FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
For Quarter Ended June 30, 1995 Commission file number 1-9915
GAYLORD CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3472452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Lake Cook Road, Suite 400
Deerfield, Illinois 60015
Telephone: (708) 405-5500
(Address, including zip code, and telephone number, including
area code, of registrant's principal offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
As of August 4, 1995, the registrant had outstanding 54,049,711 shares of
its $0.0001 par value Class A Common Stock (including 18,008,701 shares held
in trust for the benefit of the warrant holders) and 18,008,701 redeemable
exchangeable warrants to obtain Class A Common Stock.
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PAGE
PART I. FINANCIAL INFORMATION NUMBERS
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Item 1. Financial Statements 1 - 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 7 - 12
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings. 13
Item 2. Changes in Securities. 13
Item 3. Defaults Upon Senior Securities. 13
Item 4. Submission of Matters to a Vote of Security Holders. 14
Item 5. Other Information. 15
Item 6. Exhibits and Reports on Form 8-K. 15
SIGNATURES 16
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS,
JUNE 30, 1995 and SEPTEMBER 30, 1994
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JUNE 30, SEPTEMBER 30,
1995 1994
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ASSETS (In millions)
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CURRENT ASSETS:
Cash and equivalents $ 7.2 $ 17.4
Trade receivables (less allowances of
$4.5 million and $3.7 million, respectively) 157.9 121.8
Inventories (Note 2) 85.3 59.6
Other current assets 12.5 7.9
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Total current assets 262.9 206.7
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PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 1,002.1 917.4
Less accumulated depreciation 363.9 324.5
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Property - Net (Note 3) 638.2 592.9
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OTHER ASSETS 39.0 43.5
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TOTAL $ 940.1 $ 843.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5) $ 32.3 $ 14.5
Trade payables 68.8 58.6
Accrued and other liabilities 68.3 62.0
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Total current liabilities 169.4 135.1
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LONG-TERM DEBT (Note 5) 689.0 696.8
OTHER LONG-TERM LIABILITIES 20.0 30.7
DEFERRED INCOME TAXES 4.3 4.3
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Class A common stock - par value, $.0001 per share;
authorized 125,000,000 shares; issued 48,847,250
shares and 48,510,859 shares, respectively, and
outstanding 48,792,367 shares and 48,427,881
shares, respectively - -
Class B common stock - par value, $.0001 per share;
authorized 15,000,000 shares; issued and
outstanding 5,250,082 shares and 5,266,273 shares,
respectively (Note 6) - -
Capital in excess of par value 172.3 170.5
Retained deficit (109.8) (188.9)
Common stock in treasury - at cost; 54,883 shares
and 82,978 shares, respectively (0.5) (0.8)
Recognition of minimum pension liability (4.6) (4.6)
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Total stockholders' equity (deficit) 57.4 (23.8)
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TOTAL $ 940.1 $ 843.1
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</TABLE>
See notes to condensed consolidated financial statements.
1
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
JUNE 30, 1995 AND 1994 (In millions, except per share data)
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THREE MONTHS ENDED JUNE 30,
---------------------------
1995 1994
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NET SALES $ 285.2 $ 203.2
COST OF GOODS SOLD 199.8 179.3
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GROSS MARGIN 85.4 23.9
SELLING AND ADMINISTRATIVE COSTS (23.4) (19.7)
NON-RECURRING OPERATING CHARGES (Note 1) - (3.5)
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OPERATING EARNINGS 62.0 0.7
INTEREST EXPENSE - Net (21.3) (20.3)
OTHER INCOME (EXPENSE) - Net 0.1 (0.1)
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EARNINGS (LOSS) BEFORE TAXES 40.8 (19.7)
INCOME TAXES (Note 4) 1.0 -
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NET INCOME (LOSS) 39.8 $ (19.7)
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RETAINED DEFICIT:
BEGINNING OF PERIOD (149.6)
-----
END OF PERIOD $(109.8)
=====
NET EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.72 $ (0.37)
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AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 55.2 53.6
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</TABLE>
See notes to condensed consolidated financial statements.
2
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED
JUNE 30, 1995 AND 1994 (In millions, except per share data)
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NINE MONTHS ENDED JUNE 30,
---------------------------
1995 1994
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NET SALES $ 782.7 $ 569.6
COST OF GOODS SOLD 565.7 509.9
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GROSS MARGIN 217.0 59.7
SELLING AND ADMINISTRATIVE COSTS (71.3) (59.4)
NON-RECURRING OPERATING CHARGES (Note 1) - (5.6)
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OPERATING EARNINGS (LOSS) 145.7 (5.3)
INTEREST EXPENSE - Net (64.5) (59.7)
OTHER EXPENSE - Net (0.1) (0.3)
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EARNINGS (LOSS) BEFORE TAXES 81.1 (65.3)
INCOME TAXES (Note 4) 2.0 -
----- -----
NET INCOME (LOSS) 79.1 $ (65.3)
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RETAINED DEFICIT:
BEGINNING OF PERIOD (188.9)
-----
END OF PERIOD $(109.8)
=====
NET EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ 1.44 $ (1.22)
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AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 55.0 53.6
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</TABLE>
See notes to condensed consolidated financial statements.
3
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
JUNE 30, 1995 AND 1994
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NINE MONTHS ENDED JUNE 30,
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1995 1994
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(In millions)
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CASH FLOWS FROM OPERATIONS:
Net income (loss) $ 79.1 $(65.3)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization 48.5 45.7
Non-cash interest expense 34.5 30.5
Change in current assets and liabilities,
excluding acquisitions and dispositions (53.9) (23.2)
Acquisition restructuring expenditures (0.9) (2.4)
Loss on asset dispositions 0.6 5.8
Other - net (5.1) 1.5
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Net cash provided by (used for) operations 102.8 (7.4)
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CASH FLOWS FROM INVESTMENTS:
Capital expenditures (44.3) (25.6)
Capitalized interest (2.1) (0.5)
Proceeds from asset sales 2.6 4.5
Other investments - net (2.7) 2.1
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Net cash used for investments (46.5) (19.5)
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CASH FLOWS FROM FINANCING:
Senior debt - repayments (Note 5) (67.6) (3.9)
Revolver borrowings - net - 12.0
Other financing - net 1.1 -
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Net cash (used for) provided by financing (66.5) 8.1
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Net decrease in cash and equivalents (10.2) (18.8)
Cash and equivalents, beginning of period 17.4 27.6
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Cash and equivalents, end of period $ 7.2 $ 8.8
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SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for:
Interest expense $ 35.4 $ 32.7
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Income taxes $ 1.2 $ -
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SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES (Note 3):
Property additions $ 43.4 $ -
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Increase in total debt $ 43.4 $ -
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</TABLE>
See notes to condensed consolidated financial statements.
4
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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1. GENERAL
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In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all normal and recurring adjustments
and accruals necessary to present fairly the financial position as of June 30,
1995 and the results of operations for the three and nine months ended June
30, 1995 and 1994 and cash flows for the nine months ended June 30, 1995 and
1994, including all the accounts of Gaylord Container Corporation (including
its subsidiaries, the Company), and are in conformity with Securities and
Exchange Commission Rule 10-01 of Regulation S-X. In addition to the normal
and recurring adjustments and accruals, for the three and nine months ended
June 30, 1994, the Company recognized non-recurring operating charges of $3.5
million and $5.6 million, respectively, related to a plant closure and a plant
sale. Certain amounts in the statements of income and cash flows for fiscal
1994 have been reclassified to conform with the current-year presentation.
The financial statements should be read in conjunction with the audited
consolidated financial statements and the notes thereto on Form 10-K for the
fiscal year ended September 30, 1994.
On October 1, 1994, the Company adopted Financial Accounting Standard No. 112,
"Employers' Accounting for Postemployment Benefits" (FAS 112). In general,
the Company does not provide post-employment benefits to its employees;
however, in certain limited circumstances the Company could be liable for
post-employment benefits. The Company believes the occurrence of such
circumstances is not probable and therefore, pursuant to the provisions of FAS
112, the Company did not recognize a liability for post-employment benefits.
2. INVENTORIES
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JUNE 30, SEPTEMBER 30,
1995 1994
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(In millions)
Inventories consist of:
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Finished products $ 19.0 $13.0
In process 60.0 38.7
Raw materials 13.0 8.6
Supplies 9.7 9.6
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Total 101.7 69.9
LIFO valuation adjustment (16.4) (10.3)
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Total $ 85.3 $59.6
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3. PROPERTY - NET
--------------
Property additions in the first nine months of fiscal 1995 totaled $89.8
million. The Company financed $43.4 million of such additions through capital
leases and debt obligations secured by those assets.
5
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
- ----------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Concluded)
- -----------------------------------------------------------------------------
4. INCOME TAXES
------------
In general, the Company has regular and Alternative Minimum Tax (AMT)
operating loss carryforwards that exceed its projected earnings for fiscal
1995. The Company recorded a current tax provision of $1.0 million and $2.0
million, respectively, for the three months and nine months ended June 30,
1995 primarily because Internal Revenue Service regulations limit the use of
AMT operating loss carryforwards in any one period to 90 percent of the AMT
income.
5. DEBT PAYMENTS
-------------
During the first nine months of fiscal 1995, the Company prepaid $53.5 million
of the term loan portion of its bank credit agreement. In July 1995,
the Company prepaid an additional $15.4 million and made a $3.9 million
quarterly amortization payment due under the term loan portion of the bank
credit agreement, reducing the outstanding balance to $23.4 million. These
prepayments will reduce future required amortization payments, commencing in
October 1995, to approximately $2.3 million per quarter. The Company
anticipates, however, that its bank term loan will be repaid in its entirety
prior to the end of calendar 1995. In addition, in July 1995, the Company
prepaid the outstanding balance of approximately $1.8 million due on a
high coupon senior secured note.
6. SUBSEQUENT EVENTS
-----------------
In June 1995, the Company redeemed 25 percent of its 31,845,533 outstanding
Redeemable Exchangeable Warrants (the Warrants), and subsequently, a portion
of the remaining Warrants were exchanged pursuant to a "Special Exercise on
July 31, 1995." As a result of the redemption and the special exercise,
approximately 13.8 million Warrants were exchanged for a like number of shares
of Class A common stock, par value $.0001 per share (Class A Common) of the
Company.
On July 31, 1995, all of the Company's 5,250,082 outstanding shares of Class B
common stock, par value $.0001 per share (Class B Common), automatically
converted into an equal number of shares of Class A Common.
As a result of the foregoing transactions, as of August 4, 1995, the Company
had outstanding 54,049,711 shares of Class A Common (including 18,008,701 shares
held in trust for the benefit of the warrant holders) and 18,008,701 Warrants.
These transactions will not effect the computation of earnings per share.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Third Quarter of Fiscal 1995 Compared with Third Quarter of Fiscal 1994.
Net sales for the third quarter of fiscal 1995 were a record $285.2 million,
an increase of approximately 40 percent compared with net sales of $203.2
million for the third quarter of fiscal 1994. Operating earnings for the
quarter were $62.0 million compared with $0.7 million for the year-ago
quarter, which included $3.5 million of non-recurring operating charges for
costs associated with the closure of a corrugated container plant. Net income
for the current quarter was $39.8 million, or $0.72 per share, versus a net
loss of $19.7 million, or $0.37 per share, in the third quarter of fiscal
1994.
Sales and earnings in the third quarter of fiscal 1995 benefited from
significantly higher average selling prices for the Company's products versus
the third quarter of fiscal 1994. Higher average selling prices increased
operating earnings by approximately $88 million compared with the prior-year
quarter.
The Company implemented a $50 per ton increase for linerboard and
corresponding price increases for corrugated products in the third quarter of
fiscal 1995, which brought total linerboard price increases since October 1993
to $235 per ton. Average selling prices for the Company's domestic
linerboard, export linerboard and corrugated products increased approximately
56 percent, 100 percent and 34 percent, respectively, in the third quarter of
fiscal 1995 compared with the prior-year quarter. The Company also
implemented a $50 per ton increase for unbleached kraft paper and
corresponding increases for converted products in the third quarter of fiscal
1995. Average selling prices for the Company's unbleached kraft paper,
grocery bags and sacks and multiwall bags in the third quarter of fiscal 1995
increased approximately 53 percent, 92 percent and 13 percent, respectively,
compared with the year-ago period.
Higher volume increased operating earnings for the third quarter of fiscal
1995 by approximately $3 million. The volume variance includes the benefit of
fixed costs eliminated with the closure of a corrugated container plant in
fiscal 1994, net of incremental fixed operating costs associated with capital
investments to expand capacity in the Company's other converting operations.
Total mill production increased approximately 7 percent quarter-over-quarter.
Containerboard production in the current quarter of 3,580 tons per day (TPD,
calculated on the basis of the number of days in the period) increased
approximately 10 percent from 3,248 TPD in the prior-year quarter, primarily
due to general productivity improvements at the Company's Bogalusa, Louisiana
mill in the current quarter. In addition, the Company's Antioch, California
mill was down for three days of scheduled maintenance in the third quarter of
fiscal 1994 whereas no maintenance down time was scheduled in the current
quarter. Unbleached kraft paper production decreased approximately 6 percent
to 640 TPD from 683 TPD in the third quarter of fiscal 1994 primarily due to
changes in product mix as a result of market conditions.
Corrugated shipments of approximately 3.1 billion square feet were down
approximately 3 percent when compared with the prior-year quarter; however,
shipments for the year-ago quarter include those from the corrugated
7
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container plant that was subsequently closed. Adjusting for the prior-year
shipments from this plant, corrugated shipments were essentially flat
quarter-over-quarter. Multiwall bag shipments of 12.4 thousand tons increased
approximately 2 percent when compared with the year-ago quarter's shipments of
12.2 thousand tons. Grocery bag and sack shipments decreased to 22.8 thousand
tons versus shipments of 26.5 thousand tons in the year-ago quarter. This
decline was primarily due to reduced shipments of standard grocery sacks as a
result of greater displacement by plastic bags as prices for grocery sacks
increased.
Gross margin as a percentage of net sales for the third quarter of fiscal 1995
increased to 29.9 percent from 11.8 percent in the prior-year quarter
primarily due to significantly higher selling prices for the Company's
products. The margin improvement was partially offset by increased fiber
costs (primarily the cost of old corrugated containers (OCC)), which adversely
affected operating earnings by approximately $25 million. The Company's
average delivered cost of OCC increased approximately $125 per ton in the
third quarter of fiscal 1995 compared with the year-ago quarter. Selling and
administrative costs of $23.4 million for the third quarter of fiscal 1995
were $3.7 million higher than the prior-year quarter primarily as a result of
increased incentive compensation costs related to improved profitability.
Net interest expense increased from the prior-year quarter by $1.0 million to
$21.3 million in the third quarter of fiscal 1995 primarily due to higher
accretion of the discount on subordinated debt and deferred financing fees
written-off in conjunction with debt prepayments, partially offset by an
increase in capitalized interest.
In general, the Company has regular and Alternative Minimum Tax (AMT)
operating loss carryforwards that exceed its projected earnings for fiscal
1995. The Company recorded a current tax provision of $1.0 million in the
third quarter of fiscal 1995 primarily because Internal Revenue Service
regulations limit the use of AMT operating loss carryforwards in any one
period to 90 percent of the AMT income.
First Nine Months of Fiscal 1995 Compared with First Nine Months of Fiscal
1994.
Net sales for the first nine months of fiscal 1995 were $782.7 million,
approximately 37 percent higher than net sales of $569.6 million for the first
nine months of fiscal 1994. Operating earnings for the current period were
$145.7 million compared with an operating loss of $5.3 million for the
year-ago period, which included $5.6 million of non-recurring operating
charges for costs associated with the closure of a corrugated container plant
and the sale of a corrugated container plant. Net income reached $79.1
million for the first nine months of fiscal 1995, or $1.44 per share, versus a
net loss of $65.3 million, or $1.22 per share, in the first nine months of
fiscal 1994.
Sales and earnings in the first nine months of fiscal 1995 benefited from
significantly higher average selling prices for the Company's products
compared to the prior-year period. Higher average selling prices increased
operating earnings by approximately $220 million compared with the year-ago
period.
8
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The Company implemented price increases in fiscal 1995 of $40 per ton in the
first quarter, $50 per ton in the second quarter and $50 per ton in the third
quarter for linerboard and unbleached kraft paper and corresponding price
increases for converted products. Average selling prices for the Company's
domestic linerboard, export linerboard and corrugated products increased
approximately 49 percent, 89 percent and 29 percent, respectively, in the
first nine months of fiscal 1995 compared with the year-ago period. Average
selling prices for the Company's unbleached kraft paper, grocery bags and
sacks and multiwall bags in the first nine months of fiscal 1995 increased
approximately 45 percent, 77 percent and 6 percent, respectively, compared
with the year-ago period.
Higher volume increased operating earnings for the first nine months of fiscal
1995 by approximately $13 million. The volume variance includes the benefit
of fixed costs eliminated with the sale or closure of two corrugated container
plants in fiscal 1994, net of incremental fixed operating costs associated
with capital investments to expand capacity in the Company's other converting
operations. Total mill production increased approximately 4 percent
period-over-period. Containerboard production in the first nine months of
fiscal 1995 increased approximately 3 percent from the prior-year period to
3,358 TPD. This was despite additional down time taken at the Bogalusa mill
to install an extended nip press on a linerboard machine in the first quarter
of fiscal 1995. Unbleached kraft paper production increased approximately 7
percent to 738 TPD from 689 TPD in the first nine months of fiscal 1994
primarily due to the temporary idling of one paper machine at the Bogalusa
mill as a result of market conditions in the second and third quarters of
fiscal 1994.
Corrugated shipments of approximately 9.3 billion square feet were down
approximately 2 percent in the first nine months of fiscal 1995 compared to
the year-ago period; however, shipments for the year-ago period include
production from the two corrugated container plants that were subsequently
closed or sold. Adjusting for the prior-year shipments from these plants,
corrugated shipments increased approximately 4 percent in the current period.
Multiwall bag shipments of 40.4 thousand tons increased approximately 8
percent compared with the year-ago period's shipments of 37.5 thousand tons.
Grocery bag and sack shipments decreased to 79.2 thousand tons versus shipments
of 90.9 thousand tons in the first nine months of fiscal 1994. This decline
was primarily due to reduced shipments of standard grocery sacks as a result
of greater displacement by plastic bags as prices for grocery sacks increased.
Gross margin as a percentage of net sales for the first nine months of fiscal
1995 increased to 27.7 percent from 10.5 percent in the prior-year period.
The margin improvement, primarily due to significantly higher selling prices
for the Company's products, was partially offset by increased fiber costs
(primarily the cost of OCC) which adversely affected operating earnings by
approximately $61 million. The Company's average delivered cost of OCC
increased approximately $100 per ton in the first nine months of fiscal 1995
compared with the year-ago period. Selling and administrative costs of $71.3
million for the first nine months of fiscal 1995 were $11.9 million higher
than the prior-year primarily as a result of increased incentive compensation
costs related to improved profitability.
9
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Net interest expense increased from the prior-year period by $4.8 million to
$64.5 million in the first nine months of fiscal 1995 primarily due to higher
accretion of the discount on subordinated debt, deferred financing fees
written-off in conjunction with debt prepayments and interest on new capital
leases, partially offset by an increase in capitalized interest.
