warranties were
made as of a specified date, such representations and warranties shall
continue on the Closing Date to have been true in all material respects as
of such specified date; and
(ii) the lists required to be provided pursuant to the representations
and warranties set forth in Sections 3.7(c), 3.8, 3.9, 3.19 and 3.27 shall
be updated as of the Closing Date (or as of a date no later than five
business days prior to the Closing Date), and such representations and
warranties shall be modified by such updates.
(c) Seller and the Company shall have performed in all material
respects all obligations arising under the agreements and covenants required
hereby to be performed by them prior to or at the Closing Date.
7.2 Consents. All consents, approvals, waivers and Permits (other than
--------
consents or filings that may need to made with respect to transfer of
environmental or similar Permits) from governmental and regulatory authorities
(other than those required under the HSR Act) required to consummation the
transactions set forth herein or contemplated hereby shall have been obtained.
7.3 No Proceedings or Litigation. No Actions by any governmental
----------------------------
authority or any other entity or person shall have been instituted or threatened
for the purpose of enjoining or preventing, or which question the validity or
legality of, the transactions contemplated hereby and which could reasonably be
expected to damage Buyer materially if the transactions contemplated hereby are
consummated, except for any Action by any person other than a governmental
authority the basis of which represents a breach by Buyer of any representation
and warranty contained herein.
7.4 Opinions of Counsel. Seller shall have delivered to Buyer (i) an
-------------------
opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for Seller and the
Company, dated as of the Closing Date and (ii) an opinion of Nobel & Hug,
special Swiss counsel for Seller, each dated as of the Closing Date,
substantially with respect to the matters set forth in Exhibits C and D attached
-------- - -
hereto.
7.5 Closing Deliveries. Buyer shall have received, at or prior to the
------------------
Closing, the following:
(a) a certificate executed by the Secretary of Seller certifying as
of the Closing Date (i) a true and correct copy of the Grundungsurkunde or
Statuten of Seller, (ii) a true and correct copy of the bylaws of Seller, (iii)
a true and correct copy of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Seller and (iv)
incumbency matters;
(b) a certificate executed by the Secretary of the Company certifying
as of the
44
<PAGE>
Closing Date (i) a true and correct copy of the certificate or articles of
incorporation of the Company and each Subsidiary, (ii) a true and correct copy
of the bylaws of the Company and each Subsidiary, (iii) a true and correct copy
of the resolutions of the board of directors of the Company and the Subsidiaries
authorizing the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby and (iv)
incumbency matters;
(c) a certificate executed by the Chief Financial Officer and any
Vice President of Seller and by the President and the Chief Financial Officer of
the Company certifying that, as of the Closing Date, all of the representations
and warranties set forth in Article III are true and correct in all material
respects as of such date (except as set forth in Sections 7.1(b)(i) and (ii) and
except as set forth on a schedule to such certificate);
(d) a certificate executed by the Chief Financial Officer and any
Vice President of Seller and by the President and the Chief Financial Officer of
the Company certifying that, as of the Closing Date, the conditions set forth in
Sections 7.1, 7.2, 7.3 and 7.6 have been satisfied;
(e) a statement prepared in accordance with Treasury Regulation
Sec.Sec. 1.1445-2(c)(3) and 1.897-2(h) certifying that the Shares are not a U.S.
real property interest as defined therein;
(f) a copy of the certificate or articles of incorporation of the
Company and each Subsidiary and all amendments thereto, each certified as of a
recent date by the appropriate Secretary of State;
(g) a certificate of the appropriate Secretary of State certifying
the good standing of the Company and each Subsidiary in the relevant state of
its incorporation and all other states where it is qualified to do business;
(h) physical possession of all original minute books, corporate seals
and stock records of the Company and the Subsidiaries; and
(i) physical possession of all Books and Records (other than those
covered by clause (g) above), Permits, policies, Contracts, plans or other
instruments of the Company and the Subsidiaries that are in the possession of
Seller, all such materials to be deemed delivered to Buyer if they are present
at any of the Facilities.
7.6 Material Changes. Since the Balance Sheet Date, there shall not have
----------------
been any Material Adverse Change.
7.7 Financing. Buyer shall have obtained and consummated financing and
---------
received proceeds thereof on terms and conditions satisfactory to Buyer,
sufficient to enable it to consummate the transactions contemplated hereby and
to provide working capital for its operations after the Closing, all as
determined by Buyer in its sole discretion. Buyer acknowledges that, for
purposes of the foregoing, the terms and conditions of the Commitment
45
<PAGE>
Letter are satisfactory to Buyer, subject to negotiation and execution of
definitive documentation.
7.8 HSR Act. All filings to be made under the HSR Act with respect to
-------
this Agreement and the transactions contemplated hereby shall have been made and
the applicable waiting period, including all extensions thereof, under the HSR
Act shall have expired or been terminated.
7.9 Lender Releases. Upon receipt of the funds with respect to the Debt
---------------
Instruments as provided in Section 5.8, the lenders described therein shall (a)
cancel, terminate, extinguish and deliver to the Company and Buyer all Debt
Instruments, and shall release all Encumbrances in connection therewith (and
shall, if necessary or advisable, reconvey all Assets or property that are the
subject of such Encumbrances) and (b) deliver to the Company and Buyer an
acknowledgement of payment and release and other evidence satisfactory to Buyer
of such termination, cancellation and extinguishment of all Debt Instruments and
related Encumbrances.
7.10 Escrow Agreement. At the Closing, Seller and the Escrow Agent shall
----------------
enter into the Escrow Agreement with Buyer and Buyer shall make the deposit into
escrow thereunder required thereby.
7.11 Resignations of Directors of the Company and the Subsidiaries. Each
-------------------------------------------------------------
member of the board of directors of the Company and each Subsidiary shall have
tendered resignations from the applicable board of directors.
ARTICLE VIII
ACTIONS BY SELLER AND BUYER
---------------------------
AFTER THE CLOSING
-----------------
8.1 Books and Records. Seller and Buyer agree that each will cooperate
-----------------
with and make available to the other party, during normal business hours, all
Books and Records and Personnel (without any disruption of employment) retained
and remaining in existence after the Closing Date that are reasonably requested
in connection with any Tax inquiry, audit, investigation or dispute, any
litigation or investigation or any other matter requiring any such Books and
Records or Personnel for any reasonable business purpose. The party requesting
access to any such Books and Records or Personnel shall bear all of the
out-of-pocket costs and expenses (including without limitation, attorneys' fees,
but excluding reimbursement for salaries and employee benefits and other normal
overhead expenses) reasonably incurred in connection with providing access to
such Books and Records and Personnel.
8.2 Survival of Representations, etc. The representations and warranties
--------------------------------
of Seller contained herein and in any Ancillary Agreement shall survive the
Closing until the eighteen month anniversary of the Closing Date, without regard
to any investigation made by Buyer, unless Buyer notifies Seller in writing
prior to such date of any specific claim or claims for alleged breach of any
such representation or warranty, in which case such representation or warranty
shall survive with respect to such claim until the final resolution by
settlement,
46
<PAGE>
arbitration, litigation or otherwise of any such claim, so long as there is a
factual basis for the claim being made and such claim is made in good faith;
provided that (i) the representations and warranties contained in Sections 3.1
(Ownership of the Shares), 3.2 (Organization and Authorization of Seller), 3.3
(Organization and Capitalization of the Company), 3.4 (Authorization) and 3.5
(Subsidiaries) shall survive indefinitely, (ii) the representations and
warranties contained in Section 3.22 (Tax Matters) shall survive through the
applicable statutes of limitations, including all extensions thereof, and (iii)
the representations and warranties contained in 3.26 (Compliance with
Environmental Laws) shall survive until the third anniversary of the Closing
Date. All representations and warranties of Buyer shall survive until the
eighteen month anniversary of the Closing Date.
8.3 Further Assurances
------------------
Following the Closing, each of Seller and Buyer shall, at the request
and expense of the other, execute such documents, instruments or conveyances and
take such actions as may be requested by the other party or its counsel and
otherwise cooperate in a reasonable manner with the other party, its Affiliates
and their respective representatives in connection with any action that may be
necessary or advisable to carry out the provisions hereof or transactions
contemplated hereby.
8.4 Litigation Support. In the event and for so long as any party hereto
------------------
is actively contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand in connection with (a) any
transaction contemplated under this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction involving the Company or any
Subsidiary, each of the other parties will cooperate with such party and its
counsel in the contest or defense, make available its personnel and provide such
testimony and access to its books and records during regular business hours as
shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification hereunder). The
covenant contained in this Section 8.4 shall not be lieu of or otherwise limit
the indemnification obligations of the parties pursuant to Article IX.
ARTICLE IX
INDEMNIFICATION
---------------
9.1 General Indemnification.
-----------------------
(a) By Seller
---------
(i) Indemnification. Subject to the limitations set forth in
---------------
Section 9.2, if the Closing shall occur, Seller shall indemnify, save and
hold Buyer, the Company, the Subsidiaries and each of their respective
Affiliates, directors, stockholders, officers, employees, successors,
transferees and assignees, and their respective representatives
47
<PAGE>
(each, a "Buyer Party"), harmless from and against any and all costs,
-----------
losses, charges, liabilities, obligations, actual damages (or, in the case
of damages incurred by a third party claimant, punitive or consequential
damages), lawsuits, actions, judgments, deficiencies, demands, fees,
claims, settlements and expenses (whether arising out of third-party claims
or otherwise), including, without limitation, interest, penalties,
reasonable attorneys' fees and expenses, all amounts paid in the
investigation, defense or settlement of any of the foregoing and costs of
enforcing this indemnity (collectively, "Losses") incurred in connection
------
with, arising out of, resulting from or relating to:
(A) any untruth or inaccuracy of any representation or
warranty of or by the Company or Seller in or pursuant to this
Agreement or any Ancillary Agreement (other than the representations
and warranties contained in Sections 3.1, 3.3(b) and 3.5(a));
(B) the nonfulfillment, nonperformance or other breach of
any covenant or agreement made by the Company or the Seller in or
pursuant to this Agreement or any Ancillary Agreement;
(C) any untruth or inaccuracy of any representation of or
by the Company or Seller in or pursuant to Sections 3.1, 3.3(b) and
3.5(a);
(D) Environmental Claims relating to:
(1) (y) remediation and investigation currently being
performed in connection with the six removed and one inactive
underground storage tanks formerly in use at the Brookfield
Facility and (z) the removal of one 500-gallon diesel tank at the
Augusta Facility;
(2) the disposal, or arrangement for the disposal,
from any of the Facilities, at any offsite facility or location
of Hazardous Substances by the Company or any Subsidiary at any
time prior to the Closing Date, except to the extent, based on
any applicable statutory and common law principles of
contribution and equitable allocation, Buyer disposed of, or
arranged for the disposal of, Hazardous Substances at any such
offsite facility or location after the Closing Date; and
(3) the matter set forth on Schedule 9.1(a)(i)(D)(3)
as specifically pending as of the Closing Date; and
(E) Environmental Claims relating to:
(1) the Former Properties; and
(2) the disposal, or arrangement for the disposal, from
any of the Former Properties, at any offsite facility or location
of Hazardous Substances (including, without limitation, the Lenz
Oil Superfund Site in
48
<PAGE>
Lemont, Illinois) by the Company or any Subsidiary at any time
prior to the Closing Date (each, a "Buyer Claim").
-----------
Except with respect to any claims by a Buyer Party for indemnification
pursuant to Section 9.1(a)(i)(A) with respect to breaches of the
representations and warranties contained in Section 3.26 (Compliance with
Environmental Laws) or Section 9.1(a)(i)(D) or (E), which claims shall be
governed exclusively by the procedures set forth in Section 9.1(c) and the
limitations set forth in Section 9.2, the indemnity provided for in this
Section 9.1(a) is not limited to matters asserted by third parties against
any Buyer Party, but includes Buyer Claims incurred or sustained by any
Buyer Party in the absence of third party claims.
(ii) Claim Procedure. Promptly after receipt by any party hereto
---------------
of notice of the commencement of any Action, or the assertion by any third
party of any Buyer Claim, with respect to which any Buyer Party is entitled
to indemnification under this Section 9.1(a), the party receiving such
notice shall use its best efforts to notify (the "Buyer Claim Notice") each
------------------
other party hereto in writing of the commencement of such Action or the
assertion of such Buyer Claim; provided that the failure to give such
notice promptly shall not relieve Seller of any liability that it may have
to the indemnified Buyer Party except to the extent that Seller is
prejudiced thereby. Seller shall have the option, and shall notify each
indemnified Buyer Party in writing within 30 business days after the date
of the Buyer Claim Notice (unless, in the reasonable judgment of the
indemnified Buyer Party or Parties, the nature of such Action or Buyer
Claim requires a response within a shorter period of time, in which case
the Buyer Claim Notice shall state the time for response and the basis for
the shorter response period) of its election either (A) to participate (at
its own expense) in the defense of such Action or Buyer Claim (in which
case the defense of such Action or Buyer Claim shall be controlled by the
indemnified Buyer Party or Parties) or (B) to take charge of and control
the defense of such Action or Buyer Claim (at its own expense). If Seller
fails to notify each indemnified Buyer Party of its election within the
applicable response period (as determined in accordance with the
immediately preceding sentence), then Seller shall be deemed to have
elected not to assume the defense of such Action or Buyer Claim. Seller's
failure to respond shall not relieve Seller of its indemnification
obligations under this Section 9.1(a). If Seller elects to assume the
defense of any Action or Buyer Claim in accordance with this Section
9.1(a)(ii), then the indemnified Buyer Party or Parties shall be entitled
to participate (at their own expense) in such defense. If Seller elects
not to assume the defense of any Action or Buyer Claim, Seller may
nonetheless participate (at its own expense) in the defense thereof.
(iii) Settlement of Buyer Claims. If Seller elects (or is
--------------------------
deemed to have elected) not to assume the defense of an Action or Buyer
Claim in accordance with Section 9.1(a)(ii), then the indemnified Buyer
Party or Parties may settle such Action or Buyer Claim without the written
consent of Seller and Seller agrees to indemnify and hold each indemnified
Buyer Party harmless from and against any such Action or Buyer Claim by
reason of such settlement; provided that at least ten days prior to any
such settlement, the indemnified Buyer Party or Parties deliver to Seller
written notice of its
49
<PAGE>
or their intention to settle such Action or Buyer Claim (which notice shall
set forth in reasonable detail the terms of such proposed settlement);
provided further that Buyer shall not enter into such proposed settlement
if Seller reasonably opposes such settlement and begins to directly pay all
of the expenses (including, without limitation, attorneys' fees) in
connection with such Action or assertion, as and when incurred. Except as
set forth in the immediately preceding sentence, Seller shall not be liable
for any settlement of any Action Buyer Claim effected without its written
consent, but if settled with its written consent (which consent shall not
be unreasonably withheld or delayed), Seller agrees to indemnify and hold
each indemnified Buyer Party harmless from and against any such Action or
Buyer Claim by reason of such settlement.
(iv) Each indemnified Buyer Party shall provide to Seller such
information and documentation as Seller shall reasonably request as
necessary to verify any Losses giving rise to a claim for indemnification
by such indemnified Buyer Party hereunder.
(v) Notwithstanding anything set forth in Section 9.1(a)(i)-
(iv), any claims by a Buyer Party for indemnification pursuant to Section
9.1(a)(i)(A) with respect to breaches of the representations and warranties
contained in Section 3.26 (Compliance with Environmental Laws) or Section
9.1(a)(i)(D) or (E) shall be governed exclusively by the procedures set
forth in Section 9.1(c) and the limitations set forth in Section 9.2.
(b) By Buyer
--------
(i) Subject to the limitations set forth in Section 9.2, if the
Closing shall occur, Buyer shall indemnify, save and hold Seller and its
subsidiaries, Affiliates, directors, stockholders, officers, employees,
successors, transferees, assignees and representatives (each, a "Seller
------
Party"), harmless from and against any and all Losses incurred in
-----
connection with, arising out of, resulting from or relating to (1) any
untruth or inaccuracy of any representation or warranty of Buyer in or
pursuant to this Agreement or any Ancillary Agreement, (2) the
nonfulfillment, nonperformance or other breach of any covenant or agreement
made by Buyer in or pursuant to this Agreement or any Ancillary Agreement
or (3) any Environmental Condition arising out of, resulting from or
relating to the operation or ownership of the business (including, without
limitation, the disposal, or arrangement for disposal, of Hazardous
Substances) of the Company and/or the Subsidiaries on or after the Closing
Date or prior to the Closing Date except to the extent that such Losses are
indemnified by Seller pursuant to Section 9.1(a)(i)(A) with respect to
breaches of the representations and warranties contained in Section 3.26
(Compliance with Environmental Laws) or Section 9.1(a)(i)(D) or (E), or
elsewhere in this Agreement (each, a "Seller Claim"). The indemnity
------------
provided for in this Section 9.1(b) is not limited to matters asserted by
third parties against any Seller Party, but includes Seller Claims incurred
or sustained by any Seller Party in the absence of third-party claims.
(ii) Claim Procedure. Promptly after receipt by any party hereto
---------------
of notice of the commencement of any Action, or the assertion by any third
party of any
50
<PAGE>
Seller Claim, with respect to which any Seller Party is entitled to
indemnification under this Section 9.1(b), the party receiving such notice
shall use its best efforts to notify (the "Seller Claim Notice") each other
-------------------
party hereto in writing of the commencement of such Action or the assertion
of such Seller Claim; provided that the failure to give such notice
promptly shall not relieve Buyer of any liability that it may have to the
indemnified Seller Party except to the extent that Buyer is prejudiced
thereby. Buyer shall have the option, and shall notify each indemnified
Seller Party in writing within 30 days after the date of the Seller Claim
Notice (unless, in the reasonable judgment of the indemnified Seller Party
or Parties, the nature of such Action or Seller Claim requires a response
within a shorter period of time, in which case the Seller Claim Notice
shall state the time for response and the basis for the shorter response
period) of its election either (A) to participate (at its own expense) in
the defense of such Action or Seller Claim (in which case the defense of
such Action or Seller Claim shall be controlled by the indemnified Seller
Party or Parties) or (B) to take charge of and control the defense of such
Action or Seller Claim (at its own expense). If Buyer fails to notify each
indemnified Seller Party of its election within the applicable response
period (as determined in accordance with the immediately preceding
sentence), then Buyer shall be deemed to have elected not to assume the
defense of such Action or Seller Claim. Buyer's failure to respond shall
not relieve Buyer of its indemnification obligations under this Section
9.1(b). If Buyer elects to assume the defense of any Action or Seller
Claim in accordance with this Section 9.1(a)(ii), then the indemnified
Seller Party or Parties shall be entitled to participate (at their own
expense) in such defense. If Buyer elects not to assume the defense of any
Action or Seller Claim, Buyer may nonetheless participate (at its own
expense) in the defense thereof.
(iii) Settlement of Seller Claims. If Buyer elects (or is
---------------------------
deemed to have elected) not to assume to defense of an Action or Seller
Claim in accordance with Section 9.1(b)(ii), then the indemnified Seller
Party or Parties may settle such Action or Seller Claim without the written
consent of Buyer and Buyer agrees to indemnify and hold each indemnified
Seller Party harmless from and against any such Action or Seller Claim by
reason of such settlement; provided that at least ten days prior to any
such settlement, the indemnified Seller Party or Parties deliver to Buyer
written notice of its or their intention to settle such Action or Seller
Claim (which notice shall set forth in reasonable detail the terms of such
proposed settlement); provided further that in the case of any Action or
any third-party assertion of a Seller Claim, Seller shall not enter into
such proposed settlement if Buyer opposes such settlement and begins to
directly pay all of the expenses (including, without limitation, attorneys'
fees) in connection with such Action, as incurred. Except as set forth in
the immediately preceding sentence, Buyer shall not be liable for any
settlement of any Action or Seller Claim effected without its written
consent, but if settled with its written consent (which consent shall not
be unreasonably withheld or delayed), Buyer agrees to indemnify and hold
each indemnified Seller Party harmless from and against any such Action or
Seller Claim by reason of such settlement.
(iv) Each indemnified Seller Party shall provide to Buyer such
information and documentation as Buyer shall reasonably request as
necessary to verify any Losses giving rise to a claim for indemnification
by such indemnified Seller Party
51
<PAGE>
hereunder.
(v) Notwithstanding anything set forth in Section 9.1(b)(i)-
(iv), any claims by a Seller Party for indemnification pursuant to Section
9.1(b)(i) relating to any Environmental Condition shall be governed
exclusively by the procedures set forth in Section 9.1(c) and the
limitations set forth in Section 9.2.
(c) Environmental Claims Procedures.
-------------------------------
(i) Subject to the terms and conditions set forth in this
Section 9.1(c), in the event that a written notice asserting a claim for
indemnification with respect to any Environmental Condition describing the
nature of the claim in reasonable detail ("Environmental Notice") shall
have been given by the party seeking to be indemnified to the party from
whom indemnification is sought prior to the expiration of the applicable
survival period of the right to indemnification for such claim, then such
right to indemnification shall survive, to the extent of such claim only,
until such claim is resolved, whether or not the Losses resulting from such
breach have been finally determined at the time the notice is given, but
only if (y) in the case of a claim made by reason of a written third-party
claim relating to (A) the disposal, or arrangement for the disposal, of
Hazardous Substances at any offsite facility or location or (B)
Environmental Conditions at, on, under or about the Former Properties, the
Environmental Notice is accompanied by a copy of the written notice of the
third-party claimant and (z) in the case of any claim made other than by
reason of a third-party claim relating to Environmental Conditions at, on,
under or about the Facilities, some expenses shall have been incurred in
good faith at or prior to the date of such notice in connection with a
violation of Environmental Laws and such Environmental Notice is
accompanied by available test results, if any, setting forth the basis for
the claim as to which the Environmental Notice relates.
(ii) If any Buyer Party seeking indemnification under Section
9.1(a)(i)(A) with respect to breaches of the representations and warranties
contained in Section 3.26 (Compliance with Environmental Laws) or under
Section 9.1(a)(i)(D) or (E), or any Seller Party seeking indemnification
under Section 9.1(b)(i) (in each case, an "Indemnified Party") receives
written notice of any claim made by a third party (a "Third-Party Claim")
or has knowledge of any other claim for indemnification other than a Third-
Party Claim, which is to be the basis for a claim for indemnification
hereunder, the Indemnified Party shall promptly give the other party (the
"Indemnifying Party") an Environmental Notice; provided that failure of the
Indemnified Party to give the Indemnifying Party prompt notice as provided
herein shall not relieve the Indemnifying Party of any of its obligations
hereunder unless and only to the extent that the Indemnifying Party shall
have been prejudiced thereby.
(iii) Upon receiving an Environmental Notice from the
Indemnified Party pursuant to Section 9.1(c)(ii), the Indemnifying Party
may, but shall not be required to, diligently and to conclusion plan,
implement and control any action (including, without limitation, the
defense of all Third-Party Claims) taken with respect
52
<PAGE>
to any Environmental Condition to which the Environmental Notice relates
(an "Indemnified Environmental Matter"), including the compromise or
settlement of any Third-Party Claim, and the Indemnifying Party shall pay
all Losses; provided that in such case, the Indemnified Party shall have no
obligation to pay any additional Losses of the Indemnified Party thereafter
incurred defending or otherwise responding to such Indemnified
Environmental Matter; provided further that should the Indemnifying Party
fail to complete or diligently pursue completion of such actions, the
Indemnified Party shall have the right (but not the obligation) to complete
such actions and to be indemnified therefor in accordance with the
provisions of this Agreement. No compromise or settlement in respect of
any Indemnified Environmental Matter may be effected by the Indemnifying
Party without the Indemnifying Party's prior written consent (which consent
shall not be unreasonably withheld), unless the sole relief is monetary
damages that are paid in full by the Indemnifying Party. The Indemnifying
Party shall give notice to the Indemnified Party as to its intention to
assume the planning, implementation or control of any Indemnified
Environmental Matter within 30 days after the date of receipt of the
Indemnified Party's notice in respect of such Indemnified Environmental
Matter. If the Indemnifying Party does not, within 30 days after the
Indemnified Party's notice is given, give notice to the Indemnified Party
of its assumption of the planning, implementation or control of the
Indemnified Environmental Matter, the Indemnifying Party shall be deemed to
have waived its rights to plan, implement or control thereof. If the
Indemnified Party assumes the planning, implementation or control of any
Indemnified Environmental Matter because of the failure of the Indemnifying
Party to do so in accordance with this Section 9.1(c)(iii), no compromise
or settlement in respect of any Indemnified Environmental Matter may be
effected by the Indemnified Party without the Indemnifying Party's prior
written consent (which consent shall not be unreasonably withheld).
(iv) Notwithstanding anything to the contrary contained in
Section 9.1(c)(iii), any actions taken by the Indemnifying Party or
Indemnified Party with respect to the planning, implementation or control
of any Indemnified Environmental Matter shall be conducted in a
commercially reasonable manner. In the event of a disagreement between the
Indemnifying Party and the Indemnified Party concerning whether any
investigative, remedial or compliance-related action taken with respect to
any Indemnified Environmental Matter is commercially reasonable, the
parties shall each in good faith attempt to resolve such disagreement on a
reasonable basis with the assistance of their respective environmental
consultants; any remaining disagreements shall promptly be referred to an
independent consultant having expertise in the matter at issue, mutually
acceptable to the parties (or, if the parties cannot so agree, the American
Arbitration Association shall select such a consultant who shall be
independent from each of the parties and whose fees and expenses shall be
paid equally by the parties), who shall evaluate the facts and
circumstances at issue and shall recommend a course of action which the
independent consultant believes in its good faith judgment should be taken
(but shall not itself perform such action). Such recommendation shall be
final and binding upon the parties. The parties agree to act as promptly
as practicable in implementing the foregoing procedures, and further agree
that, in the event of exigent circumstances that require any actions by the
Indemnifying Party or the Indemnified Party, as the case may
53
<PAGE>
be, before the foregoing procedures can be implemented, each of the
Indemnifying Party and the Indemnified Party, as the case may be, may
undertake such actions at its own expense and shall be entitled to
indemnification hereunder to the extent that its actions are subsequently
ratified by such procedure.
(v) For purposes of this Section 9.1(c), "commercially
reasonable manner" shall be determined from the perspective of a reasonable
business person acting (without regard to the availability of
indemnification hereunder) to achieve compliance with Environmental Law or
avoid or mitigate a loss or liability or potential loss or liability with
respect to Environmental Law.
(vi) Notwithstanding anything to the contrary contained in this
Section 9.1(c), Buyer may not seek, and is not entitled to, indemnification
from Seller pursuant to this Section 9.1 for any Losses resulting from the
disclosure to any governmental authority of any Environmental Condition
unless Buyer believes, in its good faith business judgment (exercised
without regard to the availability of indemnification hereunder), and after
consultation with counsel, that such disclosure is required under any
Environmental Law. Buyer agrees to consult with Seller prior to any such
disclosure, except in the event that such advance consultation is
prohibited or rendered impracticable by exigent circumstances, in which
case Buyer shall promptly thereafter notify Seller of such disclosure.
9.2 Limitations on Indemnity
------------------------
(a) General. The respective indemnification obligations of Seller
-------
and Buyer with respect to any breach of any representation, warranty, covenant
or agreement pursuant to Section 9.1 shall be limited to claims for Losses made
prior to the last date of survival thereof referred to in Section 8.2, subject
to the terms set forth in such Section.
(b) Maximum Liability
-----------------
(i) Seller Liability. The maximum aggregate amount of Losses
----------------
for which Seller shall be liable pursuant to Sections 9.1(a)(i)(A), (B) and
(D) hereof to all Buyer Parties hereunder shall be $43,000,000. The
indemnification obligations of Seller with respect to Buyer Claims pursuant
to Sections 9.1(a)(i)(C) and (E) shall not be limited as to any dollar
amount.
(ii) Buyer Liability. The maximum aggregate amount of Losses for
---------------
which Buyer shall be liable pursuant to Section 9.1(b) to all Seller
Parties hereunder shall be $43,000,000.
(c) Deductibles
-----------
(i) Seller Deductibles.
------------------
(A) No Buyer Party shall seek, or be entitled to,
indemnification
54
<PAGE>
from Seller pursuant to Section 9.1(a)(i)(D) until the aggregate
amount of Losses incurred by all Buyer Parties in connection with
matters addressed in such Section exceeds $200,000. Once such
aggregate amount of Losses exceeds $200,000, such portion of such
aggregate Losses, if any, then outstanding that exceeds $200,000,
together with all Losses resulting from future Buyer Claims pursuant
to Section 9.1(a)(i)(D), shall be considered in the calculation of the
Seller Deductible as set forth in Section 9.2(c)(i)(B) below.
(B) No Buyer Party shall seek, or be entitled to,
indemnification from Seller pursuant to Section 9.1(a)(i)(A), (B) or
(D) (subject to Section 9.2(c)(i)(A) above) until the aggregate amount
of Losses incurred by all Buyer Parties under such Sections (but for
the operation of this Section 9.2(c)(i)) exceeds $4,300,000 (the
"Seller Deductible"). Once such aggregate amount of Losses exceeds
-----------------
the Seller Deductible, such portion of such aggregate Losses, if any,
then outstanding that exceeds the Seller Deductible, together with all
future Losses resulting from Buyer Claims, shall be fully
reimbursable, subject to the limitations set forth in Section
9.2(b)(i). Claims made pursuant to Section 9.1(a)(i)(C) or (E) are
not subject to the Seller Deductible.
(ii) Buyer Deductible. No Seller Party shall seek, or be
----------------
entitled to, indemnification from Buyer pursuant to Section 9.1(b) until
the aggregate amount of Losses incurred by all Seller Parties under such
Section (but for the operation of this Section 9.2(c)(ii)) exceeds
$4,300,000 (the "Buyer Deductible"). Once such aggregate amount of Losses
----------------
exceed the Buyer Deductible, such portion of such aggregate Losses, if any,
then outstanding that exceeds the Buyer Deductible, together with all
future Losses resulting from Seller Claims, shall be fully reimbursable,
subject to Section 9.2(b)(ii).
(d) Insurance Proceeds. To the extent that any Buyer Claim or Seller
------------------
Claim is covered by insurance held by such indemnified Buyer Party or Seller
Party, such indemnified party shall be entitled to indemnification pursuant to
this Agreement only with respect to the amount of the Losses that are in excess
of the cash proceeds received from such insurance. If such indemnified party
receives such cash insurance proceeds prior to the time such claim is paid, then
the amount payable by the indemnifying party pursuant to such claim shall be
reduced by the amount of such proceeds. If such indemnified party receives such
cash insurance proceeds after such claim has been paid, then upon the receipt by
the indemnified party of any cash proceeds pursuant to such insurance in excess
of the amount of Losses incurred by such indemnified party with respect to such
claim, such indemnified party must repay any portion of such excess amount which
was previously paid by the indemnifying party to such indemnified party in
satisfaction of such claim.
(e) Pre-Closing Disclosure. An indemnified party shall not be
----------------------
entitled to indemnification pursuant to Section 9.1(a) or (b) for any untruth or
inaccuracy of any representation or warranty made to it, or for the
nonfulfillment, nonperformance or other breach of any covenant or agreement for
its benefit, if
55
<PAGE>
(i) such untruth, inaccuracy, nonfulfillment, nonperformance or other
breach was made known to such indemnified party by appearing either on the
Disclosure Schedule or in any certificate delivered at Closing pursuant to
this Agreement (provided that, with respect to any such item disclosed by
Seller or the Company pursuant to Section 7.5(c), if (A) the failure to
disclose such item on the Disclosure Schedule as of the date hereof
constituted a breach of any representation or warranty set forth in Article
III when such representation or warranty was made on the date hereof and
(B) all such items, in the aggregate, do not constitute a Material Adverse
Effect, then Buyer shall be entitled to indemnification with respect to
such item pursuant to Section 9.1(a)); and
(ii) such indemnified party consummates the transactions contemplated
hereby.
Notwithstanding the foregoing, nothing contained in this Section
9.2(e) shall prevent Buyer from seeking indemnification against Seller for
any breach by Seller of any covenant contained herein (including, without
limitation, the provisions of Section 5.1).
(f) Calculation of Losses. The amount of any Losses under Section
---------------------
9.1(a) or (b) shall be calculated giving effect to (i) actual Tax savings, if
any, to the indemnified party resulting from the payments (or adjustments)
giving rise to such indemnity payments and (ii) the actual additional Taxes, if
any, payable by such indemnified party as a result of the receipt of such
payments, in each case subject to the limitations on indemnification contained
in Section 9.2(b). In either case, the amount shall be reasonably determined by
the indemnified party taking into account actual Tax savings and actual
additional Taxes realized or incurred or to be realized or incurred during the
taxable period in which such indemnity payment accrues and prior periods;
provided that such amount shall be further adjusted if actual Tax savings and
actual additional Taxes are incurred in any subsequent periods. All such
calculations shall be subject to the reasonable review of the indemnifying
party. Upon request by the indemnifying party, the indemnified party shall
provide a certificate prepared by an independent accounting firm regarding
actual Tax savings and/or actual additional Taxes incurred or realized in any
given year. If an indemnity payment is made prior to the filing of relevant Tax
returns, the amount shall be determined on an estimated basis. Proper
adjustments shall be made if the actual Tax savings or actual additional Taxes
differ from the estimated amount. Any indemnity payment made pursuant to
Section 9.1(a) or (b) shall, to the extent permitted by law, be treated by
Buyer, Seller and the Company as an adjustment to the Purchase Price.
(g) Subrogation. Upon making payment for an indemnification claim
-----------
pursuant to this Article IX, so long as all indemnified parties shall have been
paid in full for all Losses due under Section 9.1 and 9.2 with respect to such
indemnification claim, the indemnifying party shall be subrogated, to the extent
of such payment, to any rights which the indemnified party may have against any
other parties with respect to the subject matter underlying such indemnification
claim.
(h) Post-Closing Liability. Seller acknowledges and agrees that,
----------------------
after the Closing, neither the Company nor any Subsidiary shall have any
obligation or liability to indemnify Seller on account of any Buyer Claim, and
Seller shall not have any right of
56
<PAGE>
contribution against the Company or any Subsidiary with respect to any Buyer
Claim.
9.3 Tax Matters
-----------
(a) Buyer shall cause the Company to prepare and file all Returns
that are not filed as of the Closing Date. Any such Returns (i) in respect of
income Taxes for periods which begin before the Balance Sheet Date and (ii) in
respect of Taxes other than income Taxes for periods which begin before the
Closing Date, shall in all cases be prepared in a manner consistent with the
Company's or relevant Subsidiaries' prior practice (including elections), except
as otherwise required by law. Subject to the foregoing, Buyer shall cause the
Company to reasonably determine the contents of such Returns. At the request of
Seller, Buyer shall provide Seller with copies of such Returns at least ten days
prior to the filing thereof for Seller's reasonable review and reasonable
consent.
(b) Seller and Buyer agree to give prompt notice to each other of any
proposed adjustment to Taxes for periods or portions thereof ending on or prior
to the Closing Date.
(c) Seller and Buyer agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance (including access to books and records) relating to the Company and
the Subsidiaries as is reasonably necessary for the preparation of any Return,
claim for refund or audit, and the prosecution or defense of any claim, suit or
proceeding relating to any proposed adjustment. Buyer shall execute or cause to
be executed and deliver or cause to be delivered any powers of attorney and
other documents reasonably necessary to enable Seller (or its advisors) to take
all actions in connection with Audits which Seller has the right to control (or
jointly control) pursuant to Section 9.3(d) hereof.
(d) Seller shall have the right (directly or through its advisors) to
control the conduct of any audit or other proceeding (an "Audit") involving
Taxes for which Seller may be obligated to indemnify Buyer or the Company
provided that it notifies the Company or Buyer in writing of its intent to
assume such control (it being understood that it may assume control after the
commencement of any Audit). In the event that an Audit is under the control of
Seller, Seller shall keep Buyer advised of the progress of the Audit and shall
allow Buyer to participate in (but not control) the Audit at its own expense.
Notwithstanding the foregoing (x) Seller shall not settle any Audit which
settlement has an adverse affect on the Company's liability for Tax with respect
to periods ending after the Closing Date (or in the case of income Taxes,
periods ending after the Balance Sheet date) without Buyer's consent, which
consent shall not be unreasonably withheld and (y) in the event that it is
reasonably likely that such Audit will involve Taxes for which Seller is
obligated to indemnify Buyer or the Company in excess of the maximum liability
of Seller under Section 9.2(b) hereof, Buyer and Seller shall jointly control
such Audit (it being understood that Buyer may assume such joint control after
the commencement of the Audit in the event that such reasonable likelihood is
established only after commencement of the Audit) and neither party shall settle
such Audit without the consent of the other, which consent shall not be
unreasonably withheld. In the event that Buyer controls any Audit for which
Seller may be obligated to indemnify Buyer or the Company, (a) Buyer shall keep
Seller fully advised of the progress of the Audit and shall allow Seller to
participate in the Audit and (b) Buyer and the Company shall not settle such
Audit without Seller's consent, which
57
<PAGE>
consent shall not be unreasonably withheld. Notwithstanding anything to the
contrary, if any Audit involves a period that begins before and ends after the
Closing Date (or in the case of income Taxes, the Balance Sheet Date), Buyer and
Seller shall jointly control such Audit and neither party shall settle such
Audit without the consent of the other party, which consent shall not be
unreasonably withheld.
(e) Seller and Buyer agree that, as of the Balance Sheet Date, the
unallocated Tax reserve is as set forth on Schedule 9.3(e).
ARTICLE X
MISCELLANEOUS
-------------
10.1 Termination
-----------
(a) Termination. This Agreement may be terminated as follows:
-----------
(i) By mutual written consent of Buyer and Seller at any time;
(ii) By Buyer or Seller if the Closing shall not have occurred on
or before July 31, 1996;
(iii) By Buyer, if any event occurs which renders impossible
in compliance with one or more of the conditions set forth Article VII
hereof, which condition or conditions are not waived by Buyer;
(iv) By Seller, if any event occurs which renders impossible
compliance with one or more of the conditions set forth in Article VI
hereof, which condition or conditions are not waived by Seller; and
(v) By Seller on or after May 8, 1996, if by 5:00 p.m. New York
City time on such date Buyer has not entered into the Commitment Letter and
provided Seller with a copy thereof.
(b) Procedure Upon Termination. In the event of termination of this
--------------------------
Agreement pursuant to Section 10.1:
(i) Each party shall redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the party
furnishing the same;
(ii) All information received by any party with respect to the
business of any other party or its Affiliates shall be subject to the terms of
the Confidentiality Agreement; and
58
<PAGE>
(iii) All obligations of the parties hereto under this Agreement
shall terminate, except for the obligations under this Section 10.1 and Sections
10.4, 10.9 and 10.11, and there shall be no liability of any party hereto to any
other party and each party hereto shall bear its own fees, costs and expenses
incurred by it or on its behalf in connection with the negotiation, preparation,
execution and performance of this Agreement, provided that termination of this
Agreement by Buyer or Seller pursuant to clause (iii) or (iv) of Section
10.1(a), respectively, by reason of intentional or knowing breaches of this
Agreement shall not relieve the defaulting or breaching party (whether or not
it is the terminating party) of liability for damages actually incurred by the
other party.
10.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of all other parties to this Agreement. Without limiting the generality
of the foregoing, the Company and Seller agree to the assignment by Buyer of its
rights pursuant to this Agreement (a) to any Affiliate or subsidiary of Buyer,
any partnership controlled by Buyer or any successor in interest to Buyer or (b)
to any lender as collateral security, so long as (i) in the case of an
assignment described in clause (a) (A) the representations and warranties of
Buyer made herein (other than in Section 4.9) are equally true of such assignee
and (B) such assignee shall execute a counterpart of this Agreement agreeing to
be bound by the provisions hereof as "Buyer" and agreeing to be jointly and
severally liable with the assignor and any other assignee for all of the
obligations of the assignor hereunder and (ii) in the case of an assignment
described in either clause (a) or (b), if such assignment has any adverse
consequences to Seller (including, without limitation, any adverse tax
consequences or any adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby), Buyer shall indemnify and hold Seller
harmless against such adverse consequences, but no such assignment of this
Agreement or any of the rights or obligations hereunder shall relieve Buyer of
its obligations under this Agreement. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have any right,
benefit or obligation hereunder.
10.3 Notices; Transfer of Funds. All notices, requests, demands and other
--------------------------
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received, if
personally delivered; when transmitted, if transmitted by telecopy, upon receipt
of telephonic or electronic confirmation; the day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express); and upon receipt, if sent by certified or registered
mail, return receipt requested. In each case notice shall be sent to:
If to the Company, addressed to:
Krueger Acquisition Corporation
c/o Ringier America, Inc.
One Pierce Place
Suite 800
Itasca, Illinois 60143-1272
Attention: Chief Financial Officer
Telecopy: (708) 285-6642
59
<PAGE>
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Paul Reinstein
Telecopy: (212) 859-4000
If to Seller, addressed to:
Ringier A.G.
Dufourstrasse 23
CH-8008
Zurich, Switzerland
Attention: Martin Werfeli
Telecopy: 011-41-6274-63215
With a copy to:
Mandelbaum & Schweiger
516 Fifth Avenue
New York, New York 10036
Attention: Gerard Mandelbaum
Telecopy: (212) 302-3412
And a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Paul Reinstein
Telecopy: (212) 859-4000
60
<PAGE>
If to Buyer, addressed to:
World Color Press, Inc.
101 Park Avenue
New York, NY 10178
Attention: General Counsel
Telecopy: (212) 697-0219
With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022
Attention: Steven Della Rocca
Telecopy: (212) 751-4864
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
10.4 Choice of Law. This Agreement shall be construed, interpreted and the
-------------
rights of the parties determined in accordance with the internal laws of the
State of New York (without reference to its choice of law provisions). Seller
hereby designates CT Corporation as its agent for service of process, which
agent may be substituted at any time upon ten days' notice to Buyer, but which
agent shall in no event be located outside the State of New York, and Seller
irrevocably consents to the service of any and all process in any action or
proceeding arising out of or relating to this Agreement by the delivery of such
process to such agent. The parties hereto irrevocably submit to the non-
exclusive jurisdiction of the United States District Court for the Southern
District of New York (or, if subject matter jurisdiction in that court is not
available, in the Supreme Court of the State of New York, New York County) over
any dispute arising out of or relating to this Agreement or any agreement or
instrument contemplated hereby or entered into in connection herewith or any of
the transactions contemplated hereby or thereby. Each party hereby irrevocably
agrees that all claims in respect of such dispute or proceeding may be heard and
determined in such courts. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum in connection therewith. The parties
hereto waive the right to a jury trial in connection with any suit, action or
proceeding seeking enforcement of such party's rights under this Agreement.
10.5 Entire Agreement; Amendments and Waivers. This Agreement, the
----------------------------------------
Ancillary Agreements and the Confidentiality Agreement constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties and, except as set forth in Article III
of this Agreement or in the Ancillary Agreements, none of Seller, the Company or
any Subsidiary is making any other representation or warranty to Buyer; provided
that the forms
61
<PAGE>
of agreements and opinions attached hereto as Exhibits shall be superseded by
the copies of such agreements and opinions executed and delivered by the
respective parties thereto, the execution and delivery of such agreements and
opinions by the parties thereto to be conclusive evidence of such parties'
approval of any change or modification therein. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the parties hereto, except
that any of the terms or provisions of this Agreement may be waived in writing
at any time by the party which is entitled to the benefits of such waived terms
or provisions. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
10.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.7 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
10.8 Titles. The titles, captions or headings of the Articles and Sections
------
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.9 Publicity. No party shall issue any press release or make any public
---------
statement regarding the transactions contemplated hereby, without the prior
approval of the other party, and the parties hereto shall issue a mutually
acceptable press release as soon as practicable after the execution and delivery
of this Agreement; provided that nothing herein shall be deemed to prohibit any
party from making any disclosure which its counsel deems necessary in order to
fulfill such party's disclosure obligations imposed by law; and provided further
that each such party shall, to the extent reasonably practicable, afford the
other parties the opportunity to review such proposed legally required
disclosure.
10.10 Confidential Information. The parties acknowledge that the
------------------------
transaction described herein is of a confidential nature and shall not be
disclosed except to consultants, advisors, lenders or other financial sources
and Affiliates, or as required by law, until such time as the parties make a
public announcement regarding the transaction as provided in Section 10.9. In
connection with the negotiation of this Agreement, the preparation for the
consummation of the transactions contemplated hereby, and the performance of
obligations hereunder, each party acknowledges that it will have access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof and not
disclose such information, except in accordance with the terms and conditions of
the Confidentiality Agreement. Notwithstanding the foregoing, Buyer may
disclose this Agreement and the information and data in Buyer possession in
connection herewith to the lenders under
62
<PAGE>
the Credit Agreement, dated as of March 6, 1995, among Printing Holdings, L.P.,
Buyer, the lenders party thereto and Bankers Trust Company, as Agent, as the
same may be modified or amended, or any successor agreement thereto, subject to
the lenders agreeing to be bound by the terms of the Confidentiality Agreement.
10.11 Fees and Expenses
-----------------
(a) The Company and Seller. Subject to Section 10.1(b)(iii),
----------------------
concurrently with the Closing, Seller shall pay all of the fees, costs and
expenses incurred by Seller, and Seller shall pay or reimburse all out-of-pocket
fees, costs and expenses (other than normal overhead expenses and reimbursement
for salaries and employee benefits) incurred by the Company, in each case
incident to or in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, legal, investment banking and accounting expenses.
(b) Buyer. Subject to Section 10.1(b)(iii), Buyer shall pay all of
-----
the fees, costs and expenses incurred by it incident to or in connection with
the negotiation, preparation, execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby.
10.12 Remedies. The rights and remedies of each party hereto set forth
--------
herein and in the Escrow Agreement are cumulative of each other. Such rights
and remedies are the exclusive rights and remedies of each party, except with
respect to every other right or remedy such party may otherwise have at law or
in equity with respect to any claim under federal, state, local or foreign law
for fraud or any other similar claim the basis of which is the intentional
misrepresentation of one person or entity by another. The exercise of one or
more of such rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of such other rights or remedies.
10.13 Representation of Counsel; Mutual Negotiation. Each party has
---------------------------------------------
been represented by counsel of its choice in negotiating this Agreement. This
Agreement shall therefore be deemed to have been negotiated and prepared at the
joint request, direction and construction of the parties, at arm's length, with
the advice and participation of counsel, and will be interpreted in accordance
with its terms without favor to any party.
10.14 Interpretive Provisions
-----------------------
(a) Whenever used in this Agreement, "to the best knowledge of the
Company," "to the best knowledge of Seller" or " to the best knowledge of the
Company and Seller" shall mean the actual knowledge of those persons listed on
Schedule 10.14(a), after due and diligent inquiry and "to the best knowledge of
Buyer" shall mean the actual knowledge of those persons listed on Schedule
10.14(a).
(b) The words "hereof," "herein," "hereby" and "hereunder" and words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or
63
<PAGE>
other subdivision hereof.
(c) Accounting terms used but not otherwise defined herein shall have
the meanings given to such terms under GAAP.
64
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
BUYER:
WORLD COLOR PRESS, INC.
By:
-----------------------------------
Name:
----------------------------
Title:
---------------------------
COMPANY:
KRUEGER ACQUISITION CORPORATION
By:
-----------------------------------
Name:
----------------------------
Title:
---------------------------
SELLER:
RINGIER A.G.
By:
-----------------------------------
Name:
----------------------------
Title:
---------------------------
EXHIBIT 10.2
EXECUTION
================================================================================
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JUNE 6, 1996
among
WORLD COLOR PRESS, INC.,
THE LENDERS PARTY HERETO,
BANKERS TRUST COMPANY, as Administrative Agent,
BA SECURITIES, INC., as Syndication Agent,
and
CITIBANK, N.A., as Documentation Agent
================================================================================
<PAGE>
WORLD COLOR PRESS, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JUNE 6, 1996
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1.
DEFINITIONS . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms and Financial Information . . . . . . . . . . . 37
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . 38
SECTION 2.
AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES . . . . . 39
2.1 Commitments; Loans . . . . . . . . . . . . . . . . . . . . . . . 39
2.2 Interest on the Loans . . . . . . . . . . . . . . . . . . . . . . 49
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
2.4 Prepayments and Payments; Reductions in Commitments; Cash
Collateralization of Standby Letters of Credit . . . . . . . . . 57
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 65
2.6 Special Provisions Governing Eurodollar Rate Loans . . . . . . . 66
2.7 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 69
2.8 Increased Costs; Taxes; Capital Adequacy. . . . . . . . . . . . . 76
2.9 Lenders' Obligation to Mitigate . . . . . . . . . . . . . . . . . 80
2.10 Replacement of a Lender . . . . . . . . . . . . . . . . . . . . . 80
SECTION 3.
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND TO LOANS AND LETTERS OF CREDIT . . . . . . . . . 81
3.1 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . 82
3.2 Conditions to All Letters of Credit . . . . . . . . . . . . . . . 87
3.3 Conditions to All Acquisition Term Loans . . . . . . . . . . . . 87
3.4 Conditions to All Loans and Letters of Credit . . . . . . . . . . 88
SECTION 4.
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 89
4.1 Organization, Powers, Good Standing and Subsidiaries . . . . . . 89
4.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . 90
(i)
<PAGE>
Page
----
4.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 92
4.4 No Material Adverse Change; No Stock Payments . . . . . . . . . . 93
4.5 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . 93
4.6 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . 93
4.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 94
4.8 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
4.9 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . 94
4.10 Securities Activities . . . . . . . . . . . . . . . . . . . . . . 95
4.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 95
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
4.13 Environmental Protection . . . . . . . . . . . . . . . . . . . . 96
4.14 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
4.15 Patents, Trademarks, etc. . . . . . . . . . . . . . . . . . . . . 98
4.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 99
4.17 Employment and Labor Agreements . . . . . . . . . . . . . . . . . 99
SECTION 5.
AFFIRMATIVE COVENANTS . . . . . . . . . . . . 100
5.1 Financial Statements and Other Reports . . . . . . . . . . . . . 100
5.2 Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . 106
5.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . 106
5.4 Maintenance of Properties; Insurance . . . . . . . . . . . . . . 107
5.5 Inspection; Lender Meeting; Appraisals . . . . . . . . . . . . . 107
5.6 Equal Security for Loans and Notes; No Further Negative Pledges . 108
5.7 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . 109
5.8 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 109
5.9 Maintenance of Leasehold Property; Excluded Collateral . . . . . 110
5.10 Environmental Disclosure and Inspection . . . . . . . . . . . . . 111
5.11 Hazardous Materials; Remedial Action . . . . . . . . . . . . . . 113
5.12 Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . 113
5.13 Deposit Accounts and Cash Management Systems . . . . . . . . . . 114
5.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 114
5.15 Fiscal Periods . . . . . . . . . . . . . . . . . . . . . . . . . 115
SECTION 6.
NEGATIVE COVENANTS . . . . . . . . . . . . . 115
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 115
6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
6.3 Investments; Joint Ventures . . . . . . . . . . . . . . . . . . . 120
6.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . 121
(ii)
<PAGE>
Page
----
6.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . 122
6.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . 123
6.7 Restriction on Fundamental Changes . . . . . . . . . . . . . . . 128
6.8 Special Restrictions on Leases . . . . . . . . . . . . . . . . . 131
6.9 Limitation on Net Consolidated Capital Expenditures . . . . . . . 132
6.10 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . 132
6.11 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 133
6.12 Other Indebtedness; Amendments and Waivers of Certain Documents . 133
6.13 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 133
SECTION 7.
EVENTS OF DEFAULT . . . . . . . . . . . . . 134
7.1 Failure to Make Payments When Due . . . . . . . . . . . . . . . . 134
7.2 Default in Other Agreements . . . . . . . . . . . . . . . . . . . 134
7.3 Breach of Certain Covenants . . . . . . . . . . . . . . . . . . . 135
7.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . 135
7.5 Other Defaults under Agreement or Loan Documents . . . . . . . . 135
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc. . . . . . . 135
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . 136
7.8 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . 136
7.9 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.11 Invalidity of Guaranty . . . . . . . . . . . . . . . . . . . . . 137
7.12 Failure of Security . . . . . . . . . . . . . . . . . . . . . . . 137
7.13 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . 138
7.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 138
SECTION 8.
ADMINISTRATIVE AGENT . . . . . . . . . . . . 139
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
8.2 Powers; General Immunity . . . . . . . . . . . . . . . . . . . . 139
8.3 Representations and Warranties; No Responsibility for Appraisal
of Creditworthiness . . . . . . . . . . . . . . . . . . . . . . . 141
8.4 Indemnification of Administrative Agent . . . . . . . . . . . . . 141
8.5 Registered Persons Treated as Owner . . . . . . . . . . . . . . . 142
8.6 Successor Administrative Agent . . . . . . . . . . . . . . . . . 142
8.7 Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . 143
8.8 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 143
(iii)
<PAGE>
Page
----
SECTION 9.
MISCELLANEOUS . . . . . . . . . . . . . . 144
9.1 Representations of Lenders . . . . . . . . . . . . . . . . . . . 144
9.2 Assignments and Participations in Loans and Notes . . . . . . . . 144
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
9.4 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
9.5 Set Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
9.6 Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . . . . 149
9.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 149
9.8 Independence of Covenants . . . . . . . . . . . . . . . . . . . . 151
9.9 Change in Accounting Principles . . . . . . . . . . . . . . . . . 151
9.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
9.11 Survival of Warranties and Certain Agreements . . . . . . . . . . 152
9.12 Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . 152
9.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 152
9.14 Obligations Several; Independent Nature of Lenders' Rights . . . 152
9.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
9.16 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 153
9.17 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 153
9.18 Consent to Jurisdiction and Service of Process . . . . . . . . . 153
9.19 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . 154
9.20 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . 155
9.21 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 155
(iv)
<PAGE>
EXHIBITS:
I Form of Notice of Borrowing
II Form of Notice of Conversion/Continuation
III Form of Notice of Issuance of Letter of Credit
IV Form of Compliance Certificate
V Form of Existing Term Note
VI Form of Tranche A Acquisition Term Note
VII Form of Tranche B Acquisition Term Note
VIII Form of Tranche C Acquisition Term Note
IX Form of Revolving Note
X Form of Swing Line Note
XI Form of Intercompany Note
XII Form of Guaranty
XIII Form of Security Agreement
XIV Form of Intercreditor Agreement
XV Form of Trademark Agreement
XVI Form of Patent Agreement
XVII Form of Acquisition Compliance Certificate
XVIII Form of Assignment Agreement
XIX Form of Opinion of Latham & Watkins
XX Form of Confidentiality Agreement
XXI Form of Opinion of Counsel to Agent
XXII Form of Departing Lender Consent
XXIII Form of Cost Adjustment Certificate
XXIV Form of Pricing Certificate
(v)
<PAGE>
SCHEDULES:
1.1A/2.1 Pro Rata Shares and Commitments
1.1B Excluded Collateral
1.1C Fiscal Quarters and Fiscal Years
1.1D Existing Letters of Credit
1.1E Identified Target Subsidiaries
1.1F Inactive Subsidiaries
1.1G Management Stock Agreements
4.1 Loan Parties
4.2B Conflicts
4.2G Deposit Accounts
4.7 Tax Sharing Agreements
4.11 ERISA Matters
4.15 Intellectual Property
4.17 Employment and Labor Agreements
5.10 Environmental Matters
6.1 Existing Indebtedness
6.1A Promissory Notes
6.2 Liens
6.3 Investments
6.4 Contingent Obligations
6.5 Management Agreement
(vi)
<PAGE>
WORLD COLOR PRESS, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JUNE 6, 1996
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 6,
1996, is entered into by and among WORLD COLOR PRESS, INC., a Delaware
corporation ("Company"), THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Lender" and collectively as
"Lenders"), BANKERS TRUST COMPANY, as administrative agent for Lenders
("Administrative Agent"), BA SECURITIES, INC., as syndication agent
("Syndication Agent") and CITIBANK, N.A., as documentation agent
("Documentation Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, Company is party to the Existing Credit Agreement, pursuant to
which the lenders thereunder have extended to Company certain credit
facilities to be used, among other things, to finance certain acquisitions
and for the general corporate purposes of Company and its Subsidiaries (such
terms and other capitalized terms being used herein as defined in Section 1
of this Agreement);
WHEREAS, Company, Bankers, as agent, and the lenders party thereto
desire to amend and restate the Existing Credit Agreement to, among other
things, modify, continue and increase the credit facilities provided
thereunder and provide additional acquisition loan facilities, the proceeds
of which will be used to finance certain additional Acquisitions, including
the Identified Acquisition;
WHEREAS, the Guarantors under the Existing Credit Agreement will
continue to guaranty the obligations of Company hereunder and under the other
Loan Documents and all New Subsidiaries (including each Identified Target
Subsidiary) will guaranty such obligations of the Company; and
WHEREAS, Company and the Guarantors under the Existing Credit Agreement
will continue to grant security interests in their respective Collateral in
favor of Collateral Agent to secure their respective obligations under the
Loan Documents and all New Subsidiaries (including each Identified Target
Subsidiary) will grant security interests in their respective Collateral to
secure their respective obligations under the Loan Documents.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree
as follows:
1
<PAGE>
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms
---------------------
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" means, from and after the Closing Date, any acquisition
by Company or any of its Subsidiaries of (i) an equity interest in, or all or
substantially all of the assets of, or any smaller portion that constitutes
an operating unit or division of, any Person as permitted pursuant to
subsection 6.7(v), including, but not limited to the Identified Acquisition,
or (ii) any contract or agreement for prepress service, printing and prepress
services, binding and finishing services or distribution services or related
assets that in each case has an identifiable stream of revenues associated
therewith.
"Acquisition Commitment Termination Date" means the Acquisition
Commitment Termination Date then in effect, which shall be the earliest of
(i) June 30, 1998, (ii) the date as of which the Obligations shall have
become immediately due and payable pursuant to Section 7, and (iii) the date
on which all of the Obligations are paid in full (including, without
limitation, the repayment, expiration, termination or cash collateralization
of Letters of Credit pursuant to this Agreement) and all Commitments are
reduced to zero.
"Acquisition Compliance Certificate" means a certificate substantially
in the form of Exhibit XVII annexed hereto.
"Acquisition EBITDA" means the sum of Consolidated EBITDA as
calculated for the applicable Target for the four Fiscal Quarter period
preceding the date the Acquisition of such Target occurs and based on the
financial statements of such Target delivered pursuant to
subsection 5.1(xviii), it being understood that Acquisition EBITDA shall not
take into account any income, expenses or other items relating to assets not
acquired in the applicable Acquisition.
"Acquisition Term Loan" or "Acquisition Term Loans" means one or
more of the Tranche A Acquisition Term Loans, Tranche B Acquisition Term
Loans or Tranche C Acquisition Term Loans or any combination thereof.
"Actual Consolidated Capital Expenditures" means, with respect to any
Fiscal Year, cash payments actually made by Company or any of its
Subsidiaries in such Fiscal Year in respect of Consolidated Capital
Expenditures other than payments made in respect of Committed Consolidated
Capital Expenditures incurred in any previous Fiscal Year.
"Additional Subordinated Indebtedness" has the meaning assigned to
that term in subsection 6.1(x).
2
<PAGE>
"Additional Subordinated Indebtedness Refinancing" means (i) the
issuance by Company of $200,000,000 or more of Additional Subordinated
Indebtedness before June 30, 1998 pursuant to and in accordance with the
provisions of subsection 6.1(x) and (ii) the prepayment of all Tranche C
Acquisition Term Loans then outstanding with the proceeds (net of
underwriting discounts and commissions and other reasonable costs associated
therewith) thereof, in each case pursuant to subsection 2.4A(ii)(c).
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination
Date, the rate per annum obtained by dividing (i) the Eurodollar Rate for
that date by (ii) a percentage equal to 100% minus the stated maximum rate of
all reserves required to be maintained against "Eurocurrency liabilities"
as specified in Regulation D (or against any other category of liabilities
which includes deposits by reference to which the interest rate on Eurodollar
Rate Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement, and includes any successor Administrative
Agent under subsection 8.6.
"Affected Lender" has the meaning assigned to that term in
subsection 2.6C.
"Affiliate" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person, (ii) any other Person that, directly or indirectly, owns
or controls, whether beneficially or as a trustee, guardian or other
fiduciary, 10% or more of the stock having ordinary voting power in the
election of directors of such Person or (iii) each of such Person's directors
and officers appointed by the board of directors of such Person. For the
purposes of this definition, "control" (including with correlative
meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Agents" means, collectively, Administrative Agent, Collateral Agent,
Syndication Agent and Documentation Agent.
"Agreement" means the Existing Credit Agreement, as amended and
restated in its entirety by this Second Amended and Restated Credit Agreement
dated as of June 6, 1996, as it may be further amended, restated,
supplemented or otherwise modified from time to time.
"Applicable Eurodollar Rate Margin" has the meaning assigned to that
term in subsection 2.2A(ii).
"Applicable Margin" has the meaning assigned to that term in
subsection 2.2A(i).
"Applicable Swing Line Margin" has the meaning assigned to that term
in subsection 2.2A(iii).
3
<PAGE>
"Asset Sale" means the sale, transfer or other disposition by Company
or any of its Subsidiaries to any Person (including in a sale-leaseback
transaction) of (i) any of the capital stock of any Subsidiary of Company;
(ii) substantially all of the assets of Company; (iii) any other assets of
Company or any of its Subsidiaries (other than the sale of inventory in the
ordinary course of business); provided that (t) any sale, transfer or other
disposition of assets by Company to any wholly-owned Subsidiary of Company
which is a party to the Guaranty, the Security Agreement and other applicable
Loan Documents, (u) any sale, transfer or other disposition of assets by any
Subsidiary of Company to Company or any wholly-owned Subsidiary of Company
which is a party to the Guaranty, the Security Agreement and other applicable
Loan Documents, (v) any sale, transfer or other disposition of assets by
Company or any of its Subsidiaries to any of Company's non-wholly-owned
Subsidiaries in one or a series of related transactions in an amount up to
$75,000,000 during any Fiscal Year (up to a maximum of $125,000,000 in the
aggregate during the term of the this Agreement)(provided that at the time of
any such sale or transfer described in this clause (v) no Potential Event of
Default or Event of Default has occurred and is continuing); (w) any sale of
residential homes by Company or any of its Subsidiaries after purchase from
new hires or employees of Company or such Subsidiary in order to facilitate
employee transfers or hiring; (x) any sale, transfer or other disposition of
assets to an IDB Lessor in connection with an Other IDB Sale-Leaseback
Transaction; (y) any sale, transfer or other disposition of Receivables
Assets in connection with a Permitted Receivables Transaction; or (z) any
other sale, transfer or other disposition of assets in one or a related
series of transactions for less than $15,000,000 (up to a maximum of
$75,000,000 during the term of this Agreement) shall not be deemed to be an
"Asset Sale" within the meaning of clause (iii) of this definition.
"Assignment Agreement" means an Assignment and Assumption Agreement
between an assigning Lender and its assignee, substantially in the form of
Exhibit XVIII annexed hereto.
"Bankers" means Bankers Trust Company.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy" as now and hereafter in effect, or any successor statute.
"Benefitted Subsidiary" means, with respect to any Letter of Credit,
the Person for whose benefit such Letter of Credit was issued, which shall be
Company or one of its Subsidiaries as specified by Company in the request for
issuance of such Letter of Credit made pursuant to subsection 2.7B.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law
or other governmental action to close and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between
banks in Dollar deposits in the applicable interbank Eurodollar market.
4
<PAGE>
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Cash" means money, currency or a positive balance in a Deposit
Account.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof,
(ii) marketable direct 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 one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Corporation or Moody's Investors Service, Inc.,
(iii) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc., (iv) certificates of deposit (whether or not Eurodollar in
nature) or bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any Lender or commercial banks organized under
the laws of the United States of America or any state thereof or the District
of Columbia or Canada, each having combined capital and surplus of not less
than $250,000,000 (each such commercial bank herein called a "Cash
Equivalent Lender"), (v) Eurodollar time deposits having a maturity of less
than one year purchased directly from any Lender or Cash Equivalent Lender
(whether such deposit is with such Lender or Cash Equivalent Lender or any
other Lender or Cash Equivalent Lender hereunder) and (vi) repurchase agree-
ments and reverse repurchase agreements with any Lender or Cash Equivalent
Lender relating to marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof; provided that
the terms of such agreements comply with the guidelines set forth in the
Federal Financial Institutions Examination Council Supervisory Policy -
Repurchase Agreements of Depositary Institutions With Securities Dealers and
Others as adopted by the Comptroller of the Currency on October 31, 1985.
"Cash Proceeds" means, with respect to any Asset Sale, cash payments
(including, in the case of any Asset Sale, any cash received by way of
deferred payment pursuant to a note receivable or otherwise (other than the
portion of such deferred payment constituting interest, which shall be deemed
not to constitute Cash Proceeds) or any Intercompany Note assumed in
connection with such Asset Sale but, in each case, only as and when so
received) received from such Asset Sale.
"Change of Control" means and is deemed to have occurred if (a) during
any period of two consecutive calendar years, individuals who at the
beginning of such period constituted Company's Board of Directors (together
with any new directors whose election by Company's Board of Directors or
whose nomination for election by Company's shareholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so
5
<PAGE>
approved) cease for any reason to constitute a majority of the directors then
in office and/or; (b) any person, entity or "group" (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)
shall at any time have acquired direct or indirect beneficial ownership of a
percentage of the outstanding stock entitled to vote in the election of
directors (other than stock having such power only by reason of the happening
of a contingency that has not occurred) of Company that exceeds the
percentage of such stock then beneficially owned by KKR and its Affiliates.
"Closing Date" means the date on or before July 31, 1996 on which the
conditions set forth in subsection 3.1 are satisfied; provided that if the
Closing Date does not occur on or prior to July 31, 1996, the obligations of
Lenders to make Loans and issue Letters of Credit pursuant to the terms of
this Agreement shall not become effective and the Existing Credit Agreement
shall continue in full force and effect.
"Collateral" means, collectively: (i) all of the capital stock or
other equity interests of each Subsidiary of Company, including, without
limitation, the capital stock or other equity interests of each Loan Party
(other than Company), (ii) the Intercompany Notes, (iii) any other collateral
pledged in accordance with the terms of the Security Agreement, (iv) all
collateral in which a Lien is granted pursuant to the terms of the Trademark
and Patent Agreements and (v) any property or interest provided in sub-
stitution for or in addition to any of the foregoing in accordance with the
provisions hereof and the Collateral Documents.
"Collateral Agent" means Bankers or any successor Collateral Agent
appointed pursuant to the terms of the Intercreditor Agreement.
"Collateral Documents" means the Security Agreement, the Trademark and
Patent Agreements, the Intercreditor Agreement, and all other instruments or
documents delivered by Company or any of its Subsidiaries in order to grant
or perfect Liens to Collateral Agent on any of its respective assets.
"Commercial Letter of Credit" means any letter of credit payable on
sight or similar instrument issued pursuant to subsection 2.7 for the purpose
of providing the primary payment mechanism in connection with the purchase of
any materials, goods or services by Company or any Benefitted Subsidiary in
the ordinary course of its businesses.
"Commitment" or "Commitments" means the Tranche A Commitments,
Tranche B Commitments, Tranche C Commitments and the Revolving Loan
Commitments of Lenders and the Swing Line Loan Commitment of Bankers.
"Commitment Termination Date" means the Commitment Termination Date
then in effect, which shall be the earliest of (i) December 29, 2002, (ii)
the date as of which the Obligations shall have become immediately due and
payable pursuant to Section 7, and (iii) the date on which all of the
Obligations are paid in full (including, without limitation, the repayment,
expiration, termination or cash collateralization of Letters of Credit
pursuant to this Agreement) and all Commitments are reduced to zero.
6
<PAGE>
"Committed Consolidated Capital Expenditures" means, with respect to
any Fiscal Year, any amounts committed for by Company or any of its
Subsidiaries in such Fiscal Year, and not actually paid for in such Fiscal
Year, in respect of specifically identified goods or services for
Consolidated Capital Expenditures so long as Company or such Subsidiary
enters into a purchase order, contract or similar document for such
commitments on or prior to April 15th of the following Fiscal Year.
"Committed Printing Equipment Proceeds" means any Proceeds of Sales of
Printing Equipment that have been applied to purchase Replacement Printing
Equipment (or to offset expenditures for the purchase of Replacement Printing
Equipment previously made during the Fiscal Year in which such Printing
Equipment was sold) or that have been committed to purchase Replacement
Printing Equipment pursuant to a purchase order that has not been cancelled,
revoked or otherwise terminated.
"Company" has the meaning assigned to that term in the introduction to
this Agreement.
"Compliance Certificate" means a certificate substantially in the form
annexed as Exhibit IV hereto delivered to Lenders by Company pursuant to
subsection 5.1(iii).
"Confidentiality Agreement" means a Confidentiality Agreement between
a potential assignee Lender and Company substantially in the form of
Exhibit XX annexed hereto.
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether in cash or accrued as liabilities and
including that portion of Capital Leases originally incurred during such
period which is capitalized on the consolidated balance sheet of Company and
its Subsidiaries and including any assets acquired during such period) by
Company and its Subsidiaries during such period that, in conformity with
GAAP, are included in the property, plant or equipment reflected in the
consolidated balance sheet of Company and its Subsidiaries and the Net Lease
Value of all equipment leased during such period by Company or any of its
Subsidiaries under an Operating Lease, other than renewals or extensions of
any then existing Operating Lease or Capital Lease, as the case may be,
covering the same assets as such respective Operating Lease or Capital Lease;
provided that "Consolidated Capital Expenditures" shall not include
expenditures to acquire equipment or other property pursuant to an
Acquisition consummated on or prior to the Acquisition Commitment Termination
Date financed all or in part with the proceeds of Acquisition Term Loans made
in connection with such Acquisition.
"Consolidated Cash Capital Expenditures" means, for any period,
Consolidated Capital Expenditures made in cash during such period, but
excluding, however, the amount thereof not actually paid at the end of such
period but including the unpaid amount thereof at the beginning of such
period to the extent paid during such period.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
period, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) provisions for taxes based
on income, (iv) depreciation expense, (v) amortization
7
<PAGE>
expense (including Capital Lease amortization), (vi) operating lease payments
and (vii) other non-cash items reducing Consolidated Net Income, but
excluding any component of items (ii) through (vii) not deducted in
calculating Consolidated Net Income, minus non-cash items increasing
Consolidated Net Income, other than items excluded from the calculation
thereof, all as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP; it being understood and agreed that for
purposes of calculating Consolidated Cash Flow Available for Fixed Charges
for the four Fiscal Quarter period ending on the last day of each of the four
Fiscal Quarters following the Closing Date, Consolidated Cash Flow Available
for Fixed Charges shall include Acquisition EBITDA for the Identified Target
Subsidiaries and for Shea Communications Company for such period to the
extent not otherwise taken into account in the calculation of Consolidated
Cash Flow Available for Fixed Charges.
"Consolidated Cash Interest Expense" means for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of Company and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of Company and its Subsidiaries,
including, without limitation, all capitalized interest, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing and net costs and benefits under Interest
Rate Agreements, but excluding, however, interest expense not payable in cash
(including amortization of discount), all as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"Consolidated Current Assets" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current assets in conformity with GAAP,
but excluding Cash and Cash Equivalents except to the extent that Cash and
Cash Equivalents exceed the sum of (i) the aggregate principal amount of all
outstanding Term Loans, Revolving Loans and Swing Line Loans and (ii) the
aggregate amount of all drawings under Standby Letters of Credit and
Commercial Letters of Credit honored by Issuing Lenders and not theretofore
reimbursed by Company.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP other than any Obligations.
"Consolidated EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) provisions for taxes
based on income, (iii) Consolidated Interest Expense, (iv) depreciation
expense, (v) amortization expense, (vi) other non-cash items reducing
Consolidated Net Income and (vii) other cash streamlining and cash
restructuring charges reducing Consolidated Net Income and incurred as a
result of the termination of employees or the consolidation of operations in
connection with the Identified Acquisition and the acquisition of Shea
Communications Company in an aggregate amount for the period commencing on
the Closing Date and continuing through and including December 31, 1997 not
to exceed $20,000,000, but excluding any component of items (ii) through
(vii) not deducted in calculating Consolidated Net Income, minus non-cash
items increasing Consolidated Net Income, other than items excluded from the
calculation thereof, all as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP; it being understood and agreed
that
8
<PAGE>
for purposes of calculating the Leverage Ratio, Consolidated EBITDA shall be
calculated for the four Fiscal Quarter period ending on the last day of the
most recent Fiscal Quarter and shall include (a) Acquisition EBITDA for such
period of each Target acquired during or after such period to the extent not
otherwise taken into account in the calculation of Consolidated EBITDA and
(b) in the event Company elects to submit an Initial Cost Adjustment
Certificate pursuant to subsection 5.1(xviii) for a particular Acquisition,
for purposes solely of the calculation of the Leverage Ratio under
subsections 2.1B, 2.2A, 2.3A and 2.3B in connection with such Acquisition and
during the period from the date of such Acquisition through the day
immediately prior to the last day of the fourth full Fiscal Quarter occurring
after the date of such Acquisition (the "Cost Synergy Period"),
Consolidated EBITDA shall be increased by the amount of estimated cost
reduction synergies set forth on such Initial Cost Adjustment Certificate as
such amount may be reduced as set forth on a subsequent Cost Adjustment
Certificate delivered pursuant to subsection 5.1(iii), it being understood
that, during the Cost Synergy Period for a particular Acquisition, all actual
cost synergies of the types set forth on the applicable Cost Reduction
Certificate for such Acquisition shall be disregarded in connection with the
calculation for the Leverage Ratio under subsections 2.1B, 2.2A, 2.3A and
2.3B.
"Consolidated Excess Cash Flow" means, for any Fiscal Year,
Consolidated Net Income for such Fiscal Year, plus to the extent deducted in
calculating Consolidated Net Income (a) amortization expense (including,
without limitation, Capital Lease amortization), (b) depreciation expense,
and (c) other non-cash items reducing Consolidated Net Income, plus decreases
in Consolidated Working Capital during such Fiscal Year, minus Net
Consolidated Capital Expenditures for such Fiscal Year (except to the extent
of any such Consolidated Capital Expenditures financed during such Fiscal
Year from the proceeds of Indebtedness incurred for such purpose) and plus
the proceeds of Indebtedness incurred during such Fiscal Year pursuant to
subsection 6.1(viii) and not applied to make Consolidated Capital
Expenditures during such Fiscal Year, minus principal payments of Term Loans
actually made during such Fiscal Year or in respect of any other Indebtedness
for borrowed money, including, without limitation, Capitalized Leases (other
than principal payments required to be made with the proceeds of equity
contributions to Company, sales of assets and payments of revolving loans or
similar facilities (including the Revolving Loans, Swing Line Loans and
Tranche B Acquisition Term Loans) to the extent that commitments to lend
(including the Revolving Loan Commitments and the Tranche B Commitments)
under any such facility are not permanently reduced in connection with such
payment and other than principal payments of Loans or other Indebtedness that
constitutes a refinancing of such Indebtedness including, but not limited to,
the payment of Tranche C Acquisition Term Loans with the proceeds of
Additional Subordinated Indebtedness), minus increases in Consolidated
Working Capital during such Fiscal Year, minus other non-cash items
increasing Consolidated Net Income. The amount of Consolidated Excess Cash
Flow so determined shall be adjusted as necessary to avoid a double addition
or subtraction on account of a single item or transaction.
"Consolidated Fixed Charges" means, for any period, the sum of the
amounts for such period of (i) Consolidated Cash Interest Expense,
(ii) provisions for taxes based on income for such period less deferred tax
expense for such period, (iii) operating lease payments and (iv)
9
<PAGE>
scheduled principal payments of all Indebtedness, all as determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, for any period, Consolidated
Cash Interest Expense plus interest expense for such period not payable in
cash (including amortization of discount) and any non-cash interest component
of Capital Leases of Company and its Subsidiaries, all as determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP;
provided that there shall be excluded (i) the income (or loss) of any Person
which becomes a Subsidiary of Company to the extent that such income (or
loss) is accrued prior to the date it becomes a Subsidiary of Company or is
merged into or consolidated with any Subsidiary of Company or that Person's
assets are acquired by Company or any of its Subsidiaries, (ii) the income
(or loss) of any Person in which any other Person (other than Company or any
of its Subsidiaries) has a joint interest, except to the extent of the amount
of dividends or other distributions actually paid to Company or any of its
Subsidiaries or the amount of any capital calls or contributions or other
funding of such losses actually required from Company or any of its
Subsidiaries during such period, (iii) the income of any of Company's
Subsidiaries to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary except to the extent of the amount of dividends
or other distributions actually paid to Company or any of its Subsidiaries
that is not subject to the restriction described in this clause (iii), and
(iv) any after-tax gains or losses attributable to asset sales outside the
ordinary course of business.
"Consolidated Total Indebtedness" means, as at any date of
determination, the total of all items of Indebtedness and all Contingent
Obligations of Company and its Subsidiaries on a consolidated basis; provided
that there shall be excluded from Consolidated Total Indebtedness the face
amount of Standby Letters of Credit.
"Consolidated Working Capital" means, as of the end of any Fiscal
Year, the Consolidated Current Assets minus the Consolidated Current
Liabilities (excluding current tax liabilities and the current portion of
Indebtedness for borrowed money having a maturity of longer than one year).
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect
to any Indebtedness, lease, dividend, letter of credit or other obligation of
another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof, or (ii) with respect to any letter of credit
issued for the
10
<PAGE>
account of or for which that Person is otherwise liable for reimbursement
thereof or (iii) under Currency Agreements or interest rate swap agreements,
interest rate collar agreements or other similar arrangements providing
interest rate protection. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement (otherwise than
for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the
obligation of another, and (b) any liability of such Person for the
obligations of another through any agreement (contingent or otherwise) (1) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (2) to maintain the solvency or any balance
sheet item, level of income or financial condition of another, or (3) to make
take-or-pay or similar payments if required regardless of non-performance by
any other party or parties to an agreement, if in the case of any agreement
described under subclauses (1), (2) or (3) of this sentence the primary
purpose or intent thereof is as described in clause (i) of the preceding
sentence. The amount of any Contingent Obligation, as at any time of
determination, shall be equal to the amount of the obligation so guaranteed
or otherwise supported at such time of determination which amount shall be
deemed to be the amount of such obligation guarantied, as reasonably
estimated by Company, if such amount cannot be specifically determined at the
time of determination.
"Contractual Obligation" means, as applied to any Person, any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"Cost Adjustment Certificate" means an Officer's Certificate delivered
by Company pursuant to subsection 5.1(iii) or 5.1(xviii) substantially in the
form of Exhibit XXIII annexed hereto.
"Covered Tax" means any Tax that is not an Excluded Tax.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
Company or any of its Subsidiaries against fluctuations in currency values.
"Date of Determination" means, for purposes of determining the
applicable Leverage Ratio on any Pricing Certificate Delivery Date, the last
day of the most recently completed Fiscal Quarter.
"Departing Lender" means each "Lender" party to, and as defined in,
the Existing Credit Agreement and which will not be a Lender hereunder on the
Closing Date.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
11
<PAGE>
"Deposit Letter" has the meaning assigned to that term in subsec-
tion 3.1K(iv).
"Disqualified Stock" means, with respect to any Person, any capital
stock of such Person that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable (other than for
another class of capital stock of such Person that is not Disqualified
Stock), pursuant to a sinking fund obligation or otherwise, or is
exchangeable for Indebtedness of such Person, or is redeemable at the option
of the holder thereof (other than for another class of capital stock of such
Person that is not Disqualified Stock), in whole or in part, on or prior to
the last day of the 2003 Fiscal Year; provided that any capital stock that
has a liquidation preference shall not by virtue of such liquidation
preference alone be deemed to be Disqualified Stock.
"Documentation Agent" has the meaning set forth in the introduction to
this Agreement, it being understood and agreed that Documentation Agent shall
have no obligations or duties as an agent under this Agreement or the other
Loan Documents for or on behalf of any party to this Agreement or any other
Loan Document.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Dyersburg IDB" means The Industrial Development Board of Dyer County,
Tennessee.
"Eligible Assignee" has the meaning assigned to that term in
subsection 9.2A.
"Employee Benefit Plan" means any Pension Plan, any employee welfare
benefit plan or any other employee benefit plan which is described in
Section 3(3) of ERISA and which is maintained for employees of any Loan Party
or any ERISA Affiliates of any Loan Party.
"Environmental Claim" means any allegation, notice of violation,
claim, demand, liability, investigation, administrative proceedings, whether
pending or threatened, or judgments or orders by any governmental authority
or any Person relating to any Hazardous Materials or any Environmental Laws.
"Environmental Laws" means all federal, state or local laws, rules,
regulations, plans, decrees, demand letters or orders relating to
environmental matters, pollution, waste disposal, industrial hygiene, land
use or the protection of human or animal health or welfare, including,
without limitation, those relating to any Release or threatened Release of
Hazardous Materials and to the generation, use, storage, transportation, or
disposal of Hazardous Materials, in any manner applicable to Company or any
of its Subsidiaries or any of their respective properties.
"Equity Securities" means any stock, shares, partnership interests,
voting trust certificates, or in general any instruments commonly known as
"equity securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or convertible into, or any right to subscribe to, purchase
or acquire, any of the foregoing.
12
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
that is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of
a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member;
and (iii) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described
in clause (ii) above is a member. ERISA Affiliates shall include each
Unrestricted Subsidiary to the extent such Unrestricted Subsidiary otherwise
qualifies as an ERISA Affiliate.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan that is subject to the provision for notice within 30 days
to the PBGC or which is described in 29 C.F.R. Section 2615.12 or 2615.15;
(ii) the failure to meet the minimum funding standard of Section 412 of the
Internal Revenue Code with respect to any Pension Plan (whether or not waived
in accordance with Section 412(d) of the Internal Revenue Code) or the
failure to make by its due date a required installment under Section 412(m)
of the Internal Revenue Code with respect to any Pension Plan or the failure
to make any required contribution to a Multiemployer Plan; (iii) the
provision by the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by a Loan Party or any of its ERISA Affiliates from any Pension
Plan during a plan year in which it was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA resulting in liability pursuant to
Section 4062(e) or Section 4063 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which could reasonably constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; (vi) the imposition of liability on a Loan Party or any of its ERISA
Affiliates pursuant to Sections 4064 or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal by a Loan Party
or any of its ERISA Affiliates in a complete or partial withdrawal (within
the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan
if there is any potential liability therefor, or the receipt by a Loan Party
or any of its ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Sections 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under Sections 4041A
or 4042 of ERISA; (viii) the occurrence of an act or omission which could
give rise to the imposition on a Loan Party or any of its ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Sections 409, 502(c), (i) or (l) or 4071 of ERISA in
respect of any Employee Benefit Plan; (ix) the assertion of a material claim
(other than routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against a Loan
Party or any of its ERISA Affiliates in connection with any such plan; (x)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan to qualify under Section 401(a) of the Internal Revenue Code, or
of the failure of
13
<PAGE>
any trust forming part of any Pension Plan to fail to qualify for exemption
from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the
imposition of a lien pursuant to Sections 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA.
"Estimated Net Cash Proceeds" means, with respect to any Asset Sale,
an amount equal to the amount estimated in good faith by Company to be the
Net Cash Proceeds of Sale of such Asset Sale.
"Eurodollar Rate" means, for any Interest Rate Determination Date, the
arithmetic average (rounded upwards to the nearest 1/16 of 1%) of the offered
quotation, if any, to first class banks in the Eurodollar market by each of
the Reference Lenders for U.S. dollar deposits of amounts in immediately
available funds comparable to the principal amount of the Eurodollar Loan of
that Reference Lender for which the Eurodollar Rate is being determined with
maturities comparable to the Interest Period for which such Eurodollar Rate
will apply as of approximately 10:00 A.M. (New York time) two Business Days
prior to the commencement of such Interest Period. If any Reference Lender
fails to provide its offered quotation to Administrative Agent, the
Eurodollar Rate shall be determined on the basis of the offered quotation(s)
of the other Reference Lender(s).
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Excluded Collateral" means (i) the real or personal property owned by
Company or any of its Subsidiaries which is designated as Excluded Collateral
on Schedule 1.1B annexed hereto and in or pursuant to subsection 5.9B hereof
and (ii) "Excluded Collateral" under and as defined in the Security
Agreement. Any property designated as Excluded Collateral may be
redesignated by Administrative Agent and Requisite Lenders as Collateral
pursuant to subsection 5.9B.
"Excluded Tax" means any of the following taxes, levies, imposts,
duties, deductions, withholdings or charges, and all liabilities with respect
thereto: (i) Taxes imposed on the net income of a Lender, Administrative
Agent or Tax Transferee (including without limitation branch profits taxes,
minimum taxes and taxes computed under alternative methods, at least one of
which is based on net income (collectively referred to as "net income
taxes") by (A) the jurisdiction under the laws of which such Lender,
Administrative Agent or Tax Transferee is organized or any political
subdivision thereof or (B) the jurisdiction of such Lender's, Tax
Transferee's or Administrative Agent's applicable lending office or any
political subdivision thereof or (C) any jurisdiction in which such Lender,
Administrative Agent or Tax Transferee is doing business, (ii) any Taxes to
the extent that they are in effect and would apply to a payment to such
Lender or Administrative Agent, as applicable, as of the Closing Date, or as
of the date such Person
14
<PAGE>
becomes a Lender, in the case of any assignee pursuant to subsection 9.2,
(iii) any Taxes that are in effect and would apply to a payment to a Tax
Transferee as of the date of acquisition of the Loans by such Tax Transferee
or the date of the change of lending office of such Tax Transferee, as the
case may be (provided however that a Person shall not be considered a Tax
Transferee for purposes of this clause (iii) as a result of a change of its
lending office or the taking of any other steps pursuant to subsection 2.9),
(iv) any Taxes to the extent of the net amount of any credit or other Tax
benefit which, in the reasonable good faith judgment of such Lender, Tax
Transferee or Administrative Agent, as the case may be, is available to such
Lender, Tax Transferee or Administrative Agent, as applicable, as a result
thereof and is allocable to the transactions contemplated by this Agreement
or (v) any Taxes that would not have been imposed but for the failure by
Administrative Agent or such Lender or Tax Transferee, as applicable, to
provide and keep current any certification or other documentation required to
qualify for an exemption from or reduced rate of any Tax.
"Existing Credit Agreement" means that certain Amended and Restated
Credit Agreement dated as of March 6, 1995 by and among Company, the lenders
named therein and Bankers, as agent, as amended by that certain First
Amendment dated as of July 2, 1995, and that certain Second Amendment dated
as of November 15, 1995, and as such agreement may have otherwise been
amended, restated, supplemented or otherwise modified from time to time prior
to the date hereof.
"Existing Indebtedness" means that Indebtedness of Company and its
Subsidiaries set forth in Schedule 6.1 annexed hereto and any refinancings
thereof permitted under subsection 6.1(vi).
"Existing Letters of Credit" means the letters of credit issued
pursuant to subsection 2.7A of the Existing Credit Agreement listed on
Schedule 1.1D annexed hereto which will, as of the Closing Date, be deemed
outstanding as Letters of Credit issued pursuant to subsection 2.7A and 2.7L
of this Agreement.
"Existing Term Loan" or "Existing Term Loans" means the Loan or
Loans maintained by a Lender or Lenders pursuant to subsection 2.1A(i).
"Existing Term Loan Exposure" means, with respect to any Lender as of
any date of determination the outstanding principal amount of the Existing
Term Loan of that Lender.
"Existing Term Note" means a promissory note issued by Company to a
Lender pursuant to subsection 2.1F and substantially in the form of Exhibit V
annexed hereto.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon)
now or heretofore owned, leased, operated or used by Company or any of its
Subsidiaries.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight federal funds
15
<PAGE>
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions received
by Administrative Agent from three federal funds brokers of recognized
standing selected by Administrative Agent.
"Fiscal Quarter" means a fiscal quarter of Company as set forth on
Schedule 1.1C annexed hereto.
"Fiscal Year" means a fiscal year of Company as set forth on
Schedule 1.1C annexed hereto.
"Funding Date" means the date of the funding of a Loan or the issuance
of any Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to the circumstances as of
the date of determination, as applied in accordance with the modifications
contained in subsection 1.2.
"GECC Leveraged Lease" means that Participation Agreement dated as of
April 30, 1990 among Company, as Lessee, General Electric Capital
Corporation, as Owner Participant, and The Connecticut National Bank, as
Owner Trustee, and the documents relating to such participation agreement as
such documents may be amended, supplemented or otherwise modified from time
to time.
"Guarantor" means each Loan Party (other than Company) under the
Guaranty and any other Subsidiary which becomes a party thereto in accordance
with the requirements of subsection 5.8.
"Guaranty" means the Amended and Restated Guaranty by and among each
Loan Party (other than Company) and any other Subsidiary of Company that
becomes a party thereto, substantially in the form of Exhibit XII annexed
hereto, as such Guaranty may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.
"Hazardous Materials" means (a) any chemical, material or substance
(i) that exhibits the properties of ignitability, corrosivity, reactivity or
EP toxicity, (ii) that is from time to time regulated or governed by any
Environmental Law, or (iii) that constitutes any oil, petroleum or petroleum
derived substance, any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil and
(b) asbestos in any form which is or could reasonably be expected to become
friable.
16
<PAGE>
"IDB Lessor" means any governmental authority or other public non-
profit entity of the State of Tennessee or of any municipality or subdivision
thereof to whom Company sells or otherwise transfers assets or equipment
pursuant to an Other IDB Sale-Leaseback Transaction.
"Identified Acquisition" means the Acquisition by Company of the
Identified Target Subsidiaries and the Inactive Identified Target
Subsidiaries pursuant to the Identified Acquisition Agreement, copies of
financial and certain other information for which have been distributed to
Administrative Agent and Lenders prior to the Closing Date.
"Identified Acquisition Agreement" means the Stock Purchase Agreement
dated April 24, 1996 by and among Ringier A.G., as seller, Krueger
Acquisition Corporation and Company, as buyer, as such agreement may have
been amended, restated, supplemented or otherwise modified prior to the
Closing Date.
"Identified Target Subsidiaries" means, collectively, each of the
Persons set forth on Schedule 1.1E annexed hereto.
"Inactive Identified Target Subsidiaries" means, collectively, each of
the Persons set forth on Schedule 1.1F annexed hereto which are acquired by
Company in connection with the Identified Acquisition.
"Inactive Subsidiaries" means each of Company's Subsidiaries listed on
Schedule 1.1F annexed hereto.
"Indebtedness" means, as applied to any Person, (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases which is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iv) any obligation owed for all or any part of the deferred purchase
price of property or services which purchase price is (y) due more than six
months from the date of incurrence of the obligation in respect thereof, or
(z) evidenced by a note or similar written instrument, but excluding trade
payables incurred in the ordinary course of business, and (v) all
indebtedness secured by any Lien on any property or asset owned by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is non-recourse to the credit of that Person but
only to the extent of the fair market value of any such property or assets;
provided that, notwithstanding anything in this Agreement to the contrary,
for purposes of the definitions of "Consolidated Cash Interest Expense",
"Consolidated Fixed Charges" and "Consolidated Total Indebtedness", the
term "Indebtedness" shall include (i) all Indebtedness of any Receivables
SPC and (ii) the amount of any sale or similar transaction of Receivables
Assets by a Receivables SPC in the event and to the extent that such a sale
or similar transaction is not characterized as indebtedness under GAAP or
Financial Accounting Standards Board Section 79.
"Initial Cost Adjustment Certificate" has the meaning assigned to that
term in subsection 2.2A.
17
<PAGE>
"Intercompany Indebtedness" means any Indebtedness of Company or any
of its Subsidiaries which is owing to Company or any other Subsidiary of
Company.
"Intercompany Note" means any intercompany promissory note
substantially in the form of Exhibit XI annexed hereto issued by Company or
any of its Subsidiaries in respect of Intercompany Indebtedness.
"Intercreditor Agreement" means the Amended and Restated Intercreditor
Agreement among Collateral Agent, for the benefit of Lenders, the Interest
Rate Exchangers (as defined therein) and the Future Credit Parties (as
defined therein), substantially in the form of Exhibit XIV annexed hereto, as
such agreement may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"Interest Payment Date" means, with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided
that in the case of each Interest Period of four months, five months, six
months, nine months or twelve months, "Interest Payment Date" shall also
include each three month anniversary of the commencement of that Interest
Period.
"Interest Period" means any interest period applicable to a Eurodollar
Rate Loan as determined pursuant to subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in interest rates entered into by Company
or any such Subsidiary and any Lender.
"Interest Rate Determination Date" means each date for calculating the
Eurodollar Rate for purposes of determining the interest rate in respect of
an Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a
Eurodollar Rate Loan.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by that Person of, or of a beneficial interest
in, stock or other Securities of any other Person (other than a Subsidiary of
such Person (or a Person who becomes a Subsidiary of such Person by virtue of
such purchase or other acquisition) but including an Unrestricted
Subsidiary), or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
that Person to any other Person (other than a Subsidiary of such Person but
including an Unrestricted Subsidiary), including all indebtedness and
accounts receivable from that other Person which are not current assets or
did not arise from sales to that other Person in the ordinary course of
business. The amount of any Investment shall be the original cost of such
18
<PAGE>
Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"Issuing Lender" means, with respect to any Standby Letter of Credit
or any Commercial Letter of Credit (including, without limitation, any
Existing Letter of Credit), the Lender which agrees or is otherwise obligated
to issue such Letter of Credit, determined as provided in subsection 2.7C.
"Joint Venture" means a joint venture, partnership, limited liability
company or other similar arrangement, whether in corporate, partnership,
limited liability company or other legal form; provided that, as to any such
arrangement in corporate form, such corporation shall not, as to any Person
of which such corporation is a Subsidiary, be considered to be a Joint
Venture to which such Person is a party.
"KKR" means Kohlberg Kravis Roberts & Co., L.P., a New York limited
partnership.
"Lender" and "Lenders" have the meaning assigned to those terms in
the introduction to this Agreement and shall include Bankers in its
individual capacity and the successors and permitted assigns of the
foregoing.
"Letter of Credit" or "Letters of Credit" means Commercial Letters
of Credit or Standby Letters of Credit issued, or deemed issued, by Issuing
Lenders for the account of Company pursuant to subsection 2.7A, including the
Existing Letters of Credit.
"Letter of Credit Facility" has the meaning assigned to that term in
subsection 2.7.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter
may become available for drawing under all Letters of Credit then outstanding
plus (ii) the aggregate amount of all drawings under all Letters of Credit
honored by Issuing Lenders and not theretofore reimbursed by Company.
"Leverage Ratio" means, as measured for the most recently completed
four Fiscal Quarter period, the ratio of (x) Consolidated Total Indebtedness
as of such date to (y) Consolidated EBITDA for the four Fiscal Quarter period
ending the last day of the most recently completed Fiscal Quarter.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to
give any security interest).
"Loan" or "Loans" means one or more of the Term Loans, the Revolving
Loans or the Swing Line Loans or any combination thereof.
19
<PAGE>
"Loan Documents" means this Agreement, the Guaranty, the Collateral
Documents, any applications, reimbursement agreements and other documents or
certificates executed in favor of an Issuing Lender relating to the Letters
of Credit and any Notes issued by Company.
"Loan Parties" means Company and any Subsidiary of Company which is or
becomes a party to a Loan Document, collectively, including, as of the
Closing Date, each Identified Target Subsidiary.
"Management Stock Agreements" means collectively, the agreements as
described in Schedule 1.1G annexed hereto.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition or prospects (financial
or otherwise) with respect to Company, individually, or Company and its
Subsidiaries, taken as a whole, or (ii) the impairment of the ability of any
Loan Party to perform, or of Collateral Agent or Lenders to enforce, monetary
Obligations or the material impairment of the ability of any Loan Party to
perform, or of Collateral Agent or Lenders to enforce (other than an
inability to enforce due solely to any action or any omission to act on the
part of Administrative Agent, Collateral Agent or Lenders) any non-monetary
Obligations, including, without limitation, the obligations of any Loan Party
to perform, or of Collateral Agent or Lenders to enforce, the Guaranty or any
Collateral Document.
"Material Subsidiary" means each Subsidiary of Company now existing or
hereafter acquired or formed by Company or any of its Subsidiaries that
either (i) for the most recent Fiscal Year, accounted for more than 5% of the
consolidated revenues of Company and its Subsidiaries, taken as a whole, or
(ii) as at the end of such Fiscal Year, was the owner of more than 5% of the
consolidated assets of Company and its Subsidiaries, taken as a whole.
"Miscellaneous Operating Leases" means all Operating Leases entered
into in the ordinary course of business the lease payments for which are
reflected on the income statement of Company and its Subsidiaries as part of
the sales, general and administrative expenses in accordance with GAAP,
including, without limitation, Operating Leases in respect of office
furniture, office equipment, automobiles and office space; provided however
that in no event shall this definition include an Operating Lease with
respect to any assets with a fair market value in excess of $500,000 used in
the prepress, printing and press, binding and finishing and/or mailing and
distribution services and similar operations of the businesses of Company and
its Subsidiaries.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of any Loan
Party or any ERISA Affiliate of any Loan Party.
20
<PAGE>
"Net Additional Debt Proceeds" has the meaning assigned to that term
in subsection 2.4A(ii)(c).
"Net Cash Proceeds of Sale" means Cash Proceeds received by Company or
any of its Subsidiaries from an Asset Sale, net of costs of sale, taxes paid
or payable as a result thereof, any amounts applied to the repayment of
Indebtedness secured by a Lien (permitted under subsection 6.2) on the assets
disposed of and excluding to the extent provided herein any Proceeds of Sales
of Printing Equipment received by Company and its Subsidiaries (up to a
maximum of $75,000,000 in the aggregate for any Fiscal Year); provided
however that, to the extent such Proceeds of Sales of Printing Equipment have
not become (or do not remain) Committed Printing Equipment Proceeds in
accordance with the definition thereof on or prior to April 15th of the
Fiscal Year immediately following the Fiscal Year in which Company or any of
its Subsidiaries received such Proceeds of Sales of Printing Equipment, such
Unused Proceeds of Sales of Printing Equipment shall be payable by Company to
Administrative Agent for application to the Obligations in the order and
manner provided by subsection 2.4A(ii)(e).
"Net Consolidated Capital Expenditures" means, with respect to any
Fiscal Year,the sum of Actual Consolidated Capital Expenditures and Committed
Consolidated Capital Expenditures for such Fiscal Year minus Consolidated
Capital Expenditures for such Fiscal Year that constitute Replacement
Printing Equipment purchased with Proceeds of Sales of Printing Equipment
received by Company or any of its Subsidiaries during such Fiscal Year.
"Net Equity Contribution Amount" means an amount equal to the sum of
(i) the amount of cash proceeds (net of any transaction costs of such sale,
issuance or contribution) received by Company in connection with the issuance
or sale of Equity Securities of Company or any equity contributions to
Company after the Closing Date (other than in respect of any Disqualified
Stock) minus (ii) the amount of any such cash proceeds that are included in
any Restricted Junior Payment made to the holders of the Senior Subordinated
Notes under subsection 6.5(iii) minus (iii) the amount of any such cash
proceeds that are applied as a voluntary prepayment of the Tranche B
Acquisition Term Loans to the extent that the Tranche B Commitments are not
reduced as provided in subsection 2.1A(ii)(c) minus (iv) the amount of
Restricted Junior Payments made by Company under subsection 6.5(v) other than
Restricted Junior Payments made as permitted under subsections 6.5(v)(a) or
(b).
"Net Lease Value" means, with respect to any Operating Lease as of the
date such Operating Lease is entered into, the present value of the lease
payments to be made pursuant thereto through the end of term of such
Operating Lease (discounted at a rate equal to the bid-side yield of a United
States Treasury bond selected by Company and maturing not more than five
years from such date), minus transaction costs incurred in connection with
the lease of the equipment subject thereto.
"New Subsidiary" has the meaning assigned to that term in
subsection 5.8.
"1995 Term Loans" means the Acquisition Term Loans and Existing Term
Loans, in each case under and as defined in the Existing Credit Agreement.