In general, the Company has regular and AMT operating loss carryforwards that
exceed its projected earnings for fiscal 1995. The Company recorded a current
tax provision of $2.0 million in the first nine months of fiscal 1995
primarily because Internal Revenue Service regulations limit the use of AMT
operating loss carryforwards in any one period to 90 percent of the AMT
income.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
General
The Company has historically financed its operations through cash provided by
operations, borrowings under its credit agreements and the issuance of debt
and equity securities. The Company's principal uses of cash are to pay
operating expenses, fund capital expenditures and service debt.
Net cash provided by operations for the first nine months of fiscal 1995 was
$102.8 million, compared with cash used by operations of $7.4 million a year
ago. The favorable comparison to the prior-year period was primarily due to
significantly higher selling prices for the Company's products.
Capital expenditures of $44.3 million in the first nine months of fiscal 1995
increased by $18.7 million from $25.6 million in the first nine months of
fiscal 1994. In addition to the $44.3 million of capital spending, the
Company acquired $43.4 million of equipment financed by capital leases and
debt obligations secured by those assets. In fiscal 1994, the Company
initiated a five-year capital plan that provides for a total investment of
approximately $250 million. The plan targets approximately 60 percent of the
spending to enhance the capacity, flexibility and cost effectiveness of the
Company's converting facilities with the remainder to be invested at the
mills. The Company has the ability to adjust the timing of certain capital
projects depending upon industry conditions. The Company plans to finance the
remainder of the five-year capital plan primarily with cash provided by
operations or debt obligations secured by the assets acquired.
At the end of fiscal 1992, the Company determined it would be unlikely that
its Antioch, California virgin fiber mill (the East Mill), which was closed in
fiscal 1991, could be sold as a mill site or that the East Mill, or some
portion thereof, could be operated economically by the Company. The Company
believed, and continues to believe, that the most likely outcome will be the
sale of individual assets and the subsequent demolition of the remaining
structures on the mill site. For the nine months ended June 30, 1995, the
Company incurred approximately $0.7 million of costs to maintain the East
Mill. Demolition of the remaining structures on the mill site will require
the Company to incur costs for asbestos removal. The Company has deferred
incurring substantial expenditures for demolition and asbestos removal until
all uncertainties regarding disposition of the mill assets have been resolved.
At June 30, 1995, balance sheet accruals for demolition and asbestos removal
were approximately $5.7 million and $15.3 million, respectively.
10
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In fiscal 1994, the Company recognized non-recurring operating charges of
$15.5 million. These charges included (i) $9.9 million primarily for
equipment abandonments, asset write-downs, lease termination costs and other
costs related to the relocation of three of the Company's converting
facilities (ii) $3.5 million for costs associated with closure of a corrugated
container plant and (iii) $2.1 million for a loss on the sale and costs
associated with the disposition of a corrugated container plant. For the nine
months ended June 30, 1995, the Company charged approximately $3.1 million of
costs associated with the fiscal 1994 non-recurring operating charges to
balance sheet accruals. At June 30, 1995, the Company had balance sheet
accruals for such costs of $8.3 million and anticipates incurring
substantially all of the remaining costs (approximately $4.7 million of which
are for non-cash equipment abandonments) by the end of fiscal 1995. In
addition, the Company has remaining balance sheet accruals of approximately
$1.1 million for non-recurring operating charges (primarily lease termination
costs) recognized in previous years and anticipates incurring such costs
ratably over the next two and one-half years.
Liquidity
At June 30, 1995, the Company had cash and equivalents of $7.2 million, a
decrease of $10.2 million from September 30, 1994 as cash used for investments
and financing (principally capital expenditures and debt repayments) exceeded
cash provided by operations. Total debt increased by $10.0 million to $721.3
million at June 30, 1995 from $711.3 million at September 30, 1994. The
increase in total debt was due to capital leases and secured financing
associated with the capital plan described above and the accretion of the
discount on subordinated debt, partially offset by senior debt repayments of
$67.6 million, approximately $53.5 million of which was a prepayment under
the term-loan portion of the Company's bank credit agreement. The Company has
made debt reduction a priority and intends to use future excess cash flow to
prepay debt. The Company anticipates that its bank term loan (of which $23.4
million was outstanding on July 31, 1995) will be repaid in its entirety prior
to the end of calendar 1995. On June 30, 1995, the Company amended and restated
its bank credit agreement. The amendment increased the revolving credit
facility from $66 million to $175 million, extended the maturity of the
revolving credit facility to June 30, 2000 and permitted open market purchases
or redemptions of up to $100 million of the Company's publicly traded debt
securities. At June 30, 1995, the Company had no amounts outstanding and
approximately $236 million of credit available under the revolving portions
of its credit agreements, including the bank credit agreement and the Company's
trade receivables-backed revolving credit facility.
The Company implemented price increases totaling $140 per ton in fiscal 1995
for containerboard and unbleached kraft paper and corresponding price increases
for converted products. The effect of higher product prices has been
partially offset by increased fiber costs, particularly the cost of OCC. From
January 1994 to May 1995, OCC costs more than tripled. From their peak in May
1995 OCC costs declined in both June and July. The secondary fiber market,
however, is difficult to predict, and there can be no assurance as to the
direction OCC costs will take in the future.
11
<PAGE>
Based upon current product prices and fiber costs, the Company believes that
cash provided by operations and borrowings available under its credit
agreements will provide adequate liquidity to meet its debt service
obligations and other liquidity requirements over the next 12 to 24 months.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any legal proceedings other than
litigation incidental to normal business activities, except as
described below:
The Company and certain of its officers and directors have been named
in a civil suit filed in May 1994 in Cook County (Illinois) Circuit
Court alleging that they omitted or misrepresented facts about the
Company's operations in connection with the Company's initial public
offering of stock in 1988 and in certain periodic reports. The
complaint, a purported class action under the Illinois Consumer Fraud
and Deceptive Practices Act and common law fraud, seeks unspecified
damages. A similar lawsuit, based on the same factual allegations,
but alleging violations of Federal securities laws and filed in the
United States District Court for the Northern District of Illinois,
was voluntarily dismissed by the same plaintiff in July 1993. The
Company believes that, after investigation of the facts, the
allegations in the complaint are without merit, and the Company is
vigorously defending itself and its officers and directors. The
outcome of such litigation is not expected to have a material adverse
effect on the Company's financial position, results of operations or
cash flows.
Item 2. Changes in Securities.
On June 21, 1995, the Company announced a redemption of 25
percent, or 7,961,383, of its 31,845,533 Redeemable Exchangeable
Warrants (the Warrants). Under the terms of the redemption, on July
27, 1995, the Company exchanged one share of its Class A common stock,
par value $.0001 per share (Class A Common) for each Warrant redeemed.
The redemption reduced from 31,845,533 to 23,884,150 the number of
Warrants eligible for a "Special Exercise on July 31, 1995."
Pursuant to the terms of the Warrant Agreement, 25 percent of the
23,507,134 Warrants surrendered by registered holders, or 5,876,783
Warrants, were exchanged for shares of Class A Common on a one-for-one
basis on July 31, 1995.
On July 31, 1995, all of the Company's 5,250,082 outstanding shares of
Class B common stock, par value $.0001 per share (Class B Common),
automatically converted into an equal number of shares of Class A
Common. Under the Company's Certificate of Incorporation, the Class B
Common would have continued to exist only if the Closing Price (as
defined) of the Class A Common had equaled or exceeded $15.25 per
share on a total of 20 or more Trading Days (as defined) on or before
July 31, 1995.
Item 3. Defaults Upon Senior Securities.
Not applicable.
13
<PAGE>
PART II. OTHER INFORMATION - CONTINUED
Item 4. Submission of Matters to a Vote of Security Holders.
On July 21, 1995, the Company held a special meeting of stockholders
at which the following issues were put to a vote by holders of the
Company's Class A Common Stock and Class B Common Stock voting
together as a single class and entitled to one vote per share and 10
votes per share, respectively:
The amendment to the Company's Certificate of Incorporation to include
a requirement that any stockholder action be taken only at a meeting
of the stockholders was approved by a vote of 82,594,060 for;
2,340,479 against; 12,152 withheld.
The amendment to the Company's Certificate of Incorporation to include
a requirement that special meetings of stockholders may be called only
by the Chairman of the Board of Directors of the Company or by an
affirmative vote of the majority of the members of the Board of
Directors then in office was approved by a vote of 82,531,946 for;
2,402,458 against; 12,287 withheld.
The amendment to the Company's Certificate of Incorporation to include
a provision which increases the stockholder vote required for
amendment of the Bylaws of the Company from a majority vote to
two-thirds of the outstanding shares of capital stock of the Company
entitled to vote was approved by a vote of 82,623,034 for; 2,313,953
against; 9,704 withheld.
The amendment to the Company's Certificate of Incorporation to include
a provision pursuant to which the Company will be governed by Section
203 of the General Corporation Law of the State of Delaware ("DGCL")
was approved by a vote of 82,568,309 for; 2,296,735 against; 81,647
withheld.
The amendment to the Company's Certificate of Incorporation to include
a provision which increases the stockholder vote required for
amendment of the above-referenced provisions of the Company's
Certificate of Incorporation from a majority vote to two-thirds of the
outstanding shares of capital stock of the Company entitled to vote
was approved by a vote of 82,600,229 for; 2,330,150 against; 16,312
withheld.
The amendment to the Company's Certificate of Incorporation to delete
a provision no longer required since the conclusion in 1992 of the
Company's financial restructuring was approved by a vote of 83,302,095
for; 1,631,384 against; 13,212 withheld.
The proposal to delete Article VIII from the Company's Bylaws pursuant
to which the Company had elected not to be governed by DGCL Section
203 was approved by a vote of 82,545,086 for; 2,320,242 against;
81,363 withheld.
14
<PAGE>
PART II. OTHER INFORMATION - CONCLUDED
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
Number and Description of Exhibit
a) 3.1(a) Amended and Restated Certificate of Incorporation of
the Registrant, as of July 21, 1995
3.2(b) Amended and Restated Bylaws of the Registrant,
incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on July
5, 1995 under the Securities Exchange Act of 1934, as
amended
4.1(a) Amended and Restated Credit Agreement dated as of June
30, 1995 by and between the Registrant, the
financial institutions signatory thereto, Bankers
Trust Company, as Agent and Co-Manager and Wells
Fargo Bank National Association, as Co-Manager
4.2(b) Rights Agreement, dated June 12, 1995, between Gaylord
Container Corporation and Harris Trust and Savings
Bank, as Rights Agent, including the form of
Certificate of Designation, Preferences and Rights of
Junior Participating Preferred Stock, Series A attached
thereto as Exhibit A, the form of Rights Certificate
attached thereto as Exhibit B and the Summary of Rights
attached thereto as Exhibit C incorporated by reference
to Exhibit 4.1 of the Registrant's Current Report on
Form 8-K filed on July 5, 1995 under the Securities
Exchange Act of 1934, as amended
27.1(a) Financial Data Schedule
b) On July 5, 1995, the Corporation filed a Current Report on Form
8-K describing the adoption of a Stockholder Rights Plan and
an amendment of the Company's Bylaws by the Board of Directors
of the Company on June 12, 1995.
- -----------------------------------------------------------------------------
(a) Filed with this Quarterly Report.
(b) Incorporated by reference.
15
<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.
GAYLORD CONTAINER CORPORATION
Date: August 4, 1995 /s/ Marvin A. Pomerantz
------------------------------
Marvin A. Pomerantz
Chairman and Chief Executive Officer
Date: August 4, 1995 /s/ Jeffrey B. Park
-------------------------------
Jeffrey B. Park
Vice President-Controller
(Principal Accounting Officer)
16
</TABLE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GAYLORD CONTAINER CORPORATION
(originally incorporated August 1, 1986)
ARTICLE ONE
-----------
The name of the Corporation is Gaylord Container
Corporation.
ARTICLE TWO
-----------
The address of the Corporation's registered
office in the State of Delaware is The Corporation Trust
Center, 1209 Orange Street, Wilmington, County of New
Castle 19801. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE THREE
-------------
The nature of the business or purposes to be
conducted or promoted by the Corporation is to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware (the "Delaware General Corporation Law").
ARTICLE FOUR
------------
The total number of shares which the Corporation
shall have authority to issue is 165,000,000 shares,
consisting of:
(1) 25,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Preferred Stock");
(2) 125,000,000 shares of Class A Common Stock,
par value $.0001 per share (hereinafter referred to as the
"Class A Common"); and
(3) 15,000,000 shares of Class B Common Stock,
par value $.0001 per share (hereinafter referred to as the
"Class B Common").
THE PREFERRED STOCK
The Corporation's board of directors (the "Board
of Directors") is authorized, subject to the limitations
prescribed by law and the provisions of this Amended and
Restated Certificate of Incorporation, to provide for the
issuance of shares of the Preferred Stock in one or more
<PAGE>
series, to establish from time to time the number of shares
to be included in each such series and to fix the designa-
tions, voting powers, preferences rights and qualifications,
limitations or restrictions of the shares of the Preferred
Stock of each such series. The number of authorized shares
of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common
Stock, without a vote of the holders of the Preferred Stock,
or of any series thereof, unless a vote of any such holders
is required pursuant to the certificate or certificates
establishing the series of Preferred Stock.
COMMON STOCK
Except as otherwise provided herein, all shares
of Class A Common and Class B Common will be identical and
will entitle the holders thereof to the same rights and
privileges. As used herein, the term "Common Stock" means,
collectively, the Class A Common and the Class B Common.
Part 1. Voting Rights.
-------------
(i) So long as any share of Class B Common is
outstanding, the holders of Class A Common and Class B
Common will vote together as a single class with respect to
all matters to be voted on by the Corporation's
stockholders, except as provided in subparagraphs (ii),
(iii) or (iv) below or as required by law. In connection
with the vote by the Corporation's stockholders on each
such matter, the holders of Class A Common will be entitled
to one vote per share and the holders of Class B Common
will be entitled to 10 votes per share, except as provided
in subparagraphs (iii) and (iv) below.
(ii) The number of directors comprising the
Board of Directors will be determined from time to time in
the manner specified in the Corporation's bylaws, subject
to this subparagraph (ii). So long as any share of Class
B Common is outstanding, (A) the holders of Class A Common,
voting separately as a class and excluding the holders of
Class B Common (but not with respect to the shares of Class
A Common held by such holders), shall be entitled to elect
a number (rounded to the next highest whole number in the
case of a fraction) of such directors equal to one-fourth
(1/4) of the total number of directors constituting the
entire Board of Directors of the Corporation (the "Class A
Directors"), provided that the holders of Class A Common
will be entitled to elect three (3) such directors to serve
on the Board of Directors during the period commencing on
the later to occur of the filing of the Restated
Certificate of Incorporation and the date of initial
-2-
<PAGE>
issuance of the Warrants (as defined herein) pursuant to
the Warrant Agreement (as defined herein) and ending
immediately prior to July 31, 1996 or, if earlier, such
time as no Warrants are outstanding and no Debentures (as
defined herein) are outstanding (the "Special Class A
Director Termination Date"), and (B) the holders of Class
B Common, voting separately as a class and excluding the
holders of Class A Common (but not with respect to the
shares of Class B Common held by such holders), shall be
entitled to elect all other directors; provided that,
subject to the following proviso, after the close of
business on any day on which, but only at such times as,
the number of outstanding shares of Class B Common
constitutes less than 12.5% of the total number of
outstanding shares of Common Stock, the holders of Class B
Common and the holders of Class A Common, voting together
as a single class with the holders of Class B Common
entitled to ten votes per share of Class B Common held and
the holders of Class A Common entitled to one vote per
share of Class A Common held, shall be entitled to elect
all such other directors; provided, further, that the
immediately preceding proviso will cease to apply, and the
holders of Class B Common voting as a single class
excluding the holders of Class A Common (but not with
respect to the shares of Class B Common held by such
holders) shall be entitled to elect all such other
directors, during any period commencing at the close of
business on the day on which the number of outstanding
shares of Class B Common constitutes 12.5% or more of the
total outstanding shares of Common Stock and ending at the
close of business on a subsequent day, if any, on which the
number of outstanding shares of Class B Common constitutes
less than 12.5% of the total number of outstanding shares
of Common Stock; and provided, further, that until the
Special Class A Director Termination Date, the number of
directors to be elected pursuant to this clause (B) will be
eight (8). For purposes of this subparagraph (ii), a
Warrant will not be deemed to be outstanding at such time
as it is either exercisable in accordance with its terms or
deemed not to be outstanding in accordance with the Warrant
Agreement. Also for purposes of this subparagraph (ii),
Debentures will be deemed not outstanding if delivered to
the Trustee (within the meaning of the applicable
Indenture) for cancellation, if the Corporation is
Discharged (within the meaning of the applicable Indenture)
from its obligations with respect thereto or if the
Corporation has satisfied the conditions set forth in
clauses (i) through (v) of Section 7.1(b) of the applicable
Indenture with respect thereto.
(iii)Upon election of the three Special
Class A Directors (as defined herein) by the holders of
Class A Common upon or after the filing of the Restated
Certificate of Incorporation, the term of office of each
such director shall be from the date of such election to
the Special Class A Director Termination Date; provided
that the term of office of each Class A Director elected
-3-
<PAGE>
upon or after the Special Class A Director Termination
Date shall be for a period until the Corporation's next
annual meeting of stockholders and such director's
successor has been duly elected and qualified or until
such director's earlier death, disability, resignation
or removal. Any vacancy occurring on the Board of
Directors on account of the death, disability,
resignation or other termination of a Special Class A
Director prior to the Special Class A Director
Termination Date may be filled only by the affirmative
vote of a majority of the remaining Special Class A
Directors, except that in the event that there are no
remaining Special Class A Directors or in the event of
an election pursuant to Section 223(c) of the Delaware
General Corporation Law to fill any such vacancies, each
such vacancy may be filled only by a vote of the holders of
Class A Common voting as a separate class, and the term of
any director so elected to fill a vacancy shall be until
the Special Class A Director Termination Date or until such
Special Class A Director's earlier death, disability,
resignation or removal.
(iv) Notwithstanding any provision hereof to
the contrary, in any vote by holders of Common Stock with
respect to confirmation of a plan of reorganization of the
Corporation pursuant to a bankruptcy proceeding under the
United States Bankruptcy Code (or any successor statute
thereto), the holders of Class A Common will be entitled to
one vote per share of Class A Common held and the holders
of Class B Common will be entitled to one vote per share of
Class B Common held.
Part 2. Dividends.
---------
When and as dividends are declared on any Common
Stock, whether payable in cash, property or securities of
the Corporation, the holders of Class A Common and the
holders of Class B Common will be entitled to share
equally, share for share, in such dividends, provided that
if dividends are declared which are payable in shares of
Class A Common or Class B Common, dividends will be
declared which are payable at the same rate on each class
of Common Stock, and the dividends payable to holders of
Class A Common will be paid in shares of Class A Common and
the dividends payable to holders of Class B Common will be
paid in shares of Class B Common, provided that, upon the
written request of the holders of a majority of the Class
B Common then outstanding, the dividends payable in shares
of Common Stock to all holders of Class B Common (including
holders not making such request) in connection with any
such dividend will be paid in shares of Class A Common.
-4-
<PAGE>
Part 3. Stock Splits and Combinations.