21
<PAGE>
"Notes" means any Existing Term Note, Tranche A Acquisition Term Note,
Tranche B Acquisition Term Note, Tranche C Acquisition Term Note, Revolving
Note or Swing Line Note or any combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto with respect to a proposed conversion
or continuation.
"Notice of Issuance of Letter of Credit" means a notice in the form of
Exhibit III annexed hereto, with appropriate insertions and deletions, with
respect to the proposed issuance or amendment of a Letter of Credit.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Agents, Collateral Agent or Lenders or any of them
under the Loan Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
"Officers' Certificate" means, with respect to any corporation, a
certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents and by
its chief financial officer, controller or treasurer, and with respect to any
partnership, a certificate executed on behalf of such partnership by a
general partner of such partnership and with respect to any limited liability
company or entity, a certificate executed on behalf of such limited liability
company or entity by its manager or by a person having primary management
responsibility with respect to such entity.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) which is not a Capital Lease,
other than any such lease under which that Person is the lessor.
"Other IDB Sale-Leaseback Transaction" means the sale, transfer or
other disposition by the Company of Facilities, equipment or other assets to
an IDB Lessor and the subsequent lease back by Company from such IDB Lessor
of such Facilities, equipment and assets in exchange for certain tax
benefits, it being understood and agreed that "Other IDB Sale-Leaseback
Transaction" shall not include the Covington, Tennessee, and Dyersburg,
Tennessee, facilities that have been sold by Company and leased back as of
the Closing Date.
"Patent Agreement" means the Amended and Restated Patent and License
Security Agreement by Company (individually and as successor in interest to
the Alden Printing Company) the Subsidiaries of Company party thereto in
favor of Collateral Agent for the benefit of Secured Parties substantially in
the form of Exhibit XVI annexed hereto, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
22
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any employee plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA and which is
maintained for employees of any Loan Party or any ERISA Affiliate of any Loan
Party.
"Permitted Encumbrances" means the following types of Liens (other
than any Lien imposed pursuant to Sections 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by subsection 5.3;
(ii) Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) attachment or judgment Liens, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within 30 days after the expiration of any such stay;
(v) leases or subleases granted to others not interfering with the
ordinary conduct of the business of Company or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, other similar charges
or encumbrances, in each case which do not interfere with the ordinary
conduct of the business of Company or any of its Subsidiaries;
(vii) Liens (excluding Liens securing Indebtedness) set forth on
the title insurance policies that Collateral Agent may approve; and
(ix) any interest or title of a lessor under any lease permitted
under this Agreement and any interest of any Person party to a
definitive agreement to acquire, or holding an option to acquire, any
property of Company or any of its Subsidiaries permitted to be sold
hereunder (subject, however, to the Liens of the Collateral Agent on
such property); provided that during any period in which any such option
is in effect, such option shall be taken into account to the extent
applicable towards the limitations
23
<PAGE>
set forth in the definition of Asset Sale and the provisions of
subsections 6.7(iii) and 6.7(iv).
"Permitted Receivables Transaction" has the meaning assigned to that
term in subsection 6.10.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Potential Event of Default" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or
cure period.
"Pricing Certificate" means an Officers' Certificate substantially in
the form of Exhibit XXIV annexed hereto and delivered by Company pursuant to
subsection 2.2A demonstrating the appropriate Leverage Ratio.
"Pricing Certificate Delivery Date" means the date of delivery to
Administrative Agent of a Pricing Certificate demonstrating the Leverage
Ratio as of the most recent Date of Determination, which delivery shall occur
(i) on any date from the last day of the preceding Fiscal Quarter to the date
of delivery of the financial statements for such Fiscal Quarter (or Fiscal
Year which ends on such last day of such Fiscal Quarter) required pursuant to
subsection 5.1(i) or 5.1(ii), as applicable, and (ii) the date on which any
Substantial Acquisition is consummated.
"Pricing Period" means, with respect to any Date of Determination, the
period commencing on the day immediately after such Date of Determination and
ending on the next Date of Determination.
"Prime Rate" means the rate which Bankers announces from time to time
as its prime lending rate, as in effect from time to time. The Prime Rate is
a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"Prime Rate Loans" means Loans to be maintained or made, as the case
may be, by Lenders pursuant to subsection 2.1A and bearing interest at rates
determined by reference to the Reference Rate as provided in subsection 2.2A.
"Printing Equipment" means any web or sheetfed offset press,
rotogravure press, flexographic press and any other kind of printing press,
any pre-press equipment, any binding machines, and any equipment related to
the foregoing owned and used by Company and its Subsidiaries in connection
with its printing and production business or its distribution business.
24
<PAGE>
"Proceeds of Sales of Printing Equipment" means the proceeds of any
sale of Printing Equipment by Company or any of its Subsidiaries intended by
Company to be used to acquire (or applied to offset expenditures previously
made for the acquisition of) Replacement Printing Equipment.
"Pro Rata Share" means,
(i) with respect to all payments, computations and other matters
relating to Existing Term Loan of any Lender, the percentage obtained by
dividing (x) the Existing Term Loan Exposure of that Lender by (y) the
-------- --
aggregate Existing Term Loan Exposure of all Lenders;
(ii) with respect to all payments, computations and other matters
relating to the Tranche A Commitment or the Tranche A Acquisition Term
Loan of any Lender, the percentage obtained by dividing (x) the Tranche
--------
A Exposure of that Lender by (y) the aggregate Tranche A Exposure of all
--
Lenders;
(iii) with respect to all payments, computations and other matters
relating to the Tranche B Commitment or the Tranche B Acquisition Term
Loan of any Lender, the percentage obtained by dividing (x) the Tranche
--------
B Exposure of that Lender by (y) the aggregate Tranche B Exposure of all
--
Lenders;
(iv) with respect to all payments, computations and other matters
relating to the Tranche C Commitment or the Tranche C Acquisition Term
Loan of any Lender, the percentage obtained by dividing (x) the Tranche
--------
C Exposure of that Lender by (y) the aggregate Tranche C Exposure of all
--
Lenders;
(v) with respect to all payments, computations and other matters
relating to the Revolving Loan Commitment or the Revolving Loans of any
Lender or any Letters of Credit issued or participations therein
purchased by any Lender or any participations in any Swing Line Loans
purchased by any Lender, the percentage obtained by dividing (x) the
--------
Revolving Loan Exposure of that Lender by (y) the aggregate Revolving
--
Loan Exposure of all Lenders;
(vi) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Existing Term Loan
--------
Exposure, Tranche A Exposure, Tranche B Exposure, Tranche C Exposure and
Revolving Loan Exposure of that Lender by (y) the sum of the aggregate
--
Existing Term Loan Exposure, Tranche A Exposure, Tranche B Exposure,
Tranche C Exposure and Revolving Loan Exposure of all Lenders;
The initial Pro Rata Share of each Lender for purposes of each of clauses
(i), (ii), (iii), (iv) and (v) of the preceding sentence is set forth
opposite the name of that Lender in Schedule 1.1A annexed hereto; provided
that Schedule 1.1A shall be amended and each Lender's Pro Rata Share shall be
adjusted from time to time to give effect to the addition or removal of any
Lender as provided herein or by assignment pursuant to subsection 9.2.
25
<PAGE>
"Receivables Assets" means any accounts receivable arising in
connection with the sale of inventory or services of Company or any of its
Subsidiaries in the ordinary course of business and any related contract
rights (including, without limitation, rights under printing contracts and
security interests) and any proceeds of the foregoing.
"Receivables Proceeds" means the amount of the purchase price received
by Company or any of its Subsidiaries upon the consummation of any Permitted
Receivables Transaction pursuant to subsection 6.10 and any additional
purchase price received by Company or any of its Subsidiaries to the extent
such additional purchase price represents an increase in such Permitted
Receivables Transaction facility to an amount greater than the previously
greatest amount of such Receivables Transaction facility.
"Receivables SPC" means an Unrestricted Subsidiary of Company formed
for the sole purpose of purchasing Receivables Assets from Company or any of
its Subsidiaries pursuant to a Permitted Receivables Transaction and engaging
in activities incidental thereto.
"Reference Lenders" means Bankers, Bank of America NT & SA and
Citibank, N.A.
"Reference Rate" means, as at any date of determination, the rate per
annum that is the higher of: (i) the Prime Rate; and (ii) the sum of (x) the
Federal Funds Effective Rate plus (y) 1/2 of 1%.
"Refinancing Indebtedness" has the meaning assigned to that term in
subsection 6.1(vi).
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(iv).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, dumping, discharge,
dispersal, leaching, or migration into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials) of
any Hazardous Material, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"Replaced Lender" has the meaning assigned to such term in subsection
2.10.
"Replacement Lender" has the meaning assigned to such term in
subsection 2.10.
"Replacement Printing Equipment" means Printing Equipment acquired by
Company or any of its Subsidiaries to replace Printing Equipment it has sold
or otherwise disposed of or
26
<PAGE>
will dispose of during the then-current Fiscal Year (or, to the extent such
Replacement Printing Equipment is purchased on or prior to (or pursuant to a
purchase order entered into on or prior to) April 15th of the Fiscal Year
immediately succeeding the Fiscal Year in which the Printing Equipment to be
replaced was sold, the immediately prior Fiscal Year), it being understood
and agreed that any such Printing Equipment so acquired need not serve the
same function as the Printing Equipment that it replaces.
"Requisite Lenders" means Lenders having or holding more than 50% of
the sum of (i) the aggregate Existing Term Loan Exposure of all Lenders, (ii)
the aggregate Tranche A Exposure of all Lenders, (iii) the aggregate Tranche
B Exposure of all Lenders, (iv) the aggregate Tranche C Exposure of all
Lenders and (v) the aggregate Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Company now or hereafter outstanding, except a dividend or
distribution payable solely in shares of capital stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase
capital stock (other than Disqualified Stock), (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock of
Company, or of any warrants, options or other rights to acquire any such
shares of stock, now or hereafter outstanding, or (iii) any payment or
prepayment of principal of, premium, if any, or interest on, redemption,
purchase, retirement, defeasance, sinking fund or similar payment with
respect to any Subordinated Indebtedness.
"Revolving Loan Commitment" or "Revolving Loan Commitments" means
the commitment or the commitments of a Lender or Lenders to maintain or make
Revolving Loans, participate in Swing Line Loans and issue or participate in
Letters of Credit as set forth in subsections 2.1A(iii), 2.1A(iv) and 2.7A.
"Revolving Loan Exposure" means, with respect to any Lender as of any
date of determination prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and thereafter, the sum
of (i) the aggregate outstanding principal amount of the Revolving Loans of
that Lender, (ii) in the event that Lender is an Issuing Lender, the
aggregate Letter of Credit Usage in respect of all Letters of Credit issued
by that Lender (in each case net of any participations purchased by other
Lenders in such Letters of Credit or any unreimbursed drawings thereunder),
(iii) the aggregate amount of all participations purchased by that Lender in
any outstanding Letters of Credit or any unreimbursed drawings under any
Letters of Credit, (iv) in the case of Swing Line Lender, the aggregate
outstanding principal amount of all Swing Line Loans (net of any partici-
pations therein purchased by other Lenders), and (v) the aggregate amount of
all participations purchased by that Lender in any outstanding Swing Line
Loans.
"Revolving Loans" means the Loans Lenders have agreed to maintain or
make pursuant to subsection 2.1A(iii).
27
<PAGE>
"Revolving Note" means a promissory note issued by Company to Lenders
pursuant to subsection 2.1F and substantially in the form of Exhibit IX
annexed hereto.
"Scheduled Existing Term Loan Repayment Amount" means, with respect to
the principal payments on Existing Term Loans required pursuant to
subsection 2.1E(i), for the last day of each of the Fiscal Quarters set forth
below, (i) if the Additional Subordinated Indebtedness Refinancing did not
occur, the correlative amount set forth opposite thereto under Scheduled
Existing Term Repayment Amount I and (ii) if the Additional Subordinated
Indebtedness Refinancing occurred, the correlative amount set forth opposite
thereto under Scheduled Existing Term Repayment Amount II, in each case as
adjusted by the operation of the succeeding sentence:
Scheduled
Existing Scheduled
Term Existing Term
Repayment Repayment
Date Amount I Amount II
Second Fiscal Quarter, 1998 $ 15,000,000 $ 0
Fourth Fiscal Quarter, 1998 $ 15,000,000 $ 0
Second Fiscal Quarter, 1999 $ 10,000,000 $ 10,000,000
Fourth Fiscal Quarter, 1999 $ 10,000,000 $ 10,000,000
Second Fiscal Quarter, 2000 $ 10,000,000 $ 10,000,000
Fourth Fiscal Quarter, 2000 $ 10,000,000 $ 10,000,000
Second Fiscal Quarter, 2001 $ 10,000,000 $ 10,000,000
Fourth Fiscal Quarter, 2001 $ 10,000,000 $ 10,000,000
Second Fiscal Quarter, 2002 $ 17,500,000 $ 32,500,000
Fourth Fiscal Quarter, 2002 $ 17,500,000 $ 32,500,000
TOTAL $125,000,000 $125,000,000
On any date that any amounts in respect of Existing Term Loans are prepaid
pursuant to subsections 2.4A(i) or 2.4A(ii), the Scheduled Existing Term
Repayment Amount I and Scheduled Existing Term Repayment Amount II set forth
above shall each be reduced by the amount of such prepayment, such reduction
to be effected by reducing each amount set forth above that corresponds to
the scheduled principal installment or installments of the Scheduled Existing
Term Repayment Amount required to be reduced as provided in sub-
section 2.4A(iii). The Scheduled Existing Term Repayment Amount for the last
day of the fourth Fiscal Quarter of the 2002 Fiscal Year shall be an amount,
if such amount is different from that specified above, sufficient to repay
all amounts owing by Company under the Existing Term Loans.
28
<PAGE>
"Scheduled Tranche A Repayment Amount" means, with respect to the
principal payments on Tranche A Acquisition Term Loans required pursuant to
subsection 2.1E(ii), for the last day of each Fiscal Quarter set forth below,
(i) if the Additional Subordinated Indebtedness Refinancing did not occur,
the correlative amount set forth opposite such Fiscal Quarter under Scheduled
Tranche A Repayment Amount I and (ii) if the Additional Subordinated
Indebtedness Refinancing occurred, the correlative amount set forth opposite
thereto under Scheduled Tranche A Repayment Amount II, in each case as
adjusted by the operation of the succeeding sentence:
Scheduled Scheduled
Tranche A Tranche A
Repayment Repayment
Fiscal Year Amount I Amount II
Second Fiscal Quarter, 1998 $ 12,500,000 $ 0
Fourth Fiscal Quarter, 1998 $ 12,500,000 $ 0
Second Fiscal Quarter, 1999 $ 17,500,000 $ 17,500,000
Fourth Fiscal Quarter, 1999 $ 17,500,000 $ 17,500,000
Second Fiscal Quarter, 2000 $ 25,000,000 $ 25,000,000
Fourth Fiscal Quarter, 2000 $ 25,000,000 $ 25,000,000
Second Fiscal Quarter, 2001 $ 30,000,000 $ 30,000,000
Fourth Fiscal Quarter, 2001 $ 30,000,000 $ 30,000,000
Second Fiscal Quarter, 2002 $ 65,000,000 $ 77,500,000
Fourth Fiscal Quarter, 2002 $ 65,000,000 $ 77,500,000
TOTAL $300,000,000 $300,000,000
On any date that any amounts in respect of Tranche A Acquisition Term Loans
are prepaid pursuant to subsections 2.4A(i) or 2.4A(ii), the Scheduled
Tranche A Repayment Amount I and Scheduled Tranche A Repayment Amount II set
forth above shall each be reduced by the amount of such prepayment, such
reduction to be effected by reducing the amounts set forth above that
correspond to scheduled principal installment or installments of the
Scheduled Tranche A Repayment Amount required to be reduced as provided in
subsection 2.4A(iii). The Scheduled Tranche A Repayment Amount for the last
day of the fourth Fiscal Quarter of the 2002 Fiscal Year shall be an amount,
if such amount is different from that specified above, sufficient to repay
all amounts owing by Company under the Tranche A Acquisition Term Loans.
29
<PAGE>
"Scheduled Tranche B Repayment Amount" means, with respect to the
principal payments on Tranche B Acquisition Term Loans required pursuant to
subsection 2.1E(ii), for the last day of each Fiscal Quarter set forth below,
an amount equal to the Tranche B Acquisition Term Loan Amount multiplied by
the correlative percentage set forth opposite such Fiscal Quarter under
Percentage Amortization, as adjusted by the operation of the succeeding
sentence:
Percentage
Fiscal Year Amortization
Second Fiscal Quarter, 1999 12.50%
Fourth Fiscal Quarter, 1999 12.50%
Second Fiscal Quarter, 2000 12.50%
Fourth Fiscal Quarter, 2000 12.50%
Second Fiscal Quarter, 2001 12.50%
Fourth Fiscal Quarter, 2001 12.50%
Second Fiscal Quarter, 2002 12.50%
Fourth Fiscal Quarter, 2002 12.50%
TOTAL 100.00%
On any date occurring after the Acquisition Commitment Termination Date that
any amounts in respect of Tranche B Acquisition Term Loans are prepaid
pursuant to subsections 2.4A(i) or 2.4A(ii), the Scheduled Tranche B
Repayment Amount set forth above shall be reduced by the amount of such
prepayment, such reduction to be effected by reducing the amounts calculated
as set forth above that correspond to scheduled principal installment or
installments of the Scheduled Tranche B Repayment Amount required to be
reduced as provided in subsection 2.4A(iii). The Scheduled Tranche B
Repayment Amount for the last day of the fourth Fiscal Quarter of the 2002
Fiscal Year shall be an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under the
Tranche B Acquisition Term Loans.
"Scheduled Tranche C Repayment Amount" means, with respect to the
principal payments on Tranche C Acquisition Term Loans required pursuant to
subsection 2.1E(ii), for the last day of each Fiscal Quarter set forth below,
the correlative amount set forth below opposite such Fiscal Quarter under
Scheduled Tranche C Repayment Amount, as adjusted by the operation of the
succeeding sentence:
30
<PAGE>
Scheduled
Tranche C
Fiscal Year Repayment Amount
Second Fiscal Quarter, 1998 $ 7,500,000
Fourth Fiscal Quarter, 1998 $ 7,500,000
Second Fiscal Quarter, 1999 $ 12,500,000
Fourth Fiscal Quarter, 1999 $ 12,500,000
Second Fiscal Quarter, 2000 $ 15,000,000
Fourth Fiscal Quarter, 2000 $ 15,000,000
Second Fiscal Quarter, 2001 $ 17,500,000
Fourth Fiscal Quarter, 2001 $ 17,500,000
Second Fiscal Quarter, 2002 $ 47,500,000
Fourth Fiscal Quarter, 2002 $ 47,500,000
TOTAL $200,000,000
On any date that any amounts in respect of Tranche C Acquisition Term Loans
are prepaid pursuant to subsections 2.4A(i) or 2.4A(ii), the Scheduled
Tranche C Repayment Amount set forth above shall be reduced by the amount of
such prepayment, such reduction to be effected by reducing the amounts set
forth above that correspond to scheduled principal installment or
installments of the Scheduled Tranche C Repayment Amount required to be
reduced as provided in subsection 2.4A(iii). The Scheduled Tranche C
Repayment Amount for the last day of the fourth Fiscal Quarter of the 2002
Fiscal Year shall be an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under the
Tranche C Acquisition Term Loans.
"Secured Parties" means Agents, Collateral Agent, Lenders, the
Interest Rate Exchangers (as defined in the Intercreditor Agreement) and the
Future Credit Parties (as defined in the Intercreditor Agreement).
"Securities" means any stock, shares, voting trust certificates,
partnership interests, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe
to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
31
<PAGE>
"Security Agreement" means the Second Amended and Restated Security
Agreement by and among each Loan Party and Collateral Agent substantially in
the form of Exhibit XIII annexed hereto, pursuant to which such Loan Party
will pledge and grant a security interest in the Collateral described therein
to Collateral Agent for the benefit of Secured Parties, as such Second
Amended and Restated Security Agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"Senior Subordinated Notes" means the senior subordinated notes issued
by Company on May 10, 1993 pursuant to the Senior Subordinated Note
Indenture.
"Senior Subordinated Note Indenture" means the Indenture dated as of
May 10, 1993 and filed by Company with the Securities and Exchange Commission
in connection with the registration of the Senior Subordinated Notes, as such
Indenture may have been or may in the future be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
provisions of subsection 6.12.
"Solvent" means, with respect to any Person, that as of the date of
determination, the then fair saleable value of the property of such Person is
(i) greater than the total amount of liabilities (including anticipated
Contingent Obligations and other contingent liabilities only to the extent of
the probable liability with respect to such Contingent Obligations and other
contingent liabilities) of such Person and (ii) greater than the amount that
will be required to pay the probable liabilities of such Person's then
existing debts as they become absolute and matured.
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of Company or any of its Subsidiaries, (ii) the
obligations of third party insurers of Company or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third party
insurers, (iii) Indebtedness of Company or any of its Subsidiaries in respect
of industrial revenue or development bonds or similar project financings,
(iv) obligations with respect to Capital or Operating Leases of Company or
any of its Subsidiaries, or (v) performance, payment, deposit or surety
obligations of Company or any of its Subsidiaries in any case if required by
law or governmental rule or regulation or in accordance with custom and
practice in the industry.
"Subordinated Indebtedness" means the Indebtedness evidenced by the
Senior Subordinated Notes, the Additional Subordinated Indebtedness and any
other Indebtedness of Company incurred with the consent of Administrative
Agent and Requisite Lenders in their sole discretion that is subordinate in
right and time of payment to the Obligations.
"Subsequent Cost Reduction Certificate" has the meaning assigned to
that term in subsection 2.2A.
"Subsidiary" means any corporation, partnership, limited liability
company, limited liability partnership, association or other business entity
of which more than 50% of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or
32
<PAGE>
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof. For the purposes of
this Agreement and any other Loan Document, (i) a wholly-owned Subsidiary is
a Subsidiary of which 100% of the shares of stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned, directly or indirectly, by
any Person or one or more of the other wholly-owned Subsidiaries of that
Person or a combination thereof and (ii) all references to any Subsidiary or
Subsidiaries of Company or any other Loan Party shall be deemed to exclude
any such Subsidiary that is an Unrestricted Subsidiary unless expressly
indicated otherwise.
"Substantial Acquisition" means an Acquisition (other than the
Identified Acquisition) the purchase price of which is greater than
$25,000,000 or the cost adjustment synergies in respect of which are greater
than $5,000,000 as demonstrated in the Cost Adjustment Certificate delivered
pursuant to subsection 5.1(xviii).
"Swing Line Lender" means Bankers and includes any successor Swing
Line Lender under subsection 8.6.
"Swing Line Loan Commitment" means the commitment of Bankers to make
or maintain Swing Line Loans pursuant to subsection 2.1A(iv).
"Swing Line Loans" means the Swing Line Loans Bankers has agreed to
make or maintain pursuant to subsection 2.1A(iv).
"Swing Line Note" means a promissory note issued by Company to Bankers
pursuant to subsection 2.1F and substantially in the form of Exhibit X
hereto.
"Syndication Agent" has the meaning assigned to that term in the
introduction to this Agreement, it being understood and agreed that
Syndication Agent shall have no obligations or duties as agents under this
Agreement or the other Loan Documents for or on behalf of any party to this
Agreement or any other Loan Document.
"Target" means the Person an equity interest in which is to be
acquired, or the Person whose assets are to be acquired, in any Acquisition,
including, with respect to the Identified Acquisition, each Identified Target
Subsidiary and Inactive Identified Target Subsidiary.
"Target Amount" has the meaning assigned that term in subsection 6.9.
"Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, governmental fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net
income" of a Person shall be construed as a reference to a tax imposed by
the jurisdiction in which that Person's principal office (and/or, in the case
of a Lender, its lending office) is located on all or part of the net income,
profits or gains of that Person (whether
33
<PAGE>
worldwide, or only insofar as such income, profits or gains are considered to
arise in or to relate to a particular jurisdiction, or otherwise).
"Tax Transferee" means any Person who acquires any interest in the
Loans (whether or not by operation of law) or the office to which a Lender or
Agent has transferred its Loans for purposes of determining where the Loans
are made, accounted for or booked.
"Term Loan" or "Term Loans" means one or more of the Existing Term
Loans or the Acquisition Term Loans.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans and Swing Line Loans plus (ii) the Letter of
Credit Usage.
"Trademark Agreement" means the Amended and Restated Trademark and
License Security Agreement by Company (individually and as successor in
interest to the Alden Printing Company) and the Subsidiaries of Company party
thereto in favor of Collateral Agent for the benefit of Secured Parties, as
such agreement may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"Trademark and Patent Agreements" means the Trademark Agreement and
the Patent Agreement, collectively.
"Tranche A Acquisition Term Loan" or "Tranche A Acquisition Term
Loans" means the Loan or Loans made or maintained by a Lender or Lenders
pursuant to subsection 2.1A(ii)(a).
"Tranche A Acquisition Term Note" means a promissory note issued by
Company to a Lender pursuant to subsection 2.1F and substantially in the form
of Exhibit VI annexed hereto.
"Tranche A Commitments" or "Tranche A Commitment" means the
commitment or commitments of a Lender or Lenders to make Tranche A
Acquisition Term Loans as set forth in subsection 2.1A(ii)(a).
"Tranche A Exposure" means with respect to any Lender as of any date
of determination (i) prior to the funding of the Tranche A Acquisition Term
Loans, that Lender's Tranche A Commitment and (ii) after the funding of the
Tranche A Acquisition Term Loans, the aggregate outstanding principal amount
of the Tranche A Acquisition Term Loans of that Lender.
"Tranche B Acquisition Term Loan" or "Tranche B Acquisition Term
Loans" means the Loan or Loans made or maintained by a Lender or Lenders
pursuant to subsection 2.1A(ii)(b).
34
<PAGE>
"Tranche B Acquisition Term Loan Amount" means the aggregate principal
amount of Tranche B Acquisition Term Loans outstanding on the Acquisition
Commitment Termination Date.
"Tranche B Acquisition Term Note" means a promissory note issued by
Company to a Lender pursuant to subsection 2.1F and substantially in the form
of Exhibit VII annexed hereto.
"Tranche B Commitments" or "Tranche B Commitments" means the
commitment or commitments of a Lender or Lenders to make Tranche B
Acquisition Term Loans as set forth in subsection 2.1A(ii)(b).
"Tranche B Exposure" means, with respect to any Lender (i) as of any
date of determination prior to the termination of the Tranche B Commitments,
that Lender's Tranche B Commitment and (ii) as of any date of determination
from and after the termination of the Tranche B Commitments, the aggregate
outstanding principal amount of the Tranche B Acquisition Term Loans of that
Lender.
"Tranche C Acquisition Term Loan" or "Tranche C Acquisition Term
Loans" means the Loan or Loans made or maintained by a Lender or Lenders
pursuant to subsection 2.1A(ii)(c).
"Tranche C Acquisition Term Note" means a promissory note issued by
Company to a Lender pursuant to subsection 2.1F and substantially in the form
of Exhibit VIII annexed hereto.
"Tranche C Commitments" or "Tranche C Commitments" means the
commitment or commitments of a Lender or Lenders to make Tranche C
Acquisition Term Loans as set forth in subsection 2.1A(ii)(c).
"Tranche C Exposure" means with respect to any Lender as of any date
of determination (i) prior to the funding of the Tranche C Acquisition Term
Loans, that Lender's Tranche C Commitment and (ii) after the funding of the
Tranche C Acquisition Term Loans, the aggregate outstanding principal amount
of the Tranche C Acquisition Term Loans of that Lender.
"Unrestricted Subsidiary" means a Subsidiary of Company organized or
acquired by Company or any of its Subsidiaries subsequent to the Closing Date
and designated by Company as an Unrestricted Subsidiary in a notice delivered
pursuant to subsection 5.1(xvi) (but not re-designated a Subsidiary of
Company in a notice to such effect delivered pursuant to subsection 5.2) and
also means any Subsidiary of any Unrestricted Subsidiary.
"Unused Proceeds of Sales of Printing Equipment" means, as of any date
of determination, Proceeds of Sales of Printing Equipment that have not
become (or do not remain) Committed Printing Equipment Proceeds as of such
date in accordance with the definition thereof.
35
<PAGE>
1.2 Accounting Terms and Financial Information
------------------------------------------
A. For purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with
GAAP and all financial statements and certificates and reports as to
financial matters required to be delivered to Lenders hereunder shall (unless
otherwise disclosed to Lenders in writing at the time of delivery thereof in
the manner described in subsection 1.2B) be prepared in accordance with GAAP
applied on a basis consistent with GAAP as applied in the preparation of the
latest financial statements furnished to Lenders hereunder (or, prior to the
delivery of the first financial statements under subsection 5.1, GAAP as
applied in the preparation of the audited financial statements of Company and
its Subsidiaries as at the end of the 1995 Fiscal Year referred to in
subsection 4.3).
All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made
by application of GAAP applied on a basis consistent with GAAP as applied in
the preparation of the latest annual or quarterly financial statements
furnished to the Lenders pursuant to subsection 5.1 (or, prior to the
delivery of the first financial statements under subsection 5.1, GAAP as
applied in the preparation of the audited financial statements of Company and
its Subsidiaries as at the end of the 1995 Fiscal Year referred to in
subsection 4.3) unless (i) Company shall have objected to determining such
compliance on such basis at the time of delivery of such financial statements
or (ii) Requisite Lenders shall so object in writing within 30 days after
delivery of such financial statements, in either of which events such
calculations shall be made on a basis consistent with GAAP as applied in the
preparation of the latest financial statements as to which such objection
shall not have been made (or, if objection is made in respect of the first
financial statements delivered under subsection 5.1, used in the preparation
of the audited financial statements of Company and its Subsidiaries as at the
end of the 1995 Fiscal Year referred to in subsection 4.3). Except in
connection with the preparation of the financial statements and other
information required to be delivered by Company to the Lenders pursuant to
subsection 5.1, calculations made with respect to the definitions, covenants
and other provisions of this Agreement shall give effect to adjustments in
component amounts required or permitted by Accounting Principles Board
Opinions Nos. 16 and 17 as a result of any Acquisition (other than the
Identified Acquisition).
B. Company shall deliver to Lenders at the same time as the delivery
of any annual or quarterly financial statement under subsection 5.1, (i) a
description in reasonable detail of any variation between the application of
accounting principles employed in the preparation of such statement and the
application of accounting principles employed in the preparation of the next
preceding annual or quarterly financial statements as to which no objection
has been made in accordance with the last sentence of subsection 1.2A (which
variation materially affects the presentation of the consolidated financial
position or results of operations of the Company and its Subsidiaries) and
(ii) reasonable estimates of the difference between such statements arising
as a consequence thereof.
36
<PAGE>
1.3 Other Definitional Provisions
-----------------------------
Any reference in this Agreement (i) to a Section, a Schedule or an
Exhibit is a reference to a section hereof, a schedule hereto or an exhibit
hereto, respectively; and (ii) to a subsection or a clause is, unless
otherwise stated, a reference to a subsection or a clause of the Section or
subsection in which the reference appears. In this Agreement the singular
includes the plural and the plural the singular; "hereof," "herein,"
"hereto," "hereunder" and the like mean and refer to this Agreement as a
whole and not merely to the specific section, paragraph or clause in which
the respective word appears; words importing any gender include the other
genders; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute
referred to; references to "writing" include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by
the words "without limitation"; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
supplements, assignments, and other modifications thereto, but only to the
extent such modifications are not prohibited by the terms of this Agreement,
and references to Persons include their respective permitted successors and
assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons.
SECTION 2.
AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Commitments; Loans
------------------
A. Commitments. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to make or maintain, as the case
may be, the Loans described in this subsection 2.1A.
(i) Existing Term Loans. The 1995 Term Loans were made pursuant to the
-------------------
Existing Credit Agreement, in each case for the purposes described in
subsection 2.5A. As of the date of this Agreement, there are outstanding
$276,780,000 in principal amount of 1995 Term Loans, $125,000,000 of which
are to be continued and maintained hereunder as Existing Term Loans. Each
Lender severally agrees to maintain and continue as Existing Term Loans
hereunder its Pro Rata Share of the principal amount of 1995 Term Loans
outstanding on the Closing Date as equals such Lender's Pro Rata Share of the
Existing Term Loans, after giving effect to subsection 2.1G. The amount of
each Lender's Existing Term Loans is set forth opposite its name on
Schedule 2.1 annexed hereto and, as of the Closing Date, the aggregate
outstanding principal amount of the Existing Term Loans shall be
$125,000,000. Any Existing Term Loans repaid or prepaid may not be
reborrowed.
37
<PAGE>
(ii) Acquisition Term Loans.
----------------------
(a) Tranche A Acquisition Term Loans. Each Lender severally
--------------------------------
agrees (i) to maintain and continue as Tranche A Acquisition Term Loans
hereunder its Pro Rata Share of $151,780,000 in principal amount of 1995
Term Loans which are outstanding on the Closing Date and are not
continued hereunder as Existing Term Loans pursuant to subsection
2.1A(i), after giving effect to subsection 2.1G, and (ii) to lend to
Company on the Closing Date an aggregate amount not exceeding its Pro
Rata Share of the remaining aggregate Tranche A Commitments to be used
for the purposes identified in subsection 2.5B. Each Lender's
commitment to maintain and make to Company Tranche A Acquisition Term
Loans pursuant to this subsection 2.1A(ii)(a) is herein called its
"Tranche A Commitment" and such commitments of all Lenders in the
aggregate are herein called the "Tranche A Commitments." The original
amount of each Lender's Tranche A Commitment and Pro Rata Share is set
forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
original amount of the Tranche A Commitments is $300,000,000. Each
Lender's Tranche A Commitment shall expire immediately and without
further action on July 31, 1996 if the conditions set forth in
subsection 3.1 are not satisfied on or before that date. Company may
make only one borrowing under the Tranche A Commitments. Amounts
borrowed under this subsection 2.1A(ii)(a) and subsequently repaid or
prepaid may not be reborrowed.
(b) Tranche B Acquisition Term Loans. Each Lender severally
--------------------------------
agrees, subject to the limitations set forth below with respect to the
maximum amount of Tranche B Acquisition Term Loans permitted to be
outstanding from time to time, to lend to Company from time to time
during the period from the Closing Date to but excluding the Acquisition
Commitment Termination Date an aggregate amount not exceeding its Pro
Rata Share of the aggregate Tranche B Commitments to be used for the
purposes identified in subsection 2.5C. Each Lender's commitment to
make Tranche B Acquisition Term Loans to Company pursuant to this
subsection 2.1A(ii)(b) is herein called its "Tranche B Commitment" and
such commitments of all Lenders in the aggregate are herein called the
"Tranche B Commitments." The original amount of each Lender's Tranche
B Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate original amount of the Tranche B Commitments is
$100,000,000; provided that the amount of the Tranche B Commitments
shall be automatically and permanently reduced from time to time by the
amount of any reductions to the Tranche B Commitments made pursuant to
subsections 2.4C or 2.4D or the succeeding paragraph of this subsection
2.1A(ii)(b). Each Lender's Tranche B Commitment shall expire on the
Acquisition Commitment Termination Date; provided that each Lender's
Tranche B Commitment shall expire immediately and without further action
on July 31, 1996 if the conditions set forth in subsection 3.1 are not
satisfied on or before that date.
Anything contained in this Agreement to the contrary notwith-
standing, the Tranche B Acquisition Term Loans and the Tranche B
Commitments shall be subject to the following limitations:
38
<PAGE>
1. subject to clause 2 of this paragraph, the Tranche B
Commitments shall be irrevocably and permanently reduced upon any
voluntary or mandatory prepayment of Tranche B Acquisition Term Loans as
provided in subsection 2.4;
2. the Tranche B Commitments shall not be reduced upon a
voluntary prepayment of the Tranche B Acquisition Term Loans with the
proceeds of equity contributions to Company of cash or sales of equity
securities of Company for cash to and received by Company unless and to
the extent Company has delivered written notice to Administrative Agent
to the contrary prior to the making of such prepayment; provided that
Company shall not be entitled to have this clause 2 apply to avoid a
reduction of the Tranche B Commitments otherwise required under clause 1
above with respect to more than $100,000,000 of such prepayments; and
3. at any date of determination, the aggregate principal amount
of all outstanding Tranche B Acquisition Term Loans shall not exceed the
aggregate Tranche B Commitments.
(c) Tranche C Acquisition Term Loans. Each Lender severally
--------------------------------
agrees to lend to Company on the Closing Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate Tranche C Commitments to
be used for the purposes identified in subsection 2.5D. Each Lender's
commitment to make Tranche C Acquisition Term Loans to Company pursuant
to this subsection 2.1A(iv) is herein called its "Tranche C
Commitment" and such commitments of all Lenders in the aggregate are
herein called the "Tranche C Commitments." The original amount of
each Lender's Tranche C Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original amount of the
Tranche C Commitments is $200,000,000. Each Lender's Tranche C
Commitment shall expire immediately and without further action on July
31, 1996 if the conditions set forth in subsection 3.1 are not satisfied
on or before that date. Company may make only one borrowing under the
Tranche C Commitments. Amounts borrowed under this subsection
2.1A(ii)(c) and subsequently repaid or prepaid may not be reborrowed.
(iii) Revolving Loans. Each Lender severally agrees, subject to the
---------------
limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, (i) to maintain and
continue as Revolving Loans hereunder its Pro Rata Share of the principal
amount of outstanding Revolving Loans as defined in and which are outstanding
under the Existing Credit Agreement as of the Closing Date after giving
effect to subsection 2.1G and (ii) to lend to Company from time to time
during the period from the Closing Date to but excluding the Commitment
Termination Date an aggregate amount not exceeding its Pro Rata Share of the
aggregate Revolving Loan Commitments to be used for the purposes identified
in subsection 2.5E. Each Lender's commitment to maintain and make to Company
Revolving Loans pursuant to this subsection 2.1A(iii) is herein called its
"Revolving Loan Commitment" and such commitments of all Lenders in the
aggregate are herein called the "Revolving Loan Commitments." The original
amount of each Lender's Revolving Loan Commitment is set forth opposite its
name on Schedule 2.1 annexed hereto and the aggregate original amount of the
39
<PAGE>
Revolving Loan Commitments is $250,000,000; provided that the amount of the
Revolving Loan Commitments shall be reduced from time to time by the amount
of any reductions thereto made pursuant to subsections 2.4C or 2.4D. Each
Lender's Revolving Loan Commitment shall expire on the Commitment Termination
Date and all Revolving Loans and all other amounts owed hereunder with
respect to the Revolving Loans and the Revolving Loan Commitments shall be
paid in full no later than that date; provided that each Lender's Revolving
Loan Commitment shall expire immediately and without further action on
July 31, 1996 if the conditions set forth in subsection 3.1 are not satisfied
on or before that date. Amounts borrowed under this subsection 2.1A(iii) may
be repaid and reborrowed to but excluding the Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Revolving Loans and the Revolving Loan Commitments shall be subject to
the following limitations:
(a) The amount otherwise available for borrowing under the
Revolving Loan Commitments as of the time of determination (other than
to repay the Swing Line Loans and accrued and unpaid interest thereon
and to reimburse any Issuing Lender for the amount of any drawings under
any Letters of Credit honored by such Issuing Lender and not theretofore
reimbursed by Company) shall be reduced by an amount equal to the sum of
(1) the principal amount of all Swing Line Loans then outstanding plus
(2) the Letter of Credit Usage as of such time of determination; and
(b) The Total Utilization of Revolving Loan Commitments shall not
exceed the aggregate Revolving Loan Commitments.
(iv) Swing Line Loans. Bankers hereby agrees, subject to the
----------------
limitations set forth below with respect to the maximum amount of Swing Line
Loans permitted to be outstanding from time to time, (i) to maintain and
continue as Swing Line Loans hereunder the Swing Line Loans as defined in and
which are outstanding under the Existing Credit Agreement and (ii) to make a
portion of the Revolving Loan Commitments available to Company from time to
time during the period from the Closing Date through but excluding the
Commitment Termination Date in an aggregate principal amount of up to
$25,000,000 by making Swing Line Loans to Company, notwithstanding the fact
that such Swing Line Loans, when aggregated with Bankers' outstanding
Revolving Loans may exceed Bankers' Revolving Loan Commitment. Bankers'
commitment to make and maintain Swing Line Loans to Company pursuant to this
subsection 2.1A(iv) is herein called its "Swing Line Loan Commitment." In
no event shall (a) the aggregate principal amount of Swing Line Loans
outstanding at any time exceed the Swing Line Loan Commitment, (b) the
aggregate principal amount of Revolving Loans and Swing Line Loans
outstanding at any time exceed the aggregate Revolving Loan Commitments
reduced by the aggregate Letter of Credit Usage at such time or (c) the Swing
Line Loan Commitment exceed the aggregate Revolving Loan Commitments. Any
reduction of the Revolving Loan Commitments made pursuant to subsection 2.4C
or 2.4D which reduces the Revolving Loan Commitment below the then current
amount of the Swing Line Loan Commitment shall result in an automatic
corresponding reduction of the Swing Line Loan
40
<PAGE>
Commitment to the amount of the Revolving Loan Commitments, as so reduced,
without any further action on the part of Bankers.
Bankers' Swing Line Loan Commitment shall expire on the Commitment
Termination Date and Swing Line Loans shall be paid (x) on the last Business
Day of each calendar month, to the extent that the aggregate principal amount
of Swing Line Loans outstanding on the third to last Business Day of such
calendar month exceeds $6,000,000, in an amount equal to the largest multiple
of $500,000 less than or equal to such outstanding principal amount of Swing
Line Loans in excess of $6,000,000 and (y) in full no later than the
Commitment Termination Date.
Amounts borrowed by Company under this subsection 2.1A(iv) may be repaid
and, to but excluding the Commitment Termination Date, reborrowed. All Swing
Line Loans shall be made as Prime Rate Loans and shall not be entitled to be
converted into Eurodollar Rate Loans. Swing Line Loans made on any Funding
Date may be in any amount.
Bankers, at any time in its sole and absolute discretion may on five
Business Days' notice, require each Lender, including Bankers, and each
Lender hereby agrees, subject to this subsection 2.1A(iv), to make a
Revolving Loan (which shall initially be funded as a Prime Rate Loan) in an
amount equal to such Lender's Pro Rata Share of the amount of the Swing Line
Loans ("Refunded Swing Line Loans") outstanding on the date notice is given
which Bankers requests Lenders to pay; provided however that the obligation
of each Lender to make any such Revolving Loan is subject to the condition
that (i) Bankers believed in good faith that all conditions under Section 3.4
to the making of such Swing Line Loan were satisfied at the time such Swing
Line Loan was made, or (ii) such Lender had actual knowledge, by receipt of
the statements required pursuant to subsection 5.1 or otherwise, that any
such condition had not been satisfied and failed to notify Bankers and
Administrative Agent in writing that it had no obligation to make Revolving
Loans until such condition was satisfied (which notice shall be effective as
of the date of receipt by Bankers and Administrative Agent), or (iii) the
satisfaction of any such condition not satisfied has been waived by Requisite
Lenders. In the case of Revolving Loans made by Lenders other than Bankers
under the immediately preceding sentence, each such Lender shall make the
amount of its Revolving Loan available to Administrative Agent, in same day
funds, at the office of Administrative Agent located at One Bankers Trust
Plaza, New York, New York, not later than 1:00 P.M. (New York time) on the
Business Day next succeeding the fifth Business Day after the date such
notice is given. The proceeds of such Revolving Loans shall be immediately
delivered to Bankers (and not to Company) and applied to repay the Refunded
Swing Line Loans. On the day such Revolving Loans are made, Bankers' Pro
Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with
the proceeds of a Revolving Loan made by Bankers and such portion of the
Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing
Line Loans and shall be due as a Revolving Loan made by Bankers. Company
authorizes Administrative Agent and Bankers to charge Company's accounts with
Administrative Agent and Bankers (up to the amount available in each such
account) in order to immediately pay Bankers the amount of such Refunded
Swing Line Loans to the extent amounts received from Lenders, including
amounts deemed to be received from Bankers, are not sufficient to repay in
full such Refunded Swing Line Loans. If any portion
41
<PAGE>
of any amount paid (or deemed to be paid) to Bankers should be recovered from
Bankers by or on behalf of Company in bankruptcy, by assignment for the
benefit of creditors or otherwise, the loss of the amount so recovered shall
be ratably shared among all Lenders proportionately in accordance with their
respective Pro Rata Shares; provided however that in the case of amounts
recovered from Bankers in respect of amounts charged against Company's
accounts, the loss of the amount so recovered shall be shared ratably by all
Lenders whose Revolving Loans made pursuant to this paragraph were less than
each such respective Lender's Pro Rata Share of the Refunded Swing Line Loan.
Subject to the proviso contained in the first sentence of this paragraph,
each Lender's obligation to make the Revolving Loans referred to in this
paragraph shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against Bankers, Company or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of an Event of Default or a Potential
Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of Company or any of its Subsidiaries; (iv) the acceleration or
maturity of any Loans or the termination of the Revolving Loan Commitments
after the making of any Swing Line Loan; (v) any breach of this Agreement by
any Loan Party, Administrative Agent or any other Lender; or (vi) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
In the event that Company or any of its Subsidiaries has filed for
protection under the Bankruptcy Code or otherwise if Bankers requests and, in
any event, subject to satisfaction of the conditions set forth in the proviso
to the first sentence of the preceding paragraph, each Lender shall acquire
without recourse or warranty an undivided participation interest equal to
such Lender's Pro Rata Share of any Swing Line Loan otherwise required to be
repaid by such Lender pursuant to the preceding paragraph by paying to
Bankers on the date on which such Lender would otherwise have been required
to make a Revolving Loan in respect of such Swing Line Loan pursuant to the
preceding paragraph, in immediately available funds, an amount equal to such
Lender's Pro Rata Share of such Swing Line Loan, and no Revolving Loans shall
be made by such Lender pursuant to the preceding paragraph. If such amount
is not in fact made available to Bankers by that Lender on the date when
Revolving Loans would otherwise be required to be made pursuant to the
preceding paragraph, Bankers shall be entitled to recover such amount on
demand from that Lender together with interest accrued from such date at the
customary rate set by Bankers for the correction of errors among banks for
three Business Days and thereafter at the rate of interest then applicable to
Prime Rate Loans. From and after the date on which any Lender purchases an
undivided participation interest in a Swing Line Loan pursuant to this
paragraph, Bankers shall promptly distribute to such Lender such Lender's Pro
Rata Share of all payments of principal and interest in respect of such Swing
Line Loan.
A copy of each notice given by Bankers to Lenders pursuant to the second
preceding paragraph shall be promptly delivered by Bankers to Company. Upon
the making of a Revolving Loan by a Lender pursuant to this
subsection 2.1A(iv), the amount so funded shall become due under such
Lender's Revolving Note and shall no longer be owed under the Swing Line
Note.
Notwithstanding anything herein to the contrary, Bankers shall not be
obligated to make any Swing Line Loans if it has elected after the occurrence
of a Potential Event of Default or
42
<PAGE>
Event of Default not to make Swing Line Loans and has notified Company in
writing or by telephone (promptly confirmed in writing) of such election.
Bankers shall promptly give notice to Lenders of such election not to make
Swing Line Loans.
B. Borrowing Mechanics. Acquisition Term Loans and Revolving Loans
made on any Funding Date shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount.
Swing Line Loans made on any date shall not be subject to an aggregate
minimum amount. Whenever Company desires that Lenders make an Acquisition
Term Loan or a Revolving Loan under subsection 2.1A(ii) or 2.1A(iii), as the
case may be, it shall deliver to Administrative Agent a Notice of Borrowing
no later than 12:00 Noon (New York time) at least three Business Days in
advance of the proposed Funding Date in the case of a Eurodollar Rate Loan
and at least one Business Day in advance of the proposed Funding Date in the
case of a Prime Rate Loan. Whenever Company desires that Bankers make a
Swing Line Loan under subsection 2.1A(iv), it shall deliver to Administrative
Agent a Notice of Borrowing no later than 12:00 Noon (New York time) on the
proposed Funding Date. The Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount and
type of Loans requested, (iii) in the case of Loans made on the Closing Date,
that such Loans shall be Prime Rate Loans, (iv) in the case of Revolving
Loans not made on the Closing Date, whether such Loans shall be Prime Rate
Loans or Eurodollar Rate Loans, (v) in the case of Loans requested to be made
during the first 90 days following the Closing Date as Eurodollar Rate Loans,
that the initial Interest Period applicable to such Loans shall be one month
unless Administrative Agent permits otherwise, in its sole discretion;
(vi) in the case of any Loans requested to be made as Eurodollar Rate Loans,
the initial Interest Period applicable thereto; (vii) in the case of
Revolving Loans and Swing Line Loans, that the amount of the proposed
borrowing will not cause the Total Utilization of Revolving Loan Commitments
to exceed the aggregate Revolving Loan Commitments; (viii) in the case of
Swing Line Loans, that the amount of the proposed borrowing will not cause
the aggregate principal amount of Swing Line Loans outstanding to exceed the
Swing Line Loan Commitment then in effect; (ix) in the case of Tranche B
Acquisition Term Loans, that the amount of the proposed borrowing will not
cause the aggregate principal amount of Tranche B Acquisition Term Loans
outstanding to exceed the Tranche B Commitments then in effect, and (x) in
the case of any Acquisition Term Loans, that (a) as of the last day of the
Fiscal Quarter immediately preceding the applicable scheduled Funding Date in
respect of such Acquisition the Leverage Ratio for the most recently
completed four Fiscal Quarters is equal to or less than 4.50:1.00 (it being
understood and agreed that Company shall not be required to comply with the
Leverage Ratio requirement of this clause (a) as a condition to the making of
Acquisition Term Loans hereunder in connection with the Identified
Acquisition) and (b) no Event of Default or Potential Event of Default has
occurred or is continuing or would be caused by the consummation of the
Acquisition. Term Loans and Revolving Loans may be continued as or converted
into Prime Rate Loans and Eurodollar Rate Loans in the manner provided in
subsection 2.2D. In lieu of delivering the above described Notice of
Borrowing, Company may give Administrative Agent telephonic notice by the
required time of the proposed borrowing under this subsection 2.1B; provided
that such notice shall be promptly confirmed in writing by delivery of a
Notice of Borrowing to Administrative Agent on or before the applicable
Funding Date.
43
<PAGE>
Neither Administrative Agent nor any Lender shall incur any liability to
any Loan Party in acting upon any telephonic notice referred to above which
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company
or for otherwise acting in good faith under this subsection 2.1B and, upon
funding of Loans by Lenders in accordance with this Agreement pursuant to any
telephonic notice, Company shall have effected Loans hereunder.
Except as provided in subsection 2.6B, 2.6C and 2.6G, a Notice of
Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination
Date, and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Loans under this Agreement shall be
made by Lenders simultaneously and proportionately to their respective Pro
Rata Shares of the Commitments for the particular types of Loans requested,
it being understood that no Lender shall be responsible for any default by
any other Lender of that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular type
of Loan requested be increased or decreased as a result of the default by any
other Lender of that other Lender's obligation to make a Loan requested
hereunder. Promptly after receipt by Administrative Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative Agent shall notify each Lender or Bankers, as the case may be,
of the proposed borrowing. Each Lender shall make the amount of its Loans
available to Administrative Agent, in same day funds, at the office of
Administrative Agent located at One Bankers Trust Plaza, New York, New York
not later than 3:00 p.m. (New York time) on the Funding Date. Except with
respect to the repayment of Refunded Swing Line Loans, as provided in sub-
section 2.1A(iv), or the reimbursement of an Issuing Lender for a drawing on
a Letter of Credit, as provided in subsection 2.7D, upon satisfaction or
waiver of the conditions precedent specified in subsections 3.1 and 3.4 in
the case of the initial Revolving Loans and Swing Line Loans on the initial
Funding Date (and/or subsection 3.1 and 3.4 in the case of any initial
Acquisition Term Loans on the initial Funding Date) and subsection 3.4 in the
case of Revolving Loans and Swing Line Loans on any subsequent Funding Date
(and subsection 3.3 and 3.4 in the case of Acquisition Term Loans on any
subsequent Funding Date), Administrative Agent shall make the proceeds of
such Loans available to Company on the Funding Date by causing an amount of
same day funds equal to the proceeds of all such Loans received by
Administrative Agent at its office located at the address set forth in the
preceding sentence to be credited to the account of Company at such office of
Administrative Agent.
Unless Administrative Agent shall have been notified by any Lender prior
to a Funding Date that such Lender does not intend to make available to
Administrative Agent such Lender's Loan requested on such Funding Date,
Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on such Funding Date and Administrative
Agent may, in its sole discretion, but shall not be obligated to, make
available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such corre-
sponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for
the correction of errors among banks for three Business Days and thereafter
at the Prime Rate. If such Lender does not pay such corresponding amount
forthwith upon Administrative Agent's demand therefor, Administrative Agent
shall promptly notify Company and Company shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon,
44
<PAGE>
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the rate payable under this Agreement for Prime Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.
D. Register.
(i) Administrative Agent shall maintain, at its address referred
to in subsection 9.10, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "Register"). Company, Administrative Agent and
Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Commitments and the Loans from time to time of each Lender and each
repayment or prepayment in respect of the principal amount of the Loans
of each Lender. Any such recordation in accordance with the terms of
this Agreement shall be conclusive and binding on Company and each
Lender, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect
Company's Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records
(including, without limitation, any Note described in subsection 2.1F)
the amount of the Loan made by it and each payment in respect thereof.
Any such recordation in accordance with the terms of this Agreement
shall be conclusive and binding on Company, absent manifest error;
provided that failure to make any such recordation, or any error in such
recordation, shall not affect Company's Obligations in respect of the
applicable Loans; provided further that in the event of any
inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners
of the corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or transfer of any such Commitment or
Loan shall be effective, in each case unless and until an Assignment
Agreement effecting the assignment or transfer thereof shall have been
accepted by Administrative Agent and recorded in the Register as
provided in subsection 9.2B(ii). Prior to such recordation, all amounts
owed with respect to the applicable
45
<PAGE>
Commitment or Loan shall be owed to the Lender listed in the Register as
the owner thereof, and any request, authority or consent of any Person
who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
E. Scheduled Payments of Term Loans.
(i) Company shall make principal payments in the aggregate amount
of the Scheduled Existing Term Repayment Amount on the last day of each
Fiscal Quarter of each Fiscal Year set forth in the definition of
Scheduled Existing Term Repayment Amount; provided that the Existing
Term Loans and all other amounts owed hereunder with respect to the
Existing Term Loans shall be paid in full no later than December 29,
2002.
(ii) Company shall make principal payments (a) in the aggregate
amount of the Scheduled Tranche A Repayment Amount on the last day of
each Fiscal Quarter of each Fiscal Year set forth in the definition of
Scheduled Tranche A Repayment Amount, (b) in the aggregate amount of the
Scheduled Tranche B Repayment Amount on the last day of each Fiscal
Quarter of each Fiscal Year set forth in the definition of Scheduled
Tranche B Repayment Amount and (c) in the aggregate amount of the
Scheduled Tranche C Repayment Amount on the last day of each Fiscal
Quarter of each Fiscal Year set forth in the definition of Scheduled
Tranche C Repayment Amount; provided that the Acquisition Term Loans and
all other amounts owed hereunder with respect to the Acquisition Term
Loans shall be paid in full no later than December 29, 2002.
F. Note Option. Any Lender may, by notice to Administrative Agent and
Company, request that all or part of the principal amount of Company's Loans
from such Lender hereunder be evidenced by an Existing Term Note, a Tranche A
Acquisition Term Note, Tranche B Acquisition Term Note, Tranche C Acquisition
Term Note, Revolving Note and/or Swing Line Note, as applicable. Within
three Business Days of Company's receipt of such notice, Company shall
execute and deliver to Administrative Agent for delivery to the appropriate
Lender a Note or Notes, payable to the notifying Lender or, if so specified
in such notice, any Person who is an assignee of such Lender pursuant to
subsection 9.2 hereof.
G. Reallocation of Pro Rata Shares. On the Closing Date, each Lender,
without executing an Assignment Agreement, shall be deemed to have
automatically purchased assignments pro rata from each Departing Lender in
all such Departing Lenders' rights and obligations under this Agreement and
the other Loan Documents, including with respect to Revolving Loan
Commitments, the commitments of Lenders to purchase participations in the
Letters of Credit and to make Refunded Swing Line Loans, outstanding
Revolving Loans and participations in Existing Letters of Credit and
including with respect to the outstanding 1995 Term Loans (collectively,
except set forth below, the "Assigned Rights and Obligations") so that,
after giving effect to such assignments, each Lender shall have its
respective Pro Rata Share as set forth in Schedule 1.1A (as adjusted as
required under the definition of Pro Rata Share)
46
<PAGE>
of the Assigned Rights and Obligations. Each such purchase hereunder shall
be at par for a purchase price equal to the principal amount of Loans and
unreimbursed drawings with respect to Letters of Credit to be purchased and
without recourse, representation or warranty, except that, as provided in the
Departing Lender Consent, each Departing Lender shall be deemed to represent
and warrant to each Purchasing Lender that the Assigned Rights and
Obligations of such Departing Lender are not subject to any Liens created by
that Departing Lender.
Administrative Agent shall calculate the net amount to be paid or
received by each Lender in connection with the assignments effected hereunder
on the Closing Date. Each Lender required to make a payment shall make the
net amount of its required payment available to Administrative Agent, in same
day funds, at the office of Administrative Agent located at One Bankers Trust
Plaza, New York, New York, not later than 12:00 p.m. (New York time) on the
Closing Date. Administrative Agent shall distribute on the Closing Date the
proceeds of such amounts to the Departing Lenders entitled to receive
payments, pro rata in proportion to the amount each Departing Lender is
entitled to receive.
2.2 Interest on the Loans
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.2E
and 2.8, each Term Loan and Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Reference
Rate or the Adjusted Eurodollar Rate, as the case may be. The applicable
basis for determining the rate of interest with respect to Loans shall be
selected by Company initially at the time a Notice of Borrowing is given
pursuant to subsection 2.1B. The basis for determining the interest rate
with respect to any Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Term Loan or Revolving Loan is outstanding
with respect to which notice has not been delivered to Administrative Agent
in accordance with the terms of this Agreement specifying the applicable
basis for determining the rate of interest then, for that day, that Loan
shall bear interest determined by reference to the Reference Rate. Each
Swing Line Loan shall bear interest on the unpaid principal amount thereof
from the date made through maturity (whether by acceleration or otherwise) at
a rate determined by reference to the Reference Rate.
Subject to the provisions of subsections 2.2E and 2.8, Term Loans,
Revolving Loans and Swing Line Loans shall bear interest through maturity as
follows:
(i) if a Prime Rate Loan (other than a Swing Line Loan), then at a
rate per annum equal to the sum of the Reference Rate plus the
Applicable Margin; "Applicable Margin" means (a) for the period from
and including the Closing Date through and including December 29, 1996,
1/8% and (b) for each portion of each subsequent Pricing Period (1)
occurring prior to the Additional Subordinated Indebtedness Refinancing,
the Applicable Margin I set forth below corresponding to the Leverage
Ratio as of the Date of Determination occurring on the day before the
commencement of such Pricing Period, and (2) occurring from and after
the Additional Subordinated Indebtedness Refinancing, the Applicable
Margin II set forth below corresponding to the Leverage Ratio as of the
47
<PAGE>
Date of Determination occurring on the day before the commencement of
such Pricing Period, as follows:
Leverage Ratio Applicable Applicable
Margin I Margin II
Less than 2.25:1.00 0% 0%
2.25:1.00 - 2.49:1.00 0% 0%
2.50:1.00 - 2.99:1.00 0% 0%
3.00:1.00 - 3.49:1.00 0% 0%
3.50:1.00 - 3.99:1.00 1/8% 0%
4.00:1.00 - 4.49:1.00 3/8% 1/4%
4.50:1.00 and higher 5/8% 1/2%
(ii) if a Eurodollar Rate Loan, then at a rate per annum equal to the
sum of the Adjusted Eurodollar Rate plus the Applicable Eurodollar Rate
Margin; "Applicable Eurodollar Rate Margin" means (a) for the period from
and including the Closing Date through and including December 29, 1996, 1-
1/8%, and (b) for each portion of each subsequent Pricing Period (1)
occurring prior to the occurrence of the Additional Subordinated
Indebtedness Refinancing, the Applicable Eurodollar Rate Margin I set forth
below corresponding to the Leverage Ratio as of the Date of Determination
occurring on the day before the commencement of such Pricing Period, and
(2) occurring from and after the Additional Subordinated Indebtedness
Refinancing, the Applicable Eurodollar Rate Margin II set forth below
corresponding to the Leverage Ratio as of the Date of Determination
occurring on the day before the commencement of such Pricing Period, in
each case as follows:
48
<PAGE>
Leverage Ratio Applicable Applicable
Eurodollar Eurodollar
Rate Margin I Rate Margin II
Less than 2.25:1.00 3/8% 1/4%
2.25:1.00 - 2.49:1.00 5/8% 1/2%
2.50:1.00 - 2.99:1.00 3/4% 5/8%
3.00:1.00 - 3.49:1.00 1% 7/8%
3.50:1.00 - 3.99:1.00 1-1/8% 1%
4.00:1.00 - 4.49:1.00 1-3/8% 1-1/4%
4.50:1.00 and higher 1-5/8% 1-1/2%
(iii) if a Swing Line Loan, then at a rate per annum equal to the
sum of the Reference Rate plus the Applicable Swing Line Margin;
"Applicable Swing Line Margin" means (a) for the period from and
including the Closing Date through and including December 29, 1996, 0%, and
(b) for each portion of each subsequent Pricing Period (1) occurring prior
to the Additional Subordinated Indebtedness Refinancing, the Applicable
Swing Line Margin I set forth below corresponding to the Leverage Ratio as
of the Date of Determination occurring on the day before the commencement
of such Pricing Period, and (2) occurring from and after the Additional
Subordinated Indebtedness Refinancing, the Applicable Swing Line Margin II
set forth below corresponding to the Leverage Ratio as of the Date of
Determination occurring on the day before the commencement of such Pricing
Period, in each case as follows:
Leverage Ratio Applicable Applicable
Swing Line Swing Line
Margin I Margin II
Less than 2.25:1.00 0% 0%
2.25:1.00 - 2.49:1.00 0% 0%
2.50:1.00 - 2.99:1.00 0% 0%
3.00:1.00 - 3.49:1.00 0% 0%
3.50:1.00 - 3.99:1.00 0% 0%
4.00:1.00 - 4.49:1.00 0% 0%
4.50:1.00 and higher 1/4% 1/8%
Notwithstanding anything in the foregoing to the contrary, if at any time
from the Closing Date through December 29, 1996 Company consummates a
Substantial Acquisition and the
49
<PAGE>
Leverage Ratio as of the date of consummation would cause an increase in either
the Applicable Margin, Applicable Eurodollar Margin or Applicable Swing Line
Margin then in effect as demonstrated by a Pricing Certificate delivered by
Company on the date of such Substantial Acquisition, then Administrative Agent
shall recalculate the Applicable Margin, Applicable Eurodollar Margin or
Applicable Swing Line Margin and give effect to any such increase as of such
date of consummation.
On each Pricing Certificate Delivery Date, Company shall deliver a Pricing
Certificate demonstrating the calculation of the Leverage Ratio as of the most
recent Date of Determination. Notwithstanding that the Pricing Certificate for
a Pricing Period may be delivered after the relevant Date of Determination,
adjustments to the amount of accrued interest (and the amount of letter of
credit fees payable under subsection 2.7F(ii)) shall be made to reflect
retroactive application of the applicable interest rate margin set forth in such
Pricing Certificate to the first day of such Pricing Period; provided that no
such adjustment shall be made with respect to Eurodollar Rate Loans for which
Interest Payment Dates have occurred during the period from the first day of
such Pricing Period to and including the Pricing Certificate Delivery Date with
respect to such Pricing Period.
Notwithstanding anything in the foregoing to the contrary, if any Pricing
Certificate delivered by Company demonstrating the appropriate Leverage Ratio
shall prove to have incorrectly understated the Leverage Ratio (as determined by
reference to a subsequent Compliance Certificate or subsequent publicly filed
financial statements of Company), such Pricing Certificate shall no longer be in
effect, and Administrative Agent shall calculate the difference between the
amount of interest (and the amount of commitment fees payable under subsections
2.3A and 2.3B and the amount of letter of credit fees payable under
subsection 2.7F(ii)) actually paid by Company on the basis of such incorrect
Pricing Certificate and the amount of interest (and the amount of commitment
fees payable under subsections 2.3A and 2.3B and the amount of letter of credit
fees payable under subsection 2.7F(ii)) which would have been due had such
incorrect Pricing Certificate not been delivered. Administrative Agent shall
notify Company of the amount of such difference, if any, in a statement setting
forth the method of calculation of such amount (which calculation, in the
absence of demonstrable error, shall be deemed correct) and Company shall pay
such amount to Administrative Agent for the account of Lenders within three
Business Days of such notice.
Notwithstanding anything in the foregoing to the contrary, if Company
delivers a Cost Adjustment Certificate in respect of an Acquisition pursuant to
subsection 5.1(xviii) (an "Initial Cost Adjustment Certificate"), then upon
the delivery of the related Cost Adjustment Certificate pursuant to subsection
5.1(iii) (a "Subsequent Cost Adjustment Certificate") for the first four full
Fiscal Quarters following such Acquisition (or, in the event Company determines
that it shall not realize the cost reduction synergies set forth in the Initial
Cost Reduction Certificate, the next complete Fiscal Quarter following such
determination), to the extent such Subsequent Cost Adjustment Certificate
indicates that the actual cost reduction synergies of the type set forth in the
Initial Cost Adjustment Certificate for the period covered thereby are less than
the cost reduction synergies estimated by Company in the Initial Cost Adjustment
Certificate for such period, the Administrative Agent shall calculate the
difference between the amount of interest
50
<PAGE>
(and the amount of commitment fees payable under subsections 2.3A and 2.3B and
the amount of letter of credit fees payable under subsection 2.7F(ii)) actually
paid by Company on the basis of the Initial Cost Adjustment Certificate and the
amount of interest (and the amount of commitment fees payable under subsections
2.3A and 2.3B and the amount of letter of credit fees payable under
subsection 2.7F(ii)) which would have been due had the actual cost reduction
synergies contained in the Subsequent Cost Adjustment Certificate been
substituted for the estimated cost reduction synergies contained in the Initial
Cost Reduction Certificate. Administrative Agent shall notify Company of the
amount of such difference, if any, in a statement setting forth the method of
calculation of such amount (which calculation, in the absence of demonstrable
error, shall be deemed correct) and Company shall pay such amount to
Administrative Agent for the account of Lenders within three Business Days of
such notice.
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be at Company's option either a one, two, three, four, five, six or nine month
period or, if permitted under clause (ix) of this subsection 2.2B, a twelve
month period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date of such Loan, in the case of a Loan initially
made as a Eurodollar Rate Loan, or on the date specified in the applicable
Notice of Conversion/Continuation, in the case of a Loan converted to a
Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, in the case of a Eurodollar Rate
Loan, if any Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) any Interest Period for a Eurodollar Rate Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (v) of this subsection 2.2B, end
on the last Business Day of a calendar month;
(v) no Interest Period for any Term Loan shall extend beyond a date
on which Company is required to make a scheduled payment of principal of
any Term Loan unless the aggregate principal amount of Term Loans that are
Prime Rate Loans plus the aggregate principal amount of Term Loans that are
Eurodollar Rate Loans with Interest
51
<PAGE>
Periods expiring on or before such date equals or exceeds the principal
amount required to be paid on the Term Loans on such date;
(vi) there shall be no more than twenty Interest Periods relating to
Eurodollar Rate Loans or any combination thereof outstanding at any time;
(vii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month;
(viii) no Interest Period with respect to any Term Loans shall
extend beyond December 29, 2002 and no Interest Period with respect to
Revolving Loans shall extend beyond the Commitment Termination Date; and
(ix) no Eurodollar Rate Loan shall have an Interest Period of twelve
months unless Company shall have obtained the prior consent of all Lenders.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest shall be payable on the Loans as follows:
(i) interest on each Prime Rate Loan (other than a Swing Line Loan)
shall be payable in arrears on and to the last day of each Fiscal Quarter,
upon any prepayment of any such Loan (to the extent accrued on the amount
being prepaid) and at maturity (including final maturity); provided that in
the event any Revolving Loans that are Prime Rate Loans are prepaid
pursuant to subsection 2.4A(i), interest accrued on such Revolving Loans
through the date of such prepayment shall be payable on the last day of the
then current Fiscal Quarter (or, if earlier, at final maturity);
(ii) interest on each Eurodollar Rate Loan shall be payable in arrears
on and to each Interest Payment Date applicable to that Loan, upon any
prepayment of that Loan (to the extent accrued on the amount being prepaid)
and at maturity (including final maturity); and
(iii) interest on each Swing Line Loan shall be payable in arrears
on and to the last day of each Fiscal Quarter and upon termination of the
Swing Line Commitment.
D. Conversion or Continuation. Subject to the provisions of
subsection 2.6, Company shall have the option (i) to convert at any time all or
any part of outstanding Term Loans or Revolving Loans (but not Swing Line Loans)
equal to $2,000,000 and integral multiples of $500,000 in excess of that amount
from Loans bearing interest at a rate determined by reference to one basis to
Loans bearing interest at a rate determined by reference to an alternative basis
or (ii) upon the expiration of any Interest Period applicable to a Eurodollar
Rate Loan, to continue all or any portion of such Loans equal to $2,000,000 and
integral multiples of $500,000 in excess of that amount as a Eurodollar Rate
Loan and the succeeding Interest Period(s) of such continued Loan shall commence
on the most recent Interest Payment Date thereof; provided
52
<PAGE>
however that a Eurodollar Rate Loan may only be converted into a Loan bearing
interest determined by reference to an alternative basis on the expiration date
of an Interest Period applicable thereto; provided further that Swing Line Loans
shall only bear interest as Prime Rate Loans and Company shall not have any
right to convert outstanding Swing Line Loans which are Prime Rate Loans into
Swing Line Loans bearing interest at a rate determined by reference to any other
basis; and provided still further that no Loan may be made as or converted into
a Prime Rate Loan during the period from December 24 of any year to and
including January 7 of the immediately succeeding year for the purpose of
investing in securities bearing interest at a rate determined by reference to
any other basis for the purpose of arbitrage or speculation; provided still
further that (y) no Loan may be made as a Eurodollar Rate Loan on the Closing
Date and (z) no Loan may be made as a Eurodollar Rate Loan with an applicable
Interest Period of other than one month during the first 90 days following the
Closing Date unless Administrative Agent so permits in its sole discretion.
Company shall deliver a Notice of Conversion/Continuation to Administrative
Agent no later than 12:00 Noon (New York time) at least one Business Day in
advance of the proposed conversion/continuation date (in the case of a
conversion to a Prime Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Loan to be converted/continued, (iii) the
nature of the proposed conversion/continuation, (iv) in the case of a conversion
to, or continuation of, a Eurodollar Rate Loan, the requested Interest Period
and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of Conversion/
Continuation, Company may give Administrative Agent telephonic notice by the
required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability to
any Loan Party in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D and upon conversion or
continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice, Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date and Company shall be bound to
effect conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the Loans not paid
when due and, to the extent permitted by applicable law, any interest payments
on the Loans or any fees
53
<PAGE>
or other amounts owed hereunder not paid when due, in each case whether at
stated maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand
at a rate which is 2% per annum in excess of the interest rate otherwise payable
under this Agreement for Prime Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Prime Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Prime Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Prime Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Prime Rate Loan to such Eurodollar
Rate Loan shall be excluded; provided that if a Loan is repaid on the same day
on which it is made, one day's interest shall be paid on that Loan.
2.3 Fees
----
A. Acquisition Commitment Fees. Company agrees to pay to Administrative
Agent, for distribution to each Lender in proportion to that Lender's Pro Rata
Share, commitment fees for the period from and including the Closing Date to and
excluding the date the Tranche B Commitments expire, equal to the average of the
daily excess of the Tranche B Commitments over the aggregate principal amount of
Tranche B Acquisition Term Loans outstanding multiplied by 3/8 of 1% per annum,
such commitment fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable quarterly in arrears on the last
day of each Fiscal Quarter, commencing on the first such date to occur after the
Closing Date, and on the date the Tranche B Commitments expire; provided however
that such per annum percentage shall be reduced to 1/4 of 1% per annum for each
day during any Pricing Period in which the Leverage Ratio as of the last day of
the most recently ended Fiscal Quarter is equal to or less than 4.50:1.00.
B. Revolving Loan Commitment Fees. Company agrees to pay to
Administrative Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Closing Date to and excluding the date the Revolving Loan Commitments expire,
equal to the average of the daily excess of the Revolving Loan Commitments over
the aggregate principal amount of Revolving Loans outstanding multiplied by 3/8
of 1% per annum, such commitment fees to be calculated on the basis of a 360-day
year and the actual number of days elapsed and to be payable quarterly in
arrears on the last day of each Fiscal Quarter, commencing on the first such
date to occur after the Closing Date, and on the date the Revolving Loan
Commitments expire; provided however that such per annum percentage shall be
reduced to 1/4 of 1% per annum for each day during any Pricing Period in
54
<PAGE>
which the Leverage Ratio as of the last day of the most recently ended Fiscal
Quarter is equal to or less than 4.50:1.00. Reductions in the amounts available
for borrowing under the Revolving Loan Commitments arising from the operation of
the limitation set forth in the second paragraph of subsection 2.1A(iii),
including reductions as a result of the making of Swing Line Loans or the
issuance of Letters of Credit, shall not constitute usages of Revolving Loan
Commitments for purposes of this subsection 2.3B and shall not reduce the amount
of the commitment fees that are payable under this subsection 2.3B.
C. Other Fees. Company agrees to pay to Administrative Agent such fees
in the amounts and at the times set forth in that certain letter agreement dated
April 30, 1996 by and among Company and Bankers.
2.4 Prepayments and Payments; Reductions in Commitments; Cash Collateralization
---------------------------------------------------------------------------
of Standby Letters of Credit
----------------------------
A. Prepayments.
(i) Voluntary Prepayments.
---------------------
(a) Company may, upon written or telephonic notice to
Administrative Agent on or prior to 12:00 Noon (New York time) on the
date of prepayment, which notice, if telephonic shall be promptly
confirmed in writing, at any time and from time to time prepay any
Swing Line Loan in whole or in part in any aggregate amount. Company
may, with respect to Prime Rate Loans, upon not less than one Business
Day's, and with respect to Eurodollar Rate Loans, upon not less than
three Business Days' prior written or telephonic notice confirmed in
writing to Administrative Agent (which notice Administrative Agent
will promptly transmit by telecopy, telex or telephone to each
Lender), at any time and from time to time prepay any Loans (other
than Swing Line Loans) in whole or in part in an aggregate minimum
amount of $2,000,000 and integral multiples of $500,000 in excess of
that amount; provided however that in the event that Company prepays a
Eurodollar Rate Loan pursuant to this subsection 2.4A(i) on a date
that is other than the expiration date of the Interest Period
applicable thereto, Company shall compensate the Lender or Lenders
receiving such prepayments in accordance with the provisions of
subsection 2.6D. Notice of prepayment having been given as aforesaid,
the principal amount of the Loans specified in such notice shall
become due and payable on the prepayment date specified therein. Any
such voluntary prepayment shall be applied as specified in
subsection 2.4A(iii).
(b) In the event Company is entitled to replace a non-consenting
Lender pursuant to subsection 9.7B, Company shall have the right, upon
five Business Days' prior written notice to Administrative Agent
(which notice Administrative Agent shall promptly transmit to each of
the Lenders), to prepay all Loans, together with accrued and unpaid
interest, fees and other amounts owing to such
55
<PAGE>
Lender in accordance with subsection 9.7B so long as (1) in the case
of the prepayment of the Revolving Loans of any Lender pursuant to
this subsection 2.4A(i)(b), the Revolving Loan Commitment of such
Lender is terminated concurrently with such prepayment pursuant to
subsection 2.4C(ii) (at which time Schedule 2.1 shall be deemed
------------
modified to reflect the changed Revolving Loan Commitments), (2) in
the case of the prepayment of the Tranche B Acquisition Term Loans of
any Lender pursuant to this subsection 2.4A(i)(b), the Tranche B
Commitment of such Lender is terminated concurrently with such
prepayment pursuant to subsection 2.4C(ii) (at which time Schedule 2.1
------------
shall be deemed modified to reflect the changed Tranche B
Commitments), and (3) in the case of the prepayment of the Loans of
any Lender, the consents required by subsection 9.7B in connection
with the prepayment pursuant to this subsection 2.4A(i)(b) shall have
been obtained, and at such time, such Lender shall no longer
constitute a "Lender" for purposes of this Agreement, except with
respect to indemnifications under this Agreement (including, without
limitation, subsections 2.6D, 2.8, 2.7H, 9.3 and 9.4), which shall
survive as to such Lender.
(ii) Mandatory Prepayments. The Loans shall be prepaid and/or the
---------------------
Tranche B Commitments and Revolving Loan Commitments shall be permanently
reduced in the amounts and under the circumstances set forth below, all
such prepayments and/or reductions to be applied as set forth below or as
more specifically provided in subsection 2.4A(iii).
(a) Prepayments and Reductions from Asset Sales. Subject to the
-------------------------------------------
Intercreditor Agreement, no later than the first Business Day
following the date of receipt by Company or any of its Subsidiaries of
Cash Proceeds of any Asset Sale, Company shall prepay the Loans and/or
the Tranche B Commitments and Revolving Loan Commitments shall be
permanently reduced in an amount equal to 75% of the Estimated Net
Cash Proceeds of such Asset Sale; provided that, in the event on the
date of receipt by Company or any of its Subsidiaries of such Cash
Proceeds, the Leverage Ratio as of the last day of the then most
recently ended Fiscal Quarter for which financial statements have been
delivered pursuant to subsection 5.1(i) or 5.1(ii) is less than
2.50:1.00, then the percentage applicable to Estimated Net Cash
Proceeds set forth above shall be reduced to 50%. On or before the
90th day after receipt of any such Cash Proceeds, Company shall
promptly make an additional prepayment of the Loans and/or the Tranche
B Commitments and Revolving Loan Commitments shall be permanently
reduced in an amount equal to 75% (or 50%, if the applicable
percentage is reduced pursuant to the preceding proviso) of the
excess, if any, of (1) the Net Cash Proceeds of Sale of such Asset
Sale over (2) the portion of the Estimated Net Cash Proceeds of such
Asset Sale already applied under the preceding sentence, to be applied
in the manner described above with respect to the application of
Estimated Net Cash Proceeds. Concurrently with any prepayment of the
Loans and/or reduction of the Tranche B Commitments and Revolving Loan
Commitments pursuant to this subsection 2.4A(ii)(a), Company shall
deliver to
56
<PAGE>
Administrative Agent an Officers' Certificate demonstrating the
derivation of the Net Cash Proceeds of Sale or Estimated Net Cash
Proceeds, as the case may be.
(b) Prepayments and Reductions Due to Reversion of Surplus
------------------------------------------------------
Assets of Pension Plans. Within one Business Day after the return to
-----------------------
Company or any of its Subsidiaries of any surplus assets of any
pension plan of Company or any of its Subsidiaries, Company shall
prepay the Loans and/or the Tranche B Commitments and Revolving Loan
Commitments shall be permanently reduced in an amount (the "Net
Reversion Amount") equal to 100% of such returned surplus assets, net
of transaction costs and expenses incurred in obtaining such return,
including incremental taxes payable as a result thereof.
(c) Prepayments and Reductions Due to Issuance of Debt. Within
--------------------------------------------------
one Business Day of receipt by Company or any of its Subsidiaries of
the cash proceeds (net of underwriting discounts and commissions and
other reasonable costs associated therewith) from the issuance or sale
of any Additional Subordinated Indebtedness or other debt Securities
of Company or any of its Subsidiaries (excluding Indebtedness
permitted by subsection 6.1 (other than subsection 6.1(x)), Company
shall prepay the Loans and/or the Tranche B Commitments and Revolving
Loan Commitments shall be permanently reduced in an amount equal to
such net cash proceeds; provided that a prepayment and/or reduction
pursuant to this subsection 2.4A(ii)(c) shall not be required in
respect of any such net cash proceeds in excess of $200,000,000 in the
aggregate during the term of this Agreement ("Net Additional Debt
Proceeds") to the extent that such Net Additional Debt Proceeds are
to be applied to consummate Acquisitions in accordance with subsection
6.7(v) within 90 days of the receipt thereof. On or before the 90th
day after receipt of any such Net Additional Debt Proceeds, Company
shall promptly make an additional prepayment of Loans and/or the
Tranche B Commitments and Revolving Loan Commitments shall be
permanently reduced in an amount equal to any Net Additional Debt
Proceeds that have for any reason not been applied to consummate
Acquisitions or to make such prepayments and/or reductions.
Concurrently with any prepayment of the Term Loans and/or reduction of
the Tranche B Commitments and Revolving Loan Commitments pursuant to
this subsection 2.4A(ii)(c), Company shall deliver to Administrative
Agent an Officers' Certificate demonstrating the derivation and
application of the Net Additional Debt Proceeds.
(d) Prepayments Due to Reductions or Restrictions of
------------------------------------------------
Commitments. Company shall from time to time prepay the Swing Line
-----------
Loans and Revolving Loans to the extent necessary to give effect to
the limitations set forth in the first two paragraphs of
subsection 2.1A(iv) and the second paragraph of subsection 2.1A(iii),
as applicable. Any such mandatory prepayments shall be applied first
to the Swing Line Loans and then to the Revolving Loans, and otherwise
as specified in subsection 2.4A(iii). Company shall from time to time
57
<PAGE>
prepay the Tranche B Acquisition Term Loans to the extent necessary to
give effect to the limitations set forth in the second paragraph of
subsection 2.1A(ii)(b), such prepayments to be applied as specified in
subsection 2.4A(iii).
(e) Prepayments from Consolidated Excess Cash Flow and Unused
---------------------------------------------------------
Proceeds of Sales of Printing Equipment. In the event that there
---------------------------------------
shall be either (x) on April 15th of any year, Unused Proceeds of
Sales of Printing Equipment derived from the Proceeds of Sales of
Printing Equipment sold during the immediately preceding Fiscal Year
commencing with 1996 or (y) Consolidated Excess Cash Flow for any
Fiscal Year commencing with 1997, or both, Company shall, on the April
15th following the end of each such Fiscal Year, as applicable, prepay
Loans and/or the Tranche B Commitments and Revolving Loan Commitments
shall be permanently reduced in an amount equal to the amount of any
such Unused Proceeds of Sales of Printing Equipment plus 50% of any
such Consolidated Excess Cash Flow; provided that Company shall not be
required to make any prepayment and/or reduction in respect of
Consolidated Excess Cash Flow pursuant to this subsection 2.4A(ii)(e)
in the event that on the relevant April 15th, the Leverage Ratio as of
the last day of the most recently ended Fiscal Quarter for which
financial statements have been delivered pursuant to subsections
5.1(i) or 5.1(ii) is less than 2.50:1.00. On or before the last day
of each Fiscal Year, Company shall promptly make an additional
prepayment of Loans and/or the Tranche B Commitments and Revolving
Loan Commitments shall be permanently reduced in an amount equal to
any Unused Proceeds of Sales of Printing Equipment derived from
Proceeds of Sales of Printing Equipment sold during any and all prior
Fiscal Years (but not including the Fiscal Year ending on such day)
that have for any reason whatsoever not theretofore been applied to
make such prepayments and/or reductions (including, without
limitation, because such Proceeds of Sales of Printing Equipment had
become Committed Printing Equipment Proceeds in accordance with the
definition thereof but the purchase order pursuant to which they were
to have been expended subsequently was cancelled, revoked or otherwise
terminated). On each April 15th commencing with April 15, 1997 and
concurrently with the making of any prepayment and/or reduction
pursuant to this subsection 2.4A(ii)(e) on any other date, Company
shall deliver an Officers' Certificate demonstrating the calculation
of the Leverage Ratio, if applicable, and the derivation of the
amounts required to be prepaid and/or reduced in connection with such
Unused Proceeds of Sales of Printing Equipment and such Consolidated
Excess Cash Flow.
(f) Prepayments from Proceeds of Permitted Receivables
--------------------------------------------------
Transaction. Within one Business Day of receipt by Company or any of
-----------
its Subsidiaries of Receivables Proceeds from any Permitted
Receivables Transaction Company shall prepay Loans and/or the Tranche
B Commitments and Revolving Loan Commitments shall be permanently
reduced in an amount equal to the aggregate amount of such Receivables
Proceeds.
58
<PAGE>
(iii) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans and
---------------------------------------------------------
Order of Maturity. Any voluntary prepayments pursuant to
-----------------
subsection 2.4A(i) shall be applied to the Loans as Company may elect
in its notice of prepayment delivered pursuant to subsection 2.4A(i).
In the event that no such election is made, such prepayment shall be
applied first to repay outstanding Acquisition Term Loans and Existing
Term Loans to the full extent thereof, second to prepay outstanding
Swing Line Loans to the full extent thereof, and third to prepay
outstanding Revolving Loans to the full extent thereof; provided that
any prepayment of Tranche B Term Loans pursuant to this subsection
2.4A(ii) shall effect a corresponding reduction of Tranche B
Commitments in accordance with clause 1 of the second paragraph of
subsection 2.1A(ii)(b). Any voluntary prepayments of the Term Loans
pursuant to subsection 2.4A(i) shall be applied proportionally to
reduce the remaining Scheduled Existing Term Loan Repayment Amount,
the Scheduled Tranche A Repayment Amount, the Scheduled Tranche B
Repayment Amount and Scheduled Tranche C Acquisition Repayment Amounts
on a pro rata basis.
(b) Application of Mandatory Prepayments by Type of Loans. Any
-----------------------------------------------------
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Tranche B
Commitments and Revolving Loan Commitments pursuant to subsections
2.4A(ii)(a)-(c), 2.4A(ii)(e) or 2.4A(ii)(f) shall be applied first to
prepay the principal amount of Term Loans to the full extent thereof,
second to the extent of any remaining portion of the Applied Amount,
to permanently reduce the Tranche B Commitments and Revolving Loan
Commitments on a pro rata basis and then, to the extent that the
Revolving Loan Commitments are less than the Letter of Credit Usage,
cash collateralize Letters of Credit outstanding.
(c) Pro Rata Application of Mandatory Prepayments of Term Loans
-----------------------------------------------------------
from Asset Sales, Pension Plan Surplus, Excess Cash Flow, Unused
----------------------------------------------------------------
Proceeds of Sales of Printing Equipment, Issuance of Debt Securities
--------------------------------------------------------------------
and Permitted Receivables Transactions. Any mandatory prepayments of
--------------------------------------
the Term Loans pursuant to subsections 2.4A(ii)(a), (b), (c), (e) or
(f) shall be applied to prepay the outstanding Tranche A Acquisition
Term Loans, Tranche B Acquisition Term Loans, Tranche C Acquisition
Term Loans and Existing Term Loans and to make corresponding
reductions of the Scheduled Tranche A Repayment Amount, Scheduled
Tranche B Repayment Amount, Scheduled Tranche C Repayment Amount and
Scheduled Existing Term Loan Repayment Amounts, respectively, by the
amount of the related prepayments in each case on a pro rata basis;
provided that, notwithstanding anything in the foregoing to the
contrary, the first $200,000,000 in aggregate principal amount of
prepayments pursuant to subsection 2.4A(ii)(c) shall be applied first
to prepay the Tranche C Acquisition Term Loans and to reduce the
Scheduled Tranche C Repayment Amount and then to prepay
59
<PAGE>
the other Term Loans and reduce the Scheduled Tranche A Repayment
Amount, Scheduled Tranche B Repayment Amount and Scheduled Existing
Term Loan Repayment Amounts, in each case on a pro rata basis as set
forth above.
(d) Application of Prepayments to Principal and Interest.
----------------------------------------------------
Except as set forth in subsection 2.2C, all prepayments of principal
shall be accompanied by payment of accrued interest on the principal
amount being prepaid and shall be applied to the payment of interest
before application to principal. Considering Term Loans, Swing Line
Loans and Revolving Loans being prepaid separately, any prepayment
shall be applied first to Prime Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in a manner
which minimizes the amount of any payments required to be made by
Company pursuant to subsection 2.6D.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. Except as provided in
--------------------------
subsection 2.7, all payments of principal, interest and fees hereunder and
under the Notes by Company shall be made without defense, set off and
counterclaim and in same day funds and delivered to Administrative Agent
not later than 12:00 Noon (New York time) on the date due at its office
located at One Bankers Trust Plaza, New York, New York, for the account of
Lenders; funds received by Administrative Agent after that time shall be
deemed to have been paid by Company on the next succeeding Business Day.
Company hereby authorizes Administrative Agent to charge its account with
Administrative Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest and fees due hereunder
(subject to sufficient funds being available in its account for that
purpose).
(ii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Subject to the last sentence of subsection 2.7E,
Administrative Agent (or, in the case of payments received by any Issuing
Lender from Company after payments have been made to such Issuing Lender by
Lenders pursuant to subsection 2.7E, such Issuing Lender) shall promptly
distribute to each Lender at its primary address set forth below its name
on the appropriate signature page hereof or such other address as any
Lender may request, its share of all such payments received by
Administrative Agent (or such Issuing Lender) and the commitment fees of
such Lender when received by Administrative Agent pursuant to subsec-
tions 2.3A and 2.3B. Notwithstanding the foregoing provisions of this
subsection 2.4B(ii), if, pursuant to the provisions of subsection 2.6C, any
Notice of Conversion/Continuation is withdrawn as to any Affected Lender or
if any Affected Lender makes Prime Rate Loans in lieu of its Pro Rata Share
of any Eurodollar Rate Loans, Administrative Agent shall give effect
thereto in apportioning payments received thereafter.
60
<PAGE>
(iii) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder or under the Notes shall be stated to be due on a day that is not
a Business Day, such payment shall be made on the next succeeding Business
Day (unless no further Business Day occurs in such Fiscal Quarter, in which
case payment shall be made on the next preceding Business Day) and such
extension of time shall be included in the computation of the payment of
interest hereunder or under the Notes or of the commitment fees hereunder,
as the case may be.
C. Voluntary Reductions of Commitments.
(i) Company shall have the right, at any time and from time to time,
to terminate in whole or permanently reduce in part, without premium or
penalty, (i) the Revolving Loan Commitments in an amount up to the amount
by which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments and (ii) the Tranche B Commitments in an amount
up to the amount by which the Tranche B Commitments exceed the aggregate
principal amount of Tranche B Acquisition Term Loans then outstanding.
Company shall give not less than five Business Days' prior written notice
to Administrative Agent designating the date (which shall be a Business
Day) of such termination or reduction and the amount of any partial
reduction. Promptly after receipt of a notice of such termination or
partial reduction, Administrative Agent shall notify each Lender of the
proposed termination or reduction. Such termination or partial reduction
of the Revolving Loan Commitments or Tranche B Commitments, as the case may
be, shall be effective on the date specified on Company's notice and shall
reduce the Revolving Loan Commitments or Tranche B Commitments, as the case
may be, of each Lender proportionately to its Pro Rata Share. Any such
partial reduction of the Revolving Loan Commitments or Tranche B
Commitments shall be in an aggregate minimum amount of $5,000,000, and
integral multiples of $1,000,000 in excess of that amount.
(ii) In the event Company is entitled to replace a non-consenting
Lender pursuant to subsection 9.7B, Company shall have the right, upon five
Business Days' written notice to Administrative Agent (which notice
Administrative Agent shall promptly transmit to each of the Lenders), to
terminate the entire Revolving Loan Commitment and Tranche B Commitment of
such Lender, so long as (1) all Loans, together with accrued and unpaid
interest, fees and other amounts owing to such Lender are repaid, including
without limitation amounts owing to such Lender pursuant to subsection
2.6D, pursuant to subsection 2.4A(i)(b) concurrently with the effectiveness
of such termination (at which time Schedule 2.1 shall be deemed modified to
------------
reflect such changed amounts) and (2) the consents required by
subsection 9.7B in connection with the prepayment pursuant to subsection
2.4A(i)(b) shall have been obtained, and at such time, such Lender shall no
longer constitute a "Lender" for purposes of this Agreement, except with
respect to indemnifications under this Agreement (including, without
limitation, subsections 2.6D, 2.8, 2.7H, 9.3 and 9.4), which shall survive
as to such Lender.
61
<PAGE>
D. Mandatory Reductions of Commitments. The Revolving Loan Commitments
shall be permanently reduced on the date of any reduction of Revolving Loan
Commitments in accordance with the provisions of subsections 2.4A(ii)(a), (b),
(c), (e) or (f). The Tranche B Commitments shall be permanently reduced upon
any mandatory prepayment of Tranche B Acquisition Term Loans as and to the
extent provided in subsection 2.4A(ii)(a), (b), (c), (e) or (f) and on the date
of any reduction of Tranche B Commitments in accordance with the provisions of
subsection 2.4A(iii)(a) and as provided in the second paragraph of subsection
2.1A(ii)(b).
E. Cash Collateralization of Standby Letters of Credit. In the event
that a Benefitted Subsidiary with respect to any Standby Letter of Credit issued
pursuant to subsection 2.7 is disposed of by Company or any of its Subsidiaries,
Company shall, upon receipt by Company or such Subsidiary of the Cash Proceeds
of such disposition, deliver to Administrative Agent, to hold as cash collateral
pursuant to arrangements in form and substance satisfactory to Administrative
Agent and Requisite Lenders as security for the obligation of Company to
reimburse the Issuing Lender for the amount of any drawings honored under such
Standby Letter of Credit, an amount which when added to all other amounts so
delivered, equals the maximum amount which at any time may be available for
drawing under such Standby Letter of Credit; provided that in lieu of furnishing
such cash collateral as aforesaid, Company may deliver such Standby Letter of
Credit to the Issuing Lender for cancellation. Any amounts delivered to
Collateral Agent to hold as cash collateral pursuant to the preceding sentence
shall be applied to reimburse the Issuing Lender for the amount of any drawings
honored under the Letter of Credit in respect of which such cash collateral was
delivered; provided further that, upon the cancellation or expiration of any
Standby Letter of Credit in respect to which cash collateral has been delivered
to Collateral Agent as provided in this subsection 2.4E, unless an Event of
Default has occurred and is continuing, Collateral Agent shall deliver the
remaining amount of any cash collateral held pursuant to the terms of this
Agreement in respect of such Standby Letter of Credit to Company.
2.5 Use of Proceeds
---------------
A. Existing Term Loans. The proceeds of the Existing Term Loans have
been applied by Company as provided in subsection 2.5A and 2.5B of the Existing
Credit Agreement.
B. Tranche A Acquisition Term Loans. The proceeds of the Tranche A
Acquisition Term Loans shall be immediately applied by Company on the Closing
Date (i) to refinance and continue as Tranche A Acquisition Term Loans hereunder
any 1995 Term Loans which are not refinanced and continued as Existing Term
Loans hereunder and (ii) to acquire equity interests or other business assets
and pay related expenditures in connection with the Identified Acquisition,
including, without limitation, the repayment of indebtedness and transaction
expenses in connection therewith.
C. Tranche B Acquisition Term Loans. The proceeds of the Tranche B
Acquisition Term Loans shall be immediately applied by Company to acquire equity
interests or other business assets and pay related expenditures in connection
with Acquisitions (other than the
62
<PAGE>
Identified Acquisition), including, without limitation, the repayment of
indebtedness and transaction expenses in connection therewith.
D. Tranche C Acquisition Term Loans. The proceeds of the Tranche C
Acquisition Term Loans shall be immediately applied by Company on the Closing
Date to acquire equity interests or other business assets and pay related
expenditures in connection with the Identified Acquisition, including, without
limitation, the repayment of indebtedness and transaction expenses in connection
therewith.
E. Revolving Loans and Letters of Credit. The proceeds of the Revolving
Loans and the Letters of Credit shall be applied by Company for (i) the working
capital and other general corporate purposes of Company and its Subsidiaries
(including to be used to refinance and continue the Revolving Loans and Swing
Line Loans, in each case as defined in and which are outstanding under the
Existing Credit Agreement) and (ii) to acquire equity interests or other
business assets and pay related expenditures in connection with the Identified
Acquisition, including, without limitation, the repayment of indebtedness and
transaction expenses in connection therewith.
F. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
which might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T, or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds. If requested by any Lender, or if
necessary, in connection with any Acquisition, Company shall execute and deliver
to Administrative Agent a completed F.R. Form U-1.
2.6 Special Provisions Governing Eurodollar Rate Loans
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 10:00 A.M. New York time on each Interest Rate Determination Date,
Administrative Agent shall have determined in good faith (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties)
the interest rate that shall apply to the Eurodollar Rate Loans for which an
interest rate is then being determined for the applicable Interest Period and
shall promptly give notice thereof (in writing or by telephone confirmed in
writing) to Company and each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined in good faith (which determination
shall be final and conclusive and binding upon all parties hereto), on any
Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that
by reason of circumstances occurring after the date of this Agreement affecting
the interbank Eurodollar market, adequate and fair means do not exist
63
<PAGE>
for ascertaining the interest rate applicable to such Loans on the basis
provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent
shall on such date give notice (by telecopy or by telephone confirmed in
writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist; (ii) any Notice of Conversion/Continuation
given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company and (iii) any
Notice of Borrowing given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be a request to make Prime
Rate Loans.
C. Illegality or Impracticability of Eurodollar Rate Loans. In the event
that on any date any Lender shall have determined in good faith (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and Administrative Agent)
that the making, maintaining or continuation of its Eurodollar Rate Loans
(i) has become unlawful as a result of compliance by such Lender in good faith
with any law, treaty, governmental rule, regulation, guideline or order (or
would conflict with any such treaty, governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply therewith
would not be unlawful) or (ii) has become impracticable, or would cause such
Lender material hardship, as a result of contingencies occurring after the date
of this Agreement which materially and adversely affect the interbank Eurodollar
market or the position of such Lender in that market, then, and in any such
event, such Lender shall be an "Affected Lender" and it shall on that day give
notice (by telecopy or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter, (a) the obligation
of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Prime Rate Loan,
and (c) the Affected Lender's obligation to maintain its outstanding Eurodollar
Rate Loans, as the case may be (the "Affected Loans"), shall be terminated at
the earlier to occur of the expiration of the Interest Period then in effect
with respect to the Affected Loans or when required by law, and the Affected
Loans shall automatically convert into Prime Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by an
Affected Lender as described above relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telecopy or by
telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make
64
<PAGE>
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any reasonable loss, expense or liability
sustained by that Lender in connection with the liquidation or re-employment of
such funds) which that Lender may sustain: (i) if for any reason (other than a
default by that Lender or the conversion of such Lender's Notice of Borrowing
from a request to make Eurodollar Rate Loans into a request to make Prime Rate
Loans pursuant to subsection 2.6B) a borrowing of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Borrowing or a telephonic
request for borrowing, or a conversion to or continuation of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Notice of Conversion/
Continuation or a telephonic request for conversion or continuation, (ii) if any
prepayment or conversion of any of its Eurodollar Rate Loans occurs on a date
that is not the last day of an Interest Period applicable to that Loan, (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company to repay its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender; provided however that if
any transfer of Eurodollar Rate Loans from the office where such Eurodollar Rate
Loans originated shall materially and unreasonably increase the cost to Company
of such Eurodollar Rate Loans, such transfer may occur only if required (x) by
the introduction of or any change (including, without limitation, any change by
way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (y) to comply with any guideline or
request from any central bank or other governmental authority of quasi-
governmental authority exercising control over banks or financial institutions
generally (whether or not such guideline or request shall have the force of
law).
F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.8A shall be made as though that Lender had actually funded (i) each
of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided however that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.8A.