-----------------------------
If the Corporation in any manner subdivides or
combines the outstanding shares of one class of Common
Stock, the outstanding shares of the other class of Common
Stock will be proportionately subdivided or combined,
provided that, upon the written request of the holders of
a majority of the Class B Common then outstanding, the
shares of Common Stock to be issued to all holders of Class
B Common (including holders not making such request) in
connection with such subdivision will be shares of Class A
Common.
Part 4. Conversion.
----------
4A. Voluntary Conversion of Class B Common. Each
record holder of Class B Common is entitled at any time and
from time to time to convert any or all of the shares of
such holder's Class B Common into an equal number of shares
of Class A Common.
4B. Automatic Conversion of Class B Common Upon
Transfer. Except in connection with an Exempt Transfer,
upon the sale, assignment, conveyance, pledge or other
transfer (a "transfer") of any shares of Class B Common,
all shares of Class B Common being so transferred will be
converted automatically into an equal number of shares of
Class A Common. As used herein, the term "Exempt Transfer"
means:
(i) any bona fide pledge of Class B Common to
a bank or other financial institution, provided that no
foreclosure occurs;
(ii) any transfer of Class B Common (a) by will
or pursuant to the applicable laws of descent and
distribution, (b) to the spouse, ancestors or lineal
descendants (whether natural or adopted) of the
transferring holder of Class B Common, (c) to any
corporation, partnership or trust in which the transferring
holder and other persons referred to in clause (b) are the
holders of all of the outstanding capital stock other than
directors' qualifying shares (in the case of a transfer to
a corporation), the sole partners (in the case of a
transfer to a partnership), and the sole beneficiaries (in
the case of a transfer to a trust), provided that in the
event that the transferring holder and such other persons
cease at any time to be the sole holders of such capital
stock, the sole partners or the sole beneficiaries, as the
case may be, the shares of Class B Common then held by such
corporation, partnership or trust shall be automatically
converted into an equal number of shares of Class A Common
or (d) to any Person who (1) is a holder of Class B Common
on the date of the filing of the Restated Certificate of
Incorporation or on the date of such transfer (except
pursuant to a pledge thereof) or (2) would be a permitted
-5-
<PAGE>
transferee of any Person described in (1) foregoing in an
Exempt Transfer described in (b) or (c) foregoing or (iii)
below; or
(iii)any transfer of Class B Common by a
corporation, partnership or trust (which in each case is
then eligible to hold Class B Common without automatic
conversion to Class A Common pursuant to (ii)(c) above) to
one or more of its stockholders (other than stockholders
holding only directors' qualifying shares), partners or
beneficiaries, as the case may be, provided that, (a) in
the case of a transfer by any corporation which has a
class of equity securities registered under the Securities
Exchange Act of 1934, as amended, at the time of such
transfer, the transferee owns of record at least 10% of
the equity securities so registered at the time of such
transfer and (b) in the case of Mid-America Group, Ltd.
only Permitted Transfers shall be Exempt Transfers.
4C. Automatic Conversion of Class B Common Upon
Certain Other Events. All outstanding shares of Class B
Common will be converted automatically into an equal number
of shares of Class A Common upon the first to occur of:
(i) July 31, 1995, but only if the Closing
Price (as defined herein) of the Class A Common has not
equalled or exceeded $15.25 per share (adjusted
proportionately for stock splits, stock combinations,
reorganizations, reclassifications of shares, stock
dividends and similar transactions affecting the Class A
Common after the date of the filing of this Restated
Certificate of Incorporation) on a total of twenty or more
Trading Days (as defined herein) (excluding for such
purposes any Trading Day on which the Corporation has
purchased shares of Class A Common Stock in the over-the-
counter market, on the NASDAQ system, or on the exchange on
which such stock is then listed) if any, during any thirty
consecutive Trading Days occurring on or prior to July 31,
1995; or
(ii) the close of business on the day on
which the holders of a majority of the shares of Class B
Common then outstanding have delivered written notice to the
Corporation's secretary electing that all outstanding
shares of Class B Common be converted into an equal number
of shares of Class A Common.
4D. Conversion Procedure.
(i) Each conversion of shares of Class B
Common into shares of Class A Common pursuant to paragraph
4A will be effected by the surrender of the certificate or
certificates representing the shares to be converted at the
principal office of the Corporation at any time during
normal business hours, together with a written notice by
-6-
<PAGE>
the holder of such shares to be converted stating that such
holder desires to convert the shares, or a stated number of
the shares, represented by such certificate or certificates
into Class A Common. Any conversion pursuant to paragraph
4B or 4C will be deemed to be effective immediately upon
the occurrence of the event giving rise to such conversion.
Any holder of certificates representing shares of Class B
Common which are automatically converted into Class A
Common pursuant to paragraph 4B or 4C may surrender
pursuant to subparagraph (ii) below the certificates
representing such shares after the occurrence of the event
giving rise to such conversion in exchange for a new
certificate representing shares of Class A Common into
which such Class B Common was converted.
(ii) Promptly after the surrender of
certificates representing shares of Class B Common being
converted pursuant to paragraph 4A, 4B or 4C (and, in the
case of a conversion pursuant to paragraph 4A, the receipt
of written notice specifying the number of shares being
converted), the Corporation will issue and deliver in
accordance with the surrendering holder's instructions (a)
the certificate or certificates for the Class A Common
issuable upon such conversion and (b) in the case of a
conversion pursuant to paragraphs 4A or 4B, a certificate
representing any Class B Common which was represented by
the certificate or certificates delivered to the
Corporation in connection with such conversion but which
was not converted.
(iii) The issuance of certificates for Class
A Common upon conversion of Class B Common will be made
without charge to the holder of such shares for any issuance
tax in respect thereof (unless such holder of the Class B
Common being converted directs the Corporation to issue such
certificate or certificates to any person other than such
holder, in which case such holder will pay any transfer tax
arising out of the issuance of such certificate), or other
costs incurred by the Corporation in connection with such
conversion and the related issuance of Class A Common.
(iv) Upon the conversion of any Class B
Common, such shares will be canceled and will not be reissued.
Part 5. No Additional Issuance.
----------------------
The Corporation will not issue any additional shares
of Class B Common without the consent of the holders of a
majority of the then outstanding shares of Class B Common
Stock and without the approval of the Majority Directors
(as defined below), other than issuances of Class B Common
with respect to the then outstanding shares of Class B
Common by way of stock dividend or stock split.
-7-
<PAGE>
Part 6. Efforts Regarding Listing/Quotation.
-----------------------------------
If the shares of Class A Common cease to be eligible
to be listed on a United States securities exchange or
quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ System"), the
Corporation will use reasonable efforts to have the Class
A Common listed (or continued to be listed) on a United
States securities exchange or qualified for trading on the
NASDAQ System.
WARRANTS
The Corporation may issue certain Redeemable
Exchangeable Warrants (the "Warrants") pursuant to the
Warrant Agreement. No Warrant shall entitle the holder
thereof to vote at a meeting of stockholders of the
Corporation or to vote for any purpose, except as required
by law (provided that this sentence will not limit the
rights of the holders of the Warrants pursuant to
Section 16A of the Warrant Agreement).
So long as any of the Warrants are outstanding and
not exercisable (in each case as determined in accordance
with the Warrant Agreement), but only until the Special
Class A Director Termination Date, if earlier:
1. The Corporation shall not effect a Change of
Control Event unless (a) if approval thereof by the Board
of Directors is required pursuant to the Delaware General
Corporation Law, pursuant hereto or pursuant to the
Corporation's bylaws, such Change of Control Event is
approved by the Majority Directors and (b) distributions,
if any, made pursuant to or in connection with such Change
of Control Event in respect of or in exchange for any
shares of Class A Common or Class B Common are made (i) pro
rata to holders thereof according to the number of shares
of Class A Common and Class B Common held by such holders
or (ii) pursuant to offers to the holders thereof which are
made pro rata according to the number of shares of Class A
Common and Class B Common held by such holders. For
purposes of the foregoing, the holder of an option,
security or other right exercisable or exchangeable for or
convertible into shares of Class A Common may, at the
discretion of the Board of Directors, be regarded as a
holder of the shares of Class A Common obtainable upon
exercise, conversion or exchange thereof;
2. The Corporation shall not, except upon
exercise, distribution on or conversion of or in exchange
for securities of the Corporation or other rights either
outstanding on the date of filing of the Restated
Certificate of Incorporation, issued in connection with the
financial restructuring of the Corporation pursuant to
-8-
<PAGE>
which the Warrants were initially issued or issued
thereafter in a manner consistent with the terms of this
provision, or except pursuant to employee or director plans
which are either in effect on the date hereof, permitted
pursuant to the terms of the Indentures or approved by the
Majority Directors, issue (a) shares of Common Stock for
consideration per share (or voting securities other than
Common Stock for consideration per unit possessing one vote
in the election of directors) less than the Exchange Price
at such time (it being understood that the consideration
per share in an underwritten public offering will include
the aggregate amount of any underwriter's commission and
discount per share), (b) any securities convertible into
shares of Common Stock with a conversion price (or voting
securities other than Common Stock for consideration per
unit possessing one vote in the election of directors) less
than the Exchange Price at the time of issuance of such
securities, or (c) any shares of capital stock with greater
than one vote per share (or which may, upon the occurrence
of an event, have greater than one vote per share), unless
in the case of any of (a), (b) or (c) foregoing with the
approval of the Majority Directors;
3. The Corporation shall not amend the terms of
Article Four of this Amended and Restated Certificate of
Incorporation in a manner adverse to the interests of the
holders of the Warrants without the prior consent of
holders of a majority of the Warrants which are then
outstanding and not exercisable in accordance with the
terms of the Warrant Agreement, provided that nothing
herein shall restrict the Corporation from at any time
changing, and no consent of the holders of the Warrants
will be required in connection with any change at any time
of, the number of authorized shares of any class of capital
stock of the Corporation; and
4. The Board of Directors shall not authorize the
commencement of any proceeding with respect to the
Corporation under Chapter 7 or Chapter 11 of the United
States Bankruptcy Code or any successor thereto without the
prior approval of either (a) the Majority Directors or
(b) all directors then serving on the Board of Directors
other than the Special Class A Directors.
DEFINITIONS
For purposes of this Amended and Restated
Certificate of Incorporation:
"Change of Control Event" means (i) a merger,
consolidation or similar transaction involving the
Corporation if either (a) Persons who beneficially held or
controlled the Corporation's voting stock immediately prior
to such transaction do not beneficially hold or control
immediately after such transaction securities which possess
-9-
<PAGE>
in the aggregate the voting power to elect a majority of
the surviving entity's or transferee's directors or
(b) after such transaction, a Person or group of Persons
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) would
beneficially hold or control securities which possess in
the aggregate the voting power to elect a majority of the
surviving entity's or transferee's directors, provided that
for such purposes securities or voting power beneficially
held or controlled by such person or group will not be
deemed to include securities or voting power beneficially
held or controlled by any of the following Persons: any
Person who was a beneficial holder of Warrants upon
issuance thereof in the financial restructuring of the
Corporation pursuant to which the Warrants were initially
issued, Grinnell College, MAG, any Control Person, Messrs.
Marvin A. Pomerantz and Warren J. Hayford and their
respective Immediate Family and any Person to which any of
the foregoing would be permitted to transfer shares of
Class B Common Stock in an Exempt Transfer (within the
meaning of subparagraph (ii) or (iii) of Part 4B of the
terms of the Common Stock included in this Article Four,
other than pursuant to clause (a) of such subparagraph
(ii)), (ii) a sale, transfer or other disposition of all or
substantially all of the property, assets or business of
the Corporation or (iii) the filing by the Corporation with
the Secretary of State of Delaware of a certificate of
dissolution pursuant to Section 275 of the General Corporation Law
of Delaware or a similar filing by a successor to the
Corporation pursuant to the corporate law of its state of
incorporation if such successor's state of incorporation is
a state other than Delaware. For purposes hereof, a Person
or group of Persons will be deemed to be a beneficial owner
or holder of securities if such Person or group is such a
beneficial owner thereof as determined pursuant to Rule
13d-3 under the Securities Exchange Act of 1934, as
amended.
"Closing Price" means the average of the closing
prices of sales of Class A Common on all domestic
securities exchanges on which such Class A Common may at
the time be listed (and where such stock is traded on more
than one such exchange, closing prices on a Trading Day
shall be weighted based on the volume of sales of Class A
Common on such exchanges on such Trading Day), or, on any
day on which there has been no sale on any such exchange,
the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, on any day
on which the Class A Common is not so listed, the average
of the representative bid and asked prices quoted in the
NASDAQ System as of the close on such day, or, on any day
on which the Class A Common is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated,
or any similar successor organization. If at any time the
Class A Common is neither listed on any national securities
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<PAGE>
exchange nor quoted in the NASDAQ System or the domestic
over-the-counter market, the "Closing Price" shall be the
fair value thereof determined by the Majority Directors,
which determination shall be conclusive.
"Control Person" means the Executive, his spouse,
any of his children or grandchildren, any trust solely for
the benefit of any of his children or grandchildren, or any
corporation, partnership or other entity or organization
but only so long as more than 50 percent of the voting
power and equity interest of such corporation, partnership
or other entity or organization is held, directly or
indirectly, by the Executive, his spouse, any of his
children or grandchildren or any trust solely for the
benefit of any of his spouse, himself, his children or
grandchildren or any combination of the foregoing.
"Debentures" means the Corporation's 13-1/2% Senior
Subordinated Debentures Due 2003 issued pursuant to an
Indenture dated November 2, 1992 between the Corporation
and Ameritrust Texas National Association and the
Corporation's 10-1/4% Senior Subordinated PIK Notes Due
2001 issued pursuant to an Indenture dated November 2, 1992
between the Corporation and Ameritrust Texas National
Association
"Exchange Price" has the meaning given such term in
the Warrant Agreement.
"Executive" means Marvin A. Pomerantz.
"Immediate Family" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse,
sibling, nephew, niece, mother-in-law, father-in-law, son-
in-law, daughter-in-law, brother-in-law or sister-in-law,
and shall include adoptive relationships.
"Indentures" means the Indenture dated November 2,
1992 between the Corporation and Ameritrust Texas National
Association and the Indenture dated November 2, 1992
between the Corporation and Ameritrust Texas National
Association pursuant to which the Debentures are issued.
"MAG" means Mid-America Group, Ltd., an Iowa
corporation, but only so long as, and only in the event
that, a majority of the voting power to elect directors of
such corporation and a majority of the equity of such
corporation is held beneficially by Marvin A. Pomerantz,
Rose Lee Pomerantz, one or more members of the Immediate
Family of the Executive, any Control Person and/or any
Person to whom Marvin A. Pomerantz, Rose Lee Pomerantz, one
or more members of Immediate Family of the Executive, any
Control Person or Mid-America Group, Ltd. would be
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permitted to transfer shares of Class B Common in an Exempt
Transfer (as defined in subparagraph (ii) or (iii) of Part
4B of the terms of the Common Stock included in Article
Four, other than pursuant to clause (a) of subparagraph
(ii) thereof).
"Majority Directors" means, with respect to any
matter, (i) a majority of all members present and voting
with respect to such matter at a meeting of the Board of
Directors which has been called in accordance with the laws
of the state of incorporation of the Corporation and the
bylaws of the Corporation and (ii) until the Special Class
A Director Termination Date, at least two of the Special
Class A Directors; provided that if one or more of the
Special Class A Directors declines to vote with respect to
such matter or fails to attend the meeting at which such
vote is taken, and such meeting (a) occurs after ten days
notice of such meeting has been given to such Special Class
A Director(s) declining to vote or failing to attend such
meeting and (b) has otherwise been called in accordance
with the laws of the state of incorporation of the
Corporation and the bylaws of the Corporation, the minimum
number of Special Class A Directors pursuant to
(ii) foregoing will be one (1), unless none of such Special
Class A Directors votes with respect to such matter at such
meeting, in which event the minimum number of Special Class
A Directors pursuant to (ii) foregoing will be zero (0);
provided, further, that any matter approved pursuant to a
written consent executed by all members of the Board of
Directors without a meeting will also be deemed to have
been approved by the "Majority Directors."
"Permanent Disability" means such physical or mental
condition of the Executive as is expected to continue
beyond a period of six months and which renders the
Executive incapable of performing any substantial portion
of the services performed by the Executive on the date
hereof, as confirmed by competent medical evidence.
"Permitted Transfer" means any transfer of Common
Stock (i) pursuant to the terms of the Exchange Agreement
dated as of June 25, 1992 among Mid-America Group, Inc.,
Grinnell College, Warren J. Hayford and the Corporation,
(ii) by Mid-America Group, Ltd., a Control Person or an
Estate Planning Transferee (as defined in clause (iv) of
this sentence) at any time after the death or Permanent
Disability of the Executive, (iii) by Mid-America Group,
Ltd., a Control Person or an Estate Planning Transferee at
any time after the termination by the Corporation of the
Executive as Chief Executive Officer of the Corporation or
the involuntary removal of the Executive as Chairman of the
Board of Directors, (iv) by Mid-America Group, Ltd., a
Control Person or an Estate Planning Transferee to any
Control Person or to any member or members of the Immediate
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<PAGE>
Family of the Executive or any trust solely for the benefit
of any such member or members in connection with estate
planning by the Executive, his spouse or any of his
children (any such Immediate Family member transferee or
trust transferee being referred to herein as an "Estate
Planning Transferee"), provided that any such transferee
(whether a Control Person or an Estate Planning Transferee)
agrees in writing, without qualification, not to transfer
such Common Stock prior to the Stock Retention Termination
Date except pursuant to a Permitted Transfer, (v) by Mid-
America Group, Ltd. or a Control Person at any time after
the filing by or against Mid-America Group, Ltd. or such
Control Person, as the case may be, of a proceeding under
any bankruptcy, reorganization, insolvency or similar law,
which proceeding is not dismissed or stayed within 90 days
of such filing (provided that such 90-day waiting period
shall terminate upon the entry in such proceeding of any
order for relief), (vi) by an Estate Planning Transferee at
any time after the filing by or against such Estate
Planning Transferee of a proceeding under any bankruptcy,
reorganization, insolvency or similar law, which proceeding
is not dismissed or stayed within 90 days of such filing
(provided that such 90-day waiting period shall terminate
upon the entry in such proceeding of any order for relief),
(vii) in connection with any foreclosure of any lien
relating to any Pledge, or in connection with any
foreclosure of any tax lien, upon shares of Common Stock
beneficially owned by Mid-America Group, Ltd. or a Control
Person, provided that this clause (vii) shall apply only to
the shares of Common Stock which are the subject of such a
foreclosure, or (viii) in connection with any foreclosure
of any lien relating to any Pledge, or in connection with
any foreclosure of any tax lien, upon shares of Common
Stock beneficially owned by an Estate Planning Transferee,
provided that this clause (viii) shall apply only to the
shares of Common Stock which are the subject of such a
foreclosure. For purposes of this definition of "Permitted
Transfer," "Pledge" means any bona fide pledge of Common
Stock to any bank or other financial institution.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization or
any other entity or organization.
"Restated Certificate of Incorporation" means the
Company's Restated Certificate of Incorporation filed with
the Secretary of State of the State of Delaware on
November 2, 1992.
"Stock Retention Termination Date" means the
earliest of (i) March 31, 1993 if the Restructuring Closing
Date, as defined in the Warrant Agreement, shall not have
occurred prior to such date, (ii) July 31, 1996, (iii) the
date on which all of the Warrants outstanding as determined
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under the terms of the Warrant Agreement shall have become
exercisable, and (iv) the date on which the Warrants are no
longer outstanding as determined under the terms of the
Warrant Agreement.