65
<PAGE>
G. Eurodollar Rate Loans After Default. After the occurrence and during
the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 Letters of Credit
-----------------
A. Letters of Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company set
forth herein, Company may request, in accordance with the provisions of this
subsection 2.7A, that on and after the Closing Date, one or more Issuing Lenders
issue Standby Letters of Credit and Commercial Letters of Credit for the account
of Company denominated in Dollars. Issuances of Letters of Credit shall be
subject to the following limitations:
(i) Company shall not request that any Lender issue any Standby
Letter of Credit or Commercial Letter of Credit if, after giving effect to
such issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments, as the amount available under such
Revolving Loan Commitments may be limited from time to time pursuant to the
second paragraph of subsection 2.1A(iii);
(ii) Company shall not request that any Lender issue any Standby
Letter of Credit having an expiration date later than the earlier of
(a) the Commitment Termination Date and (b) the date which is one year from
the date of issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender from
agreeing that a Standby Letter of Credit will automatically be extended for
one or more successive periods not to exceed one year each unless such
Issuing Lender elects not to extend for any such additional period;
(iii) Company shall not request that any Lender issue any Commercial
Letter of Credit having an expiration date (a) later than the earlier of
(X) the date which is 30 days prior to the Commitment Termination Date and
(Y) the date which is 180 days from the date of issuance of such Commercial
Letter of Credit or (b) that is otherwise unacceptable to the applicable
Issuing Lender in its reasonable discretion; and
(iv) Company shall not request that any Issuing Lender issue any
Letter of Credit if, after giving effect to such issuance, the sum of
(x) the Letter of Credit Usage in respect of all Letters of Credit other
than Standby Letters of Credit issued in support of Indebtedness to the
extent included in clause (y) hereof and (y) the aggregate Indebtedness of
Company and its Subsidiaries pursuant to subsection 6.1(vii) would exceed
$50,000,000 at any time on or after the Closing Date.
66
<PAGE>
It shall be a condition precedent to the issuance of any Standby Letter of
Credit or Commercial Letter of Credit in accordance with the provisions of this
subsection 2.7 that each condition set forth in subsections 3.2 and 3.3 shall
have been satisfied.
Immediately upon the issuance of each Standby Letter of Credit or
Commercial Letter of Credit, and as of the Closing Date, with respect to each
Existing Letter of Credit, each Lender shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Lender a participation in such
Letter of Credit and drawings thereunder in an amount equal to such Lender's Pro
Rata Share of the maximum amount which is or at any time may become available to
be drawn thereunder.
Each Standby Letter of Credit and Commercial Letter of Credit may provide
that the Issuing Lender may (but shall not be required to) pay the beneficiary
thereof upon the occurrence of an Event of Default and the acceleration of the
maturity of the Loans or, if payment is not then due to the beneficiary, provide
for the deposit of funds in an account to secure payment to the beneficiary and
that any funds so deposited shall be paid to the beneficiary of the Letter of
Credit if conditions to such payment are satisfied or returned to the Issuing
Lender for distribution to Lenders (or, if all Obligations shall have been
indefeasibly paid in full, to Company) if no payment to the beneficiary has been
made and 30 days after the final date available for drawings under the Letter of
Credit has passed. Each payment or deposit of funds by an Issuing Lender as
provided in this paragraph shall be treated for all purposes of this Agreement
as a drawing duly honored by such Issuing Lender under the related Letter of
Credit.
B. Notice of Issuance. Whenever Company desires the issuance of a Letter
of Credit, it shall deliver to Administrative Agent and the Lender which Company
has requested to issue such Letter of Credit, a Notice of Issuance of Letter of
Credit in the form of Exhibit III hereto no later than 12:00 Noon (New York
time) at least three Business Days (in the case of Standby Letters of Credit),
or five Business Days (in the case of Commercial Letters of Credit), or in each
case such shorter period as may be agreed to by an Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The Notice of
Issuance of Letter of Credit shall specify (i) the proposed date of issuance
(which shall be a business day under the laws of the jurisdiction of the Issuing
Lender), (ii) the face amount of the Letter of Credit, (iii) the expiration date
of the Letter of Credit, (iv) the name and address of the beneficiary, (v) the
Benefitted Subsidiary or Benefitted Subsidiaries, if any, with respect to such
Letter of Credit and the amount inuring to the benefit of such Benefitted
Subsidiary, (vi) which Lender Company has requested to issue such Letter of
Credit and (vii) a summary of the purpose and contemplated terms of such Letter
of Credit. As soon as practicable after delivery of such notice, the Issuing
Lender for such Letter of Credit shall be determined as provided in subsec-
tion 2.7C. Prior to the date of issuance, Company shall specify a precise
description of the documents and the proposed text of any certificate to be
presented by the beneficiary which, if presented by the beneficiary in
substantial compliance with the terms and conditions of the Letter of Credit
prior to the expiration date of the Letter of Credit, would require the Issuing
Lender to make payment under the Letter of Credit; provided that the Issuing
Lender, in its sole reasonable judgment, may require changes in any such
documents and certificates; provided further that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the same
business day (under the
67
<PAGE>
laws of the jurisdiction of the Issuing Lender) that such draft is presented if
such presentation is made after 11:00 a.m. in the time zone of the Issuing
Lender on such business day. In determining whether to pay under any Letter of
Credit, the Issuing Lender shall be responsible only to determine that the
documents and certificates required to be delivered under that Letter of Credit
have been delivered and that they substantially comply on their face with the
requirements of that Letter of Credit.
C. Determination of Issuing Lender.
(i) Company may request any Lender to issue a Letter of Credit and,
upon receipt by a Lender of a notice from Company pursuant to
subsection 2.7B requesting the issuance of a Letter of Credit, such Lender
shall promptly notify Company and Administrative Agent whether or not, in
its sole discretion, it has elected to issue such Letter of Credit. If
such Lender elects to issue such Letter of Credit, such Lender shall be the
Issuing Lender with respect thereto. If such Lender declines to issue such
Letter of Credit, Company may request any other Lender to issue such Letter
of Credit by delivering the notice described in subsection 2.7B to such
Lender. In the event that all Lenders shall have declined to issue such
Letter of Credit, notwithstanding the prior election of Bankers not to
issue such Letter of Credit, but subject to the terms and conditions of
this Agreement, Bankers shall be obligated to issue such Letter of Credit
and Bankers shall be an Issuing Lender with respect to the Letter of Credit
issued by it.
(ii) Each Issuing Lender which elects to issue a Standby Letter of
Credit shall promptly after issuance thereof, or any amendment, payment or
cancellation thereto, furnish each Lender (and Administrative Agent, if
Administrative Agent is not such Issuing Lender) with a copy of such
Standby Letter of Credit or of such amendment, payment or cancellation, as
the case may be.
D. Payment of Amounts Drawn Under Letters of Credit. In the event of any
drawing under any Letter of Credit by the beneficiary thereof, the Issuing
Lender shall promptly notify Company (and Administrative Agent, if
Administrative Agent is not such Issuing Lender), and Company shall reimburse
such Issuing Lender on the date on which such drawing is honored in an amount in
same day funds equal to the amount of such drawing.
E. Payment by Lenders with Respect to Letters of Credit. In the event
that Company shall fail to reimburse an Issuing Lender as provided in
subsection 2.7D in an amount equal to the amount of any drawing honored by such
Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall
promptly notify each Lender of the unreimbursed amount of such drawing and of
such Lender's respective participation therein, which participation shall be
equal to such Lender's Pro Rata Share of the unreimbursed amount of such
drawing. Each Lender shall make available to such Issuing Lender an amount
equal to its respective participation in same day funds, at the office of such
Issuing Lender specified in such notice, not later than 1:00 P.M. (New York
time) on the business day (under the laws of the jurisdiction of such Issuing
Lender) after the date notified by such Issuing Lender. In the event that any
Lender fails to make available to such Issuing Lender the amount of such
Lender's participation in such
68
<PAGE>
Letter of Credit as provided in this subsection 2.7E, such Issuing Lender shall
be entitled to recover such amount on demand from such Lender together with
interest at the customary rate set by such Issuing Lender for the correction of
errors among banks for three Business Days and thereafter at the Prime Rate.
Nothing in this subsection 2.7 shall be deemed to prejudice the right of any
Lender to recover from such Issuing Lender any amounts made available by such
Lender to such Issuing Lender pursuant to this subsection 2.7E in the event that
it is determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of which payment
was made by such Lender constituted gross negligence or willful misconduct on
the part of such Issuing Lender. Each Issuing Lender shall distribute to each
other Lender which has paid all amounts payable by it under this subsection 2.7E
with respect to any Letter of Credit issued by such Issuing Lender such other
Lender's Pro Rata Share of all payments received by such Issuing Lender from
Company in reimbursement of drawings honored by such Issuing Lender under such
Letter of Credit, as the case may be, when such payments are received.
Notwithstanding anything to the contrary herein, each Lender which has paid all
amounts payable by it under this subsection 2.7E shall have a direct right to
reimbursement of such amounts from Company, subject to the procedures for
reimbursing Lenders set forth in this subsection 2.7.
F. Compensation. Company agrees to pay, without duplication, the
following amounts to each Issuing Lender with respect to each Letter of Credit
issued by it:
(i) with respect to each Letter of Credit, an administrative fee
payable to the Issuing Lender equal to the greater of (a) for the period
from and after the date of issuance thereof (or, with respect to Existing
Letters of Credit, for the period from and after the Closing Date) 1/4 of
1% per annum of the maximum amount available from time to time to be drawn
under such Letter of Credit, in each case calculated in arrears on and
through the last day of each Fiscal Quarter and on the basis of a 360-day
year and the actual number of days elapsed and (b) $500, and payable on the
Business Day immediately succeeding such date of calculation in immediately
available funds;
(ii) with respect to each Letter of Credit, a letter of credit fee
payable to the Administrative Agent equal to, for the period from and
including the date of issuance thereof (or, with respect to Existing
Letters of Credit, for the period from and after the Closing Date)
including the Closing Date, (a) (x) the per annum Applicable Eurodollar
Rate Margin (as defined and calculated in accordance with subsection 2.2A)
minus (y) 5/8 of 1% per annum (not to be less than zero), multiplied by
(b) the maximum amount available from time to time to be drawn under such
Letter of Credit, calculated on the basis of a 360-day year and the actual
number of days elapsed and payable quarterly in arrears on the first
Business Day immediately succeeding the last day of each Fiscal Quarter and
upon expiration of such Letter of Credit in immediately available funds;
(iii) with respect to honored drawings made under any Letter of
Credit, interest, payable in immediately available funds on demand, on the
amount paid by such Issuing Lender in respect of each such drawing from the
date of the drawing to but excluding the
69
<PAGE>
date such amount is reimbursed by Company at a rate which is 2% per annum
in excess of the rate of interest otherwise payable under this Agreement
for Prime Rate Loans; and
(iv) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment made thereunder, documentary and
processing charges in accordance with such Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be.
Promptly upon receipt by such Issuing Lender or Administrative Agent, as
the case may be, of any amount described in subdivision (ii) or (iii) of this
subsection 2.7F, such Issuing Lender or Administrative Agent, as the case may
be, shall distribute to each Lender its Pro Rata Share of such amount.
G. Obligations Absolute. The obligation of Company to reimburse each
Issuing Lender for drawings made under the Letters of Credit issued by it and
the obligations by Lenders under subsection 2.7E shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company may have at any time against a beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such transferee
may be acting), such Issuing Lender, Administrative Agent, any Lender or
any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including
any underlying transaction between Company or any of its Subsidiaries and
the beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by such Issuing Lender under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit, provided that such
payment does not constitute bad faith, gross negligence or willful
misconduct of such Issuing Lender;
(v) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(vi) the fact that an Event of Default or a Potential Event of Default
shall have occurred and be continuing.
70
<PAGE>
H. Additional Payments. If by reason of (a) any change in applicable
law, regulation, rule, decree or regulatory requirement or any change in the
interpretation or application by any judicial or regulatory authority of any
law, regulation, rule, decree or regulatory requirement in each case that
becomes effective after the date hereof or (b) compliance by any Issuing Lender
or any Lender with any direction, request or requirement issued after the date
hereof (whether or not having the force of law) by any governmental or monetary
authority including, without limitation, Regulation D:
(i) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letters of Credit issued
by such Issuing Lender or participations therein purchased by any Lender;
or
(ii) there shall be imposed on such Issuing Lender or any Lender any
other condition regarding this subsection 2.7, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Issuing Lender or any Lender of issuing, making or maintaining any
Letter of Credit or of purchasing or maintaining any participation therein, or
to reduce the amount receivable in respect thereof by such Issuing Lender or any
Lender (other than an increase in cost or reduction in amount receivable as a
consequence of any Tax, which shall be governed by the provisions of
subsection 2.8), then and in any such case such Issuing Lender or such Lender
may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify Company, and Company shall
pay on demand such amounts as such Issuing Lender or such Lender may specify to
be necessary to compensate such Issuing Lender or such Lender for such
additional cost or reduced receipt, together with interest on such amount from
10 days after the date of such demand until payment in full thereof at a rate
equal at all times to the Prime Rate per annum. The determination by such
Issuing Lender or any Lender, as the case may be, of any amount due pursuant to
this subsection 2.7H as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.
I. Indemnification; Nature of Issuing Lender's Duties. In addition to
amounts payable as elsewhere provided in this subsection 2.7, Company hereby
agrees to protect, indemnify, pay and save each Issuing Lender harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) which such Issuing Lender 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 bad faith, gross negligence or willful misconduct
of such Issuing Lender as determined by a court of competent jurisdiction or
(ii) the failure of such Issuing Lender 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 government or governmental authority (all
such acts or omissions herein called "Government Acts").
As between Company and each Issuing Lender, Company assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit issued by such
Issuing Lender by, the
71
<PAGE>
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Lender shall not be responsible: (i)
for the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and
issuance of such Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of such Issuing Lender, including,
without limitation, any Government Acts. None of the above shall affect,
impair, or prevent the vesting of any of such Issuing Lender's rights or powers
hereunder; provided however that such Issuing Lender shall be responsible for
any payment such Issuing Lender makes under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit in the event such payment
constitutes gross negligence or willful misconduct of such Issuing Lender as
determined by a court of competent jurisdiction.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Lender under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith and without bad faith,
gross negligence or willful misconduct, shall not put such Issuing Lender under
any resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection 2.7,
Company shall have no obligation to indemnify any Issuing Lender in respect of
any liability incurred by such Issuing Lender arising out of the gross
negligence or willful misconduct of such Issuing Lender, as determined by a
court of competent jurisdiction, or out of the wrongful dishonor by such Issuing
Lender of proper demand for payment made under the Letters of Credit issued by
it.
J. Computation of Interest. Interest payable pursuant to this
subsection 2.7 shall be computed on the basis of a 360-day year and the actual
number of days elapsed in the period during which it accrues.
K. Amendments. Company may request that the Issuing Lender that issued a
Letter of Credit enter into one or more amendments of such Letter of Credit by
delivering to Administrative Agent and Issuing Lender a Notice of Issuance of
Letter of Credit specifying (i) the Issuing Lender, (ii) the proposed date of
the amendment and (iii) the requested amendment. Any Issuing Lender shall be
entitled to enter into amendments with respect to
72
<PAGE>
Letters of Credit; provided however that any such amendment extending the expiry
date or increasing the stated amount of any Letter of Credit shall only be
permitted if such Issuing Lender would be permitted to issue a new Letter of
Credit having such an expiry date or stated amount under this subsection 2.7 on
the date of the amendment.
L. Existing Letters of Credit. Notwithstanding anything to the contrary
herein, as of the Closing Date, all of the Existing Letters of Credit shall be
deemed to be Letters of Credit issued hereunder and shall be subject to all of
the terms and provisions of this Agreement, including all terms and provisions
applicable to Letters of Credit under this Agreement. Each Lender agrees that
its obligations with respect to Letters of Credit pursuant to subsection 2.7E
shall include the Existing Letters of Credit as of the Closing Date. With
respect to each Existing Letter of Credit, for the period commencing on the
Closing Date to and including the expiration date of any such Existing Letter of
Credit, Company shall pay all fees and commissions set forth in subsection 2.7F
at the times and in the manner set forth therein.
2.8 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs and Taxes. In the event that any
Lender shall determine in good faith (which determination shall, absent manifest
or demonstrable error, be final and conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by such
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Covered Tax with respect to this Agreement or any of the Loans
or any of its obligations hereunder, or changes the basis of taxation of
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder (but not changes in
Excluded Taxes);
(ii) imposes, modifies or holds applicable any additional reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC insurance
or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, Lender (or its
applicable lending office) (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected in
the definition of Adjusted Eurodollar Rate, as the case may be); or
(iii) imposes any other condition on or affecting such Lender (or
its applicable lending office) or its obligations hereunder or the
interbank Eurodollar market, other than with respect to Taxes;
73
<PAGE>
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto, then, in any such case, Company shall promptly pay to such
Lender, upon demand, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest as such Lender
in its sole discretion shall determine) as may be necessary to compensate such
Lender on an after-tax basis for any such increased cost or reduction in amounts
received or receivable hereunder; provided that any increased cost arising as a
result of any of the foregoing other than in respect of Taxes shall apply only
to Eurodollar Rate Loans. Such Lender shall deliver to Company a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this subsection 2.8A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest or demonstrable error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company under
-----------------------------
this Agreement and the other Loan Documents to or for the benefit of any
Lender or Administrative Agent or any Person who acquires any interest in
the Loans pursuant to the provisions hereof shall be paid free and clear of
and (except to the extent required by law) without any deduction or
withholding on account of any Covered Tax imposed, levied, collected,
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of Company
or by any federation or organization of which the United States of America
or any such jurisdiction is a member at the time of payment.
(ii) Withholding in respect of Payments. If Company or any other
----------------------------------
Person is required by law to make any deduction or withholding on account
of any Tax from any sum paid or payable by a Loan Party to Administrative
Agent or any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) in the event such Tax is a Covered Tax, the sum payable by
Company in respect of which the relevant deduction, withholding or
payment is required shall be increased to the extent necessary to
ensure that, after the making of that deduction, withholding or
payment, Administrative Agent or such Lender, as the case may be,
receives on the due date and retains (free from any liability
74
<PAGE>
in respect of any such deduction, withholding or payment) a net sum
equal to what it would have received and so retained had no such
deduction, withholding or payment in respect of Covered Taxes been
required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required to
pay by clause (b) above, Company shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the rate of
such deduction, withholding or payment from that in effect at the date of
this Agreement in respect of payments to such Lender.
(iii) Tax Refund. If Company determines in good faith that a
----------
reasonable basis exists for contesting a Covered Tax, the relevant Lender
or Tax Transferee or Administrative Agent, as applicable, shall cooperate
with Company in challenging such Tax at Company's expense if requested by
Company (it being understood and agreed that neither Administrative Agent
nor any Lender shall have any obligation to contest, or any responsibility
for contesting, any Tax). If any Lender, Tax Transferee or Administrative
Agent, as applicable, receives a refund (whether by way of a direct payment
or by offset) of any Covered Tax for which a payment has been made pursuant
to this subsection 2.8 which, in the reasonable good faith judgment of such
Lender, Tax Transferee or Administrative Agent, as the case may be, is
allocable to such payment made under subsection 2.8, the amount of such
refund (together with any interest received thereon) shall be paid to
Company to the extent payment has been made in full pursuant to this
subsection 2.8.
(iv) U.S. Tax Certificates. Each Lender that is organized under the
---------------------
laws of any jurisdiction other than the United States or any state or other
political subdivision thereof shall deliver to Administrative Agent for
transmission to Company, on or prior to the Closing Date (in the case of
each Lender listed on the signature pages hereof) or on the date (and as a
condition to effectiveness) of the Assignment Agreement pursuant to which
it becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or Administrative
Agent (each in the reasonable exercise of its discretion), such
certificates, documents or other evidence, properly completed and duly
executed by such Lender (including, without limitation, Internal Revenue
Service Form 1001 or Form 4224 or any other certificate or statement of
exemption required by Treasury Regulations Section 1.1441-4(a) or
Section 1.1441-6(c) or any successor thereto) to establish whether or not
such Lender is subject to deduction or withholding of United States federal
income tax under Section 1441 or 1442 of the Internal Revenue Code or
otherwise (or under any comparable provisions of any successor
75
<PAGE>
statute) or is subject to deduction or withholding at a reduced rate under
any applicable treaty or otherwise with respect to any payments to such
Lender of principal, interest, fees or other amounts payable under any of
the Loan Documents. Company shall not be required to pay any additional
amount to any such Lender under clause (c) of subsection 2.8B(ii) if such
Lender shall have failed to satisfy the requirements of the immediately
preceding sentence; provided that if such Lender shall have satisfied such
requirements on the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment Agreement pursuant
to which it became a Lender (in the case of each other Lender), nothing in
this subsection 2.8B(iv) shall relieve Company of its obligation to pay any
additional amounts pursuant to clause (c) of subsection 2.8B(ii) in the
event that, as a result of any change in applicable law, such Lender is no
longer properly entitled to deliver certificates, documents or other
evidence at a subsequent date establishing the fact that such Lender is not
subject to withholding as described in the immediately preceding sentence.
C. Capital Adequacy Adjustment. If any Lender shall have determined in
good faith that the adoption, effectiveness, phase-in or applicability of any
law, rule or regulation (or any provision thereof) regarding capital adequacy
after the date hereof, or any change therein or in the interpretation or
administration thereof after the date hereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive issued after the date hereof,
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or will have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or other obligations hereunder to a level
below that which such Lender or such controlling corporation would have achieved
but for such adoption, effectiveness, phase-in, applicability, change or
compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after demand by such Lender (with a copy of such
demand to Administrative Agent), Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction as and when incurred. Each
Lender, upon determining in good faith that any additional amounts will be
payable pursuant to this subsection 2.8C, will give prompt written notice
thereof to Company, which notice shall set forth the basis of the calculation of
such additional amounts, although the failure to give any such notice shall not
release or diminish any of Company's obligations to pay additional amounts under
this subsection 2.8C.
2.9 Lenders' Obligation to Mitigate
-------------------------------
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans under this Agreement becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.6, 2.7H or 2.8, it will, to the extent
not inconsistent with such Lender's internal policies, use reasonable efforts
76
<PAGE>
(i) to make, fund or maintain the Commitments of such Lender or the Affected
Loans of such Lender through another lending office of such Lender, or (ii) take
such other reasonable measures, if as a result thereof the circumstances which
would cause such Lender to be an Affected Lender would cease to exist or the
additional amounts which would otherwise be required to be paid to such Lender
pursuant to subsection 2.6, 2.7H or 2.8 would be materially reduced and if, as
determined by such Lender in its sole discretion, the making, funding or
maintaining of such Commitments or Loans through such other lending office or in
accordance with such other measures, as the case may be, would not otherwise
materially adversely affect such Commitments or Loans or the interests of such
Lender; provided that such Lender will not be obligated to utilize such other
lending office pursuant to this subsection 2.9 unless Company agrees to pay all
expenses incurred by such Lender in utilizing such other lending office. A
certificate as to the amount of any such expenses payable by Company pursuant to
this subsection 2.9 (setting forth in reasonable detail the basis for requesting
such amount) submitted by such Lender to Company shall be conclusive absent
manifest or demonstrable error.
2.10 Replacement of a Lender
-----------------------
In the event of a refusal by a Lender to consent to a proposed change,
waiver, discharge or termination with respect to this Agreement which has been
approved by the Requisite Lenders, Company shall have the right for a 60 day
period following such refusal, to replace such Lender (a "Replaced Lender")
with one or more Eligible Assignees (collectively, the "Replacement Lender")
acceptable to Administrative Agent, provided that (i) at the time of any
replacement pursuant to this subsection 2.10 the Replacement Lender and Replaced
Lender shall enter into one or more Assignment Agreements pursuant to subsection
9.2B (and with all fees payable pursuant to such subsection 9.2B to be paid by
the Replacement Lender) pursuant to which the Replacement Lender shall acquire
all of the outstanding Loans and Commitments of, and in each case participations
in Letters of Credit and Swing Line Loans by, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Lender, (B) an amount
equal to all unpaid drawings with respect to Letters of Credit that have been
funded by (and not reimbursed to) such Replaced Lender, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all
accrued, but theretofore unpaid, fees owing to the Replaced Lender with respect
thereto, (y) the appropriate Issuing Lender an amount equal to such Replaced
Lender's Pro Rata Share of any unpaid drawings with respect to Letters of Credit
(which at such time remains an unpaid drawing) issued by it to the extent such
amount was not theretofore funded by such Replaced Lender, and (z) Swing Line
Lender an amount equal to such Replaced Lender's Pro Rata Share of any Refunded
Swing Line Loans to the extent such amount was not theretofore funded by such
Replaced Lender, and (ii) all obligations (including without limitation all such
amounts, if any, owing under subsection 2.6D) of Company owing to the Replaced
Lender (other than those specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concurrently being,
paid), shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective Assignment Agreements,
recordation of such assignment in the Register by Administrative Agent pursuant
to subsection 2.1D, the payment of amounts referred to in clauses (i) and (ii)
above and, if so requested by the
77
<PAGE>
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by Company, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder
except with respect to indemnification provisions under this Agreement which by
the terms of this Agreement survive the termination of this Agreement, which
indemnification provisions shall survive as to such Replaced Lender.
Notwithstanding anything to the contrary contained above, no Issuing Lender may
be replaced hereunder at any time while it has Letters of Credit outstanding
hereunder unless arrangements satisfactory to such Issuing Lender (including the
furnishing of a Standby Letter of Credit in form and substance, and issued by an
issuer satisfactory to such Issuing Lender or the furnishing of cash collateral
in amounts and pursuant to arrangements satisfactory to such Issuing Lender)
have been made with respect to such outstanding Letters of Credit.
SECTION 3.
CONDITIONS TO EFFECTIVENESS OF AGREEMENT
AND TO LOANS AND LETTERS OF CREDIT
The obligations of each Lender to make Loans and issue Letters of Credit
hereunder is subject to the satisfaction of all of the following conditions:
3.1 Conditions to Effectiveness
---------------------------
The effectiveness of this Agreement is subject to prior or concurrent
satisfaction of the following conditions:
A. Company Documents. On or before the Closing Date, Company shall
execute and deliver to Lenders (or to Administrative Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel), each, unless otherwise noted, dated the Closing Date:
(i) certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and from the applicable Secretary of State of every
jurisdiction in which it is qualified to conduct its business, each to be
dated a recent date prior to the Closing Date;
(ii) copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing (i) the consummation of the Identified Acquisition in
accordance with the terms of the Identified Acquisition Agreement and (ii)
the execution, delivery and performance of this Agreement and each
Collateral Document to which it is a party and all other agreements,
documents, instruments and certificates required to be executed by Company
in connection with the
78
<PAGE>
foregoing, each certified as of the Closing Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment;
(iv) signature and incumbency certificates of the officers of Company
executing this Agreement and any Collateral Documents to which it is a
party;
(v) executed copies of this Agreement and any Collateral Documents to
which it is a party; and
(vi) such other documents as Administrative Agent may reasonably
request.
B. Company Subsidiary Documents. On or before the Closing Date, each
Loan Party (other than Company), shall execute and deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel), each, unless otherwise
noted, dated the Closing Date:
(i) certified copies of its Certificate or Articles of Incorporation
or other organizational document, together with good standing certificates
from the applicable Secretary of State of its jurisdiction of organization
and of every jurisdiction in which it is qualified to conduct its business,
each to be dated a recent date prior to the Closing Date;
(ii) copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of the Guaranty and
each Collateral Document to which it is a party and any other agreements or
documents executed in connection herewith to which it is a party, each
certified as of the Closing Date by its corporate secretary or an assistant
secretary;
(iv) signature and incumbency certificates of its officers executing
the Guaranty and any Collateral Document to which it is a party and other
agreements or documents executed in connection herewith;
(v) executed copies of the Guaranty and any Collateral Documents to
which it is a party; and
(vi) such other documents as Administrative Agent may reasonably
request.
C. Payment of Fees and Expenses. On the Closing Date, Company shall have
paid to Administrative Agent, for distribution (as appropriate) to Lenders,
Departing Lenders and Administrative Agent (i) the fees payable on the Closing
Date referred to in subsection 2.3, (ii) all "breakage" amounts due under
subsection 2.6D of the Existing Credit Agreement as a result of the payments to
be made to the Departing Lenders pursuant to subsection 2.1G (or
79
<PAGE>
arrangements satisfactory to Administrative Agent shall have been made for the
payment of such fees) and (iii) all accrued and unpaid interest, letter of
credit fees and other fees and expenses under the Existing Credit Agreement.
D. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be reasonably
satisfactory in form and substance to Administrative Agent and such counsel, and
Administrative Agent and such counsel shall have received all such counterpart
originals or certified copies of such documents as Administrative Agent may
reasonably request.
E. Opinions of Counsel for Loan Parties. Lenders and their respective
counsel shall have received originally executed copies of one or more favorable
written opinions of Latham & Watkins, counsel for the Loan Parties, in form and
substance reasonably satisfactory to Administrative Agent and its counsel dated
as of the Closing Date and setting forth substantially the matters in the
opinions designated as Exhibit XIX annexed hereto, and covering such other
matters and including such changes as shall be reasonably requested by
Administrative Agent for the benefit of Lenders and their counsel.
F. Opinion of Administrative Agent's Counsel. Lenders shall have
received an originally executed copy of one or more favorable written opinions
of O'Melveny & Myers LLP, counsel to Administrative Agent, dated as of the
Closing Date, substantially in the form of Exhibit XXI annexed hereto and as to
such other matters as Administrative Agent on behalf of Lenders may reasonably
request.
G. Representations and Warranties of Loan Parties. Concurrently with the
making of the Loans, each of the Loan Parties (other than Company) shall have
delivered to Administrative Agent an Officers' Certificate from such Loan Party
in form and substance satisfactory to Administrative Agent to the effect that
the representations and warranties in Section 4 hereof pertaining to such Loan
Party are true, correct and complete in all material respects on and as of the
Closing Date to the same extent as though made on and as of that date and that
no Event of Default or Potential Event of Default has occurred and is
continuing.
H. Performance of Agreements. Each of the Loan Parties shall have
performed in all material respects all agreements which this Agreement and the
other Loan Documents provide shall be performed by such Person on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Requisite Lenders.
I. Existing Debt, Consents and Other Matters. Company shall have
obtained all such consents, waivers, amendments, approvals and other third party
instruments similar to the foregoing as may be required under the existing
contracts and agreements of Company and its Subsidiaries (after giving effect to
the Identified Acquisition), including, without limitation, under the Senior
Subordinated Note Indenture, the Existing Indebtedness, the GECC Leveraged Lease
and any other Indebtedness or Contractual Obligations, to permit the borrowings
under this
80
<PAGE>
Agreement, the consummation of the transactions contemplated by the Loan
Documents and the Identified Acquisition and other related transactions, which
shall be in form and substance satisfactory to Administrative Agent and
Requisite Lenders, and no event of default or event that with the giving of
notice or the passage of time could result in an event of default shall have
occurred and be continuing under any of the Senior Subordinated Note Indenture,
the Existing Indebtedness, the GECC Leveraged Lease or any other Indebtedness or
Contractual Obligations, and Administrative Agent shall have received an
Officers' Certificate from Company to such effect, except to the extent that on
or concurrently with the Closing Date any such Indebtedness owed to such
existing lenders shall have been paid in full, and any commitments to lend
thereunder shall have been terminated.
J. Copies of Certain Amendments. Company shall have delivered or caused
to be delivered a certificate of its chief financial officer certifying either:
that since March 6 1995 there have been no amendments to the Senior Subordinated
Note Indenture, the GECC Leveraged Lease or any Existing Indebtedness or that,
to the extent there have been such amendments, that a true and accurate schedule
identifying each such amendment is attached to such certificate.
K. Security Interests. Each Loan Party shall have taken or caused to be
taken all such actions as may be necessary (in Administrative Agent's reasonable
judgment) to give Collateral Agent a valid and perfected first priority security
interest in the Collateral, subject only to Permitted Encumbrances and Liens
permitted under subsection 6.2. Such actions shall include, without limitation:
(i) the delivery to Collateral Agent for filing pursuant to the
Security Agreement of properly executed financing statements under the
Uniform Commercial Code (or any equivalent or similar legislation) in form
and substance satisfactory to Collateral Agent in each jurisdiction as may
be necessary (in Collateral Agent's reasonable judgment) to perfect
effectively the security interests in the Collateral created by the
Security Agreement;
(ii) the delivery pursuant to the Security Agreement of (a) Intercom-
pany Notes (if any) and (b) the stock or similar certificates (which
certificates shall be registered in the name of Collateral Agent or
properly endorsed in blank for transfer or accompanied by irrevocable
undated stock powers duly endorsed in blank, all in form and substance
satisfactory to Collateral Agent) representing the capital stock or other
equity to be pledged on the Closing Date pursuant to the Security
Agreement;
(iii) the delivery to Collateral Agent in a form suitable for
filing with the United States Trademark and Patent Office, the Trademark
Agreement and the Patent Agreement.
(iv) Collateral Agent and Company shall have agreed upon the form of a
letter agreement ("Deposit Letter") or amendment thereto to be sent to
the financial institutions maintaining Deposit Accounts of Company or any
of its Subsidiaries (in accordance with the provisions of subsection 5.13),
which Deposit Letter shall provide,
81
<PAGE>
among other things, that the applicable financial institutions (i) transfer
all amounts in such accounts to the account specified therein at the
request of Collateral Agent (provided that Collateral Agent shall not make
such a request unless an Event of Default shall have occurred and be
continuing) and (ii) acknowledge that Collateral Agent's security interest
in such accounts is prior to any bankers' lien, right of set-off or other
right or interest of such financial institution in such account;
(v) the delivery to Collateral Agent of one or more favorable written
opinions of counsel to the Loan Parties in the states of Tennessee,
Florida, Kentucky and Wisconsin, in each case addressed to the Collateral
Agent for the benefit of the Secured Parties and in form and substance
satisfactory to Collateral Agent and its counsel dated as of the Closing
Date; and
(vi) evidence reasonably satisfactory to Collateral Agent that all
other filings, recordings and other actions Collateral Agent deems
necessary or advisable to establish, preserve and perfect the Liens granted
to Collateral Agent in the Collateral shall have been made.
L. Departing Lender Consent. Administrative Agent shall have received,
with a copy for each Lender, a copy of the consent made by each Departing
Lender, substantially in the form of Exhibit XXII annexed hereto.
M. Management Stock Agreements. Company shall have delivered to
Administrative Agent copies of the Management Stock Agreements certified in an
Officer's Certificate as being true, correct and complete as of the Closing
Date.
N. Identified Acquisition Documents. On the Closing Date (i) Lenders
shall have received executed or conformed copies of the Identified Acquisition
Agreement and any exhibits, schedules and amendments thereto and Administrative
Agent, on behalf of Lenders, shall have received all other agreements, documents
and legal opinions to be delivered in connection therewith, each of the
foregoing being certified by an officer of Company as being true, complete and
correct as of the Closing Date, which Identified Acquisition Agreement and other
agreements, documents and legal opinions shall, to the extent not delivered to
Administrative Agent on or prior to April 30, 1996, be in form and substance
satisfactory to Administrative Agent and which amendments to the Identified
Acquisition Agreement shall be in form and substance satisfactory to Requisite
Lenders, (ii) Lenders shall have received an Officers' Certificate from Company
stating that (a) the Identified Acquisition Agreement shall be in full force and
effect and no material term or condition thereof shall have been amended,
modified or waived after the execution thereof except with the prior written
consent of Administrative Agent and Requisite Lenders, (b) all agreements and
conditions contained in the Identified Acquisition Agreement and any agreements
or documents referred to therein required to be performed or complied with by
any Loan Party party thereto on or before the date the Identified Acquisition is
consummated shall have been so performed or satisfied, (c) Company shall not be
in default in the performance of or compliance with any of the terms or
provisions thereof and (d) to the best of Company's knowledge, each seller
thereunder has performed, satisfied or
82
<PAGE>
complied with all agreements and conditions contained in the Identified
Acquisition Agreement and any agreements or documents referred to therein
required to be performed or complied with by such seller on or before the date
on which the Identified Acquisition is consummated, no such seller is in default
in the performance of or compliance with any of the term or provisions of the
Identified Acquisition Agreement and each such seller will consummate the
Identified Acquisition as provided in the Identified Acquisition Agreement.
O. Identified Acquisition. Company shall have submitted a Notice of
Borrowing to make not less than $148,220,000 of Tranche A Acquisition Term Loans
and not less than $200,000,000 of Tranche C Acquisition Term Loans in connection
with the consummation of the Identified Acquisition and all conditions to the
funding of such Loans on the Closing Date shall have been satisfied, including,
but not limited to all requirements required under subsection 5.8 with respect
to all Identified Target Subsidiaries.
P. Other Documents. Each Loan Party shall have delivered to
Administrative Agent such other documents as Administrative Agent may reasonably
request.
3.2 Conditions to All Letters of Credit
-----------------------------------
The obligation of Bankers to issue any Letter of Credit hereunder and the
issuance of any Letter of Credit by any other Lender hereunder are in addition
to the conditions precedent specified in subsection 3.4, subject to prior or
concurrent satisfaction of all of the following conditions:
A. On or before the date of issuance of a Letter of Credit pursuant to
this Agreement, each of the conditions set forth in subsections 3.1 shall have
been satisfied as of the Closing Date.
B. On or before the date of issuance of any Letter of Credit hereunder,
Administrative Agent shall have received, in accordance with the provisions of
subsection 2.7B, a Notice of Issuance of Letter of Credit relating to the
proposed Letter of Credit, all other information specified in subsection 2.7B,
and such other documents as the Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
3.3 Conditions to All Acquisition Term Loans
----------------------------------------
The obligations of Lenders to make each Acquisition Term Loan hereunder on
any Funding Date other than the Closing Date are in addition to the conditions
precedent specified in subsection 3.4, subject to prior or concurrent
satisfaction of all of the following conditions:
A. Administrative Agent shall have received (i) an originally executed
Compliance Certificate signed by the chief financial officer of Company
demonstrating in reasonable detail the calculation of the Leverage Ratio and
Company's compliance with the restrictions contained in subsections 6.1, 6.2,
6.3, 6.4, 6.5, 6.6, 6.7, 6.8 and 6.9 and subsection 3.3B(i), in each case on a
pro forma basis after giving effect to the related Acquisition and (ii) the
information and
83
<PAGE>
Officer's Certificate required to be delivered by Company in connection with
such Acquisition pursuant to subsection 5.1(xviii), including, but not limited
to, the applicable Acquisition Compliance Certificate and Cost Adjustment
Certificate (if any).
B. As of that Funding Date:
(i) the Leverage Ratio for the four most recently completed Fiscal
Quarters shall be equal to or less than 4.50:1.00 (it being understood and
agreed that Company shall not be required to comply with the Leverage Ratio
requirement of this clause (i) as a condition to the making of Acquisition
Term Loans hereunder in connection with the Identified Acquisition);
(ii) the representations and warranties contained herein shall be true
and correct in all material respects on and as of that Funding Date after
giving effect to consummation of the related Acquisition to the same extent
as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date; and
(iii) no event shall have occurred and be continuing or would
result from the consummation of the related Acquisition which would
constitute an Event of Default or Potential Event of Default.
3.4 Conditions to All Loans and Letters of Credit
---------------------------------------------
The obligations of Lenders to make each Loan and the obligation of an
Issuing Lender to issue a Letter of Credit on each Funding Date are subject to
the following further conditions precedent:
A. Administrative Agent shall have received, in accordance with the
provisions of subsection 2.1B or 2.7B, as the case may be, an originally
executed Notice of Borrowing or Notice of Issuance of Letter of Credit, as the
case may be, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or any executive officer of
Company designated by any of the above-described officers on behalf of Company
in writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) the representations and warranties contained herein shall be true
and correct in all material respects on and as of that Funding Date to the
same extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date;
84
<PAGE>
(ii) no event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing or the issuance of such Letter of Credit which would constitute
an Event of Default or a Potential Event of Default;
(iii) each of the Loan Parties shall have performed in all
material respects all agreements and satisfied all conditions which this
Agreement and the other Loan Documents provide shall be performed by it on
or before such Funding Date;
(iv) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making that Loan or Issuing Lender from issuing that Letter of Credit; and
(v) there shall not be pending or, to the knowledge of Company
threatened, any action, suit, proceeding or arbitration or, to the
knowledge of Company, any governmental investigation pending or threatened,
against or affecting Company or any of its Subsidiaries or any property of
Company or any of its Subsidiaries, which has not been disclosed by Company
pursuant to subsection 4.6 or 5.1(viii) prior to the making of the last
preceding Loans (or, in the case of the initial Loans made hereunder, prior
to the execution of this Agreement) or the issuing of the most recent
Letter of Credit (or, in the case of the initial Letter of Credit, prior to
the execution of this Agreement) and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, which, in either
event, in the opinion of Requisite Lenders, could reasonably be expected to
have a Material Adverse Effect. No injunction or other restraining order
shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of,
this Agreement or the making of the Loans or the issuing of a Letter of
Credit hereunder (or, with respect to any Acquisition Term Loan, the
consummation of the related Acquisition).
SECTION 4.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to maintain and
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce Lenders to purchase participations in Letters of Credit, Company
represents and warrants to each Lender that the following statements are true:
4.1 Organization, Powers, Good Standing and Subsidiaries
----------------------------------------------------
A. Organization and Powers. Each Loan Party is a corporation or other
Person duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization
85
<PAGE>
(which jurisdiction is set forth on Schedule 4.1 annexed hereto, as Schedule 4.1
may be modified by Company to reflect the creation or acquisition of any New
Subsidiary formed or acquired in accordance with subsection 5.8 or the deletion
of any Subsidiary no longer existing; all references herein to Schedule 4.1
shall be deemed to be references to Schedule 4.1 as it may be so modified,
amended or supplemented from time to time), has all requisite power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Loan Document to
which it is, respectively, a party, to carry out the transactions contemplated
hereby and thereby and, in the case of Company, to issue the Notes and, in the
case of each Loan Party issuing an Intercompany Note, to issue the Intercompany
Notes issued by such Loan Party.
B. Good Standing. Each Loan Party is in good standing wherever necessary
to carry on its present business and operations, except in jurisdictions in
which the failure to be in good standing has and will have no Material Adverse
Effect. The jurisdictions in which each Loan Party owns property or otherwise
conducts business as of the Closing Date are set forth on Schedule 4.1 annexed
hereto.
C. Subsidiaries. Company has no Subsidiaries other than as identified in
Schedule 4.1 annexed hereto. The capital stock of Company and each of its
Subsidiaries is duly authorized, validly issued and fully paid and
nonassessable. The capital stock or other equity interests of each Person
(other than Company) identified on Schedule 4.1 is not Margin Stock. Company
and each of its Subsidiaries is validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and has full power and
authority to own its assets and properties and to operate its business as
presently owned and operated except where failure to be in good standing or lack
of power has not had and will not have a Material Adverse Effect. Schedule 4.1
hereto correctly sets forth the ownership interest of each Subsidiary of
Company.
D. Inactive Subsidiaries. Except as set forth on Schedule 4.1 annexed
hereto, no Inactive Subsidiary has any property or other assets of any kind
(except for its corporate name) and no Inactive Subsidiary is conducting any
business.
E. Acquisitions. Company and each Subsidiary making any Acquisition
shall have the corporate, partnership or other power to consummate such
Acquisition upon the consummation thereof, on the terms set forth in any
applicable purchase agreement, agreement of merger or other operative agreement.
Upon the consummation of any Acquisition, such Acquisition shall have been duly
authorized by all necessary action of Company and any of its Subsidiaries
participating therein.
4.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and performance
of the Loan Documents to which it is a party and the issuance, delivery and
payment of the Notes and the Intercompany Notes have been duly authorized by all
necessary corporate, partnership or other action by each Loan Party, as the case
may be.
86
<PAGE>
B. No Conflict. Except as disclosed on Schedule 4.2B annexed hereto, the
execution, delivery and performance by each Loan Party of each Loan Document to
which it is a party and the consummation of the transactions contemplated hereby
and thereby, the consummation of any Acquisition (including the Identified
Acquisition) and the issuance, delivery and payment of the Notes and the
Intercompany Notes or any Subordinated Indebtedness do not and will not (i)
violate any provision of law applicable to Company or any of its Subsidiaries,
the Certificate of Incorporation or Bylaws or partnership agreement or other
organizational document of Company or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on Company
or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than Liens permitted under
subsection 6.2(ii) and 6.2(v)), or (iv) require any approval of stockholders or
other holders of equity interests or any approval or consent of any Person under
any Contractual Obligation of Company or any of its Subsidiaries other than
approvals or consents which will be or have been obtained on or before the
Closing Date (or, in the case of an Acquisition or any Subordinated
Indebtedness, on or before the date such Acquisition is consummated or such
Subordinated Indebtedness is issued, as the case may be, except that all such
approvals or consents with respect to the Identified Acquisition shall have been
obtained on or before the Closing Date) and disclosed in writing to Lenders. As
of the Closing Date, neither Company nor any of its Subsidiaries is obligated or
liable under any Contingent Obligation prohibited under subsection 6.4.
C. Governmental Consents. The execution, delivery and performance by
each Loan Party of the Loan Documents to which it is a party and application of
the proceeds of the Loans, the issuance, delivery and payment of the Notes, the
issuance, delivery and payment of the Senior Subordinated Notes pursuant to the
Senior Subordinated Note Indenture and the consummation of any Acquisition
(including the Identified Acquisition) do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body except for the filings to perfect the security interests granted pursuant
to Loan Documents and except with respect to any Acquisition (including the
Identified Acquisition), such consents, filings, approvals and authorizations as
shall have been made or obtained prior to the consummation of such Acquisition
or for which arrangements shall have been made for the subsequent issuance
thereof within four weeks of the closing of such Acquisition (or, if an
additional period is necessary such additional period as is satisfactory to the
Administrative Agent; provided that with respect to the Identified Acquisition,
all such consents, filings, approvals and authorizations shall have been made or
obtained prior to the Closing Date). As of the Closing Date, all consents or
approvals from or notices to or filings with any federal, state, or other
(domestic or foreign) regulatory authorities required to be obtained on or
before such date in connection with the documents or transactions described or
referred to in the preceding sentence will have been accomplished in all
material respects in compliance in all material respects with all applicable
laws and regulations. None of the issuance of the Senior Subordinated Notes (or
any other Subordinated Indebtedness) or the consummation of the transactions
contemplated thereby violates any applicable law or regulation in any material
respect.
87
<PAGE>
D. Binding Obligation. This Agreement is, and the other Loan Documents
when executed and delivered hereunder will be, the legally valid and binding
obligations of the applicable Loan Parties, enforceable against the applicable
Loan Parties in accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles.
E. Valid Issuance of Subordinated Indebtedness. Company and each other
applicable Loan Party (if any) has the corporate power and authority to issue
its Subordinated Indebtedness. Such Subordinated Indebtedness is the legally
valid and binding obligation of such Loan Party enforceable in accordance with
its terms (including, without limitation, those terms pertaining to
subordination) except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles. The subordination provisions of
such Subordinated Indebtedness are enforceable against the holders thereof
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles. Such Subordinated Indebtedness has either (i) been
registered or qualified under applicable federal or state securities laws, or
(ii) is exempt therefrom.
F. Obligations Constitute Senior Indebtedness. With respect to
Subordinated Indebtedness that is authorized and issued by Company or any other
Loan Party, all outstanding monetary Obligations including, without limitation,
all of such Loan Party's monetary obligations with respect to the repayment of
Loans, its obligations under the Guaranty and its pledge of Collateral under the
Security Agreement and the other Collateral Documents as security for the
repayment of all monetary Obligations, will not violate, or constitute (with due
notice or lapse of time or both) a default under, any indenture or note pursuant
to which such Subordinated Indebtedness has been issued, and all indebtedness
with respect to such Loans and all other monetary obligations hereunder will be
within the definition of "Senior Indebtedness" or equivalent definition
contained in such indentures or notes.
G. Deposit Accounts. Each Deposit Account of Company and its
Subsidiaries as of the Closing Date is listed on Schedule 4.2G annexed hereto.
4.3 Financial Condition
-------------------
Company has heretofore delivered to Lenders the following financial
statements: the audited combined balance sheets of Company and its Subsidiaries
as at the end of the 1995 Fiscal Year and the related combined statements of
income, stockholders' equity and changes in cash flow of Company and its
Subsidiaries for such fiscal year. All financial statements set forth or
referred to in the materials specified in the first sentence of this
subsection 4.3A were prepared in accordance with GAAP and fairly present the
financial position of Company and of its Subsidiaries, as the case may be, as at
the date thereof and the results of operations and changes in cash flow of
Company and its Subsidiaries for the period then ended. Neither Company nor any
of its Subsidiaries has any material Contingent Obligation, contingent liability
or liability for
88
<PAGE>
taxes, long-term lease or unusual forward or long-term commitment, which is not
reflected in the foregoing statements, in the notes thereto or the most recent
financial statements delivered pursuant to subsection 5.1 (if any).
4.4 No Material Adverse Change; No Stock Payments
---------------------------------------------
Since the last day of its 1995 Fiscal Year, there has been no change in the
business, operations, properties, assets or condition or prospects (financial or
otherwise) of Company and its Subsidiaries, taken as a whole, or other event
that has caused or evidences, in any case or in the aggregate, a Material
Adverse Effect. Since the last day of its 1995 Fiscal Year, neither Company nor
any of its Subsidiaries has directly or indirectly declared, ordered, paid or
made or set apart any sum or property for any Restricted Junior Payment or
agreed to do so except as permitted by subsection 6.5. Except as permitted
pursuant to subsection 6.5 hereof or, with respect to time periods prior to the
Closing Date, subsection 6.5 of the Existing Credit Agreement, no Restricted
Junior Payments have been made since the last day of its 1995 Fiscal Year.
4.5 Title to Properties; Liens
--------------------------
Each Loan Party and each Subsidiary thereof has good, sufficient and legal
title to the Collateral and all the properties and assets reflected in the most
recent consolidated balance sheets referred to in subsection 4.3 or in the most
recent financial statements delivered pursuant to subsection 5.1 of this
Agreement, except for assets acquired or disposed of in the ordinary course of
business since the date of such consolidated balance sheet or assets disposed of
in accordance with subsection 6.7. Except as permitted hereunder, all such
properties and assets are free and clear of Liens.