"Trading Day" means a day on which the principal
national securities exchange on which the Class A Common is
listed or admitted to trading is open for the transaction
of business or, if the Class A Common is not listed or
admitted to trading on any national securities exchange,
any day other than a Saturday, a Sunday, or a day on which
banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Special Class A Directors" means the Class A
Directors serving on the Board of Directors during the
period commencing on the later to occur of the filing of
the Restated Certificate of Incorporation and the date of
initial issuance of Warrants pursuant to the Warrant
Agreement and ending immediately prior to the Special Class
A Director Termination Date.
"Warrant Agreement" means the Warrant Agreement
dated November 2, 1992 between the Corporation and Harris
Trust and Savings Bank, an Illinois banking corporation, as
Warrant Agent.
ARTICLE FIVE
------------
If no shares of Class B Common are then outstanding,
the corporation shall not merge or consolidate with or into
any other corporation or corporations, sell all or
substantially all of its assets, liquidate, dissolve or
wind up, unless such merger, consolidation, sale,
liquidation, dissolution or winding up has been approved by
the affirmative vote of the holders of 66-2/3% of the
outstanding Class A Common. Such vote shall be in addition
to any other vote required by law or this Amended and
Restated Certificate of Incorporation. Any amendment of
this Article Five shall require the affirmative vote of the
holders of Common Stock, voting together as a single class,
representing at least 66-2/3% of the total number of votes
entitled to be cast by all holders of outstanding Common
Stock or, if no Class B Common Stock is then outstanding,
by the holders of 66-2/3% of the outstanding Class A
Common. Such vote shall be in addition to any other vote
required by law or this Amended and Restated Certificate of
Incorporation.
ARTICLE SIX
-----------
The Corporation is to have perpetual existence.
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ARTICLE SEVEN
-------------
In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized to make, alter, amend or repeal the bylaws of
the Corporation. If no shares of Class B Common are then
outstanding, any alteration, amendment or repeal of the
bylaws of the Corporation by the stockholders of the
Corporation shall require the affirmative vote of two-
thirds of the then outstanding shares of the capital stock
of the Corporation entitled to vote on such alteration,
amendment or repeal.
ARTICLE EIGHT
-------------
Meetings of stockholders may be held within or
without the State of Delaware, as the bylaws may provide.
The books of the Corporation may be kept outside the State
of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the
bylaws of the Corporation. Elections of directors need not
be by written ballot unless the bylaws of the Corporation
so provide.
ARTICLE NINE
------------
Part 1. Limitation of Liability.
(i) To the fullest extent permitted by the
Delaware General Corporation Law as it now exists or may
hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights
than permitted prior thereto), no director of the
Corporation shall be liable to the Corporation or its
stockholders for monetary damages arising from a breach of
fiduciary duty owed to the Corporation or its stockholders.
(ii) Any repeal or modification of the
foregoing paragraph by the stockholders of the Corporation
shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such
repeal or modification.
Part 2. Right to Indemnification.
Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved
(including involvement as a witness) in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of
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the fact that he or she is or was a director or officer of
the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect
to an employee benefit plan (hereinafter, an "indemnitee"),
whether the basis of such proceeding is alleged action in
an official capacity as a director or officer or in any
other capacity while serving as a director or officer,
shall be indemnified and held harmless by the Corporation
to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall
continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided
in Part 3 hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify
any such indemnitee in connection with a proceeding (or
part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of
Directors. The right to indemnification conferred in this
Part 2 shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final
disposition (hereinafter an "advancement of expenses");
provided, however, that, if and to the extent that the
Delaware General Corporation Law requires, an advancement
of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to
the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to
repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is
no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be
indemnified for such expenses under this Part 2 or
otherwise.
Part 3. Right of Indemnitee to Bring Suit.
If a claim for indemnification (including the
advancement of expenses) under Part 2 is not paid in full
by the Corporation within 45 days after a written claim has
been received by the Corporation, except in the case of a
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claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may
at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim. If successful
in whole or in part in any such suit, or in a suit brought
by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of procuring
or defending such suit. In any suit brought by the
indemnitee to enforce a right to indemnification hereunder
(but not in a suit brought by the indemnitee to enforce a
right to an advancement of expenses) it shall be a defense
that the indemnitee has not met the applicable standard of
conduct set forth in the Delaware General Corporation Law.
In any suit by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon
a final adjudication that the indemnitee has not met the
applicable standard of conduct set forth in the Delaware
General Corporation Law. Neither the failure of the
Corporation (including its board of directors, independent
legal counsel, or its stockholders) to have made a
determination prior to the commencement of any such suit
that indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including the Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create
a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a
suit brought by the indemnitee, be a defense to such suit.
In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this
Article Nine or otherwise shall be on the Corporation.
Part 4. Service for Subsidiaries.
Any person serving as a director, officer, employee
or agent of another corporation, partnership, joint venture
or other enterprise, at least 50% of whose equity interests
are owned by the Corporation (hereinafter a "subsidiary"),
shall be conclusively presumed to be serving in such
capacity at the request of the Corporation.
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Part 5. Reliance.
Persons who after the date of the adoption of this
provision become or remain directors or officers of the
Corporation or who, while a director or officer of the
Corporation, become or remain a director, officer, employee
or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advancement of
expenses and other rights contained in this Article Nine in
entering into or continuing such service. The rights to
indemnification and to the advancement of expenses
conferred in this Article Nine shall apply to claims made
against an indemnitee arising out of acts or omissions
which occurred or occur both prior and subsequent to the
adoption hereof.
Part 6. Non-Exclusivity of Rights.
The rights to indemnification and to the advancement
of expenses conferred in this Article Nine shall not be
exclusive of any other right which any person may have or
hereafter acquire under this Amended and Restated
Certificate of Incorporation or under any statute, bylaw,
agreement, vote of stockholders or disinterested directors
or otherwise.
Part 7. Insurance.
The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer,
employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether
or not the Corporation would have the power to indemnify
such person against such expenses, liability or loss under
the Delaware General Corporation Law.
Part 8. Indemnification of Employees and Agents
of the Corporation.
The Corporation may, to the extent authorized from
time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses, to any
employee or agent of the Corporation to the fullest extent
of the provisions of this Article 9 with respect to the
indemnification and advancement of expenses of directors
and officers of the Corporation.
ARTICLE TEN
-----------
Except as otherwise provided herein, the Corporation
reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated
Certificate of Incorporation in the manner now or hereafter
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prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this
reservation. Notwithstanding anything contained in this
Amended and Restated Certificate of Incorporation to the
contrary, if no shares of Class B Common are then
outstanding, ARTICLE SEVEN, this ARTICLE TEN, and ARTICLE
ELEVEN of this Amended and Restated Certificate of
Incorporation shall not be altered, amended or repealed and
no provision inconsistent therewith shall be adopted
without the affirmative vote of the holders of at least
two-thirds of the then outstanding shares of the capital
stock of the Corporation entitled to vote on such
alteration, amendment, repeal or adoption.
ARTICLE ELEVEN
--------------
Subject to the rights of the holders of any series
of Preferred Stock, if no shares of Class B Common are then
outstanding, (i) any action required or permitted to be
taken by the stockholders of the Corporation must be
effected at an annual or special meeting of stockholders of
the Corporation and may not be taken or effected without a
meeting of the stockholders of the Corporation, (ii) the
stockholders of the Corporation may not take any action by
consent in writing in lieu of a meeting of the stockholders
of the Corporation, and (iii) special meetings of
stockholders of the Corporation may be called only by the
chairman of the Board of Directors, or the Board of
Directors pursuant to a resolution adopted by the
affirmative vote of the majority of the total number of
directors then in office.
ARTICLE TWELVE
--------------
The corporation expressly elects to be governed by
Section 203 of the General Corporation Law of the State of
Delaware.
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______________________________________________________________
______________________________________________________________
GAYLORD CONTAINER CORPORATION
CREDIT AGREEMENT
Dated as of November 17, 1986
and Amended and Restated as of June 30, 1995
with
The Financial Institutions Signatory Hereto,
BANKERS TRUST COMPANY,
As Agent and Co-Manager
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Manager
______________________________________________________________
______________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
The Table of Contents and Article and Section headings used in
this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2 Accounting Terms; Financial Statements. . . . . . . . 29
ARTICLE II
LOAN PROVISIONS
Section 2.1 Loan Commitments. . . . . . . . . . . . . . . . . . . 30
Section 2.2 Notes . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.3 Borrowing Options . . . . . . . . . . . . . . . . . . 36
Section 2.4 Minimum Amount of Each Borrowing. . . . . . . . . . . 36
Section 2.5 Notice of Borrowing; Roll-Over
Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.6 Disbursement of Funds . . . . . . . . . . . . . . . . 38
Section 2.7 Interest. . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.8 Letters of Credit . . . . . . . . . . . . . . . . . . 40
Section 2.9 Interest Periods. . . . . . . . . . . . . . . . . . . 47
Section 2.10 Increased Costs, Illegality, etc. . . . . . . . . . . 48
Section 2.11 Compensation. . . . . . . . . . . . . . . . . . . . . 51
Section 2.12 Responsibility for Making Loans . . . . . . . . . . . 51
Section 2.13 Swing Line Revolving Loans. . . . . . . . . . . . . . 51
ARTICLE III
TERMINATION OF COMMITMENTS, PREPAYMENTS AND FEES
Section 3.1 Mandatory Reduction of the Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.2 Mandatory Reduction of the Standby
Letter of Credit Commitments. . . . . . . . . . . . . . . . . . 56
Section 3.3 Voluntary Reduction of the Commitments. . . . . . . . 56
Section 3.4 Voluntary Prepayments . . . . . . . . . . . . . . . . 57
Section 3.5 Repayments of Amended Revolving Notes . . . . . . . . 57
Section 3.6 Mandatory Prepayments . . . . . . . . . . . . . . . . 58
Section 3.7 Other Provisions With Respect to the
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.8 Order of Prepayments and Payments . . . . . . . . . . 60
Section 3.9 Commitment Fees . . . . . . . . . . . . . . . . . . . 61
Section 3.10 Other Fees. . . . . . . . . . . . . . . . . . . . . . 61
Section 3.11 Net Payments. . . . . . . . . . . . . . . . . . . . . 61
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the
Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower . . . . . . . . 74
Section 5.2 Negative Covenants of the Borrower. . . . . . . . . . 85
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 Intentionally omitted . . . . . . . . . . . . . . . . 95
Section 6.2 Conditions Precedent to Effectiveness of
this Agreement. . . . . . . . . . . . . . . . . . . . 95
Section 6.3 Leasehold Mortgages . . . . . . . . . . . . . . . . . 99
Section 6.4 Conditions to Borrowings Other than
Roll-Over Borrowings. . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . .100
Section 7.2 No Waiver of Events of Default. . . . . . . . . . . .105
ARTICLE VIII
THE AGENT
Section 8.1 Appointment . . . . . . . . . . . . . . . . . . . . .105
Section 8.2 Nature of Duties. . . . . . . . . . . . . . . . . . .105
Section 8.3 Rights, Exculpation, etc. . . . . . . . . . . . . . .106
Section 8.4 Reliance. . . . . . . . . . . . . . . . . . . . . . .106
Section 8.5 Indemnification . . . . . . . . . . . . . . . . . . .106
Section 8.6 The Agent Individually. . . . . . . . . . . . . . . .107
Section 8.7 Resignation by the Agent. . . . . . . . . . . . . . .107
Section 8.8 Removal . . . . . . . . . . . . . . . . . . . . . . .108
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver; Modifications in Writing . . . . . . . . .108
Section 9.2 Further Assurances. . . . . . . . . . . . . . . . . .110
Section 9.3 Notices, etc. . . . . . . . . . . . . . . . . . . . .110
Section 9.4 Costs, Expenses and Taxes . . . . . . . . . . . . . .112
Section 9.5 Confirmations . . . . . . . . . . . . . . . . . . . .114
Section 9.6 Transfers of Notes. . . . . . . . . . . . . . . . . .114
Section 9.7 Adjustment; Set-Off . . . . . . . . . . . . . . . . .114
Section 9.8 Execution in Counterparts . . . . . . . . . . . . . .116
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Section 9.9 Binding Effect; Assignment; Addition and
Substitution of Banks . . . . . . . . . . . . . . . .116
Section 9.10 Consent to Jurisdiction . . . . . . . . . . . . . . .119
Section 9.11 Mortgage Covenants of Agent and Banks . . . . . . . .119
Section 9.12 Release of Collateral . . . . . . . . . . . . . . . .119
Section 9.13 Governing Law . . . . . . . . . . . . . . . . . . . .120
Section 9.14 Severability of Provisions. . . . . . . . . . . . . .120
Section 9.15 Headings. . . . . . . . . . . . . . . . . . . . . . .120
Section 9.16 No Association. . . . . . . . . . . . . . . . . . . .120
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SCHEDULES
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Schedule 1.1(a) Commitment Amounts
Schedule 1.1(b) Industrial Development and Pollution Control
Bond
Schedule 1.1(c) Indebtedness, Financing Lease Obligations and
Sale and Leaseback Arrangements
Schedule 1.1(d) Permitted Liens
Schedule 1.1(f) Mortgages
Schedule 3.2 Mandatory Reductions of Standby Letter of
Credit Commitments
Schedule 4.1(b) Matters with regard to Stock of the Borrower
Schedule 4.1(d) Conflicting Agreements
Schedule 4.1(f) Indebtedness for Money Borrowed
Schedule 4.1(h) Title to Properties
Schedule 4.1(i) Litigation
Schedule 4.1(j) Governmental Consents
Schedule 4.1(k) Financial Statement
Schedule 4.1(l) Material Adverse Changes
Schedule 4.1(o) ERISA
Schedule 4.1(s) Finder's Fees
Schedule 4.1(t) Employee Controversies
Schedule 4.1(u) Environmental Matters
Schedule 4.1(v) Deposit Accounts
Schedule 5.1(i) Insurance
Schedule 5.1(r) Updated Title Insurance Properties
Schedule 5.2(p) Take or Pay Contracts
EXHIBITS
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Exhibit A Form of Amended Term Note
Exhibit B Form of Amended Revolving Note
Exhibit C Form of Amended Standby Letter of Credit Note
Exhibit D Form of Accountant's Letter
Exhibit E Form of Officer's Certificate Under Section
5.1(a)(ii)
Exhibit F Form Officer's Certificate Under Section
5.1(a)(iii)
Exhibit G Form of Officer's Certificate Under section
6.2(n)
Exhibit H Form of Opinion of Counsel To Borrower
Exhibit I Form of Reliance Letter
Exhibit J Intentionally Omitted
Exhibit K Intentionally Omitted
Exhibit L Form of Assignment Agreement
Exhibit AA 12-3/4% Indenture
Exhibit BB 11-1/2% Indenture
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AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement"), dated as of November 17, 1986, and amended and
restated as of June 30, 1995, is made among Gaylord Container
Corporation, a Delaware corporation,(the "Borrower"), the
undersigned financial institutions in their capacities as
lenders hereunder (collectively, the "Banks," and each
individually, a "Bank"), and Bankers Trust Company, as both
agent (together with any successor agent appointed hereunder,
the "Agent") and co-manager for the Banks, and Wells Fargo Bank,
National Association as co-manager for the Banks.
W I T N E S S E T H:
WHEREAS, the Borrower initially entered into a credit
agreement on November 17, 1986 (the "Gaylord Loan Agreement")
with the banks then signatory thereto in order to provide (i) a
term loan facility in the aggregate principal amount of $165
million, (ii) a revolving credit facility in an aggregate amount
not to exceed $20 million at any time outstanding, and (iii) a
capital expenditure loan facility in an aggregate amount not to
exceed $70 million; and
WHEREAS, the Borrower and the banks then signatory
thereto subsequently entered into various amendments to the
Gaylord Loan Agreement and on March 29, 1988 the Borrower and
the banks then signatory thereto amended and restated the
Gaylord Loan Agreement (such agreement, as amended and restated,
is referred to herein as the "Initial Agreement") in order to
provide (i) a term loan facility in the aggregate principal
amount of $205 million which was used, among other things, for
the acquisition of certain assets of the Container Products
Division (the "Division") of Fibreboard Corporation, a Delaware
corporation ("Fibreboard"), (ii) a revolving credit facility in
an aggregate amount not to exceed $80 million at any time
outstanding, (iii) a capital expenditure loan facility in an
aggregate amount not to exceed $130 million, and (iv) a standby
letter of credit facility in the aggregate principal amount not
to exceed $34 million; and
WHEREAS, on May 24, 1988 the Borrower and the banks then
signatory thereto amended and restated the Initial Agreement
(such agreement, as amended and restated and further amended, is
referred to herein as the "Second Agreement") in order to
provide (i) a term loan facility in the aggregate principal
amount of $50 million to be used for general corporate purposes,
(ii) a revolving credit facility in an aggregate amount not to
exceed $80 million at any time outstanding, (iii) a capital
expenditure loan facility in an aggregate amount not to exceed
<PAGE>
$130 million, and (iv) a standby letter of credit facility in
the aggregate principal amount not to exceed $33 million; and
WHEREAS, on June 28, 1991 the Borrower and the banks then
signatory thereto amended and restated the Second Agreement
(such agreement, as amended and restated and further amended, is
referred to herein as the "Third Agreement") in order to provide
(i) a term loan facility in the aggregate principal amount of
$28,571,428.58 to be used for general corporate purposes, (ii)
a revolving credit facility in an aggregate principal amount not
to exceed $80 million at any time outstanding to be used for
working capital and other general corporate purposes, (iii) a
capital expenditure loan facility in an aggregate principal
amount not to exceed $127,736,875, (iv) a standby letter of
credit facility in an aggregate principal amount not to exceed
$17,923,794.83, and (v) an additional revolving credit facility
in an aggregate principal amount not to exceed $25 million at
any time outstanding to be used for working capital purposes;
and
WHEREAS, on July 31, 1992 the Borrower and the banks then
signatory thereto amended and restated the Third Agreement (such
agreement, as amended and restated and further amended, is
referred to herein as the "Fourth Agreement") in order to
provide (A) prior to a financial restructuring of the Borrower
for the following credit facilities: (i) a term loan facility in
the aggregate principal amount of $28,571,428.58, (ii) a
revolving credit facility in an aggregate amount not to exceed
$80 million at any time outstanding to be used for working
capital and general corporate purposes, (iii) a capital
expenditure loan facility in an aggregate principal amount not
to exceed $121,918,750.50, (iv) a standby letter of credit
facility in an aggregate amount not to exceed $14,513,612.30,
and (v) an additional revolving credit facility in an aggregate
principal amount not to exceed $25 million at any time
outstanding to be used for working capital purposes and (B)
following the financial restructuring of the Borrower for the
following credit facilities: (i) a term loan facility in the
aggregate principal amount $175 million, (ii) a revolving credit
facility in an aggregate principal amount of $66 million and
(iii) a standby letter of credit facility in an aggregate
principal amount of $25,699,711.98;
WHEREAS, the Borrower and the banks then signatory
thereto amended the Fourth Agreement pursuant to (i) the First
Amendment to Amended and Restated Credit Agreement dated as of
April 28, 1993, (ii) the Second Amendment to Amended and
Restated Credit Agreement dated as of December 8, 1993,
(iii) the Third Amendment to Amended and Restated Credit
Agreement dated as of July 31, 1994, and (iv) the Fourth
Amendment to Amended and Restated Credit Agreement dated as of
January 31, 1995;
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WHEREAS, the Borrower has requested that the Fourth
Agreement be further amended in order to (i) increase the
Revolving Loan Commitment to $175 million (including increasing
the sub-limit for Revolving Loan Letters of Credit), (ii) extend
the maturity of the Revolving Loan Commitment and Standby Letter
of Credit Commitment, and (iii) increase the Swing-Line
Revolving Commitment to $25 million, all as set forth herein,
and the Banks and the Agent are agreeable to such requested
changes;
WHEREAS, the Borrower has requested and the Banks have
agreed to continue their existing commitments under the term
loan facility and the standby letter of credit facility on the
terms and conditions provided herein; and
WHEREAS, the Borrower, the Banks and the Agent have
determined that the amendments and modifications desired to be
made are so numerous as to make it desirable for the sake of
convenience to amend and restate the Fourth Agreement in its
entirety as herein provided;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Definitions. As used herein, and unless
the context requires a different meaning, the following terms
have the meanings indicated:
"Accounts Receivable" means presently existing and
hereafter arising or acquired accounts receivable, notes,
drafts, acceptances, choses in action and other forms of
obligations and receivables relating in any way to Inventory or
arising from the sale of Inventory or the rendering of services
by the Borrower or howsoever otherwise arising, including the
right to payment of any interest or finance charges with respect
thereto and all proceeds of insurance with respect thereto,
together with all merchandise represented by any of the Accounts
Receivable, all of the Borrower's rights as an unpaid vendor,
all pledged assets and letters of credit, guaranty claims, liens
and security interests held by or granted to the Borrower to
secure payment of any Accounts Receivable and all books,
customer lists, ledgers, records and files (whether written or
stored electronically) relating to any of the foregoing.
"Acquisition" means the acquisition on March 29, 1988 by
the Borrower from Fibreboard of certain assets of the Division.
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"Adjusted Consolidated Net Worth" means, as of any date
of determination thereof, the Consolidated Net Worth of the
Borrower, adjusted to exclude from the calculation thereof any
impact thereon caused by the application of FASB 87 and/or FASB
106 to the Borrower beyond that reflected on the Borrower's
financial statements as of the end of the Borrower's Fiscal Year
ended in September, 1993 and for the Fiscal Year then ended.
"Affiliate" means, with respect to any Person, any Person
or group acting in concert in respect of the Person in question
that, directly or indirectly, controls or is controlled by or is
under common control with such Person. For the purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with"), as used
with respect to any Person or group of Persons, shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of such Person,
whether through (i) the ownership of voting securities, or (ii)
by contract or otherwise. Neither BT nor Bankers Trust New York
Corporation nor any of their respective Subsidiaries nor any
other Bank or its Subsidiaries and any corporation of which any
Bank is a Subsidiary shall, for purposes of this Agreement, be
deemed to be Affiliates of the Borrower or any of its
Subsidiaries.
"Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Agreement" means this Credit Agreement, as the same may
at any time be amended or modified and in effect.
"Amended Revolving Note" and "Amended Revolving Notes"
have the meanings specified in Section 2.2(b).
"Amended Standby Letter of Credit Note" and "Amended
Standby Letter of Credit Notes" have the meanings specified in
Section 2.2(c).
"Amended Term Note" and "Amended Term Notes" have the
meanings specified in Section 2.2(a).
"Amendments" has the meaning assigned to that term in
Section 6.2(e).
"Assignees" has the meaning assigned to that term in
Section 9.9.
"Average Daily Cash and Cash Equivalents" means, for any
period of time, the average aggregate daily amount of cash and
cash equivalents of the Borrower during such period of time.
"Average Daily Revolver Availability" means, for any
period of time, the average daily amount during such period of
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time (as calculated by the Agent) by which (a) $175 million
minus any permanent reductions in the Revolving Loan Commitments
which have been made exceeds (b) the aggregate daily amount
(calculated as at the close of each Business Day) during such
period of (i) the outstanding principal balance of Revolving
Loans plus (ii) the undrawn face amount of outstanding Revolving
Loan Letters of Credit.
"Bankruptcy Code" means Title I of the Bankruptcy Reform
Act of 1978, as amended, set forth in Section 101 et seq. of
Title 11 of the United States Code and applicable portions of
Titles 18 and 28 of the United States Code, as amended.
"Banks" and "Bank" have the respective meanings assigned
to those terms in the introduction to this Agreement.
"Basic Agreements" means, collectively, this Agreement,
the Security Agreement, the Mortgages and the Pledge Agreement,
but shall exclude any such agreement from and after the date
upon which such agreement terminates by its terms.
"Board" means the Board of Governors of the Federal
Reserve System.
"Borrower" has the meaning assigned to that term in the
introduction to this Agreement.
"Borrowing" means the incurrence of one Type of Loan
(including a Roll-Over Borrowing) on a given date pursuant to
Section 2.5.
"Borrowing Margins" and "Borrowing Margin" mean, respec-
tively (i) the borrowing margins referred to in Sections 2.7(a),
(b), (c) and (d), collectively, and (ii) any one of such
borrowing margins.
"BT" means Bankers Trust Company, a New York banking
corporation.
"Business Day" means (i) a day on which banks in Chicago,
Illinois and New York, New York are not authorized or required
to be closed, and (ii) with respect to a Eurodollar Rate Loan,
also a day on which dealings in foreign currencies and exchange
between banks may be carried out in London, England and the
Cayman Islands.
"Capital Expenditure Letter of Credit" means the standby
letter of credit issued by the Agent on behalf of the Banks for
the account of the Borrower in the original face amount of
$18,105,000 in connection with the issuance by the Borrower to
the Export-Import Bank of the United States of a promissory note
in the original stated principal amount of $17 million, and any
replacements or substitutions thereof as provided in Section 2.8.
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The Capital Expenditure Letter of Credit shall be separate
from the Purchase Agreement Letters of Credit and Revolving Loan
Letters of Credit.
"Capital Expenditures" means, without duplication, with
respect to any Person for a given Fiscal Year any amounts
expended on a cash basis during such Fiscal Year, as the case
may be, for any purchase or other acquisition for value of any
asset or improvement that is classified on a consolidated
balance sheet of such Person prepared in accordance with
generally accepted accounting principles as a fixed or capital
asset, including, without limitation, the direct or indirect
acquisition of such assets or improvements by way of increased
product or service charges, offset items or otherwise, and shall
include Financing Lease Obligations.
"Cash Interest Expense" has the meaning assigned to that
term in Section 5.1(l).
"CD Rate" means, with respect to each Interest Period to
be applicable to a CD Rate Loan, the sum (rounded upward to the
nearest 1/100th of 1%) of (i) the rate obtained by dividing (a)
the Certificate of Deposit Rate for such Interest Period by (b)
a percentage equal to 100% minus the stated maximum rate
(expressed as a percentage) of all reserve requirements as
specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves)
that would be applicable on the first day of such Interest
Period to a negotiable certificate of deposit of comparable size
and with maturity equal to such Interest Period of any member
bank of the Federal Reserve System, plus (ii) the then average
daily net annual assessment payable by the Reference Banks to
the Federal Deposit Insurance Corporation for insuring such
certificates of deposit rounded upward to the nearest 1/100th of
1% at the office of each Reference Bank in the United States of
America during the most recent period for which such rate has
been determined prior to the commencement of the relevant
Interest Period. The determination of the CD Rate by the Agent
shall be conclusive and binding on the Borrower absent manifest
error.
"CD Rate Loan" means any Loan which bears interest at a
rate determined with reference to the CD Rate.
"CD Rate Revolving Loan" means a Revolving Loan or any
portion thereof during any period in which it or any such
portion of it bears interest at the CD Rate.
"CD Rate Standby Letter of Credit Loan" means a Standby
Letter of Credit Loan or any portion thereof during any period
in which it or any such portion of it bears interest at the CD
Rate.
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"CD Rate Term Loan" means the Term Loan or any portion
thereof during any period in which it or any such portion of it
bears interest at a rate determined with reference to the CD
Rate.
"Certificate of Deposit Rate" means the arithmetic
average (rounded upward to the nearest 1/100th of 1%) of the
consensus bid rate determined by each Reference Bank for the bid
rates per annum, at 10:00 A.M. (New York time) on the first day
of the Interest Period to be applicable to a CD Rate Loan for
which such Certificate of Deposit Rate is to be applicable, of
two or more New York or Chicago, as the case may be, certificate
of deposit dealers of recognized standing selected by such
Reference Bank in New York, New York or Chicago, Illinois, as
the case may be, for the purchase of certificates of deposit
issued by such Reference Bank in an amount approximately
comparable to the principal amount of the CD Rate Loan of such
Reference Bank for which such Certificate of Deposit Rate is to
be applicable and with a maturity equal to the Interest Period
applicable to such CD Rate Loan, provided that if any Reference
Bank fails to provide the Agent in a timely fashion with its
aforesaid rate, then the Certificate of Deposit Rate shall equal
the arithmetic average of the rates provided to the Agent by the
other Reference Bank or Banks.
"Change in Control" means any Person or group of Persons
(within the meaning of section 13(d)(3) or section 14(d)(2) of
the Exchange Act) acquiring in one or more transactions (a)
beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of fifty percent (50%) or more of the voting power
of the Borrower's Common Stock, or (b) the power to elect a
majority of the Borrower's board of directors; provided,
however, that Common Stock beneficially owned by or voting power
controlled by such Person or group will not be deemed to include
Common Stock beneficially owned or voting power controlled so
long as it is beneficially owned or controlled directly or
indirectly by (1) Mid-America Group, Ltd., an Iowa corporation
(but only so long as Mid-America Group, Ltd. is controlled by
Marvin A. Pomerantz and/or his spouse or heirs), (2) Marvin A.
Pomerantz and/or his spouse or heirs, or (3) Warren J. Hayford
and/or his spouse or heirs.
"Class A Common Stock" means the Borrower's Class A
Common Stock, $.01 par value per share.
"Class B Common Stock" means the Borrower's Class B
Common Stock, $.01 par value per share.
"Code" means the Internal Revenue Code of 1986, as from
time to time amended, including the regulations proposed or
promulgated thereunder, or any successor statute and the regula-
tions proposed or promulgated thereunder.
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"Collateral" means, collectively, all "Collateral" as
defined in the Security Agreement and all securities pledged
under the Pledge Agreement.
"Commitment" means, with respect to each Bank, the
aggregate commitment of such Bank hereunder to make credit
available to the Borrower.
"Commitment Fee" means, collectively, the commitment fees
referred to in Section 3.9(a) and Section 3.9(b).
"Common Stock" means, collectively, the Class A Common
Stock and Class B Common Stock.
"Consolidated Current Assets" means, with respect to any
Person, as at the time any determination thereof is to be made,
the amount, without duplication, that is classified on a
consolidated balance sheet of such Person and its Subsidiaries
as the consolidated current assets of such Person and its
Subsidiaries at such time in accordance with generally accepted
accounting principles.
"Consolidated Current Liabilities" means, with respect to
any Person, as at the time any determination thereof is to be
made, all Indebtedness of such Person and its Subsidiaries,
without duplication, that is classified as consolidated current
liabilities on a consolidated balance sheet of such Person and
its Subsidiaries in accordance with generally accepted
accounting principles, except that there shall be excluded from
Consolidated Current Liabilities fixed sinking fund payments,
mandatory redemptions and other payments of principal
outstanding or due (whether as a result of an acceleration or
otherwise) or other mandatory prepayments required to be made
with respect to any Indebtedness for Money Borrowed within one
year after such date of determination or any other Indebtedness
for Money Borrowed maturing on demand.
"Consolidated Net Income" and "Consolidated Net Loss"
mean, respectively, with respect to any period, the aggregate of
the net income (loss) of the Person in question for such period,
on a consolidated basis, provided that:
(i) the net income (loss) of any Person which is not a
Subsidiary shall be included only to the extent of the amount
of cash dividends or distributions paid to the Person in
question or a consolidated Subsidiary of such Person, and
(ii) the net income (loss) of any Person acquired in a
pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded.
There shall be excluded in computing Consolidated Net Income the
excess (but not the deficit), if any, of (1) any gain which must be
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treated as an extraordinary item under generally accepted
accounting principles or any gain realized upon the sale or
other disposition of any real property or equipment that is not
sold in the ordinary course of business or of any capital stock
of the Borrower or a Subsidiary of the Borrower over (2) any
loss which must be treated as an extraordinary item under
generally accepted accounting principles or any loss realized
upon the sale or other disposition of any real property or
equipment that is not sold in the ordinary course of business or
of any capital stock of the Borrower or a Subsidiary of the
Borrower.
"Consolidated Net Worth" of the Borrower means the total
common stockholders' equity of the Borrower minus the book value
of all assets of the Borrower and its Subsidiaries in excess of
$10 million acquired after the date hereof which would be
treated as intangibles, including, without limitation, goodwill
and unallocated purchase price, under generally accepted
accounting principles.
"Credit Exposure" has the meaning assigned to that term
in Section 9.9.
"Current Ratio" means, with respect to the Borrower, as
at the time any determination thereof is to be made, a ratio the
numerator of which shall be the Consolidated Current Assets of
the Borrower and the denominator of which shall be the
Consolidated Current Liabilities of the Borrower.
"Default Rate" has the meaning assigned to such term in
Section 2.7(d).
"Deposited Monies" has the meaning assigned to that term
in Section 3.7.
"Division" has the meaning assigned to that term in the
introduction to this Agreement.
"EBITDA" means for any applicable period: (a)
Consolidated Net Income or Consolidated Net Loss, as the case
may be, of the Borrower (before income taxes), plus (b) interest
expense (net of interest income on Permitted Investments and
funds held in escrow accounts for the benefit of the Banks
referred to in Section 3.7), plus (c) amortization and
depreciation.
"Eight Year Note" means the $5 million principal amount
10% recoupment note of the Borrower due March 29, 1996.
"Eight Year Note Letter of Credit" means the standby
letter of credit issued by the Agent on behalf of the Banks for
the account of the Borrower in connection with the issuance by
the Borrower to Fibreboard pursuant to the Purchase Agreement of its
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Eight Year Note, and any replacements or substitutions
thereof as provided in Section 2.8.
"11-1/2% Indenture" means the Indenture by and between
the Borrower and Shawmut Bank Connecticut, National Association,
as trustee, pursuant to which the 11-1/2% Senior Notes are
issued, in the form of Exhibit BB hereto, as the same may be
amended, modified or supplemented from time to time in
accordance with the terms of this Agreement.
"11-1/2% Senior Notes" means the 11-1/2% Senior Notes Due
2001 of the Borrower issued pursuant to the 11-1/2% Indenture,
as the same may be amended, modified or supplemented from time
to time in accordance with the terms of this Agreement.
"Employee Benefit Plan" means an "employee benefit plan"
as defined in Section 3(3) of ERISA, which is or has been estab-
lished or maintained, or to which contributions are or have been
made, by the Borrower or any of its Related Persons, any
Subsidiary of the Borrower or Related Persons to such
Subsidiary.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as from time to time amended.
"Eurodollar Rate" means, with respect to each Interest
Period to be applicable to a Eurodollar Rate Loan, the rate
obtained by dividing:
(i) the arithmetic average (rounded upward to the nearest
1/16th of 1%) of the offered quotation to first class banks in
the interbank Eurodollar market by each Reference Bank for
U.S. dollar deposits of amounts in immediately available funds
comparable to the principal amount of the Eurodollar Rate Loan
to be made by such Reference Bank with maturities comparable
to such Interest Period, determined as of 10:00 A.M. (New York
City time) two Business Days prior to the commencement of such
Interest Period, provided that if any Reference Bank fails to
provide the Agent with its aforesaid rate then the Eurodollar
Rate shall be calculated using the rate provided to the Agent
by the other Reference Bank or Banks,
by
(ii) a percentage equal to 100% minus the stated maximum
rate (expressed as a percentage) as prescribed by the Board of
all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves)
applicable on the first day of such Interest Period to any
member bank of the Federal Reserve System in respect of
Eurodollar funding or liabilities.
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The determination of the Eurodollar Rate by the Agent shall be
conclusive and binding on the Borrower absent manifest error.
"Eurodollar Rate Loan" means any Loan which bears
interest at a rate determined with reference to the Eurodollar
Rate.
"Eurodollar Rate Revolving Loan" means a Revolving Loan
or any portion thereof during any period in which it or any such
portion of it bears interest at the Eurodollar Rate.
"Eurodollar Rate Standby Letter of Credit Loan" means a
Standby Letter of Credit Loan or any portion thereof during any
period in which it or any such portion of it bears interest at
the Eurodollar Rate.
"Eurodollar Rate Term Loan" means the Term Loan or any
portion thereof during any period in which it or any such
portion of it bears interest at a rate determined with reference
to the Eurodollar Rate.
"Event of Default" has the meaning assigned to that term
in Section 7.1.
"Excess Cash Flow" means, for any year, an amount equal
to seventy-five percent (75%) of the amount (if any) by which
(a) Average Daily Revolver Availability plus Average Daily Cash
and Cash Equivalents during the Excess Cash Flow Period for the
applicable Fiscal Year exceed (b) $45 million.
"Excess Cash Flow Period" means, for any Fiscal Year of
the Borrower, the Borrower's fourth (4th) Fiscal Quarter of such
Fiscal Year.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"FASB 87" means Statement No. 87 Employers' Accounting
for Pension Plans issued by the Financial Accounting Standards
Board.
"FASB 106" means Statement No. 106 Employers' Accounting
for Post-Retirement Benefits Other than Pensions issued by the
Financial Accounting Standards Board.
"FASB 109" means Statement No. 109 Accounting for Income
Taxes issued by the Financial Accounting Standards Board.
"Federal Funds Rate" means on any one day the weighted
average of the rate on overnight Federal funds transactions with
members of the Federal Reserve System only arranged by Federal
funds brokers as published as of such day by the Federal Reserve
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Bank of New York, or if not so published, the rate then used by
first class banks in extending overnight loans to other first
class banks.
"Fibreboard" has the meaning assigned to that term in the
introduction to this Agreement.
"Financing Lease" means, at the time any determination
thereof is to be made, any lease of property, real or personal,
with respect to which the present value of the minimum rental
commitment is capitalized on the balance sheet of the lessee in
accordance with generally accepted accounting principles.
"Financing Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability
with respect to a Financing Lease which would at such time be so
required to be capitalized on such a balance sheet in accordance
with generally accepted accounting principles.
"FINEX Drafts" means drafts aggregating up to $6.4
million to be drawn by Beloit Rauma S.A. on the Borrower and
purchased by BT.
"Fiscal Month" means the period beginning on the day
following the expiration of the preceding fiscal month,
consisting of either 28 or 35 days and ending on the last Sunday
of a calendar month or the first Sunday of the following month.
"Fiscal Quarter" means, in the case of the first three
fiscal quarters of each Fiscal Year, the period beginning on the
day following the expiration of the preceding fiscal quarter
(with the first fiscal quarter beginning on the day following
the last Sunday in September) and ending on the Sunday thirteen
or fourteen weeks following its beginning and, in the case of
the fourth fiscal quarter, the period beginning on the day
following the expiration of the third fiscal quarter and ending
on the last Sunday in September.