4.6 Litigation; Adverse Facts
-------------------------
There is no action, suit, proceeding or arbitration (whether or not
purportedly on behalf of Company or any of its Subsidiaries) at law or in equity
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any arbitrator or panel of arbitrators, or, to the knowledge of Company, pending
or threatened against or affecting any Loan Party or any of their respective
Subsidiaries or any property of any Loan Party or any of their respective
Subsidiaries which could reasonably be expected to result in any Material
Adverse Effect, and there is no basis known to Company for any such action, suit
or proceeding. Neither Company nor any of its Subsidiaries is (i) in violation
of any applicable law which has caused or may cause a Material Adverse Effect or
(ii) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which could reasonably be expected to have
a Material Adverse Effect. To the knowledge of Company, there is no action,
suit, proceeding or investigation pending or threatened against or affecting
Company or any of its Subsidiaries which would be expected to affect the
validity or the enforceability of this Agreement, the Notes or the other Loan
Documents or any purchase
89
<PAGE>
agreements, agreement of merger or other operative agreement entered into in
connection with an Acquisition.
4.7 Payment of Taxes
----------------
Except to the extent permitted by subsection 5.3, all material tax returns
and reports of Company and its Subsidiaries required to be filed by any of them
have been timely filed (except with respect to a Target acquired on or after the
date hereof pursuant to an Acquisition provided that such Target is in
compliance with subsection 5.3 as of the date of such Acquisition), and all
material taxes, assessments and other governmental fees and charges upon Company
and its Subsidiaries and upon their respective properties, assets, income and
franchises which are due and payable have been paid when due and payable or an
adequate reserve therefor has been made in accordance with GAAP. Company does
not have written notice, and no executive officer of Company has actual
knowledge, of any proposed tax assessment against any Loan Party or any of their
respective Subsidiaries that would have a Material Adverse Effect. Neither
Company nor any of its Subsidiaries has executed or filed with the Internal
Revenue Service or any other governmental authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any taxes, assessments, fees or other governmental charges.
Except as set forth on Schedule 4.7 annexed hereto, as such Schedule 4.7 may be
modified by Company to include any tax sharing agreements or agreements
regarding payments in lieu of taxes relating, in either case, to a Target
acquired in an Acquisition permitted under subsection 6.7(v) hereof, neither
Company nor any of its Subsidiaries has any obligation under any written tax
sharing agreement or agreement regarding payments in lieu of taxes.
4.8 Performance
-----------
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation of Company or any of its
Subsidiaries, and no condition exists which, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the
consequences, direct or indirect, of such default or defaults, if any, could not
reasonably be expected to have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreement or instrument or any charter or other
internal restriction which has had, or is reasonably expected to result in,
individually or in the aggregate, a Material Adverse Effect.
4.9 Governmental Regulation
-----------------------
Neither Company nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any
federal or state statute or regulation limiting its ability to incur
Indebtedness for money borrowed.
90
<PAGE>
4.10 Securities Activities
---------------------
Neither Company nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
4.11 Employee Benefit Plans
----------------------
Except as set forth on Schedule 4.11 annexed hereto:
A. Each Loan Party and each of its ERISA Affiliates is in compliance in
all material respects with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to all
Employee Benefit Plans.
B. There has been no ERISA Event in respect of which there is any
outstanding liability of a Loan Party or any of its ERISA Affiliates, except to
the extent that any such event could not reasonably be expected to result in
liability in excess of $5,000,000.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employee of a Loan Party, except to the extent that the annual cost of providing
such health and welfare benefits does not exceed $5,000,000.
D. As of the most recent valuation date for any Pension Plan, the excess
of (i) the actuarial present value (determined on the basis of reasonable
assumptions employed by the independent actuary for such Pension Plan) of the
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) over (ii) the
fair market value of the assets of such Pension Plan, individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which there is no such excess), does not exceed
the greater of (x) 20% of the value set forth in clause (i) above and (y)
$5,000,000.
4.12 Disclosure
----------
No representation or warranty of any Loan Party contained in this
Agreement, or any other document, certificate or written statement furnished to
Lenders by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement (including any Acquisition) contains
any untrue statement of a material fact or omits to state a material fact (known
to executive officers of Company or any of its Subsidiaries in the case of any
document not prepared by it) necessary in order to make the statements contained
herein or therein not misleading. The historical financial information relating
to Company and its Subsidiaries contained in the financial materials distributed
to Administrative Agent and Lenders fairly presents the consolidated financial
position and the results of operations of Company and its Subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flow of Company and its Subsidiaries for each of the periods covered thereby
subject, in the case of unaudited financial statements, to changes resulting
from normal year end adjustments and
91
<PAGE>
based on their normal accounting procedures applied on a consistent basis. The
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed to be reasonable at the
time made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by such projections may differ from projected results. There
is no fact known to any Loan Party or any of their respective Subsidiaries
(other than matters of a general economic nature) which could have a Material
Adverse Effect which has not been disclosed herein or in such other documents,
certificates and statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
4.13 Environmental Protection
------------------------
Except to the extent that such matter, operation, event, occurrence,
condition, activity or non-compliance could not reasonably be expected, together
with any other matter, operation, event, occurrence, condition, activity or
noncompliance, to have a Material Adverse Effect:
(i) The past and current operations of each Loan Party and its
Subsidiaries (and, the Target of any Acquisition) (including, without
limitation, all operations and conditions at or in the Facilities currently
owned and/or operated by any Loan Party or any of its Subsidiaries) and, to
the best knowledge of the Loan Parties, the past operations of any
predecessor in interest, have been and continue to be conducted in
compliance in all material respects with all Environmental Laws, except for
such items of non-compliance which have been cured and for which there is
no material future liability.
(ii) Each Loan Party and each of its Subsidiaries (and the Target of
any Acquisition) have obtained all material permits under Environmental
Laws necessary to their respective operations, and all such permits are in
good standing, and each Loan Party and each of its Subsidiaries are in
compliance with all material terms and conditions of such permits.
(iii) No Loan Party and none of its Subsidiaries (nor the Target
of any Acquisition) has received (A) any written notice or claim alleging
that it is or may be liable to any Person as a result of the Release or
threatened Release of any Hazardous Materials or (B) any letter or request
for information under Section 104 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Sec. 9604) or
comparable state laws, and to the best knowledge of the Loan Parties, none
of the operations of any Loan Party or any of their respective Subsidiaries
(or the Target of any Acquisition) is the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond
to a Release or threatened Release of any Hazardous Material at any
Facility or at any other location.
(iv) None of the operations of any Loan Party or any of its
Subsidiaries (or, to the best knowledge of Company at the time of any
Acquisition, the Target of any Acquisition) is subject to any judicial or
administrative proceeding alleging the violation
92
<PAGE>
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect.
(v) Each Loan Party and each of its Subsidiaries (and the Target of
any Acquisition) and all of their Facilities or operations are not subject
to any outstanding written order or written agreement with any governmental
authority or private party respecting (A) any Environmental Laws or (B) any
Environmental Claims.
(vi) No Loan Party and none of its Subsidiaries (nor the Target of any
Acquisition) has any contractual undertaking which would create a liability
in connection with any Release of any Hazardous Materials by Company or any
of its Subsidiaries.
(vii) No Loan Party and none of its Subsidiaries or, to the
knowledge of the Loan Parties, any predecessor of any Loan Party or any of
its Subsidiaries (including the Target of any Acquisition), has filed any
notice under any Environmental Law indicating past or present treatment or
disposal of Hazardous Materials at any Facility, and none of any Loan
Party's or any of its Subsidiary's operations (or the operations of the
Target of any Acquisition) involves the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent in either case (A) in
violation of any Environmental Laws, in any material respect or (B) other
than in the ordinary course of such Loan Party's or such Subsidiary's (or
such Target's) business.
(viii) To the best knowledge of the Loan Parties, no Hazardous
Material exists on, under or about any Facility in a manner that could
reasonably be expected to give rise to an Environmental Claim having a
Material Adverse Effect, and no Loan Party and none of its Subsidiaries has
filed any notice or report required by any governmental authority of a
Release of any Hazardous Materials that could reasonably be expected to
give rise to an Environmental Claim which could reasonably be expected to
have a Material Adverse Effect.
(ix) No Loan Party and none of its Subsidiaries (or, to the knowledge
of any of the Loan Parties, any of their predecessors or the Target of any
Acquisition) has disposed of any Hazardous Materials in a manner that may
give rise to an Environmental Claim which could reasonably be expected to
have a Material Adverse Effect.
(x) No underground storage tanks or surface impoundments are on or at
the Facilities currently owned and/or operated by any Loan Party or any of
its Subsidiaries or, to the best of the knowledge of the Loan Parties, were
on or at any Facilities previously owned and/or operated by any of them
during or prior to the period of such ownership or operation, except in
compliance with Environmental Laws in all material respects.
93
<PAGE>
(xi) No Lien in favor of any Person for (A) any liability under
Environmental Laws, or (B) damages arising from or costs incurred by such
Person in response to a Release has been filed or has been attached to the
Facilities.
(xii) To the best knowledge of the Loan Parties (i) there are no
wastes, drums or containers discharged, disposed of, accumulated or buried
on, in or under the ground or ground waters or any surface waters located
on any premises owned or operated by any Loan Party or any of its
Subsidiaries in violation of any Environmental Laws; and (ii) no Loan Party
and none of its Subsidiaries and no third parties have discharged, disposed
of, accumulated or buried any wastes, drums or containers on, in or under
the ground or any ground waters or surface waters located on such premises
in violation of any Environmental Laws.
(xiii) There are no polychlorinated biphenyls, and, to the best
knowledge of the Loan Parties, asbestos or urea formaldehyde in or on
premises owned or operated by any Loan Party or any of its Subsidiaries in
a manner that could reasonably be expected to give rise to an Environmental
Claim.
Notwithstanding anything in this subsection 4.13 to the contrary, all references
in this subsection 4.13 to Subsidiaries shall also refer to Unrestricted
Subsidiaries and no event or condition has occurred with respect to any Loan
Party or any of its Subsidiaries (or any of their predecessors or the Target of
any Acquisition) relating to any Environmental Laws or any Release of Hazardous
Materials at any Facility or any other location which, individually or in the
aggregate, has had a Material Adverse Effect.
4.14 Solvency
--------
Company and its Subsidiaries, taken as a whole, are (i) Solvent, (ii) have
capital that is not unreasonably small in relation to their respective
businesses or any contemplated or undertaken transaction and (iii) do not intend
to incur, or believe that they will incur, debts beyond their ability to pay
such debts as they mature.
4.15 Patents, Trademarks, etc.
-------------------------
Each Loan Party and its Subsidiaries own, or are licensed to use, all
patents, trademarks, trade names, copyrights, technology, know-how and processes
used in or necessary for the conduct of its business as currently conducted that
are material to the condition (financial or other), business, or operations of
the Loan Parties and their Subsidiaries taken as a whole ("Intellectual
Property"). Schedule 4.15 annexed hereto, as such Schedule 4.15 may be
modified by Company to include any patent, trademark, copyright registration and
application therefor relating to an Acquisition permitted under
subsection 6.7(v) hereof or otherwise acquired or held by any such Person, lists
all patents, trademark and copyright registration and applications therefor of
each Loan Party and its Subsidiaries (including, each Target in respect of the
Identified Acquisition). No claim has been asserted by any Person with respect
to the use of any such Intellectual Property, or challenging or questioning the
validity or effectiveness of any such
94
<PAGE>
Intellectual Property and neither Company knows of any valid basis for any such
claim which, in either case, could reasonably be expected to result in a
Material Adverse Effect. The use of such Intellectual Property by each Loan
Party and its Subsidiaries does not infringe on the rights of any Person,
subject to such claims and infringements as do not, in the aggregate, give rise
to any liability on the part of any Loan Party or any of its Subsidiaries that
could reasonably be expected to result in a Material Adverse Effect. The
consummation of the transactions contemplated by this Agreement will not in any
material manner or to any material extent impair the ownership of (or the
license to use, as the case may be) any of such Intellectual Property by any
Loan Party or any of its Subsidiaries. The rights of each Loan Party and its
Subsidiaries to sell, franchise or license under such brand names then being
used may be transferred in connection with any sale of assets or stock of the
related business by any Loan Party or any of its Subsidiaries.
4.16 Labor Matters
-------------
There are no strikes or other labor disputes against any Loan Party or any
of its Subsidiaries, including any Target, pending or, to the best knowledge of
the Loan Parties, threatened that could reasonably be expected to have a
Material Adverse Effect. Hours worked by and payments made by any Loan Party or
any of its Subsidiaries (or, to the best knowledge of Company at the time of any
Acquisition, the Target of such Acquisition) to their respective employees are
not in violation of the Fair Labor Standards Act or any other applicable law
dealing with such matters.
4.17 Employment and Labor Agreements
-------------------------------
Except as disclosed on Schedule 4.17 (as Schedule 4.17 may be modified by
Company in connection with an Acquisition, it being understood that all such
disclosures with respect to the Identified Acquisitions shall be set forth on
Schedule 4.17), there are no employment agreements covering management employees
of any Loan Party or any of its Subsidiaries and there are no collective labor
agreements covering any employees of any Loan Party or any of its Subsidiaries.
Each Loan Party and each of its Subsidiaries is in compliance with the terms and
conditions of all such collective bargaining agreements except where failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.
AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments shall
be in effect and until payment in full of all of the Loans and other
Obligations, the cancellation or expiration of all Letters of Credit and the
reimbursement of all amounts drawn thereunder, unless Requisite Lenders shall
otherwise give prior written consent, Company shall perform all covenants in
this Section 5.
95
<PAGE>
5.1 Financial Statements and Other Reports
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Lenders:
(i) as soon as practicable and in any event within 45 days after the
end of the first through third Fiscal Quarter during each Fiscal Year
commencing with the first Fiscal Quarter ending in 1996, (a) a consolidated
balance sheet of Company and its Subsidiaries as at the end of such period
and the related consolidated statements of income, stockholders' equity and
cash flows of Company and its Subsidiaries for such Fiscal Quarter, setting
forth in each case in comparative form the consolidated figures for the
corresponding periods of the previous Fiscal Year, all in reasonable detail
and certified by the chief financial officer of Company that they fairly
present the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and statement of cash
flows for the periods indicated, subject to changes resulting from audit
and normal year-end adjustment and (b) a narrative description of the
financial performance of Company and its Subsidiaries for the applicable
period as compared with the corresponding period of the prior Fiscal Year
(it being understood and agreed that any analysis prepared by the
management of Company contained in a Form 10-Q and delivered to Lenders
shall satisfy the requirement for such narrative required under this
subsection 5.1(i)(b));
(ii) as soon as practicable and in any event within 90 days after the
end of each Fiscal Year commencing with Fiscal Year 1996, (a) a
consolidated balance sheet of Company and its Subsidiaries as at the end of
such year and the related consolidated statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal Year,
setting forth in each case, in comparative form the consolidated figures
for the previous Fiscal Year, all in reasonable detail and (b) in the case
of such consolidated financial statements, accompanied by a report thereon
of Deloitte & Touche or other independent certified public accountants of
recognized national standing selected by Company and satisfactory to
Requisite Lenders which report shall be unqualified and shall state that
such consolidated financial statements present fairly the financial
position of Company and its Subsidiaries as at the dates indicated and the
results of their operations and statement of cash flows for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years (except as otherwise stated therein) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards and (b)
in the case of all such financial statements, certified by the chief
financial officer of Company;
(iii) (a) together with each delivery of financial statements
pursuant to subdivisions (i) and (ii) above, (x) an Officers' Certificate
of Company stating that the signers have reviewed the terms of this
Agreement and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of
96
<PAGE>
Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signers do not
have knowledge of the existence as at the date of the Officers'
Certificate, of any condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof
and what action Company or any of its Subsidiaries has taken, is taking or
proposes to take with respect thereto; and (y) a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of such
accounting periods with the restrictions contained in subsections 6.1, 6.2,
6.3, 6.4, 6.5, 6.6, 6.7, 6.8 and 6.9 and, if not specified in the financial
statements delivered pursuant to subdivisions (i) or (ii) above, as the
case may be, specifying the aggregate amount of interest paid or accrued by
Company and its Subsidiaries and the aggregate amount of depreciation and
amortization charged on the books of Company and its Subsidiaries during
such accounting period; and (b) together with each delivery of financial
statements pursuant to subdivision (i) and (ii) above, a Cost Adjustment
Certificate in respect of each Acquisition consummated during the preceding
five Fiscal Quarter period and for which Company delivered an Initial Cost
Adjustment Certificate;
(iv) together with each delivery of consolidated financial statements
pursuant to subdivision (ii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event which constitutes an Event of Default or Potential
Event of Default has come to their attention, and if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention which causes them to
believe that either or both the information contained in the certificates
delivered therewith pursuant to subdivision (iii) above is not correct or
that the matters set forth in the Compliance Certificates delivered
therewith pursuant to clause (a)(y) of such subdivision (iii) above for the
applicable Fiscal Year are not stated in accordance with the terms of this
Agreement; provided that any statement required to be made under this
subdivision (iv) may be omitted or modified to the extent that the making
of such statement would expressly violate GAAP;
(v) promptly upon receipt thereof, copies of all reports submitted to
Company or any of its Subsidiaries by independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of Company or such Subsidiaries made by such
accountants (excluding the comment letter submitted by such accountants to
management in connection with their annual audit);
(vi) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by Company to its security holders or by any Subsidiary of
Company to its
97
<PAGE>
security holders other than Company or another Subsidiary of Company, of
all regular and periodic reports and all registration statements and
prospectuses, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions, and of all press
releases and other statements made available generally by Company or any of
its Subsidiaries to the public concerning material developments in the
business of Company and its Subsidiaries ;
(vii) within two Business Days, in the case of clauses (a) and (b)
below, and within five Business Days, in the case of clauses (c) and (d)
below, upon any executive officer of any Loan Party obtaining knowledge (a)
of any condition or event which constitutes an Event of Default or
Potential Event of Default, or becoming aware that any Lender or
Administrative Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default under
this Agreement, (b) that any Person has given any notice to Company or any
Subsidiary of Company or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 7.2,
(c) of any condition or event which would be required to be disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4 and 5 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange
Act, or (d) of any development or other information which could reasonably
be expected to have a Material Adverse Effect, notice of any such
condition, event or development (which notice may be telephonic), such
notice to be promptly followed by an Officers' Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and
the nature of such claimed default, Event of Default, Potential Event of
Default, event or condition, and what action Company or any of its
Subsidiaries has taken, is taking or proposes to take with respect thereto;
(viii) within five Business Days after any executive officer of any
Loan Party obtaining knowledge of (a) the institution of, or threat of, any
action, suit, proceeding, governmental investigation or arbitration against
or affecting Company or any of its Subsidiaries or any property of Company
or any of its Subsidiaries not previously disclosed by Company to Lenders,
or (b) any material development in any such action, suit, proceeding,
governmental investigation or arbitration, which, in either case, if
adversely determined, might result in a Material Adverse Effect, Company
shall, or shall cause such Loan Party to, promptly give notice thereof to
Lenders and provide such other information as may be reasonably available
to it to enable Lenders and their counsel to evaluate such matters.
(ix) within ten Business Days after Company or any executive officer
of Company or any other Loan Party knows or has reason to know of the
occurrence of any ERISA Event (other than an event described in clause
(vii) of the definition of ERISA Event which could not reasonably be
expected to result in liability, and in the case of any
98
<PAGE>
event described in clause (viii) or (ix) of the definition of ERISA Event,
liability in excess of $500,000), a written notice specifying the nature
thereof, what action Company or any of its Subsidiaries has taken, is
taking or proposes to take with respect thereto, and, when known, any
action taken or threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto;
(x) with reasonable promptness copies of (a) all notices received by
Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA; and (b) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xi) as soon as available and in any event within 60 days after the
end of each Fiscal Year (A) projected annual balance sheets, income
statements and cash flow statements for Company and its Subsidiaries
prepared on a consolidated basis for Company for the succeeding Fiscal Year
and (B) projected income statements and cash flow statements for Company
for the succeeding Fiscal Year on a quarterly basis, all signed by the
chief financial officer of Company together with appropriate supporting
details as requested by Administrative Agent;
(xii) promptly after the end of each Fiscal Quarter, a report
listing the Letters of Credit outstanding on the last day of such Fiscal
Quarter, which report shall include, with respect to each Letter of Credit,
the stated amount, expiry date and Issuing Lender;
(xiii) (a) promptly upon entering into any Indebtedness, guaranty
of Indebtedness of any Person, receivables financing, leveraged lease or
similar financing (other than Miscellaneous Operating Leases), copies of
the documents and agreements entered into in connection therewith and
(b) promptly upon entering into any amendment, modification, supplement or
waiver to any Indebtedness, leveraged lease or similar financing (other
than Miscellaneous Operating Leases) or any document or agreement entered
into in connection therewith, that imposes additional obligations upon
Company or any of its Subsidiaries or confers additional rights upon the
holders of such Indebtedness or other financing, in either case that could
be adverse in any material respect to Company or any of its Subsidiaries or
any Lender, including, without limitation, any amendment, modification or
supplement that imposes any obligation that is more restrictive than the
provisions of this Agreement and the other Loan Documents or imposes any
financial or operational requirements or restrictions or reduces any
commitment or obligation of the Person providing such financing, a copy of
such amendment, modification, supplement or waiver along with an Officers'
Certificate describing such amendment, modification, supplement or waiver
and the reasons therefor;
(xiv) promptly, in the event Company or any of its Subsidiaries
enters into an Interest Rate Agreement, written notice of the amount,
maturity and rate thereof and the financial institution party thereto and
promptly, in the event Company or any of its
99
<PAGE>
Subsidiaries opens a new Deposit Account, written notice thereof and of the
purpose for which such Deposit Account is to be utilized;
(xv) promptly upon the combination or merger of Company or any of its
Subsidiaries into Company, all agreements and documentation pursuant to
which such combination or merger is consummated;
(xvi) promptly upon the formation or acquisition of a Subsidiary
which Company desires to designate as an Unrestricted Subsidiary, an
Officers' Certificate of Company notifying Administrative Agent of such
Unrestricted Subsidiary and describing the type and amount of the initial
Investment to be made by Company or any of its Subsidiaries in such
Unrestricted Subsidiary and the anticipated business activities of such
Unrestricted Subsidiary and promptly upon the making of any subsequent
Investment by Company or any of its Subsidiaries in such Unrestricted
Subsidiary, an Officers' Certificate of Company describing the type and
amount of such subsequent Investment;
(xvii) on April 15th and the last Business Day of each Fiscal Year,
an Officers' Certificate of the chief financial officer of Company
detailing the amount and derivation of both Unused Proceeds of Sales of
Printing Equipment and Committed Printing Equipment Proceeds derived from
the Proceeds of Sales of Printing Equipment sold during the immediately
preceding Fiscal Year; and
(xviii) as soon as practicable but in no event less than five
Business Days prior to the date on which any Acquisition is consummated,
(a) financial statements of the Target and its Subsidiaries, if any, on a
consolidated basis, for the most recently completed fiscal year of the
Target, (b) copies of all other consolidated balance sheets and
consolidating balance sheets (to the extent consolidating balance sheets
are available) and related statements of operations and statements of cash
flows of the Target and its Subsidiaries, if any, acquired in such
Acquisition, that are to be delivered to Company or any of its Subsidiaries
in connection with such Acquisition, (c) to the extent then available,
copies of all purchase agreements, agreements of merger, letters of intent
or other operative agreements entered into by Company or any of its
Subsidiaries in connection with such Acquisition (it being understood and
agreed that, to the extent such agreements or letters of intent have not
been entered into at such time, copies of such agreements and letters of
intent shall be delivered reasonably promptly after the execution thereof),
(d) an Acquisition Compliance Certificate of Company completed in respect
of such Acquisition, (e) in the case of any Acquisition, at Company's
option, a Cost Adjustment Certificate completed in respect of such
Acquisition, (f) to the extent applicable, supplements to Schedules 4.1,
4.7, 4.15 and 4.17 to this Agreement, which supplements shall, from and
after the relevant date of acquisition be deemed to form a part of the
applicable Schedules to this Agreement and (g) any other information
relating to such Acquisition reasonably requested by Administrative Agent
or any Lender except to the extent that such information includes matter as
to which a legal privilege is asserted in good faith by any Loan Party;
provided however that, notwithstanding anything contained in this subsec-
tion 5.1(xviii) to the contrary, Administrative Agent and each
100
<PAGE>
Lender shall hold all non-public information that has been identified as
such by Company obtained pursuant to the requirements of this
subsection 5.1(xviii) in accordance with its customary procedures for
handling confidential information of this nature and, in any event, may
make disclosures reasonably required by any bona fide assignee, transferee
or participant in connection with the contemplated assignment or transfer
of any of the Commitments or Loans or participation therein or Letters of
Credit, provided still further that such assignee, transferee or
participant agrees to be bound by this paragraph, or as required or
requested by any governmental agency or representative thereof or pursuant
to legal process; provided still further that, unless specifically
prohibited by applicable law or court order, any Lender that receives a
request by any governmental agency or representative thereof (other than
any such request in connection with any examination of the financial
condition of such Lender by such governmental agency) for disclosure of any
such non-public information shall notify Company of such request as soon as
reasonably practicable prior to disclosure of such information to enable
Company and its Subsidiaries to seek a protective order or other
appropriate confidential treatment; provided still further that in no event
shall Administrative Agent or any Lender be obligated or required to return
any materials furnished by Company or any of its Subsidiaries.
(xix) with reasonable promptness, such other information and data
with respect to Company or any of its Subsidiaries, including any
Unrestricted Subsidiary, as from time to time may be reasonably requested
by any Lender.
5.2 Corporate Existence, etc.
-------------------------
Company will at all times preserve and keep in full force and effect the
existence of Company and the corporate, partnership or other existence of each
of its Subsidiaries and the rights and franchises material to the business of
Company and each of its Subsidiaries; provided however that the existence of any
such Subsidiary (other than any Unrestricted Subsidiary owned in whole or part
by Company or any of its Subsidiaries) may be terminated if such termination is
in the best interest of Company and is not materially disadvantageous to any
Lender; provided further that, so long as no Potential Event of Default or Event
of Default has occurred and is continuing or would be caused thereby, the
existence of any Unrestricted Subsidiary may be terminated; provided still
further that, if any such Unrestricted Subsidiary is merged with a Subsidiary of
Company, such Subsidiary of Company that is not an Unrestricted Subsidiary (or
that ceases to be an Unrestricted Subsidiary pursuant to an Officers'
Certificate of Company delivered to Administrative Agent giving notice that such
Unrestricted Subsidiary is being re-designated a Subsidiary of Company for all
purposes of this Agreement and the other Loan Documents and stating that all of
the provisions of subsection 5.8 have been satisfied with respect to such
Subsidiary as if it were a New Subsidiary) shall be the surviving entity and the
equity of such Subsidiary shall have been, or shall simultaneously with the
consummation of the merger be, pledged to Collateral Agent for the benefit of
Secured Parties pursuant to the Security Agreement.
101
<PAGE>
5.3 Payment of Taxes and Claims; Tax Consolidation
----------------------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business, income or
property before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien upon any of its properties or assets, prior to the time when
any material penalty or fine shall be incurred with respect thereto; provided
that no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; provided further that no
such charge or claim with respect to amounts not previously paid in good faith
incurring interest, penalty or fines shall result in a breach of this
subsection 5.3 so long as such charge or claim and any interest, penalty or
fines incurred thereon are (a) paid when due upon first notice thereof from the
applicable taxing authority (if any) or (b) contested in accordance with the
first proviso hereof; provided still further that, anything to the contrary
contained herein notwithstanding, no such tax, assessment, charge or levy shall
remain unpaid beyond the date five days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment entered or filed against
Company or any of its Subsidiaries, or any of the respective properties, as a
result of the failure to make such payment.
B. Company will not, and will not permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
other than Company and its Subsidiaries for any period ending on or after Fiscal
Year 1995.
5.4 Maintenance of Properties; Insurance
------------------------------------
Company will maintain or cause to be maintained in good repair, working
order and condition all material properties of Company and its Subsidiaries used
or useful in the businesses of Company and its Subsidiaries and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and businesses and the properties and businesses of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations.
5.5 Inspection; Lender Meeting; Appraisals
--------------------------------------
Company shall permit any authorized representatives designated by any
Lender at the expense of that Lender, to visit and inspect any of the properties
of Company or any of its Subsidiaries, including its and their financial and
accounting records (such records to include, without limitation, copies of all
federal, state, local and foreign tax returns filed by Company or any of its
Subsidiaries, and any comment letters submitted by accountants to management in
102
<PAGE>
connection with any audit of the financial statements of such Persons by such
accountants), and to make copies and take extracts therefrom, and to discuss its
and their affairs, finances and accounts with its and their officers and
independent certified public accountants, all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested and Company hereby authorizes such accountants to discuss, at
Company's expense, the affairs, finances and accounts of Company and its
Subsidiaries with Administrative Agent or any Lender. At any one time during
each Fiscal Year at Administrative Agent's sole discretion, or at any time upon
the occurrence or continuance of a Potential Event of Default or an Event of
Default, Administrative Agent and its authorized representatives shall be
entitled to conduct an audit of Company and its Subsidiaries (including the
books and records, inventory and accounts receivable of such Persons), the
reasonable expenses of which shall be payable by Company, and in connection
therewith Administrative Agent and such representatives shall have access to
records and personnel as provided in the preceding sentence. Without in any way
limiting the foregoing, Company at its expense shall participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year at such time as
may be agreed to by Company and Administrative Agent.
Administrative Agent and Requisite Lenders may request from time to time
that Company conduct appraisals of any of the equipment included in the
Collateral or any of the Facilities and, promptly upon receiving any such
request, Company shall retain a nationally recognized appraisal firm acceptable
to Administrative Agent and Requisite Lenders to conduct any such appraisals.
One such appraisal of the real property at each Facility and one such appraisal
of the equipment located at any one Facility shall be at Company's expense.
Company will use its best efforts to have such appraisals completed as soon as
practicable and in a manner satisfactory to Administrative Agent and Requisite
Lenders.
In the event that Company or any of its Subsidiaries conducts an appraisal
of one or more of the Facilities and/or the equipment or other property owned or
leased by any such Subsidiary, Company shall deliver a copy of such appraisal to
Administrative Agent for distribution to Lenders promptly upon the completion
thereof.
5.6 Equal Security for Loans and Notes; No Further Negative Pledges
---------------------------------------------------------------
A. If Company or any of its Subsidiaries shall create or assume any Lien
upon any of its property or assets, whether now owned or hereafter acquired,
other than Liens not prohibited by subsection 6.2 (unless prior written consent
to the creation or assumption thereof shall have been obtained from Requisite
Lenders), it shall make or cause to be made effective provision whereby the
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such other Indebtedness shall
be so secured; provided that this covenant shall not be construed as consent by
Requisite Lenders to any violation by Company of the provisions of
subsection 6.2; provided further that Company shall under no circumstances be
required to make or cause to be made effective provision whereby the Loans or
the Notes will be secured, directly or indirectly, by Margin Stock to the extent
that such grant of security would violate applicable law.
103
<PAGE>
B. Except with respect to Margin Stock and as disclosed on Schedule 6.2
annexed hereto, neither Company nor any of its Subsidiaries shall maintain or
enter into any agreement prohibiting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired; provided that
restrictions on the creation or assumption of any Lien (i) upon assets being
sold pursuant to a definitive agreement for the sale of such assets to which
Company or any of its Subsidiaries is a party are permitted if such sale of
assets is permitted under subsection 6.7, (ii) upon assets being financed
pursuant to Indebtedness in respect of such assets to which Company or any of
its Subsidiaries is a party are permitted if such Indebtedness is permitted
under subsection 6.1 and such assets secure such Indebtedness as permitted under
subsection 6.2 and (iii) upon assets which are subject to an option to acquire
such assets pursuant to a definitive agreement containing such option to which
Company or any of its Subsidiaries is a party are permitted if the sale of the
underlying assets would be permitted under subsection 6.7 (subject, however, to
the Liens of Collateral Agent).
5.7 Compliance with Laws, etc.
-------------------------
Company shall, and shall cause its Subsidiaries (including any Unrestricted
Subsidiaries) to, exercise all due diligence in order to comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which would in any case or in the
aggregate have a Material Adverse Effect.
5.8 New Subsidiaries
----------------
In the event that any Unrestricted Subsidiary is re-designated a Subsidiary
of Company in a notice to such effect delivered pursuant to subsection 5.2 or,
after the date hereof, any Loan Party forms or acquires in any manner a
Subsidiary (a "New Subsidiary") which has not been designated as an
Unrestricted Subsidiary, Company shall promptly cause the following to occur:
(i) the New Subsidiary shall execute and deliver the Guaranty
substantially in the form of the Guaranty annexed hereto as Exhibit XII
(or, if the Guaranty has already been executed and delivered, such New
Subsidiary shall execute and deliver a counterpart to the Guaranty
substantially in the form of Exhibit A thereto pursuant to which such New
Subsidiary shall become jointly and severally liable as a guarantor under
the Guaranty).
(ii) Each Loan Party that owns any of the capital stock or other
equity of such New Subsidiary shall assume all obligations as a "Pledgor"
under the Security Agreement including the obligation to pledge all shares
of capital stock and other equity of any direct or indirect Subsidiary of
Company to Collateral Agent for the benefit of Secured Parties.
(iii) Company shall cause the New Subsidiary to execute and
deliver a promissory note evidencing all Intercompany Indebtedness owed by
such New Subsidiary to Company and its Subsidiaries and such promissory
note shall be pledged to Collateral Agent for the benefit of Secured
Parties under the Security Agreement.
104
<PAGE>
(iv) the New Subsidiary shall execute and deliver counterparts to the
Security Agreement substantially in the form of Exhibit A thereto and shall
execute and deliver counterparts to the Trademark and Patent Agreements in
substantially the form of Exhibit A thereto, if applicable, and take all
actions and deliver all documents (if any) required under subsection 5.9
hereof.
(v) if requested by Administrative Agent and Requisite Lenders,
opinion(s) of counsel covering the matters described in clauses (i), (ii),
(iii) and (iv) above, substantially in the form of opinions as to similar
matters given pursuant to subsections 3.1E and 3.1K(v) and otherwise in
form and substance reasonably satisfactory to Administrative Agent and
Requisite Lenders shall be delivered to Administrative Agent and each
Lender; provided that the failure of Company to deliver opinions reasonably
requested by Administrative Agent and Requisite Lenders covering matters
not opined on pursuant to the opinions delivered pursuant to such
subsection 3.1E shall not become an Event of Default pursuant to subsec-
tion 7.3 of this Agreement unless and until such failure has not been
remedied or waived within 30 days after receipt by Company of notice from
Administrative Agent of such failure.
Notwithstanding anything in the foregoing to the contrary (but subject to
the proviso contained in clause (v) above), if such New Subsidiary is acquired
in connection with an Acquisition, then Company shall comply with the foregoing
requirements within two Business Days following the consummation of such
Acquisition; provided that Company shall comply with the foregoing requirements
on or prior to the Closing Date with respect to the Identified Acquisition. In
addition to the foregoing, in the event Company forms or acquires a Receivable
SPC, Company shall promptly cause the capital stock or other equity of such
Receivables SPC to be pledged to Collateral Agent under the Security Agreement.
5.9 Maintenance of Leasehold Property; Excluded Collateral
------------------------------------------------------
A. Maintenance of Leasehold Property. Company shall, and shall cause its
Subsidiaries to, comply with all of their respective obligations under all
leases of real property or similar agreements now existing or hereafter entered
into by them (whether as lessor or lessee) except that Company and its
Subsidiaries may amend, modify or terminate any lease in the ordinary course of
business if such amendment, modification or termination could not reasonably be
expected to have a Material Adverse Effect. Company shall (i) make available to
Administrative Agent and, if requested, provide Administrative Agent with, a
copy of each notice of default received by Company or and of its Subsidiaries
under any such lease and make available to Administrative Agent and, if
requested, provide Administrative Agent with, a copy of each notice of default
sent by Company or any if its Subsidiaries under any such lease; and (ii) notify
Administrative Agent, on or before the fifteenth day of each month, of any new
leased premises or lease that Company or such Subsidiary plans to take
possession of during the following thirty day period or has become liable for
during the preceding thirty day period.
105
<PAGE>
B. Excluded Collateral; Other Matters.
(i) Administrative Agent and Requisite Lenders may, in their
discretion from time to time, designate any Excluded Collateral as
Collateral (other than Excluded Collateral that is encumbered by a Lien
securing Indebtedness permitted under this Agreement to the extent that the
granting of a Lien in such Excluded Collateral to the Collateral Agent
would violate any agreement relating to such Indebtedness) hereunder and
Company shall, and shall cause its Subsidiaries to, take such actions and
deliver such instruments with respect to such Collateral as required to
grant a perfected security interest in such Collateral or as otherwise
required by the provisions of any Collateral Document. In addition,
Administrative Agent and Requisite Lenders may, in their discretion from
time to time, designate any property of Company or any of its Subsidiaries
now existing or hereafter acquired as Excluded Collateral in which case it
shall not be necessary to satisfy the requirements of the Security
Agreement or the immediately preceding sentence with respect to such
property (unless and until Administrative Agent and Requisite Lenders
otherwise elect pursuant to the preceding sentence) and Administrative
Agent and Requisite Lenders hereby instruct Collateral Agent and Collateral
Agent hereby agrees to release any security interests with respect to any
Excluded Collateral benefitting Secured Parties and execute any and all
such instruments or documents (including, without limitation, UCC-3 release
statements) as Company shall reasonably request to evidence such release;
and
(ii) Administrative Agent and Requisite Lenders hereby designate
pursuant to this subsection 5.9B as Excluded Collateral hereunder each of
the Facilities and items of equipment set forth on Schedule 1.1B annexed
hereto.
5.10 Environmental Disclosure and Inspection
---------------------------------------
(i) Company shall, and shall cause each of its Subsidiaries to,
exercise all reasonable due diligence in order to comply and cause (a) all
tenants under any lease or occupancy agreement affecting any portion of the
Facilities and (b) all other Persons on or occupying such property to
comply with all Environmental Laws in all material respects.
(ii) Except to the extent such disclosure would include a matter as to
which a legal privilege is asserted in good faith by any Loan Party,
Company shall: (a) have delivered to Administrative Agent and Lenders on or
before the Closing Date, a Schedule of Environmental Matters annexed as
Schedule 5.10 hereto setting forth in reasonable detail a description of
all material operations, claims, notices, investigations, allegations,
events, occurrences, conditions, activities and other matters whether or
not similar to the foregoing that are exceptions to the representations and
warranties made pursuant to the enumerated subdivisions of subsection 4.13
as of the Closing Date, but as if such representations and warranties were
made without giving effect to the materiality qualification contained in
the introductory language contained in subsection 4.13 and (b) promptly
advise Lenders in writing and in reasonable detail of
106
<PAGE>
(1) any material Release of any Hazardous Material reported to any federal,
state or local governmental or regulatory agency under any applicable
Environmental Laws, (2) any and all material written communications with
respect to material Environmental Claims or any material Release of
Hazardous Material reported to any federal, state or local governmental or
regulatory agency, (3) any material remedial action taken by Company or any
other Person in response to (A) any Hazardous Material on, under or about
any Facility, the existence of which could reasonably be expected to result
in an Environmental Claim having a Material Adverse Effect or (B) any
Environmental Claim that could reasonably be expected to have a Material
Adverse Effect, (4) any Loan Party's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Facility
that could cause such Facility or any material part thereof, in the good
faith determination of Company, to be subject to any material restrictions
on the ownership, occupancy, transferability or use thereof under any
Environmental Laws or that could otherwise reasonably be expected to have a
material adverse effect on the use of the Facilities, (5) any request for
information from any governmental agency that indicates such agency is
investigating whether Company or any of its Subsidiaries may be potentially
responsible for a material Release of Hazardous Materials and (6) promptly
upon the completion of any material excavation or remediation relating to
the existence of any Hazardous Materials at any of the Facilities, written
evidence satisfactory to Administrative Agent that such excavation has
occurred in material compliance with any applicable Environmental Laws.
(iii) Company shall promptly notify Lenders of any proposed
acquisition of stock, assets, or property by Company or any of its
Subsidiaries that could reasonably be expected to expose Company or any of
its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have a Material Adverse Effect and any proposed
action to be taken by Company or any of its Subsidiaries to commence
manufacturing, industrial or other operations that could reasonably be
expected to subject Company or any of its Subsidiaries to additional
Environmental Laws compliance or non-compliance with which could reasonably
be expected to have a Material Adverse Effect.
(iv) Company and its Subsidiaries shall, at their own expense, provide
copies of such documents or information as Administrative Agent or any
Lender may reasonably request in relation to any matters disclosed pursuant
to this subsection 5.10 except to the extent that such document or the
information includes a matter as to which a legal privilege is asserted in
good faith by Company or such Subsidiary.
(v) Not later than 45 days from the date on which a request is
received from Administrative Agent, Company and its Subsidiaries shall
conduct and complete, or shall cause to be conducted and completed, at its
expense, additional environmental investigations, audits and reviews as is
reasonably requested by Administrative Agent at any of the Facilities if
deemed necessary by Administrative Agent in its reasonable discretion.
Company and its Subsidiaries shall deliver to Administrative Agent the
information and reports which are obtained pursuant to such investigations,
audits and reviews, except to
107
<PAGE>
the extent that such information or reports include matter as to which a
legal privilege is asserted in good faith by any Loan Party.
(vi) Notwithstanding anything contained in this subsection 5.10 to the
contrary, Administrative Agent and each Lender shall hold all non-public
information that has been identified as such by Company obtained pursuant
to the requirements of this subsection 5.10 in accordance with its
customary procedures for handling confidential information of this nature
and, in any event, may make disclosures reasonably required by any bona
fide assignee, transferee or participant in connection with the
contemplated assignment or transfer of any of the Commitments or Loans or
participation therein or Letters of Credit, provided that such assignee,
transferee or participant agrees to be bound by this paragraph, or as
required or requested by any governmental agency or representative thereof
or pursuant to legal process; provided further that, unless specifically
prohibited by applicable law or court order, any Lender that receives a
request by any governmental agency or representative thereof (other than
any such request in connection with any examination of the financial
condition of such Lender by such governmental agency) for disclosure of any
such non-public information shall notify Company of such request as soon as
reasonably practicable prior to disclosure of such information to enable
Company and its Subsidiaries to seek a protective order or other
appropriate confidential treatment; provided still further that in no event
shall Administrative Agent or any Lender be obligated or required to return
any materials furnished by Company or any of its Subsidiaries.
5.11 Hazardous Materials; Remedial Action
------------------------------------
Company shall, and shall cause its Subsidiaries to, promptly take any and
all necessary or appropriate remedial action, as determined by Company in its
reasonable judgment, in connection with the presence, storage, use, disposal,
transportation or Release of any Hazardous Materials on, under or about any
Facility. In the event Company or any of its Subsidiaries undertakes any
remedial action with respect to any Hazardous Material on, under or about any
Facility, Company or such Subsidiary shall conduct and complete such remedial
action in material compliance with all applicable Environmental Laws and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities, except when and only to the extent that
Company's or such Subsidiary's liability or the means by which such liability
may be addressed for such presence, storage, use, disposal, transportation or
discharge of any Hazardous Material or such remedial action is being contested
in good faith by Company or such Subsidiary.
5.12 Environmental Indemnity
-----------------------
Company shall fully and promptly pay, perform, discharge, defend, indemnify
and hold harmless Agents and Secured Parties, their Subsidiaries and Affiliates,
and their respective directors, officers and employees ("Indemnitees") from
and against any action, suit, proceeding, claim, loss, damage, cost or expense,
including, without limitation, interest, penalties and reasonable attorneys' and
consultants' fees, asserted against, suffered or incurred by any
108
<PAGE>
Indemnitee arising under or resulting from this Agreement or the other Loan
Documents (or the enforcement of the rights of any Indemnitee under the Loan
Documents or in the Collateral) or Lenders' agreements to make the Loans and (i)
any Environmental Laws on account of any operations or activities at the
Facilities, (ii) any Release of any Hazardous Material by Company or any of its
Subsidiaries whether or not such Release originates or emanates from Company's
or such Subsidiary's Facilities or any premises contiguous thereto or (iii) any
other environmental matter affecting such Facility within the jurisdiction of
any federal, state or municipal official administering Environmental Laws;
provided that Company shall not have any obligation to an Indemnitee hereunder
with respect to any liabilities arising from the bad faith, gross negligence or
willful misconduct of such Indemnitee.
5.13 Deposit Accounts and Cash Management Systems
--------------------------------------------
Company shall use and maintain, and shall cause its Subsidiaries to use and
maintain, their respective Deposit Accounts and cash management systems in a
manner reasonably satisfactory to Collateral Agent. Company shall not permit
any of its Deposit Accounts or any Deposit Account of any of its Subsidiaries at
any time to have a principal balance in excess of $2,000,000 unless Company has
delivered to Collateral Agent an agreement in form and substance satisfactory to
Collateral Agent executed by the financial institution at which such Deposit
Account is maintained confirming, among other things, Collateral Agent's
security interest in such Deposit Account and has taken all other steps
necessary or otherwise reasonably requested by Collateral Agent to ensure that
Collateral Agent has control of such Deposit Account; provided, however that,
for the fifteen-day period immediately following the Closing Date, Company and
its Subsidiaries shall not be required to deliver any such agreement with
respect to the Deposit Accounts acquired in connection with the Identified
Acquisition. Company shall not permit the aggregate amount on deposit in the
Deposit Accounts of Company and all of its Subsidiaries (other than Deposit
Accounts maintained by a Lender) to exceed $10,000,000.
Notwithstanding the foregoing paragraph, at Collateral Agent's or Requisite
Lenders' written request, Company and its Subsidiaries shall promptly take all
actions that are reasonably requested by Collateral Agent or otherwise necessary
to grant to Collateral Agent for the benefit of Secured Parties control of the
Deposit Accounts of Company and its Subsidiaries and, in connection therewith,
Company and its Subsidiaries shall promptly obtain agreements with the Persons
at which such Deposit Accounts are maintained in form and substance satisfactory
to Collateral Agent pursuant to which each such Person, among other things,
waives its rights to set-off with respect to amounts in each such Deposit
Account (provided that if Company or any of its Subsidiaries is unable to obtain
any such agreements from any such Person, Company or such Subsidiary shall,
within thirty days after receipt by Company or such Subsidiary of such written
request by Collateral Agent or Requisite Lenders, transfer all amounts in the
applicable Deposit Account to a Deposit Account maintained at a financial
institution from which Company or such Subsidiary shall be able to obtain such
agreements) and shall deliver to Collateral Agent opinions of counsel reasonably
requested by Collateral Agent or Requisite Lenders confirming the first priority
status of such Liens (which opinion may be a reasoned opinion).
109
<PAGE>
5.14 Further Assurances
------------------
Company shall, and shall cause each of its Subsidiaries to, execute and
deliver, or cause to be executed and delivered, to Administrative Agent such
documents and agreements, and shall take or cause to be taken such actions, as
Administrative Agent may from time to time request to carry out the terms and
conditions of this Agreement and the other Loan Documents.
5.15 Fiscal Periods
--------------
Company shall maintain and Company shall cause their its Subsidiaries to
maintain the Fiscal Years and Fiscal Quarters ending on the dates set forth on
Schedule 1.1C. In the event that any Fiscal Year or Fiscal Quarter or end for
any Subsidiary of Company is changed (provided however that no such change shall
affect the dates on which payments are to be paid by Company hereunder or have
the effect of changing the Commitment Termination Date without the prior written
consent of Administrative Agent and all affected Lenders), it shall be changed
in the same manner for Company and all of its Subsidiaries.
SECTION 6.
NEGATIVE COVENANTS
Company covenants and agrees that, from and after the Closing Date and so
long as any of the Commitments shall be in effect and until payment in full of
all of the Loans and other Obligations, the cancellation or expiration of all
Letters of Credit and the reimbursement of all amounts drawn thereunder, unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform all covenants in this Section 6.
6.1 Indebtedness
------------
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume, guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(i) Company and its Subsidiaries may become and remain liable with
respect to the Obligations;
(ii) in addition to Indebtedness otherwise permitted by this
subsection 6.1, Company and each of its Subsidiaries may become and remain
liable with respect to its respective Contingent Obligations permitted to
be incurred by such Person under subsection 6.4 and, upon any obligations
actually arising pursuant thereto, the Indebtedness corresponding to the
Contingent Obligation so extinguished;
(iii) Company and each of its Subsidiaries may remain and may
become and remain liable with respect to Intercompany Indebtedness;
provided that (a) all such
110
<PAGE>
Intercompany Indebtedness shall be evidenced by Intercompany Notes, (b) all
such Intercompany Indebtedness shall, to the extent permitted by applicable
law, be subordinated pursuant to the terms of the promissory notes
evidencing such Intercompany Indebtedness in right of payment, from and
after such time as the Loans shall become due and payable (whether at
stated maturity, by acceleration or otherwise), to the payment in full of
the Obligations of such Subsidiary under the Loan Documents, as applicable,
and (c) any payment by Company or any of its Subsidiaries under any
guaranty of the Obligations shall result in a pro tanto reduction of the
amount of any Intercompany Indebtedness owed by such Subsidiary to Company
or any Subsidiary of Company for whose benefit the payment is made;
provided further that neither Company nor any Subsidiary of Company the
equity of which is pledged as Collateral shall extend any loans to any
Subsidiary of Company the equity of which is not pledged as Collateral
hereunder;
(iv) Company and its Subsidiaries may remain liable with respect to
the Existing Indebtedness; provided however that from and after the Closing
Date the principal amount of each such item of Existing Indebtedness and
the Refinancing Indebtedness therefor shall not exceed the amount thereof
set forth on Schedule 6.1 annexed hereto;
(v) Company may become and remain liable with respect to the Senior
Subordinated Notes;
(vi) Company and its Subsidiaries may become and remain liable with
respect to (y) unsecured Indebtedness which refinances any Indebtedness
permitted under subsections 6.1(iv), (v), (x) or (xi) and (z) Indebtedness
secured by Liens on real or personal property which refinances Existing
Indebtedness which was secured by Liens as of the date of this Agreement
(collectively, the "Refinancing Indebtedness"); provided that (a) the
aggregate principal amount of any item of Refinancing Indebtedness shall
not exceed the aggregate principal amount of the Indebtedness which was
outstanding on the date of such refinancing that is being refinanced with
the proceeds thereof (except that Existing Indebtedness secured by real
property may be refinanced by non-recourse Refinancing Indebtedness secured
by the same real property collateral, in an original principal amount up to
the appraised value of such real property collateral), (b) each item of
Refinancing Indebtedness specified in clause (z) shall be unsecured or, if
secured, secured only by all or a portion of the same real or personal
property which secured the Existing Indebtedness which has been refinanced,
(c) the average maturity of any Refinancing Indebtedness shall be no less
than the average maturity of the Existing Indebtedness which has been
refinanced, (d) with respect to Refinancing Indebtedness that refinances
Subordinated Indebtedness, such Refinancing Indebtedness shall provide for
subordination thereof to the Obligations (and any refinancing thereof) to
the same or a greater degree as applies to the Subordinated Indebtedness
being refinanced and (e) the Refinancing Indebtedness shall include
representations and warranties, covenants, events of default and other
provisions that are not more restrictive or burdensome in any material
respect than the terms of the Indebtedness which has been refinanced, and
in the case of
111
<PAGE>
Refinancing Indebtedness which is Subordinated Indebtedness, shall satisfy
the requirements set forth in subsection 6.12 otherwise applicable to
amendments to Subordinated Indebtedness (except that such Refinancing
Indebtedness may bear interest at the market rate at the time of such
refinancing), unless Administrative Agent and Requisite Lenders otherwise
consent in writing;
(vii) Company and its Subsidiaries may become and remain liable
with respect to promissory notes issued in respect of a Company's or any
such Subsidiary's obligation to make deferred payments of insurance
premiums arising in the ordinary course of business in an aggregate amount
for Company and its Subsidiaries not to exceed, when aggregated with the
Letter of Credit Usage other than with respect to Standby Letters of Credit
issued in support of Indebtedness otherwise permitted pursuant to this
subsection 6.1(vii), $50,000,000 in aggregate principal amount at any time,
it being understood that all such promissory notes listed on Schedule 6.1A
annexed hereto shall be taken into account for purposes of determining the
limits set forth in this subsection 6.1(vii);
(viii) so long as at the time of incurrence thereof no Event of
Default or Potential Event of Default has occurred and is continuing or
would be caused thereby, Company and its Subsidiaries may become and remain
liable with respect to Indebtedness (including Capital Lease obligations)
to finance or refinance permitted Consolidated Capital Expenditures
incurred after December 31, 1995; provided that (a) either (1) after giving
effect to such incurrence, the aggregate principal amount of all such
Indebtedness incurred in the then-current Fiscal Year shall not exceed
$60,000,000 for the 1996 Fiscal Year and thereafter an amount equal to the
sum of (x) $60,000,000 plus (y) if and to the extent the amount of
Indebtedness incurred under this subsection 6.1(viii)(a)(1) during the 1996
Fiscal Year or any subsequent Fiscal Year is less than the amount permitted
under this subsection 6.1(viii)(a)(1), the difference between the amount of
such Indebtedness permitted and the amount of such Indebtedness so incurred
for each such Fiscal Year shall be carried forward and available to be
incurred under this subsection 6.1(viii)(a)(1) in any subsequent year to
the extent that such amount has not been previously utilized under this
subsection 6.1(viii)(a)(1) (it being understood and agreed that the amount
permitted to be so carried forward from the 1996 Fiscal Year shall not
exceed $60,000,000) or (2) the Leverage Ratio measured as at the last day
of the most recently ended Fiscal Quarter for which financial statements
have been delivered pursuant to subsection 5.1(i), for the four Fiscal
Quarter period ending on such date, calculated on a pro forma basis after
giving effect to the incurrence of such Indebtedness proposed to be
incurred, is not greater than 2.50:1.00, (b) if secured, such Indebtedness
shall be secured only by Liens on the real or personal property so financed
or refinanced and the loan to value ratio thereof shall not exceed 100% and
(c) the documentation governing such Indebtedness shall not contain any
financial covenants or any cross-default provision to this Agreement or the
documentation governing the Senior Subordinated Notes or other Subordinated
Indebtedness, and no such Indebtedness the outstanding principal amount of
which is $20,000,000 or more shall contain any cross-default provision to
the
112
<PAGE>
documentation governing any other obligation of Company or any of its
Affiliates (other than to any other obligation owed to the holder of such
obligation or its Affiliates);
(ix) Company may become and remain liable with respect to any
unsecured Indebtedness evidencing an obligation in respect of a Restricted
Junior Payment otherwise permitted by subsection 6.5(iii) but not paid in
cash;
(x) so long as at the time of incurrence thereof no Event of Default
or Potential Event of Default has occurred and is continuing or would be
caused thereby, Company may from time to time following the Closing Date
issue debt Securities subordinate in right and time of payment to the
Obligations (the "Additional Subordinated Indebtedness"); provided that
(a) such Additional Subordinated Indebtedness is unsecured, (b) the
maturity of any Additional Subordinated Indebtedness is no less than one
year following the Commitment Termination Date, (c) such Additional
Subordinated Indebtedness includes representations and warranties,
covenants, events of default and other provisions that are not more
restrictive or burdensome to Company than the terms of this Agreement, (d)
such Additional Subordinated Indebtedness is satisfactory in form and
substance to Administrative Agent and Requisite Lenders, in their sole
discretion, and (e) Company applies the proceeds of such Additional
Subordinated Indebtedness (net of underwriting discounts and commissions
and other reasonable costs associated therewith) to prepay the Loans
pursuant to subsection 2.4A(ii)(c) to the extent required thereby;
(xi) so long as at the time of incurrence thereof no Event of Default
or Potential Event of Default has occurred and is continuing or would be
caused thereby, Indebtedness of any Target and its Subsidiaries acquired in
respect of an Acquisition may remain outstanding; provided that (a) such
Indebtedness was incurred prior to the date of such Acquisition and was not
incurred in contemplation of such Acquisition; and (b) the aggregate
principal amount of such Indebtedness (and any Indebtedness refinancing
such Indebtedness) outstanding at any time with respect to all
Acquisitions, together with the aggregate amount of Contingent Obligations
under subsection 6.4(vi) (other than any such Contingent Obligations
guarantying Indebtedness otherwise included under this clause (b)), shall
not exceed the sum of (1) $100,000,000 and (2) (x) prior to the Acquisition
Commitment Termination Date, the amount by which the Tranche B Commitments
have been reduced pursuant to subsection 2.4C or 2.4D and (y) from and
after the Acquisition Commitment Termination Date, the amount by which the
Tranche B Commitments had been reduced pursuant to subsection 2.4C or 2.4D
prior to the Acquisition Commitment Termination Date; and
(xii) in addition to Indebtedness otherwise permitted by this
subsection 6.1, Company and its Subsidiaries may become and remain liable
with respect to Indebtedness in an aggregate amount not to exceed
$50,000,000 in principal amount outstanding at any time; provided however
that to the extent the principal amount of any Indebtedness incurred in one
or more related transactions under this clause (xii) exceeds $20,000,000,
the documentation governing such Indebtedness shall contain no financial
covenants or
113
<PAGE>
cross-default provisions or only those financial covenants and cross-
default provisions as are in all respects satisfactory in form and
substance to Administrative Agent and Requisite Lenders, and no provision
contained in such documentation shall in any event be more burdensome to
Company or any of its Subsidiaries than the provisions contained in this
Agreement.
6.2 Liens
-----
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or permit to exist any Lien on or with
respect to any property or asset (including any document or instrument in
respect of goods or accounts receivable) of Company or any of its Subsidiaries,
whether now owned or hereafter acquired, or any income or profits therefrom,
except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 6.2 annexed hereto;
(iv) Liens granted to secure either Existing Indebtedness as permitted
by subsection 6.1(iv) to the extent such Liens are granted prior to the
Closing Date, Refinancing Indebtedness to the extent permitted by
subsection 6.1(vi)(z), Indebtedness to the extent permitted by
subsection 6.1(viii) or Contingent Obligations as permitted by
subsection 6.4(v);
(v) Liens created to secure Indebtedness permitted under subsection
6.1(xi) of the Target and its Subsidiaries of any Acquisition outstanding
on the date of such Acquisition; provided that (a) such Liens exist
pursuant to an agreement executed prior to the date of such Acquisition and
were not created in contemplation of such Acquisition; (b) the aggregate
amount of such secured Indebtedness outstanding (together with all other
Indebtedness and Contingent Obligations referred to in subsection 6.1(xi))
at any time shall not exceed the amount permitted under subsection
6.1(xi)(b) and (c) such Liens shall encumber only assets encumbered by such
Liens on or prior to the date such Acquisition is consummated or after
acquired property as provided under any agreement which creates such Liens
and is in effect prior to the date of such Acquisition; and
(vi) in addition to the Liens permitted by clauses (i)-(v), the
Company and its Subsidiaries may grant Liens securing the payment of
Indebtedness described in subsection 6.1(xii); provided that if such Liens
are on Collateral and such Collateral has not been released from the Liens
of the Collateral Documents, such Liens otherwise permitted under this
subsection 6.2(vi) shall be subordinate to the Liens of the Collateral
Documents.
114
<PAGE>
6.3 Investments; Joint Ventures
---------------------------
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly make or own any Investment in any Person or enter into any Joint
Venture, except:
(i) Cash and Cash Equivalents;
(ii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 6.1(iii);
(iii) Company and its Subsidiaries may make and own Investments
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations and other debts
of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(iv) Company and its Subsidiaries may receive and hold promissory
notes or other Investments received in connection with the settlement of
pending litigation;
(v) Company and its Subsidiaries may acquire and retain ownership of
Investments in connection with Asset Sales or other dispositions of assets
not prohibited by subsection 6.7 effected in compliance with the provisions
thereof;
(vi) Company and its Subsidiaries may make and own Investments
described in Schedule 6.3 annexed hereto;
(vii) so long as at the time of the making of such Investment no
Event of Default or Potential Event of Default has occurred and is
continuing or would be caused thereby, Company and its Subsidiaries may
make and own Investments in Unrestricted Subsidiaries; provided that the
aggregate cumulative fair market value (measured as of the time of the
respective transfer) of all assets (including, but not limited to Cash,
Cash Equivalents, capital and other assets) directly or indirectly
transferred by Company or any of its Subsidiaries to any and all Persons in
connection with acquisitions of Unrestricted Subsidiaries and to
Unrestricted Subsidiaries by way of capital contribution, loan or otherwise
shall not exceed $25,000,000; provided further that neither Company nor any
of its Subsidiaries shall at any time be obligated or liable to any Person
with respect to any of the assets, actions or activities of any
Unrestricted Subsidiary;
(viii) Company or any of its Subsidiaries may make and own
Investments acquired in connection with the sale of the stock or all or any
part of the assets of any Unrestricted Subsidiary;
(ix) Company's officers and employees may issue promissory notes to
Company in payment for equity interests of Company issued to such officers
and employees pursuant to Company's management equity program in an
aggregate amount outstanding from time to time not to exceed $20,000,000
during the term of this Agreement; and
115
<PAGE>
(x) subject to the limitations set forth therein, Company and its
Subsidiaries may make and own Investments permitted by subsection 6.4(v);
(xi) in addition to the Investments permitted by clauses (i)-(x),
Company and its Subsidiaries may make and own Investments (other than
Investments of the types described in subsection 6.3(vii) or 6.3(viii)) in
an aggregate amount (measured with respect to each such Investment
according to the amount of Cash and fair market value (as determined in
good faith by two executive officers of Company) of all other property
comprising such Investment at the time such Investment was made) of not
more than the sum of $75,000,000 minus the amount of any Investments made
pursuant to subsection 6.3(vii); provided that in no event shall Company or
any of its Subsidiaries be permitted to make Investments pursuant to this
subsection 6.3(xi) if at the time such Investment is made, an Event of
Default or Potential Event of Default has occurred and is continuing or
would be caused thereby.
6.4 Contingent Obligations
----------------------
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or become or be liable with respect to any Contingent
Obligation, except:
(i) Company (a) may become and remain liable with respect to interest
rate cap agreements and other similar Interest Rate Agreements which do not
require any payments to be made or received by Company or any of its
Subsidiaries after the date of effectiveness thereof and (b) may also
become and remain liable with respect to other Interest Rate Agreements in
an aggregate notional amount under all such Interest Rate Agreements
described in this clause (b) of not more than the aggregate principal
amount of floating rate Indebtedness of Company then outstanding;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under this Agreement, the Guaranty, the
Collateral Documents and with respect to Letters of Credit;
(iii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations described in Schedule 6.4 annexed
hereto;
(iv) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any obligation of Company
or one of its Subsidiaries permitted under subsection 6.1 and in respect of
any obligation of one of Company's Subsidiaries not expressly prohibited by
the provisions of this Agreement; provided however that the principal
amount of any such Contingent Obligation shall not exceed the principal
amounts of the corresponding obligation to which it relates;
(v) Company and its Subsidiaries may make and own Investments in any
investment accounts established by Company for the sole purpose of securing
(a) worker's compensation liabilities of Company or any of its Subsidiaries
or (b) the obligations of
116
<PAGE>
third party insurers of Company and any of its Subsidiaries arising by
virtue of the laws of any jurisdiction requiring third party insurers;
provided that the sum of (x) the aggregate principal amount of such
Investments and any other Investments or property securing the obligations
described in clauses (a) or (b) above plus (y) the aggregate face amount of
any Letters of Credit issued to support such liabilities and obligations of
Company and any of its Subsidiaries shall not at any time exceed
$75,000,000;
(vi) so long as at the time of incurrence thereof no Event of Default
or Potential Event of Default has occurred and is continuing or would be
caused thereby, Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations of any Target acquired in respect of
an Acquisition that were incurred prior to the date of such Acquisition;
provided that the aggregate amount of such Contingent Obligations (other
than the amount of any such Contingent Obligations excluded from subsection
6.1(xi)(c)), when added to the aggregate principal amount of Indebtedness
of the Company and its Subsidiaries outstanding at such time permitted
solely pursuant to subsection 6.1(xi) hereof, shall not exceed the sum of
the amount specified in subsection 6.1(xi)(b)(1) plus the amount specified
in subsection 6.1(xi)(b)(2) at any time; and
(vii) in addition to the Contingent Obligations permitted by
clauses (i) - (vi) of this subsection 6.4, Company and its Subsidiaries may
become and remain liable with respect to Contingent Obligations not to
exceed $30,000,000 in the aggregate at any time outstanding; provided that
any outstanding Indebtedness incurred by Company or any of its Subsidiaries
pursuant to subsection 6.1(ii) in respect of a Contingent Obligation of
Company or such Subsidiary created pursuant to this clause (vii) shall be
treated as a Contingent Obligation for purposes of calculating the
aggregate amount permitted at any time by this clause (vii).
6.5 Restricted Junior Payments
--------------------------
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment except that (i) Company may pay any management fees to KKR in
accordance with the terms of and subject to the subordination provisions
required in the agreement referred to in Schedule 6.5 annexed hereto;
(ii) Company and its Subsidiaries may make Restricted Junior Payments to cancel
or repurchase Securities or options for Securities granted pursuant to
Management Stock Agreements to holders of such Securities upon the death,
disability or termination of employment of such holders; (iii) Company may make
Restricted Junior Payments to the holders of the Senior Subordinated Notes and
the holders of the Additional Subordinated Indebtedness from the proceeds of the
sale of Equity Securities of Company; (iv) Company may make scheduled interest
payments on the Senior Subordinated Notes (to the extent permitted by the
subordination provisions of the Senior Subordinated Note Indenture) and in
respect of the Additional Subordinated Indebtedness (to the extent permitted by
the subordination provisions of the instruments evidencing such Additional
Subordinated Indebtedness and the documents pursuant to which such Additional
Subordinated Indebtedness is issued); and (v) Company may declare and pay
dividends in Cash on the common stock of Company; provided that the aggregate
117
<PAGE>
amount of such Restricted Junior Payments does not exceed the sum of
(a) $12,500,000 plus (b) (1) 25% multiplied by the positive Consolidated Net
Income, if any, for the period (treated as a single accounting period) from the
Closing Date to the end of the most recent completed Fiscal Quarter preceding
the date of computation minus (2) 100% of all such dividends, distributions and
payments made and funds set apart for such purpose pursuant to this subsection
6.5(v)(b) during such period plus (c) 100% of the Net Equity Contribution
Amount, it being understood and agreed that unless Company designates otherwise
in writing delivered to Administrative Agent prior to the date Company makes
such Restricted Junior Payment, such Restricted Junior Payment shall be
allocated first to any amounts available under clause 6.5(v)(b), second to
amounts available under clause (a) and then to amounts available under
clause (c) of this subsection 6.5(v); provided however that in no event shall
Company be permitted to make the Restricted Junior Payments pursuant to
subsections 6.5(i), (iii) or (v) upon the occurrence and during the continuance
of an Event of Default or if an Event of Default would be caused thereby.
6.6 Financial Covenants
-------------------
A. Consolidated Fixed Charge Coverage Ratio. Company will not permit the
ratio of (i) Consolidated Cash Flow Available for Fixed Charges to
(ii) Consolidated Fixed Charges as measured on the last day of each Fiscal
Quarter (the "Reference Date"), commencing with the last day of the second
Fiscal Quarter of Fiscal Year 1996, for any four Fiscal Quarter period ending on
any Reference Date, to be less than the correlative ratio applicable below:
Minimum
Consolidated
Fixed Charge
Reference Date Coverage Ratio
Second Fiscal Quarter 1996 1.85:1.00
Third Fiscal Quarter 1996 1.90:1.00
Fourth Fiscal Quarter 1996 2.00:1.00
First Fiscal Quarter 1997 2.00:1.00
Second Fiscal Quarter 1997 2.00:1.00
Third Fiscal Quarter 1997 2.00:1.00
Fourth Fiscal Quarter 1997 2.00:1.00
First Fiscal Quarter 1998 2.00:1.00
Second Fiscal Quarter 1998 1.75:1.00
Third Fiscal Quarter 1998 1.75:1.00
Fourth Fiscal Quarter 1998 1.50:1.00
118
<PAGE>
Minimum
Consolidated
Fixed Charge
Reference Date Coverage Ratio
First Fiscal Quarter 1999 1.50:1.00
Second Fiscal Quarter 1999 1.40:1.00
Third Fiscal Quarter 1999 1.40:1.00
Fourth Fiscal Quarter 1999 1.40:1.00
First Fiscal Quarter 2000 1.40:1.00
Second Fiscal Quarter 2000 1.40:1.00
Third Fiscal Quarter 2000 1.40:1.00
Fourth Fiscal Quarter 2000 1.30:1.00
First Fiscal Quarter 2001 1.30:1.00
Second Fiscal Quarter 2001 1.30:1.00
Third Fiscal Quarter 2001 1.30:1.00
Fourth Fiscal Quarter 2001 1.30:1.00
First Fiscal Quarter 2002 1.30:1.00
Second Fiscal Quarter 2002 1.00:1.00
Third Fiscal Quarter 2002 1.00:1.00
B. Leverage Ratio. Company will not permit at any time the Leverage
Ratio as measured on the last day of each Fiscal Quarter (the "Reference
Date"), commencing with the last day of the second Fiscal Quarter of Fiscal
Year 1996, to exceed the correlative ratio applicable below.
Maximum
Reference Date Leverage
Ratio
Second Fiscal Quarter 1996 4.95:1.00
Third Fiscal Quarter 1996 4.65:1.00
Fourth Fiscal Quarter 1996 4.15:1.00
First Fiscal Quarter 1997 4.15:1.00
119
<PAGE>
Maximum
Reference Date Leverage
Ratio
Second Fiscal Quarter 1997 4.00:1.00
Third Fiscal Quarter 1997 4.00:1.00
Fourth Fiscal Quarter 1997 3.75:1.00
First Fiscal Quarter 1998 3.75:1.00
Second Fiscal Quarter 1998 3.50:1.00
Third Fiscal Quarter 1998 3.50:1.00
Fourth Fiscal Quarter 1998 3.50:1.00
First Fiscal Quarter 1999 3.25:1.00
Second Fiscal Quarter 1999 3.25:1.00
Third Fiscal Quarter 1999 3.25:1.00
Fourth Fiscal Quarter 1999 3.00:1.00
First Fiscal Quarter 2000 3.00:1.00
Second Fiscal Quarter 2000 3.00:1.00
Third Fiscal Quarter 3.00:1.00
Fourth Fiscal Quarter 2000 2.50:1.00
First Fiscal Quarter 2001 2.50:1.00
Second Fiscal Quarter 2001 2.50:1.00
Third Fiscal Quarter 2001 2.50:1.00
Fourth Fiscal Quarter 2001 2.00:1.00
First Fiscal Quarter 2002 2.00:1.00
Second Fiscal Quarter 2002 2.00:1.00
Third Fiscal Quarter 2002 2.00:1.00
C. Consolidated Cash Flow Available for Fixed Charges. Company will not
permit Consolidated Cash Flow Available for Fixed Charges as measured on the
last day of each Fiscal Quarter (the "Reference Date"), commencing with the
last day of the second Fiscal Quarter of Fiscal Year 1996), to be less than:
for any four Fiscal Quarter period ending on any Reference Date, the amount
indicated under "Minimum Consolidated Cash Flow Available for Fixed Charges
(Four Fiscal Quarters)" for such Reference Date, it being understood that
Company shall
120
<PAGE>
not be deemed to have violated this subsection 6.6C unless Consolidated Cash
Flow Available for Fixed Charges for the applicable period is less than the
amount specified above for such period as of a particular Reference Date:
Minimum
Consolidated
Cash Flow
Available for
Fixed Charges
(Four Fiscal
Reference Date Quarters)
Second Fiscal Quarter 1996 $215,000,000
Third Fiscal Quarter 1996 $240,000,000
Fourth Fiscal Quarter 1996 $270,000,000
First Fiscal Quarter 1997 $275,000,000
Second Fiscal Quarter 1997 $275,000,000
Third Fiscal Quarter 1997 $275,000,000
Fourth Fiscal Quarter 1997 $275,000,000
First Fiscal Quarter 1998 $300,000,000
Second Fiscal Quarter 1998 $300,000,000
Third Fiscal Quarter 1998 $300,000,000
Fourth Fiscal Quarter 1998 $300,000,000
First Fiscal Quarter 1999 $300,000,000
Second Fiscal Quarter 1999 $300,000,000
Third Fiscal Quarter 1999 $300,000,000
Fourth Fiscal Quarter 1999 $300,000,000
First Fiscal Quarter 2000 $320,000,000
Second Fiscal Quarter 2000 $320,000,000
Third Fiscal Quarter 2000 $320,000,000
Fourth Fiscal Quarter 2000 $320,000,000
121
<PAGE>
Minimum
Consolidated
Cash Flow
Available for
Fixed Charges
(Four Fiscal
Reference Date Quarters)
First Fiscal Quarter 2001 $330,000,000
Second Fiscal Quarter 2001 $330,000,000
Third Fiscal Quarter 2001 $330,000,000
Fourth Fiscal Quarter 2001 $330,000,000
First Fiscal Quarter 2002 $340,000,000
Second Fiscal Quarter 2002 $340,000,000
Third Fiscal Quarter 2002 $340,000,000
6.7 Restriction on Fundamental Changes
----------------------------------
Subject to the provisions of subsection 5.2, Company will not, and will not
permit any of its Subsidiaries to, form or acquire any new Subsidiaries, enter
into any transaction of merger or consolidation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of their business, property or fixed assets,
whether now owned or hereafter acquired, or acquire by purchase or otherwise any
of the business, property or fixed assets of, or stock or other evidence of
beneficial ownership of, any Person, except:
(i) any Subsidiary of Company may be merged or consolidated with or
into Company or any wholly-owned Subsidiary of Company (provided that an
Inactive Subsidiary shall not be the surviving entity of any such merger or
consolidation), or be liquidated, wound up or dissolved, or all or
substantially all of its business, property or assets may be conveyed,
sold, leased, transferred or otherwise disposed of, in one transaction or a
series of transactions, to Company or any wholly-owned Subsidiary of
Company (other than any Inactive Subsidiary); provided that, in the case of
such a merger or consolidation, Company or such wholly-owned Subsidiary, as
the case may be, shall be the continuing or surviving corporation; provided
further that, in the case of such a merger or consolidation or disposition
of a majority of the stock of a Subsidiary of Company or substantially all
of the business, property or assets of such a Subsidiary (the "Affected
Subsidiary") which is a guarantor of any of the Obligations (a) the
continuing, surviving or transferee corporation (if other than Company)
shall expressly assume the obligations of the Affected Subsidiary under
such guaranty and (b) in the case of a merger or consolidation, the net
worth of the continuing or surviving corporation
122
<PAGE>
(calculated without giving effect to any increase in the amount of
Intercompany Indebtedness for which the continuing or surviving corporation
is liable as compared to the amount of Intercompany Indebtedness for which
the Affected Subsidiary was liable immediately prior to such merger or
consolidation) shall not be less than the net worth of the Affected
Subsidiary immediately prior to such merger or consolidation and (c) the
continuing, surviving or transferee corporation shall deliver to
Administrative Agent an Officers' Certificate to the effect that such
merger, consolidation, liquidation or sale and each agreement, if any,
required by this subsection 6.7(i) complies with the requirements of this
subsection 6.7(i) and that all conditions precedent relating to such
transaction have been complied with; provided still further that, subject
to the terms of the applicable Collateral Document, in the case of such a
merger or consolidation or disposition of a majority of the stock of an
Affected Subsidiary or any of the business, property or assets of such
Affected Subsidiary the stock or assets of which are pledged to secure the
Obligations, the stock or assets, as the case may be, of the continuing,
surviving or transferee corporation (if other than Company) shall, at the
time of consummation of such merger, consolidation or transfer, be pledged
to secure the Obligations;
(ii) Company or any of its Subsidiaries may sell or dispose of in the
ordinary course of business property which is obsolete or no longer useful
in any of its businesses or is of de minimis value, as determined in good
faith by any executive officer of such Person; provided that the proceeds
of an Asset Sale pursuant to this clause (ii) shall be applied in
accordance with subsection 2.4A(ii)(a);
(iii) so long as no Event of Default has occurred and is
continuing or would be caused thereby, Company and any of its Subsidiaries
may sell or otherwise dispose of any of its assets outside of the ordinary
course of business (it being agreed that all sales of Printing Equipment
are deemed to be outside the ordinary course of business for purposes of
this clause (iii)); provided that any such sale or other disposition is
made for the fair market value of such assets as determined in good faith
by two executive officers of Company; provided further that (except for
trade-ins of Printing Equipment), (x) to the extent that the aggregate fair
market value of all property other than Cash received at any time during
the term of this Agreement as consideration for assets sold pursuant to
this clause (x) (but excluding any such property received in asset sales
pursuant to clause (y) below) that remains held by Company or any of its
Subsidiaries does not exceed $25,000,000, not less than 50% of the
consideration received by Company or such Subsidiary in any such
transaction shall be Cash and (y) except as otherwise permitted by the
foregoing clause (x), not less than 80% of the consideration received by
Company
123
<PAGE>
or such Subsidiary shall be Cash, however the simultaneous receipt of
promissory notes or other consideration and sale of such promissory notes
or other consideration to a third party for Cash shall be deemed to be Cash
for purposes of this second proviso if such sale of notes is permitted
under subsection 6.10; provided still further that the proceeds of an Asset
Sale pursuant to this clause (iii) shall be applied in accordance with
subsection 2.4A(ii); provided still further that except for sales of
Printing Equipment during any Fiscal Year the net proceeds of which are
applied to acquire Replacement Printing Equipment during such Fiscal Year,
Company and its Subsidiaries shall not sell or otherwise dispose of assets
pursuant to this clause (iii) (including by way of a sale-leaseback
transaction except a sale-leaseback transaction that is entered into within
90 days of Company's initial acquisition of the asset subject to such sale-
leaseback) either (a) having an aggregate value in excess of $100,000,000
during any 12-month period preceding the date of any such asset sale or
disposition or (b) $200,000,000 from the Closing Date through the
Commitment Termination Date;
(iv) Company or any of its Subsidiaries may sell assets (other than
Printing Equipment) in the ordinary course of business; provided that any
such sale or other disposition of assets is made for the fair market value
of such assets and that the proceeds of an Asset Sale pursuant to this
clause (iv) shall be applied in accordance with subsection 2.4A(ii)(a);
(v) Company or any of its Subsidiaries may (a) purchase inventory,
equipment and other personal property in the ordinary course of business,
(b) make capital expenditures in accordance with subsection 6.9, (c) make
and own Investments in accordance with the provisions of subsection 6.3,
(d) purchase or otherwise acquire stock and other Securities, or beneficial
interests therein, of its Subsidiaries (including of Persons who become
Subsidiaries by virtue of any such purchase or acquisition) (but not, in
any event, of any Unrestricted Subsidiary), (d) make any loan, advance or
capital contribution to its Subsidiaries (other than Unrestricted
Subsidiaries) and (e) make Acquisitions; provided that Company shall comply
with the ratio set forth in subsection 3.3B(i) as of the date of any
Acquisition and any other requirements set forth herein (including under
subsection 5.1(xviii)) and, to the extent such Acquisition is of the equity
interest of any Person, such Person shall be a Subsidiary of Company upon
giving effect to such Acquisition or shall be merged with and into Company
or one of its Subsidiaries within five days of the consummation of such
Acquisition; provided further that the board of directors of the Target of
any Acquisition shall have adopted a resolution approving such Acquisition
pursuant to applicable corporate law; provided still
124
<PAGE>
further that, notwithstanding anything in the foregoing to the contrary,
Company and its Subsidiaries shall not make any Acquisition (other than the
Identified Acquisition) the aggregate purchase price of which exceeds
$250,000,000 unless Administrative Agent and Requisite Lenders otherwise
consent in writing;
(vi) Company and its Subsidiaries may create New Subsidiaries or a
Receivables SPC (and transfer Receivable Assets thereto in accordance with
subsection 6.10); provided that the requirements of subsection 5.8 shall be
satisfied with respect to any such New Subsidiary or Receivables SPC;
(vii) Company and its Subsidiaries may be combined as contemplated
by subsection 5.2;
(viii) in addition to the dispositions permitted under
subsection 6.7(iii), so long as no Event of Default has occurred and is
continuing or would be caused thereby, Company and its Subsidiaries may
sell or otherwise dispose of any of its assets in one or a related series
of transactions outside the ordinary course of business having a fair
market value of $5,000,000 or less, up to $60,000,000 in the aggregate
during the term of this Agreement; and
(ix) in addition to the dispositions permitted under
subsection 6.7(iii), so long as no Event of Default has occurred and is
continuing or would be caused thereby, Company may sell, transfer or
otherwise dispose of assets as permitted pursuant to subsection 6.8A.
6.8 Special Restrictions on Leases
------------------------------
A. Company will not and will not permit any of its Subsidiaries to,
directly or indirectly, enter into any sale-leaseback transaction with or
relating to any governmental Person or related entity, including but not limited
to any Other IDB Sale-Leaseback Transaction; except Company may sell, transfer
or otherwise dispose of assets to an IDB Lessor in connection with an Other IDB
Sale-Leaseback Transaction provided that the following conditions are met on or
prior to the consummation of such Other IDB Sale-Leaseback Transaction:
(i) except for any such assets subject to Liens permitted under
subsection 6.1(viii), such assets shall be transferred subject to the Liens
created by the Collateral Documents in favor of Collateral Agent for the
benefit of the Secured Parties;
125
<PAGE>
(ii) Collateral Agent shall have received a written acknowledgement
signed by such IDB Lessor and any other parties to such Other IDB Sale-
Leaseback Transaction acknowledging the seniority of the security interest
in such assets (other than in respect of any such assets subject to Liens
permitted under subsection 6.1(viii)) created by the Collateral Documents
in favor of Collateral Agent for the benefit of the Secured Parties;
(iii) Collateral Agent shall have received a first priority
security interest in Company's interest in and to each document to which it
is a party delivered in connection with such Other IDB Sale-Leaseback
Transaction, including the taking of possession of any instruments
delivered in connection therewith; and
(iv) Collateral Agent shall have received a consent letter executed
and acknowledged by such IDB Lessor, in form and substance satisfactory to
Collateral Agent, in its sole discretion, pursuant to which such IDB Lessor
shall, among other things, (i) grant to Collateral Agent a right of entry,
at any time and from time to time, onto the premises on which such assets
are located to inspect or remove such assets or arrange a public or other
sale of such assets and (ii) agree that all liens, claims, demands, rights
or interest which such IDB Lessor then has or thereafter acquires in, on or
to such assets shall be subordinate in right of time and payment to the
security interest of Collateral Agent in such assets (other than in respect
of any such assets subject to Liens permitted under subsection 6.1(viii)).
B. Company will not, and will not permit any of its Subsidiaries to,
become liable, whether directly or by assignment or as a guarantor or other
surety, for the obligations of a lessee under any Operating Lease of a
Subsidiary of Company, except (i) in connection with the financing or
refinancing of permitted Consolidated Capital Expenditures and
(ii) Miscellaneous Operating Leases.
6.9 Limitation on Net Consolidated Capital Expenditures
---------------------------------------------------
Company will not, and will not permit any of its Subsidiaries to, make or
incur, in the aggregate, obligations for Net Consolidated Capital Expenditures
during any Fiscal Year in excess of $135,000,000 (the "Target Amount");
provided however that if the aggregate amount of Net Consolidated Capital
Expenditures for the immediately preceding Fiscal Year (commencing with the 1996
Fiscal Year) is less than the Target Amount for such immediately preceding
Fiscal Year, then the lesser of (i) the Target Amount for such immediately
preceding Fiscal Year minus the Net Consolidated Capital Expenditures for such
immediately preceding Fiscal Year and (ii) 25%
126
<PAGE>
of the Target Amount, so adjusted pursuant to this subsection 6.9, for such
immediately preceding Fiscal Year, shall be added to the Target Amount for the
current Fiscal Year. Notwithstanding the foregoing, Company's repurchase of the
Covington, Tennessee, and Dyersburg, Tennessee, facilities and/or any other
assets which are the subject of an Other IDB Sale-Leaseback Transaction pursuant
to the exercise of its option to repurchase such facilities received in
connection with the sale-leaseback of such facilities, shall not be deemed to be
a Consolidated Capital Expenditure under this subsection 6.9 except to the
extent of the exercise price with respect to such options and any other expendi-
tures of Company in connection with such repurchases that would otherwise be
deemed to be Consolidated Capital Expenditures.
6.10 Sale or Discount of Receivables
-------------------------------
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, sell with recourse (except to the extent of the amount Company or
such Subsidiary reasonably estimates, based on historical loss experience, will
not be received in connection with the collection of notes or accounts
receivable), or discount or otherwise sell for less than 95% of the face value
thereof, any of its notes or accounts receivable or otherwise enter into an
accounts receivable or similar financing; provided that Company and its
Subsidiaries may sell, transfer or otherwise convey their respective Receivables
Assets to a Receivables SPC for not less than 95% of the face value thereof in
connection with a securitized accounts receivable financing on terms and
conditions in form and substance acceptable to Administrative Agent and
Requisite Lenders in their sole discretion (the "Permitted Receivables
Transaction") so long as Company applies the Receivables Proceeds thereof to
prepay the Loans pursuant to subsection 2.4A(ii)(f); it being understood and
agreed that to the extent Company and its Subsidiaries enter into any Permitted
Receivables Transaction pursuant to this subsection 6.10, Collateral Agent shall
release the Lien of the Security Documents encumbering any such Receivables
Assets sold in connection therewith.
6.11 Transactions with Affiliates
----------------------------
Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 10% or more of the capital stock of
Company, or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or such Subsidiary, as the case may be, than those
which might be obtained at the time from a Person who is not such a holder of
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between or among
127
<PAGE>
Company and/or any of Company's wholly-owned (directly or indirectly)
Subsidiaries, (ii) any management fees paid to KKR pursuant to an agreement
which was entered into and effective prior to January 1, 1990, (iii) the
Management Stock Agreements or (iv) the Intercompany Notes.
6.12 Other Indebtedness; Amendments and Waivers of Certain Documents
---------------------------------------------------------------
Neither Company nor any of its Subsidiaries will (i) amend or otherwise
change the terms of the Senior Subordinated Note Indenture, the Additional
Subordinated Indebtedness, any other Subordinated Indebtedness, Existing
Indebtedness, Refinancing Indebtedness or Indebtedness described in subsections
6.1(viii) or (xi) (the "Other Indebtedness") except as specifically permitted
hereby, or make any payment consistent with an amendment or change thereto, if
the effect of such amendment or change is to increase the interest rate on such
Other Indebtedness, change the dates upon which payments of principal or
interest are due thereon in a manner adverse to the obligor, change any event of
default or condition to an event of default with respect to such Other
Indebtedness in a manner adverse to the obligor, change the redemption or any
repurchase provisions thereof in a manner adverse to the obligor, change the
subordination provisions thereof (or of any guaranty thereof) or which amendment
or change, together with all other amendments or changes made, increases
materially the obligations of the obligor or confers additional rights on the
holder of such Other Indebtedness which would be adverse to Company, any of its
Subsidiaries or any Lender; or (ii) defease, or make any payments the effect of
which is to defease the Senior Subordinated Notes or any other Subordinated
Indebtedness in whole or in part (whether pursuant to the defeasance provisions
of the Senior Subordinated Note Indenture or the documentation governing such
other Subordinated Indebtedness or otherwise).
6.13 Conduct of Business
-------------------
From and after the Closing Date, Company will not permit Company and its
Subsidiaries to engage in any business other than the business engaged in by
Company and its Subsidiaries the date hereof and similar and related businesses.
Any Receivables SPC shall engage only in the business of holding Receivables
Assets pursuant to a Permitted Receivables Transaction and in activities
incidental thereto.
Company will not permit any of its Subsidiaries that may exist as of the
Closing Date and that is not a Loan Party to engage in any business or incur any
Indebtedness or Contingent Obligations in each case other than as specified on
Schedule 4.1 annexed hereto. Anything contained herein to the contrary
notwithstanding, neither Company nor any of its Subsidiaries shall directly or
indirectly distribute, sell or otherwise transfer any property or other assets
of any
128
<PAGE>
kind to any Subsidiary of Company that is in existence as of the Closing Date
and that is not a Loan Party.
SECTION 7.
EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of Default") shall
occur and be continuing:
7.1 Failure to Make Payments When Due
---------------------------------
Failure to pay any installment of principal of any Loan when due, whether
at stated maturity, by acceleration, by notice of prepayment or otherwise;
failure to pay when due any amount payable to any Issuing Lender in
reimbursement of any drawing under any Letter of Credit issued pursuant to
subsection 2.7; or failure to pay interest or any other amount due under this
Agreement within five days after the date due; or
7.2 Default in Other Agreements
---------------------------
(a) Failure of Company or any of its Subsidiaries or any Receivables SPC to
pay when due or any default in the payment when due of any principal or interest
on any other Indebtedness having an outstanding principal amount of $20,000,000
or more, individually or in the aggregate, or in the payment when due of any
Contingent Obligation of $20,000,000 or more, individually or in the aggregate,
or obligation under an Operating Lease requiring annual lease payments in any
Fiscal Year in excess of $7,500,000 for such Operating Lease in each case beyond
any period of grace provided which failure to pay or default in payment shall be
continuing; or (b) breach or default by Company or any of its Subsidiaries or
any Receivables SPC with respect to any other term of any evidence of any other
Indebtedness or Contingent Obligation in an amount of $20,000,000 or more,
individually or in the aggregate or Operating Lease, requiring annual payments
in excess of $7,500,000 or more individually or in the aggregate, of any loan
agreement, mortgage, indenture, lease or other agreement relating thereto, in
each case beyond any period of grace provided which breach or default shall be
continuing, if the effect of such failure, default or breach is to cause, or to
permit the holder or holders of that Indebtedness, Operating Lease or Contingent
Obligation (or a trustee on behalf of such holder or holders or counterpart to
such Interest Rate Agreement), as the case may be, to cause,
129
<PAGE>
that Indebtedness, Operating Lease or Contingent Obligation, as the case may be,
to become or be declared due prior to its stated maturity or, in the case of any
lease, terminated prior to its stated maturity, or in the case of an Interest
Rate Agreement terminated prior to its stated date of termination, it being
understood that, for purposes of this clause (b), the amount of liability under
any Interest Rate Agreement is the amount payable by Company and its
Subsidiaries upon termination thereof; or
7.3 Breach of Certain Covenants
---------------------------
Failure of Company or any other Loan Party to perform or comply with any
term or condition contained in the second paragraph of subsection 2.1A(iii) or
subsections 2.4A(ii), 2.5, 5.2, 5.6, 5.8, 5.9, 5.13, or Section 6 of this
Agreement; or
7.4 Breach of Warranty
------------------
Any representation or warranty made by any Loan Party in any Loan Document
or in any statement, certificate, report or financial statement at any time
given by such Person in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false in any material respect on the date as of
which made or deemed made; or
7.5 Other Defaults under Agreement or Loan Documents
------------------------------------------------
Company or any other Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents other than those referred to above in subsections 7.1, 7.3 or 7.4 and
such default shall not have been remedied or waived within 30 days after the
first to occur of (A) the date as of which such Loan Party shall receive written
notice of any such failure from Administrative Agent or any Lender and (B) the
date as of which any executive officer of Company shall become aware thereof; or
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(A) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries (other than
any Inactive Subsidiary) or any Receivables SPC in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal or state law; or
(B) an involuntary case shall be commenced against Company or any of its
Subsidiaries (other than any Inactive Subsidiary) or any Receivables SPC under
the Bankruptcy Code or under any other bankruptcy, insolvency or similar law now
or hereafter in effect and such case is not dismissed or discharged for 90 days;
or (C) a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Company or any of its Subsidiaries (other
than any
130
<PAGE>
Inactive Subsidiary) or any Receivables SPC, or over all or a substantial part
of its property, shall have been entered; or the involuntary appointment of an
interim receiver, trustee or other custodian of Company or any of its
Subsidiaries (other than any Inactive Subsidiary) or any Receivables SPC, for
all or a substantial part of its property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of the
property of Company or any of its Subsidiaries (other than any Inactive
Subsidiary) or any Receivables SPC and the continuance of any such events in
subpart (C) for 30 days unless dismissed or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
---------------------------------------------------
Company or any of its Subsidiaries (other than any Inactive Subsidiary) or
any Receivables SPC, shall have an order for relief entered with respect to it
or commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; the making by
Company or any of its Subsidiaries (other than any Inactive Subsidiary) or any
Receivables SPC, of any assignment for the benefit of creditors; or the
inability or failure of Company or any of its Subsidiaries (other than any
Inactive Subsidiary) or any Receivables SPC, or the admission by Company or any
of its Subsidiaries (other than any Inactive Subsidiary) or any Receivables SPC
in writing of its inability to pay its debts as such debts become due; or the
Board of Directors of Company or any of its Subsidiaries (other than any
Inactive Subsidiary) or any Receivables SPC or any committee thereof adopts any
resolution or otherwise authorizes action to approve any of the foregoing; or
7.8 Judgments and Attachments
-------------------------
A. Any of the assets of Company or any of its Subsidiaries (other than
any Inactive Subsidiary) shall be attached, seized, levied upon or subjected to
a writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of Company or any
such Subsidiary; or any Person shall move or apply for the appointment of a
receiver, trustee or custodian for any of the assets of Company or any of its
Subsidiaries (other than any Inactive Subsidiary) and such motion or application
shall remain unstayed or undismissed for 30 consecutive days; or Company or any
of its
131
<PAGE>
Subsidiaries (other than any Inactive Subsidiary) shall have concealed, removed
or permitted to be concealed or removed, any part of its property with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property or incurred an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other similar law; or
B. Any money judgment, writ or warrant of attachment, or similar process
involving in any case an amount in excess of $5,000,000 shall be entered or
filed against Company or any of its Subsidiaries (other than any Inactive
Subsidiary) or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 30 days or in any event later
than five days prior to the date of any proposed sale thereunder; or
7.9 Dissolution
-----------
Any order, judgment or decree shall be entered against Company or any
Material Subsidiary decreeing the dissolution or split up of such Person and
such order shall remain unstayed or undischarged for a period in excess of 30
days; or
7.10 ERISA
-----
There occurs one or more ERISA Events which individually or in the
aggregate results in liability of the Loan Parties and their ERISA Affiliates in
excess of $5,000,000 during the term of this Agreement; or there exists, as of
any valuation date for a Pension Plan, an excess of (i) the actuarial present
value (determined on the basis of reasonable assumptions employed by the
independent actuary for such Pension Plan) of benefit liabilities (as defined in
Section 4001(a)(16) of ERISA) over (ii) the fair market value of the assets of
such Pension Plan, individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which there is no such excess) which exceeds the greater of (x) 20% of the value
set forth in clause (i) above or (y) $5,000,000.
7.11 Invalidity of Guaranty
----------------------
The Guaranty for any reason, other than the satisfaction in full of all of
the Obligations, the termination of this Agreement or the termination of such
Guaranty (or any Loan Party's obligations thereunder) in accordance with its
terms, ceases to be in full force and effect or is declared to be null and void,
or any Loan Party thereto denies that it has any further liability
132
<PAGE>
under such Guaranty or that such Guaranty is void or has no force or effect in
whole or in part or gives notice to such effect; or
7.12 Failure of Security
-------------------
The Security Agreement or any other Collateral Document shall, at any time,
cease to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Loan Party or, in
the case of the Security Agreement, Collateral Agent shall not have or shall
cease to have a valid and perfected first priority security interest in the
Collateral, in each case for any reason other than (i) the failure of Collateral
Agent to take any action within its control, (ii) the release of Collateral in
accordance with the terms of the Security Agreement or (iii) the failure of
Collateral Agent to have a perfected security interest in Collateral located at
any sales office of any Loan Party (other than any such sales office listed on
Schedule VIII of the Security Agreement or that is otherwise required to be
disclosed to the Lenders under the Loan Documents); or
7.13 Change in Control
-----------------
A Change In Control shall have occurred; or
7.14 Conduct of Business
-------------------
Company or any of its Subsidiaries (other than any Inactive Subsidiary)
shall be enjoined, restrained or in any way prevented by the order of any court
or any administrative or regulatory agency from conducting all or a material
part of its business, and such order shall not be vacated or stayed within 20
days after the issuance thereof;
THEN (i) upon the occurrence of any Event of Default described in the
foregoing subsections 7.6 or 7.7 each of (x) the unpaid principal amount of and
accrued interest on the Loans, (y) an amount equal to the maximum amount which
may at any time be drawn under all Letters of Credit then outstanding (whether
or not any beneficiary under any Letter of Credit shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letter of Credit) and (z) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company and the obligation of each Lender to make any Loan and the
obligation and the right of any Lender to issue any Letter of Credit hereunder
shall thereupon terminate, and (ii) upon the occurrence and
133
<PAGE>
during the continuation of any other Event of Default, Requisite Lenders may, by
written notice to Company, declare all of the Loans to be, and an amount equal
to the amounts described in clauses (x) through (z) above to be, and the same
shall forthwith become, due and payable, together with accrued interest thereon,
and the obligation of each Lender to make any Loan and the obligation and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate; provided that the foregoing shall not affect in any way the
obligations of Lenders to purchase from Issuing Lenders participations in the
unreimbursed amount of any drawings under any Letters of Credit as provided in
subsection 2.7E. So long as any Letter of Credit shall remain outstanding, any
amounts described in clause (y) above with respect to such Letter of Credit,
when received by Issuing Lender, shall be held by the Issuing Lender pursuant to
such documentation as the Issuing Lender shall request, as cash collateral for
the obligation of Company to reimburse the respective Issuing Lender in the
event of any drawing under such Letter of Credit, and so much of such funds
shall at all times remain on deposit as cash collateral as aforesaid as shall
equal the maximum amount available at any time for drawing under all Letters of
Credit (the "Maximum Available Amount"); provided that, in the event of
cancellation or expiration of any Letter of Credit or any reduction in the
Maximum Available Amount, the Issuing Lender shall apply the difference between
the Maximum Available Amount immediately prior to such cancellation, expiration
or reduction and the Maximum Available Amount immediately after such
cancellation or reduction, first, to the payment in full of the outstanding
Obligations, second, to the payment in full of the other outstanding Benefitted
Obligations (as defined in the Intercreditor Agreement) and then, to Company or
to such other Person who may be lawfully entitled to receive such funds or as a
court of competent jurisdiction may direct. Nevertheless, if at any time within
60 days after acceleration of the maturity of any Loan, Company shall pay all
arrears of interest and all payments on account of the principal which shall
have become due otherwise than by acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of principal of and accrued interest on the Loans, and payments
of amounts referred to in clause (y) above, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 9.7, then Requisite Lenders by written notice to Company may
rescind and annul the acceleration and its consequences; but such action shall
not affect any subsequent Event of Default or Potential Event of Default or
impair any right consequent thereon. The provisions of this paragraph are
intended merely to bind Lenders to a decision which may be made at the election
of Requisite Lenders and are not intended to benefit Company and do not grant
Company the right to require Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met. Except as otherwise
expressly provided in this Section 7, Company hereby waives diligence,
presentment, demand, protest and notice of every kind.
134
<PAGE>
SECTION 8.
ADMINISTRATIVE AGENT
8.1 Appointment
-----------
Bankers is hereby appointed Administrative Agent hereunder by each Lender
and each Lender hereby authorizes Administrative Agent to act hereunder and
under the other instruments and agreements referred to herein (including,
without limitation, the Collateral Documents) as its agent hereunder and
thereunder. Administrative Agent agrees to act as such upon the express
conditions contained in this Section 8, the Intercreditor Agreement and in the
other Loan Documents. Other than as set forth in this subsection 8.1 or
subsection 8.6 or in the last sentence of subsection 8.7, the provisions of this
Section 8 are solely for the benefit of Administrative Agent and Lenders and
Company shall not have any rights as a third party beneficiary of, nor shall it
have any obligations under or with respect to, any of the provisions of this
Section 8. In performing its functions and duties under this Agreement,
Administrative Agent shall act solely as agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for Company or any of its Subsidiaries.