"Fiscal Year" means the twelve consecutive Fiscal Month
period beginning on the day following the expiration of the
preceding fiscal year and ending on the last Sunday of September
of the following year.
"Fourth Agreement" has the meaning assigned to that term
in the introduction to this Agreement.
"Gaylord de Mexico" means Gaylord Container de Mexico
S.A. de C.V., a Mexican maquiladora corporation which is
approximately ninety-nine percent (99%) owned by the Borrower.
"Gaylord Foundation" means Gaylord Container Foundation
of Delaware, a Delaware not-for-profit corporation controlled by
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the Borrower, which corporation shall at all times be exempt
from Federal income tax under Section 501(c)(3) of the Code.
"Gaylord Loan Agreement" has the meaning assigned to that
term in the introduction to this Agreement.
"Gaylord Purchase Agreement" means the Share Purchase
Agreement dated as of September 17, 1986 by and between Gaylord
Holdings Limited and the Borrower with respect to the purchase
by the Borrower of all the outstanding ordinary shares of
Gaylord Container Limited. The Disclosure Schedule (as defined
in the Gaylord Purchase Agreement) shall be deemed to be
included in the Gaylord Purchase Agreement for purposes of this
Agreement.
"GCC" means Gaylord Chemical Corporation, a Delaware
corporation.
"GCC Credit Amount" has the meaning assigned to that term
in Section 5.2(b).
"GMA" means GMA Sales Corporation, a Delaware
corporation.
"Government Acts" has the meaning assigned to that term
in Section 2.8(h).
"GRC" means Gaylord Receivables Corporation, a Delaware
corporation.
"Increase Date" has the meaning assigned to that term in
Section 3.9(a).
"Indebtedness" means, without duplication, all
obligations of the Borrower or a Subsidiary of the Borrower
which are classified upon a balance sheet of the Borrower or
such Subsidiary in accordance with generally accepted accounting
principles as liabilities of the Borrower or such Subsidiary or
indebtedness of any Person for which the Borrower or such
Subsidiary is liable, and in any event shall include all
Indebtedness for Money Borrowed and all of the following:
(i) all indebtedness guaranteed, directly or indirectly, in
any manner by the Borrower or a Subsidiary of the Borrower or
endorsed (other than for collection or deposit in the ordinary
course of business) or discounted with recourse (to the extent
of such recourse);
(ii) all indebtedness in effect guaranteed, directly or
indirectly, by the Borrower or a Subsidiary of the Borrower
through any agreements, whether contingent or otherwise,
(a) to purchase such indebtedness, or
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(b) to purchase, sell or lease (as lessee or lessor)
property, products, materials or supplies, or to
purchase or sell transportation or services, for
the purpose of enabling the debtor to make
payment of such indebtedness or of assuring the
owner of such indebtedness against loss,
regardless of the delivery or non-delivery for
any reason of the property, products, materials
or supplies or the furnishing or nonfurnishing
for any reason of the transportation or services,
except supply contracts for goods or inventory to
be used by the Borrower or a Subsidiary of the
Borrower in its business entered into in the
ordinary course of business of the Borrower or
such Subsidiary and not having a term or, if in
effect on the date hereof, not having a remaining
term (in each case including all extensions or
renewals thereof which are not in the sole
control of the Borrower or any Subsidiary of the
Borrower) in excess of three years, or
(c) other than as permitted by this Agreement, to
make any loan, advance, capital contribution or
other investment in any Person for the purpose of
assuring a minimum equity, asset base, working
capital or other balance sheet condition for any
date, or to provide funds for the payment of any
liability, dividend or stock liquidation payment,
or otherwise to supply funds to or in any manner
invest in any Person;
(iii) all indebtedness of any joint venture, partnership
or other Person for which the Borrower or a Subsidiary of the
Borrower is liable;
(iv) all indebtedness, including Financing Lease
Obligations (to the extent required to be capitalized under
generally accepted accounting principles), of the Borrower or a
Subsidiary of the Borrower created or arising under any
conditional sale agreement or other title retention agreement or
under any Financing Lease, even though the rights and remedies
of the seller or lender or lessor under such agreement or lease
in the event of default are limited to repossession or sale of
property; and
(v) all indebtedness secured by any mortgage, lien
(except liens arising under Section 4-208 of the Uniform
Commercial Code), pledge, charge, security interest, option or
other encumbrance upon or in property owned by the Borrower or
a Subsidiary of the Borrower, even though the Borrower or such
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Subsidiary has not assumed or become liable for the payment of
such indebtedness (other than indebtedness arising in the
ordinary course by reason of liability arising as an endorser of
an instrument).
"Indebtedness for Money Borrowed" means, without dupli-
cation, (i) all Indebtedness of the Borrower or a Subsidiary of
the Borrower, as the case may be, current or funded, secured or
unsecured, incurred in connection with borrowings (including the
sale of debt securities) or the making available of credit or
funds to or on behalf of another Person, including letters of
credit, other than (a) trade and intercompany accounts
receivable owed to the Borrower or any Subsidiary of the Borrower,
and (b) any forbearance by the Borrower or any Subsidiary of the
Borrower with respect to any accounts receivable owed to the
Borrower or any Subsidiary of the Borrower and which forbearance
arises in the customary and ordinary course of the Borrower's
business and the Borrower does not continue such forbearance for
a period in excess of 270 days, (ii) all Indebtedness of the
Borrower or a Subsidiary of the Borrower, as the case may be,
issued, incurred or assumed in respect of the purchase price of
property except for (A) trade and intercompany accounts payable
incurred in the ordinary course of business on customary trade
terms, and (B) amounts owing with respect to the purchase or the
financing of the purchase of property, liability and other
insurance in the ordinary course of business, (iii) all
Financing Lease Obligations of the Borrower or a Subsidiary of
the Borrower, and (iv) any guaranty or other obligation
specified in subparagraph (i) or (ii) of the definition of
"Indebtedness" with respect to Indebtedness of any other Person
of any of the types specified in the preceding clauses (i), (ii)
and (iii).
"Initial Agreement" has the meaning assigned to that term
in the introduction to this Agreement.
"Initial Borrowing" means the first Borrowing by the
Borrower under this Agreement.
"Initial Borrowing Date" means the date of the Initial
Borrowing.
"Interest Coverage Ratio" has the meaning assigned to
that term in Section 5.1(1).
"Interest Period" has the meaning assigned to that term
in Section 2.9.
"Interest Period Termination Date" has the meaning
assigned to that term in Section 2.9(b).
"Interim Maturity Date" means (i) the last day of any
Interest Period, or (ii) in the case of a Prime Rate Loan which the
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Borrower has elected to convert to a Roll-Over Borrowing
constituting a CD Rate Loan or a Eurodollar Rate Loan prior to
the end of the applicable Interest Period with respect to such
Prime Rate Loan, the date of Borrowing specified in the relevant
Notice of Borrowing with respect to such CD Rate Loan or
Eurodollar Rate Loan.
"Inventory" means goods, merchandise and other personal
property, wherever located, now owned or hereafter acquired by
the Borrower of every kind or description which are held for
sale or lease or are furnished or to be furnished under a
contract of service or are raw materials, work in process or
materials used or consumed or to be used or consumed in the
Borrower's business, together with all the containers, packing,
packaging, shipping and similar materials related thereto, and
including inventory on the premises of others and items in
transit, all proceeds of insurance with respect thereto and all
books, customer lists, ledgers, records and files (whether
written or stored electronically) relating to any of the
foregoing.
"Investment" means, with respect to any Person (such
Person being referred to in this definition as the "Investor"),
(i) any amount paid by the Investor, directly or indirectly, or
any transfer of property, directly or indirectly, by the
Investor to any other Person for capital stock of, or as a
capital contribution to, or any amount which the Investor has
advanced, directly or indirectly, to any other Person, (ii) the
equity interest of the Investor in any Person, (iii) any
Indebtedness of any Person which is owed to the Investor and
which has been acquired for value by the Investor, and (iv) any
guaranty or other obligation specified in subparagraph (i) or
(ii) of the definition of "Indebtedness" with respect to any
Indebtedness of any other Person.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without
limitation, any conditional sale or other title retention agree-
ment or lease in the nature thereof, any sale of receivables
with recourse against the seller or any Affiliate of the seller,
any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute other
than to reflect ownership by a third party of property leased to
the Borrower or any of its Subsidiaries under a lease which is
not in the nature of a conditional sale or title retention
agreement, or any subordination arrangement in favor of another
Person (other than any subordination arising in the ordinary
course and associated with the settlement of Accounts
Receivable).
"Loan means any one of the Term Loan, the Revolving Loan,
the Standby Letter of Credit Loan and the Swing Line Revolving
Loan, and "Loans" means, collectively, all of such Loans.
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"Loan and Principal Payments Schedule" means with respect
to a particular Note the schedule attached thereto as provided
for in Section 2.2.
"Loan Documents" has the meaning assigned to that term in
Section 8.1.
"Material Liabilities" has the meaning assigned to that
term in Section 4.1(k).
"Material Subsidiary" means any Subsidiary of the
Borrower having assets as of the date of determination with a
value greater than or equal to one percent of the value of the
consolidated assets of the Borrower as of such date.
"Maximum Commitment" means, when used with reference to
any Bank the aggregate of the amounts set forth opposite the
name of such Bank on Schedule 1.1(a) hereof under the captions
"Amount of Revolving Loan Commitment", "Amount of Term Loan
Commitment" and "Amount of Standby Letter of Credit Commitment";
in each case subject to termination or reduction from time to
time in accordance with this Agreement.
"Mortgaged Property" has the meaning assigned to that
term in each of the respective Mortgages.
"Mortgages" means, collectively, the mortgages and deeds
of trust identified on Schedule 1.1(f) by the Borrower as
mortgagor and the Agent on behalf of the Banks as mortgagee, as
each such agreement is amended or modified and in effect on the
date hereof and may at any time hereafter be amended or modified
in accordance with the terms thereof and in effect.
"Most Recent Balance Sheet" has the meaning assigned to
that term in Section 4.1(k).
"Multiemployer Plan" means any plan described in Section
4001(a)(3) of ERISA to which contributions are or have been made
by the Borrower or any of its Related Persons, any Subsidiary,
or Related Persons to such Subsidiary.
"Net Cash Proceeds" has the meaning ascribed to that term
in Section 3.6(a).
"1994 Financial Statements" has the meaning assigned to
that term in Section 4.1(k).
"1974 IRB" means the Industrial Development Revenue Bond
in the principal amount of $13.3 million issued by the
California Pollution Control Financing Authority and dated as of
April 1, 1974, the proceeds of which were loaned to Fibreboard.
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"1974 IRB Letter of Credit" means that certain standby
letter of credit issued by the Agent for the account of the
Borrower in connection with the issuance by the Borrower
pursuant to the Purchase Agreement of its promissory note to
Fibreboard mirroring Fibreboard's obligations under the
Installment Sale Agreement relating to the 1974 IRB.
"Note" means any of the Amended Term Notes, the Amended
Revolving Notes or the Amended Standby Letter of Credit Notes,
and "Notes" means, collectively, all of such Notes.
"Note Participation Agreement" means that certain note
participation agreement between the Borrower and BT relating to
the Borrower's participation interests in the FINEX Drafts.
"Notice of Borrowing" has the meaning assigned to that
term in Section 2.5.
"Participants" has the meaning assigned to that term in
Section 9.9.
"Payment Office" has the meaning assigned to that term in
Section 2.6.
"PBGC" means the Pension Benefit Guaranty Corporation
created by Section 4002(a) of ERISA.
"Permitted Investments" means:
(i) any evidence of indebtedness, maturing not more than
one year after the date of issue, issued by the United States
of America, or any instrumentality or agency thereof and
guaranteed fully as to principal, interest and premium, if
any, by the United States of America;
(ii) any certificate of deposit or bankers' acceptance,
maturing not more than 90 days after the date of purchase,
issued by a commercial banking institution which is a member
of the Federal Reserve System and which has a combined capital
and surplus and undivided profits of not less than $200
million;
(iii) commercial paper, maturing not more than 90 days
after the date of purchase, issued by a corporation (other
than the Borrower or any Subsidiary of the Borrower or any of
their respective Affiliates) organized and existing under the
laws of any state within the United States of America with a
rating, at the time as of which any determination thereof is
to be made, of "P-l" (or higher) according to Moody's
Investors Service, or "A-l" (or higher) according to Standard
& Poor's Corporation;
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(iv) shares or other evidences of participation in any
mutual fund which invests exclusively in any one or more of
the foregoing or which is rated at least AAA or the equivalent
thereof by Standard & Poor's Corporation or the equivalent
thereof by Moody's Investors Service, Inc., including, without
limitation, any such mutual fund managed or advised by any
Bank (including the Agent);
(v) demand deposits with any bank or trust company;
(vi) interest rate swap or other similar hedging
arrangements consented to in writing by the Agent;
(vii) the participation interests of the Borrower in the
FINEX Drafts granted to the Borrower pursuant to the Note
Participation Agreement;
(viii) the interest of the Borrower in Gaylord Central
National, Inc., a Delaware corporation and a joint venture
with Central National-Gottesman, Inc., which interest shall be
represented by an equity contribution by the Borrower of no
more than $100,000;
(ix) (a) arrangements described in items 17, 18 and 19 of
Schedule 1.1(c), subject to the limitations set forth therein
with respect to such items 17, 18 and 19; and (b) purchases of
capital stock or notes receivable of or contributions of
capital to or other equity investments in one or more
corporations (other than the Borrower), limited liability
companies, partnerships or joint ventures; provided, however
that the aggregate value of all cash, cash equivalents and
other property used to make such purchases or contributions or
other equity investments shall not exceed $25 million, and
provided further that (1) the aggregate value of all such
purchases, contributions to capital and other equity
investments made in cash or cash equivalents shall not exceed
$10 million; and (2) any such purchases, contributions to
capital and other equity investments made in property of the
Borrower shall be made solely with machinery and/or equipment
and/or other property which Borrower has determined in good
faith is outdated, obsolete or no longer used or useful in the
Borrower's business and operations;
(x) purchases of industrial development and pollution
control bonds listed on Schedule 1.1(b); provided, however,
that the purchase price for all such bonds held by the
Borrower as of any date of determination thereof shall not
exceed $1 million, and provided further, that the Borrower
shall utilize such bonds in satisfaction of the next payment
or payments due under such bonds;
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(xi) the interest of the Borrower in the Gaylord
Foundation;
(xii) the investment by the Borrower of up to $1 million
in the aggregate in Gaylord de Mexico;
(xiii) other investments consented to in writing by the
Required Banks;
(xiv) the redemption or repurchase of the Public Debt in
an aggregate principal amount not to exceed $100 million
excluding any premium applicable to any such redemption or
repurchase;
(xv) the redemption, repurchase or prepayment of other
Indebtedness of the Borrower, which, by its terms, matures
within five years of the date hereof, provided that the
aggregate of any such Indebtedness so redeemed, repurchased or
prepaid shall in no event exceed $5 million; and
(xvi) acquisitions permitted by Section 5.2(h).
"Permitted Liens" means:
(i) all Liens created by any of the Basic Agreements (or
otherwise in favor of the Agent or the Banks), and Liens under
section 4.14 of the 11-1/2% Indenture;
(ii) Liens for taxes not yet due and payable or which
are being contested in good faith by appropriate proceedings
diligently pursued, provided that (a) any sale or foreclosure
of any portion of the Mortgaged Property as a result of such
Liens shall have been duly suspended, and (b) such provision
for the payment of all such taxes known to the Person against
which the Liens have been placed has been made on the books of
such Person if and to the extent required by generally
accepted accounting principles;
(iii) mechanics', materialmen's, carriers' and ware-
housemen's Liens, pre-judgment or judgment Liens with respect
to actions involving individually and in the aggregate a
liability of $5 million or less and similar Liens arising by
operation of law (including Liens arising under Sections
2-402, 2-705 and 4-208 of the Uniform Commercial Code) and
arising in the ordinary course of business and securing
obligations of a Person that are not overdue for a period of
more than 30 days or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in
the case of any such contest (a) any sale or foreclosure of
any portion of the Mortgaged Property as a result of such
Liens shall have been duly suspended, and (b) such provision
for the payment of such Liens has been made on the books of
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such Person if and to the extent required by generally
accepted accounting principles;
(iv) Liens arising in connection with worker's compensa-
tion, unemployment insurance, old age pensions, social
security and other similar benefits which are not overdue or
are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such
contest (a) any sale or foreclosure of any portion of the
Mortgaged Property as a result of such Liens shall have been
duly suspended, and (b) such provision for the payment of such
Liens has been made on the books of the Person against which
the Liens have been placed if and to the extent required by
generally accepted accounting principles;
(v) such imperfections of title, covenants,
restrictions, easements and encumbrances shown on the title
reports (as redated and recertified as commitments to issue
title insurance) and such other imperfections of title,
covenants, restrictions, easements and other encumbrances on
real property, including zoning restrictions which do not
prohibit the use being made to such property on the date
hereof, which in each case do not arise out of the incurrence
of any Indebtedness for Money Borrowed and which do not
interfere with or impair in any material respect the utility,
operation, value or marketability of the real property on
which such Lien is imposed;
(vi) Liens with respect to those industrial development
and pollution control revenue bonds listed in Schedule 1.1(b);
(vii) (a) Liens incurred or deposits made in the
ordinary course of business to secure the performance of bids
or other contractual obligations, including Liens arising as
the result of non-assignability provisions of contracts, but
exclusive of obligations incurred in connection with the
borrowing of money or the payment of the deferred purchase
price of property, in an amount not to exceed in the aggregate
$1 million, and (b) Liens securing surety, indemnity,
performance, appeal and release bonds in connection with
contracts made with governmental entities in an amount not to
exceed in the aggregate $1 million at any time outstanding,
provided that full provision for the payment of all such
obligations has been made on the books of a Person if and to
the extent required by generally accepted accounting
principles;
(viii) Liens upon real and/or tangible personal
property, acquired by purchase, construction or otherwise by
a Person, each of which Liens was created solely for the
purpose of securing Indebtedness representing, or incurred to
finance, the cost (including the cost of construction) of the
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property (hereinafter referred to as "Purchase Money Liens");
provided that:
(a) no such Purchase Money Lien shall extend to or
cover any property of such Person other than the
respective property so acquired and improvements thereon;
(b) the principal amount of the Indebtedness secured
by any such Purchase Money Lien shall at no time exceed
100% of the fair value (as reasonably determined in good
faith by a Responsible Officer of such Person) of the
respective property at the time it was so acquired; and
(c) the aggregate principal amount (exclusive of the
aggregate principal amount of the bonds listed on
Schedule 1.1(b), letters of credit issued by the Agent on
behalf of the Borrower and the promissory notes issued to
Fibreboard in connection with the Purchase Agreement) of
the Indebtedness secured by all Purchase Money Liens,
taken together with the aggregate principal amount of
Indebtedness consisting of Financing Lease Obligations
and the aggregate principal amount of Indebtedness
consisting of sale and leaseback arrangements ("Leaseback
Obligations"), shall not exceed the aggregate amount of
such Indebtedness permitted from time to time under
Section 5.2(b) hereof.