8.2 Powers; General Immunity
------------------------
A. Duties Specified. Each Lender irrevocably authorizes Administrative
Agent to take such action on such Lender's behalf and to exercise such powers
hereunder and under the other instruments and agreements referred to herein
(including, without limitation, the Collateral Documents) as are specifically
delegated to Administrative Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Administrative Agent shall
have only those duties and responsibilities which are expressly specified in
this Agreement and the other Loan Documents and it may perform such duties by or
through its agents or employees. The duties of Administrative Agent shall be
mechanical and administrative in nature; Administrative Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon Administrative Agent any obligations in respect of
this Agreement or the other instruments and agreements referred to herein except
as expressly set forth herein or therein.
135
<PAGE>
B. No Responsibility for Certain Matters. Administrative Agent shall not
be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement, or
any other Loan Document, including the Notes issued hereunder, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by such Administrative Agent to Lenders or by or
on behalf of Company to Administrative Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or the use of Letters of Credit or of
the existence or possible existence of any Event of Default or Potential Event
of Default. Anything contained in this Agreement to the contrary
notwithstanding, Administrative Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the Letter of Credit Usage
or the component amounts thereof.
C. Exculpatory Provisions. Administrative Agent and its directors,
employees or agents shall not be liable to Lenders for any action taken or
omitted hereunder or in connection herewith (including, without limitation, any
act or omission under any Loan Document) unless caused by its or their gross
negligence or willful misconduct. If Administrative Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any other Loan
Document, Administrative Agent shall be entitled to refrain from such act or
taking such action unless and until Administrative Agent shall have received
instructions from Requisite Lenders. Without prejudice to the generality of the
foregoing, (i) Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys, accountants, experts and
others professional advisors selected by it; and (ii) no Lender shall have any
right of action whatsoever against Administrative Agent as a result of
Administrative Agent acting or (where so instructed) refraining from acting
under this Agreement or any other Loan Document in accordance with the
instructions of Requisite Lenders. Administrative Agent shall be entitled to
refrain from exercising any power, discretion or authority vested in it under
this Agreement unless and until it has obtained the instructions of Requisite
Lenders.
D. Administrative Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in its individual
capacity. With respect to its
136
<PAGE>
participation in the Loans and Letters of Credit, Administrative Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Administrative Agent in
its individual capacity. Administrative Agent and each of its Affiliates may
accept deposits from, lend money to and generally engage in any kind of banking,
trust, financial advisory or other business with Company or any Affiliate of
Company as if it were not performing the duties specified herein, and may accept
fees and other consideration from Company or any such Affiliate for services in
connection with this Agreement or any other transaction or otherwise without
having to account for the same to Lenders.
8.3 Representations and Warranties; No Responsibility for Appraisal of Credit-
--------------------------------------------------------------------------
worthiness
----------
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and such Lender's purchasing of participations in
such Letters of Credit and has made and shall continue to make its own appraisal
of the creditworthiness of such Persons. Administrative Agent shall have no
duty or responsibility either initially or on a continuing basis to make any
such investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto whether coming
into its possession before the making of the Loans or the issuance of the
Letters of Credit or any time or times thereafter and shall further have no
responsibility with respect to the accuracy of or the completeness of the
information provided to Lenders.
8.4 Indemnification of Administrative Agent
---------------------------------------
Each Lender severally agrees to indemnify Administrative Agent,
proportionately to such Lender's Pro Rata Share, to the extent Administrative
Agent shall not have been reimbursed by Company, for liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent in performing its duties hereunder or any of the other
instruments and agreements referred to herein, in any way relating to or arising
out of this Agreement, including, but not limited to, its duties as Collateral
Agent; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements
137
<PAGE>
resulting from Administrative Agent's gross negligence or willful misconduct.
If any indemnity furnished to Administrative Agent for any purpose shall, in the
opinion of such Administrative Agent, be insufficient or become impaired
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
8.5 Registered Persons Treated as Owner
-----------------------------------
Administrative Agent may deem and treat the Persons listed as Lenders in
the Register as the owners of the corresponding Loans listed therein for all
purposes hereof unless and until an Assignment Agreement effecting the
assignment or transfer thereof shall have been accepted by Administrative Agent
and recorded in the Register as provided in subsection 9.2B. Any request,
authority or consent of any person or entity who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, transferee or
assignee of the corresponding Loan.
8.6 Successor Administrative Agent
------------------------------
A. Successor Administrative Agent. Administrative Agent may resign at
any time by giving thirty days' prior written notice thereof to Lenders and
Company and may be removed at any time with or without cause by Requisite
Lenders. Upon any such resignation or removal, Requisite Lenders shall have the
right, upon five days' notice to Company, to appoint a successor Administrative
Agent; provided further that if such successor shall not be a Lender, such
appointment shall be subject to the consent of Company, which consent shall not
be unreasonably withheld. If no successor Administrative Agent shall have been
so appointed by Requisite Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation or Requisite Lenders' removal of the retiring Administrative Agent,
then, upon five days' notice to Company, the retiring Administrative Agent may,
on behalf of Lenders, appoint a successor Administrative Agent, which shall be a
bank which maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or of any State
thereof, or any Affiliate of such bank, having a combined capital and surplus of
at least $50,000,000; provided that if such successor shall not be a Lender,
such appointment shall be subject to the consent of Company, which consent shall
not be unreasonably withheld. Upon the acceptance of any appointment as an
Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative
138
<PAGE>
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 8.6A shall also constitute the
resignation or removal of Bankers or its successor as Swing Line Lender, and any
successor Administrative Agent appointed pursuant to subsection 8.6A shall, upon
its acceptance of such appointment, become the successor Swing Line Lender for
all purposes hereunder. In such event (i) Company shall prepay any outstanding
Swing Line Loans made by the retiring or removed Administrative Agent in its
capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or
removed Administrative Agent and Swing Line Lender shall surrender any Swing
Line Note held by it to Company for cancellation, and (iii) if so requested by
the successor Administrative Agent and Swing Line Lender in accordance with
subsection 2.1F, Company shall issue a new Swing Line Note to the successor
Agent and Swing Line Lender substantially in the form of Exhibit X annexed
---------
hereto, in the principal amount of the Swing Line Loan Commitment then in effect
and with other appropriate insertions.
C. Successor Collateral Agent. Any resignation or removal of
Administrative Agent pursuant to subsection 8.6A shall also constitute the
resignation or removal of Bankers or its successor as Collateral Agent, and any
successor Administrative Agent appointed pursuant to subsection 8.6A shall, upon
its acceptance of such appointment, become the successor Collateral Agent for
all purposes hereunder.
8.7 Intercreditor Agreement
-----------------------
Each Lender hereby authorizes Collateral Agent to enter into the
Intercreditor Agreement for the benefit of that Lender and agrees to be bound by
the terms of such document. Each Lender hereby authorizes the Collateral Agent
to enter into each of the Collateral Documents and the Guaranty on behalf of and
for the benefit of Lenders and agrees to be bound by the terms of the Collateral
Documents and the Guaranty; provided that Collateral Agent shall not enter into
or consent to any amendment, modification, termination or waiver of any provi-
sion contained in the Intercreditor Agreement or the Collateral Documents or the
Guaranty without the prior consent of Requisite Lenders in accordance with
subsection 9.7. Each Lender agrees that no Lender shall have any right
individually to seek or to enforce the Guaranty or to realize upon the security
granted by any Collateral Document, in each case as amended, it being understood
and agreed that such rights and remedies may be exercised only by Collateral
Agent for the benefit
139
<PAGE>
of Lenders and the other Secured Parties in accordance with the terms of the
Guaranty, the Collateral Documents and the Intercreditor Agreement, as
applicable.
8.8 Notice of Default
-----------------
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Event of Default or Potential Event of Default unless
Administrative Agent has received actual notice from a Lender or Company or any
other Loan Party referring to this Agreement, describing such Event of Default
or Potential Event of Default and stating that such notice is a "notice of
default." In the event that Administrative Agent receives such a notice,
Administrative Agent shall give notice thereof to Lenders as soon as may be
reasonably practicable; provided that if a notice received by Administrative
Agent has also been provided to Lenders, Administrative Agent shall have no
obligation to give notice to Lenders with respect thereto. Subject to the
provisions of the clause beginning with the word "THEN" appearing after
subsection 7.14, Administrative Agent shall take such action with respect to
such Event of Default or Potential Event of Default as shall be reasonably
directed by Requisite Lenders; provided that, unless and until Administrative
Agent shall have received such directions, Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or Potential Event of Default as it may deem
advisable in the interests of Lenders. In the event that any Lender has actual
knowledge of any Event of Default or Potential Event of Default, such Lender
shall give notice thereof to Administrative Agent as soon as reasonably
practicable.
SECTION 9.
MISCELLANEOUS
9.1 Representations of Lenders
--------------------------
Each Lender hereby represents that it is a commercial bank, insurance
company, savings and loan association, savings bank or other financial
institution, pension fund or mutual fund or other "accredited investor" (as
defined in Regulation D under the Securities Act of 1933, as amended) which
makes (or purchases interests in) loans in the ordinary course of its business
and that it will make all Loans made by it for its own account in the ordinary
course of such business and not with a view to or for sale in connection with
any distribution of the Notes or other evidence of Indebtedness; provided
however that, subject to subsection 9.2, the disposition of the
140
<PAGE>
Notes or other evidence of Indebtedness held by that Lender shall at all times
be within its exclusive control. Each Lender that becomes a party hereto
pursuant to an Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in Section 2(c) of such
Assignment Agreement are incorporated herein by this reference.
9.2 Assignments and Participations in Loans and Notes
-------------------------------------------------
A. General. Subject to subsection 9.2B, each Lender shall have the right
at any time to (i) sell, assign or transfer to one or more commercial banks,
insurance companies, savings and loan associations, savings banks or other
financial institutions, pension funds or mutual funds or other accredited
investors ("Eligible Assignees") or (ii) sell participations to any Person in,
all or any part of its Commitments or any Loan or Loans made by it or its
Letters of Credit or participations therein or any other interest herein or in
any other Obligations owed to it; provided that no such sale, assignment,
transfer or participation shall, without the consent of Company, require Company
to file a registration statement with the Securities and Exchange Commission or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; provided further that prior to receiving any
confidential or other material information regarding Company or the transactions
contemplated by this Agreement, any Eligible Assignee shall have entered into a
Confidentiality Agreement; provided further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by Administrative Agent and recorded in the Register as provided in
subsection 9.2B(ii); provided further that no such sale, assignment, transfer or
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a corresponding
interest in the Revolving Loan Commitment and the Revolving Loans of the Lender
effecting such sale, assignment, transfer or participation; and provided further
that, anything contained herein to the contrary notwithstanding, the Swing Line
Loan Commitment and the Swing Line Loans of Swing Line Lender may not be sold,
assigned or transferred as described in clause (i) above to any Person other
than a successor Administrative Agent and Swing Line Lender to the extent
contemplated by subsection 8.6. Except as otherwise provided in this subsection
9.2, no Lender shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment or transfer of, or
any granting of participations in, all or any part of its Commitments or the
Loans, the Letters of Credit or participations therein, or the other Obligations
owed to such Lender.
141
<PAGE>
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit or participation therein, or other Obligation may (a) be assigned
in any amount to another Lender, with the giving of written notice to
Company and Administrative Agent, (b) be assigned in any amount to any
Affiliate of any Lender with the prior consent of Administrative Agent
(which consent shall not be unreasonably withheld) or (c) be assigned in an
aggregate amount of not less than $10,000,000 (or such lesser amount as
shall constitute the aggregate amount of the Commitments, Loans, Letters of
Credit and participations therein, and other Obligations of the assigning
Lender) to any other Eligible Assignee with the prior consent of
Administrative Agent (which consent shall not be unreasonably withheld).
To the extent of any such assignment in accordance with either clause (a),
(b) or (c) above, the assigning Lender shall be relieved of its obligations
with respect to its Commitments, Loans, Letters of Credit or participations
therein, or other Obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to Administrative
Agent, for its acceptance and recording in the Register, an Assignment
Agreement, together with a processing and recordation fee of $3,500 and
such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent
pursuant to subsection 2.8B(iv). Upon such execution, delivery, acceptance
and recordation, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned
to it pursuant to such Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and (z) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, relinquish its rights
(other than any rights which survive the termination of this Agreement
under subsection 9.11B) and be released from its obligations under this
Agreement (and, in the case of an Assignment Agreement covering all or the
remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto; provided
that, anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to any
outstanding Letters of Credit such Lender shall continue to have all rights
and obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments hereunder
shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender
142
<PAGE>
and, if any such assignment occurs after the issuance of any Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Notes, if any, to Administrative Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee and/or the
assigning Lender in accordance with subsection 2.1F, be issued to the
assignee and/or to the assigning Lender, with appropriate insertions, to
reflect the new Commitments and/or outstanding Term Loans, as the case may
be, of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
-----------------------------------------------------------
Upon its receipt of an Assignment Agreement executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together with
the processing and recordation fee referred to in subsection 9.2B(i) and
any forms, certificates or other evidence with respect to United States
federal income tax withholding matters that such assignee may be required
to deliver to Administrative Agent pursuant to subsection 2.8B(iv),
Administrative Agent shall, if Administrative Agent has consented to the
assignment evidenced thereby (to the extent such consent is required
pursuant to subsection 9.2B(i)), (a) accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such assignment),
(b) record the information contained therein in the Register, and (c) give
prompt notice thereof to Company. Administrative Agent shall maintain a
copy of each Assignment Agreement delivered to and accepted by it as
provided in this subsection 9.2B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation,
and all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.6D and 2.8) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby acknowl-
edge and agree that, solely for purposes of subsections 9.5 and 9.6, (a) any
participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.2, any Lender may
143
<PAGE>
assign and pledge all or any portion of its Loans, the other Obligations owed to
such Lender, and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and any operating circular issued by such Federal Reserve Bank; provided that
(i) no Lender shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any such assignment and pledge and
(ii) in no event shall such Federal Reserve Bank be considered to be a
"Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
9.3 Expenses
--------
Whether or not the transactions contemplated hereby shall be consummated,
Company agrees to pay promptly (i) all the reasonable costs and expenses of
preparation of this Agreement and the other Loan Documents, and all the
reasonable costs of furnishing all opinions by counsel for Company and the other
Loan Parties (including without limitation any opinions requested by Lenders as
to any legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with; (ii) the reasonable fees, expenses and disbursements
of counsel to Administrative Agent and Collateral Agent (including reasonable
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of this Agreement, the other Loan
Documents, the Letters of Credit, the Notes and the Loans hereunder, and any
amendments and waivers hereto and thereto; (iii) all other actual and reasonable
costs and expenses incurred by Administrative Agent and Collateral Agent
(including reasonable attorneys' fees) in connection with the negotiation,
preparation and execution of the Loan Documents and the transactions
contemplated hereby and thereby, including the arrangement by Administrative
Agent for one or more Lenders to participate in the facilities described herein;
(iv) all the actual costs and expenses of creating and perfecting Liens in favor
of Secured Parties pursuant to any Loan Document, including filing and recording
fees and expenses, title insurance, fees and expenses of counsel for providing
such opinions as Lenders may reasonably request and reasonable fees and expenses
of legal counsel to Administrative Agent and Collateral Agent; and (v) after the
occurrence of an Event of Default, all reasonable costs and expenses (including
reasonable attorneys' fees, including reasonable allocated costs of internal
counsel, and reasonable costs of settlement) incurred by each Lender in
enforcing any Obligations of or in collecting any payments due from Company
hereunder or under the Notes, if any, by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any
insolvency or bankruptcy proceeding.
144
<PAGE>
9.4 Indemnity
---------
In addition to the payment of expenses pursuant to subsection 9.3, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to indemnify, pay and hold Agents and Lenders, and the officers, directors,
employees and agents of Agents and Lenders (collectively called the
"Indemnitees") harmless from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
reasonable costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitee shall be designated a party
thereto) other than losses and costs with respect to Taxes which shall be
governed by subsection 2.8, which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, or Lenders' agreement to make the Loans
or the use or intended use of the proceeds of Loans and the issuance of Letters
of Credit hereunder and Lenders' agreement to purchase participations therein as
provided for herein, or the use or intended use of the Letters of Credit, the
Guaranty or the transactions or documents contemplated thereby or referenced to
therein, including but not limited to any Acquisition (the "indemnified
liabilities"); provided that Company shall not have any obligation to an
Indemnitee hereunder with respect to indemnified liabilities arising from the
bad faith, gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them.
9.5 Set Off
-------
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default (after the giving of any notice and the
expiration of any grace period contained in the definition thereof), each Lender
is hereby authorized by Company at any time or from time to time, without notice
to Company, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the account of Company or against and on account
145
<PAGE>
of the obligations and liabilities of Company to that Lender under this
Agreement and the Notes, the Letters of Credit including, but not limited to,
all claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit or the other Loan Documents, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) that
Lender shall have declared the principal of and interest on the Loans and Notes,
if any, any obligations of Company in respect of the Letters of Credit and other
amounts due hereunder to be due and payable as permitted by Section 7 and
although said obligations and liabilities, or any of them, may be contingent or
unmatured.
9.6 Ratable Sharing
---------------
Each Lender agrees with each other Lender that (i) with respect to all
amounts received by them which are applicable to the payment of principal of or
interest on the Loans and amounts payable in respect of Letters of Credit or
commitment fees, equitable adjustment will be made so that, in effect, all such
amounts will be shared among Lenders proportionately to their respective Pro
Rata Shares (subject to adjustment to give effect to the interest rate borne by
Affected Loans pursuant to subsection 2.6C) whether received by voluntary
payment, by the exercise of the right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any or all of the
Obligations and (ii) if any of them shall exercise any right of counterclaim,
set-off, banker's lien or similar right with respect to amounts owed by Company
hereunder or in respect of the Letters of Credit, that Lender shall apportion
the amount recovered as a result of the exercise of such right pro rata in
accordance with (a) all amounts outstanding at such time owed by Company to it
hereunder and (b) all amounts otherwise owed by Company to it, and (iii) if any
of them shall thereby through the exercise of any right of counterclaim, set-
off, banker's lien or otherwise, or as adequate protection of a deposit treated
as cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal and interest due with respect to
the Loans made by that Lender or amounts payable in respect of any Letter of
Credit or any participation therein, or any other amount payable hereunder
(collectively, the "Aggregate Amounts Due" to such Lender), which is greater
than the proportion received by any other Lender in respect of the Aggregate
Amounts Due to such other Lender, then the Lender receiving such proportionately
greater payment shall (y) notify each other Lender and Administrative Agent of
such receipt and (z) purchase participations (which it shall be deemed to have
done simultaneously upon the receipt of such payment) in the Aggregate Amounts
Due to the other Lenders so that all recoveries of Aggregate Amounts Due shall
be shared by Lenders in proportion to their respective Pro Rata Shares; 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
146
<PAGE>
purchase prices paid for such participations shall be returned to that Lender to
the extent of such recovery, but without interest. Company expressly consents
to the foregoing arrangements and agrees that any participant in respect of any
Loan may exercise any and all rights of banker's lien, set-off or counterclaim
with respect to any and all monies owing by Company to that participant as fully
as if that participant were a Lender in the amount of such participation held by
that participant.
9.7 Amendments and Waivers
----------------------
A. No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, if any, or of any other Loan Document, or
consent to any departure by Company or any of its Subsidiaries therefrom, shall
in any event be effective without the written concurrence of Requisite Lenders
and Company; provided that any amendment, modification, termination, or waiver:
(i) of the definition of any "Pro Rata Share" or of "Requisite Lenders";
(ii) of the final maturity dates (but not the date of any scheduled installment
of principal) of any of the Loans; (iii) resulting in a decrease of the
principal of or interest rates borne by the Loans, any amounts payable in
respect of the Letters of Credit (including affecting the fees payable in
connection therewith) or the amount of fees payable to Lenders hereunder; or
(iv) the provisions contained in subsections 2.6B, 2.6C, 2.6D, 7.1 and 9.7 shall
be effective only if evidenced by a writing signed by or on behalf of Requisite
Lenders and any Lender adversely affected thereby; provided further that any
amendment, modification, termination, or waiver: (a) of any provision expressly
requiring the approval or concurrence of all Lenders, (b) releasing all or
substantially all of the Collateral or (c) releasing the Guaranty or any Loan
Party from its obligations under the Guaranty other than in accordance with the
terms thereof shall be effective only if evidenced by a writing signed by or on
behalf of all Lenders; and provided still further that Company may supplement
Schedules 4.1, 4.7, 4.15 and 4.17 to this Agreement to the extent permitted by
this Agreement and the Schedules to the Security Agreement and the Patent and
Trademark Agreements to the extent permitted by each such Agreement,
respectively, without requiring the consent of Administrative Agent or any
Lender. No increase in any Lender's Commitments shall be effective without the
concurrence of such Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Potential Events of Default or Events of
Default or of a mandatory reduction in the Commitments shall not constitute an
increase in the Commitment of any Lender, and that an increase in the available
portion of any Commitment of, or the extension of credit in excess of its
Commitment by, any Lender shall not constitute an increase in the Commitment of
such Lender). No amendment, modification, termination or waiver of (1) any
provision of Section 8 shall be effective without the written concurrence of
Administrative Agent and (2) any provision of subsection 2.1A(iv) or any other
147
<PAGE>
provision of this Agreement relating to the Swing Line Loan Commitment or the
Swing Line Loans shall be effective without the written concurrence of the Swing
Line Lender.
B. If, in connection with any proposed amendment, modification,
termination or waiver to any of the provisions of this Agreement or the Notes as
contemplated by clauses (i) through (iv) of the first proviso of subsection 9.7A
or clauses (a) through (c) of the second proviso of subsection 9.7A, the consent
of the Requisite Lenders is obtained but the consent of one or more of such
other Lenders whose consent is required is not obtained, then Company shall have
the right, so long as all non-consenting Lenders whose individual consent is
required are treated as described in either clause (i) or (ii) below, to either
(i) replace each such non-consenting Lender or Lenders with one or more
Replacement Lenders pursuant to subsection 2.10 so long as at the time of such
replacement, each such Replacement Lender consents to the proposed amendment,
modification, termination or waiver, or (ii) terminate such non-consenting
Lender's Commitments and repay in full its outstanding Loans in accordance with
subsections 2.4A(i)(b) and 2.4C(ii); provided that unless the Commitments that
are terminated and the Loans that are repaid pursuant to the preceding clause
(ii) are immediately replaced in full at such time through the addition of new
Lenders or the increase of the Commitments and/or outstanding Loans of existing
Lenders (who in each case must specifically consent thereto), then in the case
of any action pursuant to the preceding clause (ii), the Requisite Lenders
(determined before giving effect to the proposed action) shall specifically
consent thereto; provided further that Company shall not have the right to
terminate such non-consenting Lender's Commitment and repay in full its
outstanding Loans pursuant to clause (ii) of this subsection 9.7B if,
immediately after the termination of such Lender's Revolving Loan Commitment in
accordance with subsection 2.4C(ii), the Revolving Loan Exposure of all Lenders
would exceed the Revolving Loan Commitments of all Lenders; provided still
further that Company shall not have the right to replace a Lender solely as a
result of the exercise of such Lender's rights (and the withholding of any
required consent by such Lender) pursuant to the second and third sentences of
subsection 9.7A.
C. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Company in any case shall entitle Company to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 9.7 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company and its
Subsidiaries.
148
<PAGE>
9.8 Independence of Covenants
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
9.9 Change in Accounting Principles
-------------------------------
If any changes in accounting principles from those used in the preparation
of the financial statements referred to in subsection 4.3 hereafter occasioned
by the promulgation of rules, regulations, pronouncements and opinions by or
required by the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or agencies with similar
functions) result in a change in the method of calculation of financial
covenants, standards or terms found in Sections 1, 5 and 6 hereof, the parties
hereto agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such changes with the desired result that the criteria for
evaluating Company's financial condition shall be the same after such changes as
if such changes had not been made.
9.10 Notices
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed by facsimile transmission, cable
or United States mail or courier service and shall be deemed to have been given
when delivered in person, receipt of telecopy, telex, facsimile transmission or
cable or four Business Days after deposit in the United States mail, registered
or certified, with postage prepaid and properly addressed; provided that notices
to Administrative Agent shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this subsection 9.10) shall be as set forth below each
party's name on the signature pages hereof.
9.11 Survival of Warranties and Certain Agreements
---------------------------------------------
A. All agreements, representations and warranties made herein shall
survive the execution and delivery and effectiveness of this Agreement, the
making of the Loans hereunder, the execution and delivery of the Notes and the
issuance of the Letters of Credit.
149
<PAGE>
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7H, 2.7I,
2.8, 2.9, 5.12, 8.6, 9.3 and 9.4 and the agreements of Lenders set forth in
subsections 8.2C, 8.4, 9.5 and 9.6 and subsection 8(c) of the Intercreditor
Agreement shall survive the payment of the Loans, the Notes, the cancellation or
expiration of the Letters of Credit and the termination of this Agreement.
9.12 Failure or Indulgence Not Waiver; Remedies Cumulative
-----------------------------------------------------
No failure or delay on the part of any Lender in the exercise of any power,
right or privilege hereunder or under any other Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege. All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to and not exclusive of,
any rights or remedies otherwise available.
9.13 Severability
------------
In case any provision in or obligation under this Agreement or the other
Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
9.14 Obligations Several; Independent Nature of Lenders' Rights
----------------------------------------------------------
The obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement and no action taken by Lenders pursuant
hereto shall be deemed to constitute Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
150
<PAGE>
9.15 Headings
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.16 Applicable Law
--------------
THIS AGREEMENT AND THE NOTES, IF ANY, SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF
NEW YORK) WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. EACH LETTER OF CREDIT
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR
RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS
(1993) REVISION, INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE
"UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE
LAWS OF THE STATE OF NEW YORK.
9.17 Successors and Assigns
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders. The terms and provisions of
this Agreement shall inure to the benefit of any assignee or transferee of any
Loan or Commitment, and in the event of such transfer or assignment, the rights
and privileges herein conferred upon Lenders shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions hereof. Neither Company's rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company without the prior
written consent of all Lenders. Lenders' rights of assignment are subject to
subsection 9.2.
9.18 Consent to Jurisdiction and Service of Process
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
151
<PAGE>
DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
9.10;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 9.18 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
9.19 Counterparts; Effectiveness
---------------------------
This Agreement and any amendments, waivers, consents, or supplements may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. It is the intention of each of the
152
<PAGE>
parties hereto that all indebtedness of the Company under the Existing Credit
Agreement be continued hereunder, that the Existing Credit Agreement be amended
and restated to reflect such continuation and to preserve the perfection and
priority of all security interests securing such indebtedness under the Existing
Credit Agreement and the other Loan Documents, and that all indebtedness and
obligations of Company and its Subsidiaries hereunder and thereunder shall be
secured by the Collateral Documents. This Agreement constitutes an amendment
and restatement of the Existing Credit Agreement made under the terms of
subsection 9.7 thereof, and is not intended by the parties to constitute a
novation or refinancing of the Notes. Notwithstanding the use of the terms
"Loan" or "Loans" to denote the interest of an individual Lender under this
Agreement, no construction shall be applied so as to defeat such intention of
the parties. All increases in the respective Commitments and Pro Rata Shares of
Lenders under the terms of this Agreement as of the Closing Date shall be deemed
to be a purchase of an assignment of Loans under subsection 9.2 of the Existing
Credit Agreement, notwithstanding the fact that the parties may not have
strictly complied with the terms thereof, strict compliance with the provisions
of which are hereby waived solely for those assignments occurring on the Closing
Date effected by the execution and delivery of this Agreement. This Agreement
shall become effective upon the execution of a counterpart hereof by Company,
Agents and Lenders and written or telephonic notification of such execution and
authorization of delivery thereof has been received by Company and
Administrative Agent; provided that unless and until all the conditions set
forth in Section 3.1 have been satisfied or waived by Administrative Agent or
Lenders then the Existing Credit Agreement shall remain in full force and effect
without giving effect to the amendments set forth herein, as if this Second
Amended and Restated Credit Agreement shall have never been executed and
delivered. Any references in the Loan Documents to specific section numbers of
the Existing Credit Agreement or to specific Schedules or Exhibits thereof shall
be deemed to refer to the appropriate section numbers of this Agreement (however
numbered) corresponding to the specific numbered sections of the Existing Credit
Agreement or to the appropriate Schedules or Exhibits hereof (however
identified) corresponding to the specific Schedules or Exhibits of the Existing
Credit Agreement.
9.20 Marshalling; Payments Set Aside
-------------------------------
Neither any Lender nor Administrative Agent shall be under any obligation
to marshal any assets in favor of any Loan Party or any other party or against
or in payment of any or all of the Obligations. To the extent that any Loan
Party makes a payment or payments to Agent or any Lender (or to Administrative
Agent for the benefit of any Lender), or Administrative Agent or any Lender
enforce their security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are
153
<PAGE>
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
9.21 Waiver of Jury Trial
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
9.21 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
154
<PAGE>
WITNESS the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
WORLD COLOR PRESS, INC.
By:
---------------------------
Name:
Title:
Notice Address:
World Color Press, Inc.
The Mill
340 Pemberwick
Greenwich, CT 06831
Attention: Marc L. Reisch
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Steven Della
Rocca, Esq.
SECOND AMENDED AND RESTATED WCP CREDIT AGREEMENT
S-1
<PAGE>
BANKERS TRUST COMPANY,
individually as a Lender and
as Administrative Agent
By:
---------------------------
Name:
Title:
Notice to Address:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
(Mail Stop 2141)
Attention: Mary Jo Jolly
with a copy to:
Bankers Trust Company
300 South Grand Avenue
Los Angeles, California 90071
Attention: Patrice Daniels
SECOND AMENDED AND RESTATED WCP CREDIT AGREEMENT
S-2
<PAGE>
BA SECURITIES, INC.,
as Syndication Agent
By:
---------------------------
Name:
Title:
Notice to Address:
Bank of America NT & SA
200 West Jackson Street, 9th Floor
Chicago, Illinois 60697
Attention: Celyndia Williams
AA - Account Administrator
With a copy to:
BA Securities, Inc.
335 Madison Avenue, 5th Floor
New York, New York 10017
Attention: Brock T. Harris
SECOND AMENDED AND RESTATED WCP CREDIT AGREEMENT
S-3
<PAGE>
BANK OF AMERICA NT & SA,
as a Lender
By:
---------------------------
Name:
Title:
Notice to Address:
Bank of America NT & SA
200 West Jackson Street, 9th Floor
Chicago, Illinois 60697
Attention: Celyndia Williams
AA - Account Administrator
With a copy to:
Bank of America NT & SA
335 Madison Avenue, 5th Floor
New York, New York 10017
Attention: Brock T. Harris
SECOND AMENDED AND RESTATED WCP CREDIT AGREEMENT
S-4
<PAGE>
CITIBANK, N.A.,
as a Lender and as
Documentation Agent
By:
---------------------------
Name:
Title:
Notice to Address:
Citibank, N.A.
399 Park Avenue, 6th Floor
New York, New York 10043
Attention: Michael Mahre
SECOND AMENDED AND RESTATED WCP CREDIT AGREEMENT
S-5
<PAGE>
ACKNOWLEDGED AND AGREED:
BANKERS TRUST COMPANY,
as Collateral Agent
By:
---------------------------
Name:
Title:
Notice to Address:
Bankers Trust Company
130 Liberty Avenue
New York, New York 10006
(Mail Stop 2141)
Attention: Mary Jo Jolly
with a copy to:
Bankers Trust Company
300 South Grand Avenue
Los Angeles, California 90071
Attention: Patrice Daniels
SECOND AMENDED AND RESTATED WCP CREDIT AGREEMENT
S-6
EXHIBIT 10.3
WORLD COLOR PRESS, INC.
FIRST AMENDMENT
TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is dated as of June 10, 1996 and entered into
by and among WORLD COLOR PRESS, INC., a Delaware corporation ("Company"),
the Lenders party to the Credit Agreement referred to below on the date
hereof but and immediately before giving effect to this Amendment (the
"Existing Lenders"), BA SECURITIES, INC., as Syndication Agent, CITIBANK,
N.A., as Documentation Agent and BANKERS TRUST COMPANY, as Administrative
Agent, and each of the lenders listed on Exhibit A hereto (the "New
---------
Lenders"). All capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company, the Existing Lenders, the Syndication Agent, the
Documentation Agent and the Administrative Agent are parties to the Second
Amended and Restated Credit Agreement dated as of June 6, 1996 (the"Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto
agree as follows:
Section 1. DEEMED ASSIGNMENT
A. Each of the Existing Lenders (the "Assignor Lenders," and
each an "Assignor Lender") severally and not jointly hereby sells and
assigns to each of the New Lenders without recourse and without
representation or warranty (other than as expressly provided herein), and
each New Lender hereby purchases and assumes from each Assignor Lender, that
interest in and to each of such Assignor Lender's rights and obligations
under the Credit Agreement as of the date hereof which in the 3aggregate
represents such New Lender's pro rata share (for each such New Lender, its
"Pro Rata Share") as set forth on, and in respect of the credit facilities
listed on, Exhibit B hereto (calculated after giving
---------
1
<PAGE>
effect to this Amendment), and such Pro Rata Share represents all of the
outstanding rights and obligations under the Credit Agreement that are being
sold and assigned to each New Lender, including, without limitation, (x) in
the case of any assignment of all or any portion of the Existing Term Loans
and the Tranche A Acquisition Term Loans, all rights and obligations with
respect to such New Lender's Pro Rata Share of such outstanding Existing Term
Loans and outstanding Tranche A Acquisition Term Loans, and (y) in the case
of any assignment of all or any portion of the Tranche B Acquisition Term
Loan Commitments and Revolving Loan Commitments and outstanding Tranche B
Acquisition Term Loans and outstanding Revolving Loans, all rights and
obligations with respect to such New Lender's Pro Rata Share of such Tranche
B Acquisition Term Loan Commitments and Revolving Loan Commitments and such
outstanding Tranche B Term Loans and outstanding Revolving Loans, including
in the case of the Revolving Loan Commitments, all rights and obligations
relating thereto with respect to Letters of Credit and Swing Line Loans.
B. In consideration of the assignment to each New Lender
described in Section 1A above, such New Lender hereby agrees to pay to
Administrative Agent, on the First Amendment Effective Date (as defined
herein), the principal amount of any outstanding Loans included within the
New Lender's Pro Rata Share of the credit facilities listed on Exhibit B
hereto, such payment to be made by wire transfer of immediately available
funds to Administrative Agent in accordance with payment instructions
separately provided by Administrative Agent to such New Lender. Upon receipt
of any such payment, Administrative Agent shall pay each Assignor Lender its
share of such payment.
C. The parties hereby agree that, upon giving effect to the
assignment and assumption described above, (i) each New Lender shall be a
party to the Credit Agreement and shall have all of the rights and
obligations under the Loan Documents, and shall be deemed to have made all of
the covenants and agreements contained in the Loan Documents, arising out of
or otherwise related to its share of the credit facilities assigned to such
New Lender hereby, and (ii) each Assignor Lender shall be absolutely released
from any of such obligations, covenants and agreements assumed or made by any
New Lender in respect of assignments to such New Lender hereby.
D. Each Assignor Lender and each New Lender hereby acknowledge
and confirm their understanding and intent that from and after the First
Amendment Effective Date, Administrative Agent shall make all payments under
the Credit Agreement in respect of the assignment made hereby to such New
Lender (including without limitation all payments of principal and accrued
but unpaid interest, commitment fees and letter of credit fees with respect
thereto) (i) in the case of any such interest and fees that shall have
accrued prior to the First Amendment Effective Date, to the applicable
Assignor Lender, and (ii) in all other cases, to the applicable New Lender;
provided that each Assignor Lender and each New Lender shall make payments
directly to each other to the extent necessary to effect any appropriate
adjustments in any amounts distributed to such
2
<PAGE>
Assignor Lender and/or such New Lender by Administrative Agent under the Loan
Documents in respect of the share of the credit facilities assigned to such
New Lender hereby in the event that, for any reason whatsoever, the payment
of consideration contemplated by Section 1A occurs on a date other than the
First Amendment Effective Date. Each Assignor Lender and each New Lender
hereby agrees from time to time, upon request of a party hereto, to take such
additional actions and to execute and deliver such additional documents and
instruments as such party may reasonably request to effect the transactions
contemplated by, and to carry out the intent of, this Agreement.
E. No Assigning Lender shall be responsible to any New Lender for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of any of the Loan Documents or for any
representations, warranties, recitals or statements made therein or made in
any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made
by any Assigning Lender to any New Lender or by or on behalf of Company or
any of its Subsidiaries to any Assigning Lender or any New Lender in
connection with the Loan Documents and the transactions contemplated thereby
or for the financial condition or business affairs of Company or any other
Person liable for the payment of any Obligations, nor shall any Assigning
Lender be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or
agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the
existence or possible existence of any Event of Default or Potential Event of
Default.
F. Each New Lender represents and warrants that it is an Eligible
Assignee; that it has experience and expertise in the making of loans such as
the Loans; that it has acquired the assignment evidenced by this Agreement
for its own account in the ordinary course of business and not with a view to
or for sale in connection with any distribution of Notes or other evidence of
Indebtedness (it being understood and agreed that, subject to the provisions
of 9.2B of the Credit Agreement, the disposition of such assignment or of any
interest therein shall at all times remain within such New Lender's exclusive
control); and that it has received, reviewed and approved a copy of the
Credit Agreement (including all Exhibits and Schedules thereto).
G. Each New Lender represents and warrants that it has received
from Assigning Lenders such financial information regarding Company and its
Subsidiaries as is available to Assigning Lenders and as such New Lender has
requested, that it has made its own independent investigation of the
financial condition and affairs of Company and its Subsidiaries in connection
with the assignment evidenced by this Agreement, and that it has made and
shall continue to make its own appraisal of the creditworthiness of Company
and its Subsidiaries. No Assignor Lender shall have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of any New Lender or to provide
any New Lender with any other credit or other information with respect
thereto, whether coming into its possession before the making of
3
<PAGE>
the initial Loans or at any time or times thereafter, and no Assignor Lender
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to any New Lender.
H. Each Assignor Lender represents and warrants to each New
Lender that the rights and obligations of such Assignor Lender assigned
hereby are not subject to any Liens created by that Assignor Lender.
I. Administrative Agent hereby waives any processing and
recordation fee that may be payable under subsection 9.2B(i) of the Credit
Agreement as a result of the assignments contemplated hereby.
J. Notwithstanding anything herein to the contrary, in the event
any New Lender does not execute and deliver this Amendment to Administrative
Agent on or prior to 10:00 a.m., June 10, 1996, Administrative Agent may
elect in its sole discretion to remove such Person as a New Lender for all
purposes under this Amendment, it being understood that any rights and
obligations under the Credit Agreement that would have been assigned to such
Person shall be retained by the Assignor Lenders, Administrative Agent shall
amend Exhibit A and Exhibit B hereto to give effect to such removal and the
removal of any Persons as a New Lender as provided in this paragraph shall
not preclude the effectiveness of this Amendment as provided in Section 3
hereof.
Section 2. ADDITION OF New Lenders AS LENDERS; PRO RATA SHARES
AND NOTICE ADDRESSES; AMENDMENTS TO CREDIT AGREEMENT
The Credit Agreement is hereby amended to include the New Lenders
listed on Exhibit A to this Agreement as Lenders for all purposes and as such
---------
New Lenders shall hereby become vested with all the rights, powers,
privileges and duties of a Lender under the Credit Agreement and each of the
other Loan Documents. For purposes of the Credit Agreement, the addresses of
each of the New Lenders shall be as set forth under such New Lenders name on
the signature pages hereof. Accordingly, the Pro Rata Shares set forth on
Schedule 1.1A/2.1 to the Credit Agreement is hereby amended by deleting it in
-----------------
its entirety and substituting in place thereof a new Schedule 1.1A/2.1 in the
-----------------
form of Exhibit B to this Amendment.
---------
Section 3. CONDITIONS TO EFFECTIVENESS
Sections 1 and 2 of this Amendment shall become effective only upon
the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "First
Amendment Effective Date"):
A. On or before the First Amendment Effective Date, Company shall
have delivered to Administrative Agent (i) executed copies of this Amendment
and (ii) the
4
<PAGE>
Notes, drawn to the order of each Existing Lender and New Lender and with
appropriate insertions, each dated the First Amendment Effective Date
(collectively, the "Amended Notes").
B. On or before the First Amendment Effective Date, each Assignor
Lender and each New Lender shall have delivered to Administrative Agent an
executed original or telefacsimile of a counterpart of this Amendment.
Section 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Company represents
and warrants to each Lender that the following statements are true, correct
and complete:
A. Corporate Power and Authority. Company has all requisite
corporate power and authority to enter into this Amendment and to issue the
Amended Notes and to carry out the transactions contemplated by, and perform
its obligations under, the Credit Agreement as amended by this Amendment (the
"Amended Agreement").
B. Authorization of Agreements. The execution and delivery of
this Amendment and the issuance, delivery and payment of the Amended Notes
have been duly authorized by all necessary corporate action on the part of
Company.
C. No Conflict. The execution and delivery by Company of this
Amendment and the Amended Notes and the performance by Company of the Amended
Agreement and the issuance, delivery and payment of the Amended Notes by
Company do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Company or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual
Obligation of Company or any of its Subsidiaries, (iii) result in or require
the creation or imposition of any Lien upon any of the properties or assets
of Company or any of its Subsidiaries (other than Liens created under any of
the Loan Documents in favor of Administrative Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its
Subsidiaries.
D. Governmental Consents. The execution and delivery by Company
of this Amendment and the Amended Notes and the performance by Company of the
Amended Agreement and the issuance, delivery and payment of the Amended Notes
by Company do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
5
<PAGE>
E. Binding Obligation. This Amendment and the Amended Agreement
and the Amended Notes being delivered by Company pursuant to the Amendment
have been duly executed and delivered by Company and, when executed and
delivered, will be the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent
as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on
and as of such earlier date.
G. Absence of Default. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(i) On and after the First Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the
"Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference
to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full force
and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy
of Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.
6
<PAGE>
B. Fees and Expenses. Company acknowledges that all costs, fees
and expenses as described in subsection 9.3 of the Credit Agreement incurred
by Administrative Agent and its counsel with respect to this Amendment and
the documents and transactions contemplated hereby shall be for the account
of Company.
C. Headings. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Sections 1 and 2 hereof, the effectiveness of which is governed
by Section 3 hereof) shall become effective upon the execution of a
counterpart hereof by Company, Existing Lenders, New Lenders, Syndication
Agent, Distribution Agent and Administrative Agent and receipt by Company and
Administrative Agent of written or telephonic notification of such execution
and authorization of delivery thereof.
[Remainder of page intentionally left blank]
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
WORLD COLOR PRESS, INC.
By:
-------------------------------------------
Name
Title:
BANKERS TRUST COMPANY,
individually as a Lender and
as Administrative Agent
By:
-------------------------------------------
Name:
Title:
S-1
<PAGE>
BANK OF AMERICA NT & SA,
as a Lender
By:
-------------------------------------------
Name:
Title:
CITIBANK, N.A.,
as a Lender and as Documentation Agent
By:
-------------------------------------------
Name:
Title:
S-2
<PAGE>
New Lenders
ABN AMRO BANK, NV, NEW YORK BRANCH, as Lender
By: ABN Amro North America, Inc.,
as Agent
By:
--------------------------------------
Name:
Title:
Notice Address:
500 Park Avenue, 2nd Floor
New York, New York 10022
Attention: Laura Fazio
BANK OF MONTREAL,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
430 Park Avenue
14th Floor
New York, New York 10022
Attention: Kanu Modi
S-3
<PAGE>
THE BANK OF NOVA SCOTIA
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
165 Broadway
One Liberty Plaza, 26th Floor
New York, New York 10006
Attention: Daniel Foote
BANK OF SCOTLAND,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
565 Fifth Avenue
New York, New York 10017
Attention: John Kelly
S-4
<PAGE>
BANK OF TOKYO - MITSUBISHI TRUST COMPANY, as
Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
1251 Avenue of the Americas
New York, NY 10020
Attention: Randy Szuch
BANQUE PARIBAS,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
787 Seventh Avenue, 32nd Floor
New York, NY 10019
Attention: Mark Black
S-5
<PAGE>
CIBC, INC., as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
425 Lexington Avenue
New York, NY 10017
Attention: Richard Hassard
FLEET NATIONAL BANK,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
75 State Street
Boston, MA 02109
Attention: William M. Clark
S-6
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK BRANCH, as
Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
Two World Trade Center,
79th Floor
New York, New York 10048
Attention: Vincent Ingato
THE INDUSTRIAL BANK OF JAPAN, LTD., as Lender
By:
-------------------------------------------
Name
Title:
Notice Address:
245 Park Avenue, 22nd Floor
New York, New York 10167
Attention: Jennifer McNamara
S-7
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD. CHICAGO
BRANCH,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
190 South LaSalle, Suite 800
Chicago, IL 60603
Attention: Yoshio Takai
NATIONSBANK, N.A.,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
767 Fifth Avenue, 5th Floor
New York, New York 10153
Attention: Margaret Vandenberg
S-8
<PAGE>
PNC BANK, KENTUCKY, INC.,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
Citizens Plaza
500 West Jefferson
Louisville, KY 40202
Attention: Ralph Phillips
THE SANWA BANK, LIMITED,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
55 East 52nd Street
New York, NY 10055
Attention: Dominic Sorresso
S-9
<PAGE>
BANK OF IRELAND, GRAND CAYMAN BRANCH, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
640 Fifth Avenue, 2nd Floor
New York, NY 10019
Attention: Roger Burns
THE FIRST NATIONAL BANK OF BOSTON, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
100 Federal Street
Boston, MA 02109
Attention: Julie Jalelian
S-10
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
1301 Avenue of the Americas
New York, NY 10019
Attention: Heidi Sandquist
CREDIT SUISSE,
as Lender
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
Notice Address:
12 East 49th Street
44th Floor
New York, NY 10017
Attention: Chris Horgan
S-11
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
One World Trade Center
48th Floor
New York, NY
Attention: Ron Wollinsky
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
75 Wall Street
29th Floor
New York, NY 10005-2889
Attention: Bill Lambert
S-12
<PAGE>
THE SAKURA BANK, LIMITED, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
277 Park Ave.
New York, NY 10172
Attention: Barry Wilson
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH, as
Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
277 Park Avenue
New York, NY 10172
Attention: Dan Lenzo
S-13
<PAGE>
THE SUMITOMO TRUST & BANKING CO., LTD., NEW YORK
BRANCH, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
527 Madison Avenue
New York, NY 10022
Attention: Robin Schreiber
TORONTO DOMINION (NEW YORK), INC., as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
31 West 52nd Street
New York, NY 10019-6101
Attention: Douglas Weir
S-14
<PAGE>
UNITED JERSEY BANK,
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
25 East Salem Street
6th Floor
Hackensack, New Jersey 07602
Attention: Bruce Gray
THE YASUDA TRUST AND BANKING CO., LTD., NEW YORK
BRANCH, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
666 5th Avenue
Suite 801
New York, NY 10103
Attention: Nick Pullen
S-15
<PAGE>
THE TOKAI BANK, LTD.,
NEW YORK BRANCH, as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
55 East 52nd St.
Park Avenue Plaza
New York, NY 10055
Attention: Mr. Muto
MERITA BANK LTD NEW YORK BRANCH
as Lender
By:
-------------------------------------------
Name:
Title:
Notice Address:
437 Madison Avenue
New York, NY 10022
Attention: Frank Maffei
S-16
<PAGE>
BAYERISCHE VEREINSBANK AG,
NEW YORK BRANCH, as Lender
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
Notice Address:
335 Madison Avenue, 19th Floor
New York, NY 10017
Attention: Ralph Enke
THE BANK OF NEW YORK,
as Lender
By:
Name
Title:
Notice Address:
New York Corporate Division
One Wall Street, 22nd Floor
New York, NY 10005
Attention: William G. C. Dakin
S-17
<PAGE>
RIGGS BANK N.A.,
as Lender
By:
--------------------------------------
Name
Title:
Notice Address:
808 17th Street, N.W., 10th Floor
Washington, D.C. 20074-0649
Attention: Tai M. Pham
FIRST UNION NATIONAL BANK,
as Lender
By:
--------------------------------------
Name
Title:
Notice Address:
550 Broad Street
Newark, NJ 17102
Attention: Robert Doherty
S-18
<PAGE>
GIROCREDIT BANK
AKTIENGESELLSCHAFT DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH, as Lender
By:
--------------------------------------
Name
Title:
Notice Address:
65 E. 55th Street, 21st Floor
New York, NY 10022
Attention: Patricia Hogan
S-19
<PAGE>
EXHIBIT A
New Lenders
ABN Amro Bank NV, New York Branch
Bank of Montreal
The Bank of Nova Scotia
Bank of Scotland
Bank of Tokyo - Mitsubishi Trust Company
Banque Paribas
CIBC, Inc.
Fleet National Bank
The Fuji Bank, Limited, New York Branch
The Industrial Bank of Japan, Ltd.
The Long-Term Credit Bank of Japan, Ltd., Chicago Branch
Nationsbank, N.A.
PNC Bank, Kentucky, Inc.
The Sanwa Bank, Limited
Bank of Ireland, Grand Cayman Branch
The First National Bank of Boston
Credit Lyonnais New York Branch
Credit Suisse
The Dai-Ichi Kangyo Bank, Ltd.
Dresdner Bank AG, New York and Grand Cayman Branches
The Sakura Bank, Limited
The Sumitomo Bank, Limited, New York Branch
The Sumitomo Trust & Banking Co., Ltd., New York Branch
Toronto Dominion (New York), Inc.
United Jersey Bank
The Yasuda Trust and Banking Co., Ltd., New York Branch
The Tokai Bank, Ltd., New York Branch
Merita Bank Ltd
Bayerische Vereinsbank AG, New York Branch
The Bank of New York
Riggs Bank N.A.
First Union National Bank
GiroCredit Bank Aktiengesellschaft der Sparkassen, Grand Cayman Island Branch
Ex. A-1
<PAGE>
EXHIBIT B
Schedule 1.1A/2.1
Ex. B-1