(ix) Liens on Accounts Receivable for which attempts at
collection have been undertaken by a third party authorized by
the Person owning such Accounts Receivable;
(x) Liens listed on Schedule 1.1(d);
(xi) Liens on assets of any Subsidiary granted in
favor of the Borrower for the purpose of securing
obligations of such Subsidiary to the Borrower; and
(xii) Liens on the Borrower's Accounts Receivable and
proceeds thereof granted to secure additional indebtedness
of the Borrower incurred in a Receivables Financing
Transaction.
"Permitted Merger" means any merger or consolidation of
any Subsidiary of the Borrower with or into the Borrower to
the extent permitted by Section 5.2(g) and any merger
permitted by Section 5.2(h).
"Person" means an individual or a corporation, limited
liability company, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or
other entity of any kind.
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"Plan" means any plan described in Section 4021(a) of
ERISA and not excluded pursuant to Section 4021(b) thereof,
which may be or has been established or maintained, or to which
contributions are or have been made, by the Borrower or any of
its Related Persons, any Subsidiary or any Related Persons to
such Subsidiary, but not including any Multiemployer Plan.
"Plan Administrator" has the meaning assigned to the term
"administrator" in Section 3(16)(A) of ERISA.
"Plan Sponsor" has the meaning assigned to the term "plan
sponsor" in Section 3(16)(B) of ERISA.
"Pledge Agreement" means, collectively, the Pledge
Agreement dated as of March 29, 1988 by the Borrower in favor of
the Agent with respect to the pledge of the capital stock owned
by the Borrower in GMA and GCC and the Pledge Agreement dated as
of June 28, 1991 by the Borrower in favor of the Agent with
respect to the pledge of the capital stock owned by the Borrower
in Gaylord de Mexico, as each such agreement may be amended,
modified or supplemented from time to time.
"Prime Rate" means the greater of (i) the rate which BT
announces from time to time as its prime lending rate, as in
effect from time to time, or (ii) the Federal Funds Rate plus
1/2%. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged
to any customer. BT may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
"Prime Rate Loan" means any Loan which bears interest at
a rate determined with reference to the Prime Rate.
"Prime Rate Revolving Loan" means a Revolving Loan or any
portion thereof during any period in which it or any such
portion of it bears interest at a rate determined with reference
to the Prime Rate.
"Prime Rate Standby Letter of Credit Loan" means a
Standby Letter of Credit Loan or any portion thereof during any
period in which it or any such portion of it bears interest at
a rate determined with reference to the Prime Rate.
"Prime Rate Term Loan" means the Term Loan or any portion
thereof during any period in which it or any such portion of it
bears interest at a rate determined with reference to the Prime
Rate.
"Pro Rata Share" means, when used with reference to any
Bank and any described aggregate or total Loan amount, Borrowing
amount, Commitment amount or other amount (as used in this
definition, an "aggregate amount"), an amount equal to the result
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obtained by multiplying (A) such aggregate amount by (B)
a fraction, the numerator of which shall be such Bank's
Commitment with respect to such aggregate amount then in effect
and the denominator of which shall be the Total Commitment with
respect to such aggregate amount then in effect.
"Public Debt" means the Public Notes, and all other
Indebtedness for Money Borrowed of the Borrower which is
subordinate and junior in right of payment to the prior payment
in full of all amounts owing to the Banks under the Basic
Agreements pursuant to an agreement in form, terms and substance
satisfactory to the Agent.
"Public Debt Indentures" means, collectively, the 12-3/4%
Indenture and the 11-1/2% Indenture.
"Public Notes" means, collectively, the 12-3/4% Senior
Subordinated Discount Debentures and the 11-1/2% Senior Notes.
"Purchase Agreement" means the Asset Purchase Agreement
dated as of February 22, 1988 by and between Fibreboard and the
Borrower with respect to the Acquisition. The disclosure
schedules and exhibits to the Purchase Agreement shall be deemed
to be included therein for purposes of this Agreement.
"Purchase Agreement Letters of Credit" means,
collectively, the Eight Year Note Letter of Credit and the 1974
IRB Letter of Credit. The Purchase Agreement Letters of Credit
shall be separate from the Revolving Loan Letters of Credit.
"Receivables Financing Transaction" means a transaction
or series of transactions whereby the Borrower sells specified
Accounts Receivable of the Borrower or incurs Indebtedness which
is secured by specified Accounts Receivable of the Borrower, in
either case on a non-recourse basis.
"Reference Banks" means, collectively, BT and Wells Fargo
Bank, National Association and any successor reference bank
consented to in writing by the Required Banks and the Borrower.
"Regulation D" means Regulation D of the Board as from
time to time in effect and any successor to all or a portion
thereof establishing reserve requirements.
"Related Person" means, with respect to any Person, any
trade or business (whether or not incorporated) which, together
with such Person, is under common control as described in
Section 414(c) of the Code, is a member of a controlled group,
as defined in Section 414(b) of the Code which includes such
Person, or is, together with such Person, a member of an
affiliated service group, as defined in Section 414(m) of the
Code.
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"Reportable Event" means a "reportable event" described
in Section 4043 of ERISA or in the regulations thereunder or
receipt of a notice of withdrawal liability with respect to a
Multiemployer Plan pursuant to Section 4202 of ERISA.
"Required Banks" means, as of the date of determination
thereof, the holders of at least 51% of the aggregate of (a) the
principal amount of the Loans then outstanding and (b) the Total
Unused Maximum Commitment at that time.
"Responsible Officer" means any of the Chairman of the
Board of Directors; President; Executive Vice President; Vice
President/Corporate Controller; Treasurer; Assistant Treasurer;
Vice President, Secretary and General Counsel; or chief
financial officer of the Borrower designated as such by the
Borrower in a certificate delivered to the Agent prior to the
Initial Borrowing hereunder.
"Revolver Termination Date" means June 30, 2000.
"Revolving Loan Commitment" means: (a) with respect to
any Bank under the caption "Amount of Revolving Loan
Commitment"; and (b) with respect to all Banks, the aggregate of
all such amounts, which aggregate amount will be $175 million.
The Revolving Loan Commitment of each Bank shall be subject to
reduction from time to time in accordance with the terms of this
Agreement.
"Revolving Loan Letters of Credit" means letters of
credit issued pursuant to Section 2.8 under the Banks' Revolving
Loan Commitments. Such letters of credit shall be separate from
the Purchase Agreement Letters of Credit and the Capital
Expenditure Letter of Credit.
"Revolving Loans" means, collectively, the loans by each
of the Banks to the Borrower in accordance with Section 2.1(c),
which shall be comprised of a Prime Rate Revolving Loan, a CD
Rate Revolving Loan or a Eurodollar Rate Revolving Loan or any
combination of the foregoing.
"Revolving Note" and "Revolving Notes" shall mean the
"Amended Revolving Note" or "Amended Revolving Notes," as
applicable, as such terms are defined in the Fourth Agreement.
"Roll-Over Borrowing" means a Borrowing wherein the
aggregate principal amount of the Borrowing being incurred
equals or is less than the aggregate principal amount of the
prior Borrowing maturing on the date of the Borrowing being
incurred.
"Second Agreement" has the meaning assigned to that term
in the introduction to this Agreement.
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"Security Agreement" means the Security Agreement dated
as of March 29, 1988, as amended through and including the date
hereof, by the Borrower in favor of the Banks and the Agent, as
such agreement may at any time be amended or modified in
accordance with the terms thereof and then in effect.
"Standby Letter of Credit Commitment" means: (a) with
respect to any Bank, the principal amount set forth opposite
such Bank's name in Schedule 1.1(a) (which shall be equal to
such Bank's Pro Rata Share of the aggregate undrawn face amount
of any Purchase Agreement Letters of Credit remaining
outstanding and the undrawn face amount of the Capital
Expenditure Letter of Credit) under the caption "Amount of
Standby Letter of Credit Commitment"; and
(b) with respect to all Banks, the aggregate of all such
amounts, which aggregate will be as set forth on Schedule 1.1(a)
and shall be equal to the aggregate undrawn face amount of any
Purchase Agreement Letters of Credit remaining outstanding and
the undrawn face amount of the Capital Expenditure Letter of
Credit. The Standby Letter of Credit Commitment of each Bank
from time to time shall be subject to reduction from time to
time in accordance with the terms of this Agreement.
"Standby Letter of Credit Loan Maturity Date" means April
30, 1999 in the case of Type A Advances. In the case of Type B
Advances, amounts owing under the Amended Standby Letter of
Credit Notes shall be immediately due and payable.
"Standby Letter of Credit Loans" means, collectively, the
Type A Advances and Type B Advances made by each of the Banks to
the Borrower in accordance with Section 2.8 and, in the case of
Type A Advances, Section 2.1(d). Type A Advances shall be
comprised of a Prime Rate Standby Letter of Credit Loan, a CD
Rate Standby Letter of Credit Loan or a Eurodollar Rate Standby
Letter of Credit Loan or any combination of the foregoing. Each
Type B Advance shall consist of a Prime Rate Standby Letter of
Credit Loan.
"Subsidiary" of any Person means any corporation of which
such Person, directly or indirectly, shall at the time (i) own
shares of any class or classes (however designated) having
ordinary voting power for the election of at least a majority of
the members of the board of directors (or the governing body) of
such corporation, other than shares having such power only by
reason of the happening of a contingency, or (ii) otherwise have
the legal right to elect such a majority.
"Swing Line Revolving Commitment" has the meaning
assigned to that term in Section 2.13(a).
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"Swing Line Revolving Lender" means the Agent acting in
the capacity of a Bank with respect to the Swing Line Revolving
Loans.
"Swing Line Revolving Loans" means the Loans made by the
Swing Line Revolving Lender to the Borrower pursuant to Section
2.13.
"Swing Line Revolving Notice of Borrowing" has the
meaning assigned to that term in Section 2.13(b).
"Swing Line Revolving Register" has the meaning assigned
to that term in Section 2.13(e).
"Taxes" has the meaning assigned to that term in Section
3.11.
"Term Loan" has the meaning assigned to such term in
Section 2.1(b) of the Fourth Agreement.
"Term Loan Commitment" means, with respect to (a) any
Bank, the principal amount set forth opposite such Bank's name
in Schedule 1.1(a) under the caption "Amount of Term Loan
Commitment", and, (b) with respect to all Banks, the aggregate
of all such amounts, which aggregate will be as set forth on
Schedule 1.1(a).
"Term Loan Maturity Date" means September 30, 1997.
"Term Note" and "Term Notes" shall mean the "Amended Term
Note" or "Amended Term Notes," as applicable, as such terms are
defined in the Fourth Agreement.
"Third Agreement" has the meaning assigned to that term
in the introduction to this Agreement.
"Total Consolidated Indebtedness for Money Borrowed"
means the total of all Indebtedness for Money Borrowed of the
Borrower and its Subsidiaries.
"Total Maximum Commitment" means, at the time any
determination thereof is to be made, the sum of the respective
Maximum Commitments of the Banks at such time.
"Total Unused Maximum Commitment" means, at the time any
determination thereof is to be made, the sum of the respective
Unused Maximum Commitments of the Banks at such time.
"Transferee" has the meaning assigned to that term in
Section 9.9.
"Trust Agreement" means the Trust Agreement entered into
between the Borrower and Harris Trust and Savings Bank, as trustee,
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pursuant to which the shares of Common Stock to be
issued pursuant to the Warrants will be issued to such trustee.
"12-3/4% Indenture" means the Indenture by and between
the Borrower and Texas Commerce Bank National Association, as
successor trustee to Ameritrust Texas National Association, as
debenture trustee, pursuant to which the 12-3/4% Senior
Subordinated Discount Debentures are (or hereafter are) issued,
in the form of Exhibit AA hereto, as the same may be amended,
modified or supplemented from time to time in accordance with
the terms of this Agreement.
"12-3/4% Senior Subordinated Discount Debentures" means
the 12-3/4% Senior Subordinated Discount Debentures Due 2005 of
the Borrower issued pursuant to the 12-3/4% Indenture, as the
same may be amended, modified or supplemented from time to time
in accordance with the terms of this Agreement.
"Type" means any type of Loan, i.e., whether a Prime Rate
Loan, a CD Rate Loan or a Eurodollar Rate Loan.
"Type A Advance" means a Standby Letter of Credit Loan
made by reason of a draw on a Purchase Agreement Letter of
Credit or Capital Expenditure Letter of Credit occurring as the
result of the decision by the Banks not to replace a Purchase
Agreement Letter of Credit or Capital Expenditure Letter of
Credit upon its expiration after having been so requested by the
Borrower.
"Type B Advance" means a Standby Letter of Credit Loan by
reason of a draw on a Purchase Agreement Letter of Credit or
Capital Expenditure Letter of Credit for any reason other than
as the result of the decision by the Banks not to replace a
Purchase Agreement Letter of Credit or Capital Expenditure
Letter of Credit after having been so requested by the Borrower.
"Underfunded Plan" has the meaning assigned to that term
in Section 4.1(o).
"Unmatured Event of Default" means an event, act or
occurrence which with the giving of notice or the lapse of time
(or both) would become an Event of Default.
"Unused Maximum Commitment" means, when used with
reference to any Bank at the time any determination thereof is
to be made, the excess, if any, of (i) such Bank's Maximum
Commitment at such time over (ii) such Bank's Utilized
Commitment at such time.
"Utilized Commitment" means, when used with reference to
any Bank at the time any determination thereof is to be made,
the then outstanding principal amount of all Loans made by such
Bank pursuant to this Agreement.
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"Warrant Agent" means Harris Trust and Savings Bank, as
the agent under the Warrant Agreement, and any successor agent
thereunder.
"Warrant Agreement" means the warrant agreement between
Borrower and the Warrant Agent, dated as of November 2, 1992 in
connection with the issuance of the Warrants, as the same may be
amended from time to time in accordance with this Agreement.
"Warrants" means:
(a) the warrants to purchase shares of Class A Common
Stock issued pursuant to the Warrant Agreement; and
(b) any warrants which may hereafter be issued pursuant
to any transfers of warrants issued pursuant to the Warrant
Agreement or any partial exercise or partial redemption of
such warrants, or pursuant to any transfers or partial
exercises or partial redemptions of warrants issued pursuant
to transfers or partial exercises or partial redemptions of
warrants;
as the same may be amended from time to time in accordance with
this Agreement.
The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms. The
words "herein," "hereof" and words of similar import as used in
this Agreement shall refer to this Agreement as a whole and not
to any particular provision in the Agreement.
Section 1.2 Accounting Terms; Financial Statements.
(a) All accounting terms used herein not expressly
defined in this Agreement shall have the respective meanings
given to them in accordance with generally accepted accounting
principles in effect on the date hereof (except with respect to
financial statements delivered to the Agent or the Banks after
the date hereof, as to which generally accepted accounting
principles shall be such as are in effect on the respective
dates of such financial statements) in the United States of
America. Except as otherwise expressly provided herein: (i)
all computations and determinations for purposes of determining
compliance with the financial requirements of this Agreement
shall be made in accordance with the generally accepted
accounting principles set forth in the preceding sentence; (ii)
wherever any computation is to be made with respect to any
Person and its Subsidiaries such computation shall be made so as
to exclude all items of income, assets and liabilities
attributable to any Person which is not a Subsidiary; and (iii)
all valuations made with respect to Inventory shall be made at
the lower of cost or market on a "last in, first out" ("LIFO") basis.
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(b) The covenants and conditions in this Agreement have
been determined based on the federal corporate income tax rates
prevailing on the date hereof. To the extent that the corporate
federal income tax rates are subsequently changed, FASB 109 will
require an immediate adjustment to income tax expense to reflect
the impact on deferred taxes of such changes in federal income
tax rates. The Borrower and the Agent hereby agree to prepare
an amendment to this Agreement adjusting in a mutually
satisfactory manner the covenants and conditions in this
Agreement to the extent FASB 109 requires a non-cash charge or
credit to Consolidated Net Income and agree thereafter to
present such amendment to the Banks and to take all reasonable
actions, including seeking the consent of the Required Banks,
necessary to amend the applicable provisions of this Agreement
in a manner consistent with such adjustments.
Section 1.3 Effect on Prior Credit Agreements. This
Agreement shall supersede the Gaylord Loan Agreement, the
Initial Agreement, the Second Agreement, the Third Agreement and
the Fourth Agreement with respect to transactions hereunder and
with respect to the Loans outstanding under the Gaylord Loan
Agreement, the Initial Agreement, the Second Agreement, the
Third Agreement and/or the Fourth Agreement immediately prior to
the date hereof. Loans outstanding under the Gaylord Loan
Agreement, the Initial Agreement, the Second Agreement, the
Third Agreement, and/or the Fourth Agreement immediately prior
to the date hereof shall be subject in all respects to the terms
of this Agreement from and after the date hereof. Except as
otherwise expressly stated herein, the execution and delivery of
this Agreement shall not excuse or waive the breach of any
covenant or the occurrence of any Event of Default under the
Gaylord Loan Agreement, the Initial Agreement, the Second
Agreement, the Third Agreement or the Fourth Agreement.
Notwithstanding the foregoing, those provisions of the Gaylord
Loan Agreement, the Initial Agreement, the Second Agreement, the
Third Agreement and the Fourth Agreement and the other Basic
Agreements granting or perfecting a Lien on or security interest
in any of the Collateral and/or the Mortgaged Property or other
collateral thereunder shall continue in full force and effect
from the respective dates of execution or perfection of those
agreements.
ARTICLE II
LOAN PROVISIONS
Section 2.1 Loan Commitments.
(a)(i) The parties hereto acknowledge and agree that:
(A) the aggregate principal amount of the "Term Loan" (as
defined under the Fourth Agreement) outstanding on the date
hereof is $61,250,000.00,
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(B) the aggregate principal amount of the "Revolving
Loan" (as defined in the Fourth Agreement) outstanding as of
the date hereof is $0,
(C) the aggregate amount of the "Standby Letter of Credit
Loans" (as defined under the Fourth Agreement) outstanding as
of the date hereof is $0,
(D) the foregoing loans are valid and subsisting
obligations of the Borrower, payment of which is enforceable
in accordance with the Fourth Agreement and the other Loan
Documents, and
(E) the terms of the Fourth Agreement are hereby amended
and restated, effective as of the date hereof, and all
obligations of the Borrower under or in respect of the
foregoing described loans and credit facilities shall be
payable hereafter to the Banks as provided herein and deemed
to be outstanding under this Agreement.
(b) Term Loan. As of the date hereof, the Term Loan is
outstanding and constitutes the only loan to be extended
pursuant to the Term Loan Commitment hereunder. From and after
the date hereof, the Term Loan shall, in accordance with
Section 2.2(a), be evidenced by the Amended Term Notes and shall
be payable in accordance with the terms thereof. No amount of
the Term Loan that is repaid or prepaid by the Borrower may be
re-borrowed hereunder. Notwithstanding the provisions of the
Fourth Agreement with respect to the application of prepayments
and repayments of the Loans, including without limitation
Article III thereof, the Banks party to the Fourth Agreement
hereby acknowledge and consent to the prepayment in full on or
prior to the date hereof by the Borrower of the Term Notes
issued by the Borrower to Lehman Brothers, Inc. and Credit
Lyonnais pursuant to the Fourth Agreement, and the consequent
reduction of such Banks' Term Loan Commitments. The Banks party
to the Fourth Agreement hereby waive any rights such Banks may
have as a result of such prepayment.
(c) Revolving Loans. Each Bank, severally and for
itself alone, hereby agrees, on the terms and subject to the
conditions hereinafter set forth, to make loans to the Borrower,
on a revolving basis from time to time from and after the date
hereof to, but not including, the Revolver Termination Date, in
the Pro Rata Share of such Bank of such amounts as the Borrower
may request, but not exceeding in the aggregate at any one time
outstanding an amount equal to the Revolving Loan Commitment of
such Bank minus such Bank's Pro Rata Share of the aggregate
undrawn face amount of Revolving Loan Letters of Credit. Prior
to the Revolver Termination Date, Revolving Loans may be repaid
and reborrowed by the Borrower in accordance with the provisions
hereof.
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(d) Standby Letter of Credit Loans. As of the date
hereof, the Capital Expenditure Letter of Credit and the
Purchase Agreement Letters of Credit are outstanding and
constitute all of the letters of credit issued or to be issued
pursuant to the Standby Letter of Credit Commitments hereunder.
In addition, each Bank, severally and for itself alone, hereby
agrees, on the terms and subject to the conditions hereinafter
set forth, to make Type A Advances to the Borrower from time to
time to, but not including, the Standby Letter of Credit Loan
Maturity Date, in the Pro Rata Share of such Bank of such
amounts as the Borrower may request, but not exceeding in the
aggregate at any one time outstanding an amount equal to the
Standby Letter of Credit Commitment of such Bank. Prior to the
Standby Letter of Credit Loan Maturity Date, Standby Letter of
Credit Loans may be repaid by the Borrower in accordance with
the provisions hereof. Standby Letter of Credit Loans shall be
made to the Borrower only with respect to payments made by the
Banks pursuant to Purchase Agreement Letters of Credit and the
Capital Expenditure Letter of Credit issued according to the
terms and conditions of Section 2.8.
Section 2.2 Notes.
(a) Term Notes. The Borrower's obligation to pay the
principal of, and interest on, each Bank's Pro Rata Share of the
Term Loan shall be evidenced by an appropriately amended and
restated promissory note (each, an "Amended Term Note" and
collectively, the "Amended Term Notes") duly executed and
delivered by the Borrower to each Bank upon receipt by the
Borrower of the Term Note previously issued to such Bank, if
any, and replaced thereby, which Amended Term Note shall be
substantially in the form of Exhibit A, and shall:
(i) be payable to the order of such Bank,
(ii) be dated the date hereof,
(iii) be in a stated principal amount equal to the
Term Loan Commitment of such Bank and be payable in
the aggregate principal amount of the Term Loans
evidenced thereby,
(iv) mature, with respect to each Loan evidenced
thereby, on the Term Loan Maturity Date,
(v) provide for repayment of the principal thereof
in quarterly installments,
(vi) bear interest as provided in this Agreement in
respect of the Prime Rate Loans, the CD Rate Loans
and the Eurodollar Rate Loans, as the case may be,
evidenced thereby, and
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(vii) have attached thereto a Loan and Principal
Payments Schedule substantially in the form of the
schedule to Exhibit A.
The outstanding principal balance of the Term Loan shall be
repaid in quarterly installments on the last day of the month
which is the third month following the most recent payment date,
commencing with July 31, 1995, until the last such date prior to
the Term Loan Maturity Date, and the final installment shall be
due on the Term Loan Maturity Date. The amount of each
installment shall be equal to the aggregate principal amount of
the Term Loan on the date hereof divided by the aggregate number
of payment dates provided for above plus 1. The amount of the
final installment shall be equal to the aggregate principal
balance of the Term Loan outstanding on the Term Loan Maturity
Date. The portion of each installment payable to each Bank
shall be in proportion to such Bank's Pro Rata Share of the Term
Loan.
Each Bank may, and is hereby authorized to, make a
notation on the Loan and Principal Payments Schedule or on its
books and records of the date and the amount of the Term Loan or
principal payment, as the case may be, and any Bank may make a
notation on the Loan and Principal Payments Schedule as to the
interest rate and Interest Period applicable to any Prime Rate
Term Loan, CD Rate Term Loan or Eurodollar Rate Term Loan. Such
schedules as maintained by the Banks shall, absent manifest
error, constitute prima facie evidence of the amount outstanding
under the Pro Rata Shares of such Banks of the Term Loan.
Notwithstanding the foregoing, the failure to make or error in
a notation with respect to the Term Loan or any principal
payment shall not limit or otherwise affect the obligation of
the Borrower hereunder or under the applicable Amended Term Note
with respect to the Term Loan and payments of principal by the
Borrower shall not be affected by the failure to make or error
in a notation thereof on the appropriate Loan and Principal
Payments Schedule nor shall such failure or error affect any
rights of the Borrower hereunder or under applicable law.
Notwithstanding the date of each Amended Term Note, interest in
respect thereof shall be payable only for the periods during
which the Term Loans evidenced thereby are outstanding and only
with respect to unpaid principal thereof and although the stated
amount of each Amended Term Note shall be equal to the relevant
Bank's Term Loan Commitment, each Amended Term Note shall be
enforceable, with respect to the Borrower's obligation to pay
the principal amount thereof, only to the extent of the unpaid
principal amount of the Term Loans at the time evidenced
thereby.
(b) Revolving Notes. The Borrower's obligation to pay
the principal of, and interest on, all the Revolving Loans made
by each Bank hereunder shall be evidenced by an appropriately
amended and restated promissory note (each an "Amended Revolving
Note" and collectively the "Amended Revolving Notes") duly
executed and delivered by the Borrower to each Bank upon receipt
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by the Borrower of the Revolving Note of the Borrower previously
issued to such Bank, if any, and replaced thereby, which Amended
Revolving Note shall be substantially in the form of Exhibit B
and shall:
(i) be payable to the order of such Bank,
(ii) be dated as of the date of issuance thereof,
(iii) provide that all Revolving Loans then outstanding
shall be repaid on the Revolver Termination Date as provided
herein,
(iv) bear interest as provided in this Agreement in
respect of the Prime Rate Loans, the CD Rate Loans and the
Eurodollar Rate Loans, as the case may be, evidenced thereby,
and
(v) have attached thereto a Loan and Principal Payments
Schedule substantially in the form of the schedule to
Exhibit B.
At the time of the making of each Revolving Loan or principal
payment each Bank may, and is hereby authorized to, make a
notation on the Loan and Principal Payments Schedule or on its
books and records with respect to the corresponding Amended
Revolving Note of the date and the amount of each Revolving Loan
or principal payment, as the case may be, and as to the interest
rate and Interest Period applicable to any Prime Rate Revolving
Loan, CD Rate Revolving Loan or Eurodollar Rate Revolving Loan.
At the option of any Bank, such Bank may maintain a separate
schedule for each type of Revolving Loan. Such schedules as
maintained by the Banks shall, absent manifest error, constitute
prima facie evidence of the amount outstanding under such Banks'
Revolving Loans. Notwithstanding the foregoing, the failure to
make or error in a notation with respect to any Revolving Loan
shall not limit or otherwise affect the obligation of the
Borrower hereunder or under the applicable Amended Revolving
Note with respect to such Revolving Loan and payments of
principal by the Borrower shall not be affected by the failure
to make or error in a notation thereof on the appropriate Loan
and Principal Payments Schedule nor shall such failure or error
affect any rights of the Borrower hereunder or under applicable
law. Notwithstanding the date of each Amended Revolving Note,
interest in respect thereof shall be payable only for the
periods during which the Revolving Loans evidenced thereby are
outstanding and although the stated amount of each Amended
Revolving Note shall be equal to the relevant Bank's Revolving
Loan Commitment, each Amended Revolving Note shall be
enforceable, with respect to the Borrower's obligation to pay
the principal amount thereof, only to the extent of the unpaid
principal amount of the Revolving Loans at the time evidenced
thereby.
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(c) Standby Letter of Credit Notes. The Borrower's
obligation to pay the principal of, and interest on, all the
Standby Letter of Credit Loans made by each Bank hereunder shall
be evidenced by an appropriately amended and restated promissory
note (each an "Amended Standby Letter of Credit Note" and
collectively the "Amended Standby Letter of Credit Notes") duly
executed and delivered by the Borrower to each Bank upon receipt
by the Borrower of the Standby Letter of Credit Note of the
Borrower previously issued to such Bank, if any, and replaced
thereby, which Amended Standby Letter of Credit Note shall be
substantially in the form of Exhibit C and shall:
(i) be payable to the order of such Bank,
(ii) be dated as of the date of issuance thereof,
(iii) provide that all Type A Advances shall be repaid in
equal semi-annual installments of principal on the last
Business Day of the second and fourth Fiscal Quarters of each
Fiscal Year, commencing in each case on the first of such
dates to occur after such Type A Advance has been made and
ending on the Standby Letter of Credit Loan Maturity Date and
that all Type B Advances shall be immediately due and payable,
all as provided herein, and
(iv) with respect to Type A Advances bear interest as
provided in this Agreement in respect of the Prime Rate Loans,
the CD Rate Loans and the Eurodollar Rate Loans evidenced
thereby, and
(v) have attached thereto a Loan and Principal Payments
Schedule substantially in the form of the schedule to
Exhibit C.
On the date hereof and at the time of the making of each Standby
Letter of Credit Loan or principal payment, as the case may be,
each Bank may, and is hereby authorized to, make a notation on
the Loan and Principal Payments Schedule or on its books and
records with respect to the corresponding Amended Standby Letter
of Credit Note of the date and the amount of each Standby Letter
of Credit Loan or principal payment, as the case may be. Such
schedules as maintained by the Banks shall, absent manifest
error, constitute prima facie evidence of the amount outstanding
under such Banks' Standby Letter of Credit Loans.
Notwithstanding the foregoing, the failure to make or error in
a notation with respect to any Standby Letter of Credit Loan
shall not limit or otherwise affect the obligation of the
Borrower hereunder or under the applicable Amended Standby
Letter of Credit Note with respect to such Standby Letter of
Credit Loan and payments of principal by the Borrower shall not
be affected by the failure to make or error in a notation
thereof on the appropriate Loan and Principal Payments Schedule
nor shall such failure or error affect any rights of the Borrower
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hereunder or under applicable law. Notwithstanding the
date of each Amended Standby Letter of Credit Note, interest in
respect thereof shall be payable only for the periods during
which the Standby Letter of Credit Loans evidenced thereby are
outstanding and although the stated amount of each Amended
Standby Letter of Credit Note shall be equal to the relevant
Bank's Standby Letter of Credit Commitment then in effect, each
Amended Standby Letter of Credit Note shall be enforceable, with
respect to the Borrower's obligation to pay the principal amount
thereof, only to the extent of the unpaid principal amount of
the Standby Letter of Credit Loans at the time evidenced
thereby.
(d) Return of Notes. Upon repayment in full to each
Bank of all Loans made by such Bank evidenced by any Note of the
Borrower payable to such Bank and termination of such Bank's
Commitment to make Loans and/or extensions of credit to the
Borrower evidenced by such Note, such Bank shall mark the Note
"cancelled" and promptly return the same to the Borrower.
Section 2.3 Borrowing Options. Subject to the other
terms and conditions hereof, all Type A Advances, the Term Loan
and the Revolving Loans, shall, at the option of the Borrower
except as otherwise provided in this Agreement, be (i) Prime
Rate Loans, (ii) CD Rate Loans, (iii) Eurodollar Rate Loans, or
(iv) part Prime Rate Loans, part CD Rate Loans and/or part
Eurodollar Rate Loans. As to any Eurodollar Rate Loan, any Bank
may, if it so elects, fulfill its commitment by causing a
foreign branch or affiliate to make or continue such Loan,
provided that in such event the Pro Rata Share of such Bank of
the Loan shall, for the purposes of this Agreement, be
considered to have been made by that Bank and the obligation of
the Borrower to repay the Pro Rata Share of such Bank of the
Loan shall nevertheless be to that Bank and shall be deemed held
by that Bank, for the account of such branch or affiliate.
Section 2.4 Minimum Amount of Each Borrowing. Other
than with respect to Standby Letter of Credit Loans, the
aggregate principal amount of each Borrowing by the Borrower
hereunder shall not be less than (i) in the case of a Prime Rate
Loan, $500,000 (or, if less, the remaining balance of the Banks'
Revolving Loan Commitments as applicable), and (ii) in the case
of a Eurodollar Rate Loan or a CD Rate Loan, $3 million and, in
either case, if greater, shall be in an integral multiple of $1
million above such minimum, provided that any Borrowing in
excess of $10 million may be made without restriction as to an
integral amount in excess of $10 million. Standby Letter of
Credit Loans shall be in the amount provided for in the
applicable Capital Expenditure Letter of Credit or Purchase
Agreement Letter of Credit.
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Section 2.5 Notice of Borrowing; Roll-Over Borrowings.
(a) Whenever the Borrower desires to make a Borrowing
(including a Roll-Over Borrowing except as hereinafter provided,
but excluding a Borrowing of a Swing Line Revolving Loan
hereunder, it shall give the Agent at each of its offices
located at 130 Liberty Street, New York, New York 10006 and 233
South Wacker Drive, Chicago, Illinois 60606 at least one
Business Day's prior telex, telecopied or other written notice
(or telephonic notice promptly confirmed in writing) (in any
case given not later than 12:00 noon (New York time)) of each
Prime Rate Loan, at least two Business Days' prior telex,
telecopied or other written notice (or telephonic notice
promptly confirmed in writing) (in any case given not later than
12:00 noon (New York time)) of each CD Rate Loan, and at least
three Business Days' prior telex, telecopied or other written
notice (or telephonic notice promptly confirmed in writing) (in
any case given not later than 12:00 noon (New York time)) of
each Eurodollar Rate Loan, to be made hereunder. Each such
notice (each a "Notice of Borrowing") shall specify the
aggregate principal amount of the Loans to be made pursuant to
such Borrowing, the date of Borrowing (which shall be a Business
Day), whether the Loans being made pursuant to such Borrowing
are to be Prime Rate Loans, CD Rate Loans or Eurodollar Rate
Loans and the Interest Period to be applicable thereto. The
Borrower shall be entitled to give only one Notice of Borrowing
for any date; however, the Borrower shall be entitled to request
three Borrowings (in addition to any Roll-Over Borrowings) on
any date. No Notice of Borrowing need be given for any
Roll-Over Borrowing with respect to Prime Rate Loans. The Agent
shall promptly give each Bank telex notice, telecopy notice or
other written notice (or telephonic notice promptly confirmed in
writing), of each proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters covered by
the Notice of Borrowing. Without in any way limiting the
Borrower's obligation to confirm in writing any telephonic
notice, the Agent may act without liability upon the basis of
telephonic notice believed by the Agent in good faith to be from
the Borrower prior to receipt of written confirmation, the
Borrower hereby waiving the right to dispute the Agent's record
of the terms of such telephonic Notice of Borrowing.
Notwithstanding the foregoing, Borrowings constituting Standby
Letter of Credit Loans shall not require notice by the Borrower
other than as may be provided in the applicable Purchase
Agreement Letter of Credit.
(b) On the last day of an Interest Period for an
outstanding Borrowing, the principal amount of the Loan repre-
sented by such outstanding Borrowing shall be reborrowed (unless
otherwise paid or prepaid) by the Borrower as a Roll-Over
Borrowing of such a Type of Borrowing and having such an
Interest Period as specified in the relevant Notice of Borrowing
given pursuant to Section 2.5(a) or deemed given pursuant to
Section 2.5(c). Notwithstanding anything in this Agreement to
the contrary, it is understood that Roll-Over Borrowings do not
constitute either new borrowings or disbursements by the Banks
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of additional monies, the term "Roll-Over Borrowing" being used
merely for convenience of definition and to denote changes in
interest rates.
(c) Unless the Borrower shall have given (i) the Agent
a Notice of Borrowing requesting that Loans be made on any
Interim Maturity Date, or (ii) the Agent written or telephonic
notice (confirmed in writing) prior to 12:00 noon (New York
time) on such Interim Maturity Date of the Borrower's intent not
to incur Loans on such Interim Maturity Date, the Borrower shall
be deemed to have requested that the Banks make Prime Rate Loans
to the Borrower on such Interim Maturity Date. Such Prime Rate
Loans deemed requested by the Borrower shall be in an aggregate
principal amount equal to the aggregate principal amount of
Loans made by the Banks maturing on such Interim Maturity Date.
Section 2.6 Disbursement of Funds. No later than
1:00 P.M. (New York time) on the date specified in each Notice
of Borrowing, each Bank will make available its Pro Rata Share
of the Borrowing (except with respect to any Borrowing
representing a Roll-Over Borrowing in which case each Bank will
be deemed to have made available its Pro Rata Share of such
Borrowing) requested to be made on such date in U.S. Dollars and
in immediately available funds, at the office (the "Payment
Office") of the Agent located at One Bankers Trust Plaza, New
York, New York 10005 (for the account of such non-U.S. office of
the Agent as the Agent may direct in the case of Eurodollar Rate
Loans) and the Agent will transfer into an account of the
Borrower maintained with the Agent the aggregate of the amounts
so made available by the Banks. Unless the Agent shall have
been notified by any Bank prior to the date of Borrowing that
such Bank does not intend to make available to the Agent such
Bank's portion of the Borrowing to be made on such date, the
Agent may assume that such Bank has made such amount available
to the Agent on such date of Borrowing and the Agent may, in
reliance upon such assumption, make available to the Borrower a
corresponding amount (the Borrower being liable for interest
hereunder only to the extent of funds actually placed in its
account by the Agent). If such corresponding amount is not in
fact made available to the Agent by such Bank, the Agent shall
be entitled to recover such corresponding amount on demand from
such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Borrower and the Borrower shall immediately
pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from the Borrower interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the
Borrower to the date such corresponding amount is recovered by
the Agent, at a rate per annum equal to the then applicable rate
for Prime Rate Loans, CD Rate Loans or Eurodollar Rate Loans, as
the case may be. Any amounts due hereunder to the Agent from
the Banks which are not paid when due shall bear interest, from
the date due until the date paid, at the Federal Funds Rate.
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Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitment hereunder or to prejudice
any rights which the Borrower may have against the Bank as a
result of any default by such Bank hereunder. No Borrowing
(except for Roll-Over Borrowings) shall be permitted hereunder
if the conditions set forth in Section 6.2 hereof are not
satisfied before and after giving effect to such Borrowing.
Section 2.7 Interest.
(a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Prime Rate Loan from the
date the proceeds thereof are made available to the Borrower
(whether pursuant to a new Borrowing or a Roll-Over Borrowing)
until maturity (whether by acceleration or otherwise) of such
Prime Rate Loan at a rate per annum which shall be the Prime
Rate in effect from time to time plus a borrowing margin equal
to one and one-half percent (1-1/2%) with respect to each Prime
Rate Loan.
(b) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each CD Rate Loan from the date
the proceeds thereof are made available to the Borrower (whether
pursuant to a new Borrowing or a Roll-Over Borrowing) until
maturity (whether by acceleration or otherwise) of such CD Rate
Loan at a rate per annum which shall be the relevant CD Rate
plus a borrowing margin equal to two and five-eights percent (2-
5/8%) with respect to each CD Rate Loan.
(c) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Rate Loan from
the date the proceeds thereof are made available to the Borrower
(whether pursuant to a new Borrowing or a Roll-Over Borrowing)
until maturity (whether by acceleration or otherwise) of such
Eurodollar Rate Loan at a rate per annum which shall be the
relevant Eurodollar Rate plus a borrowing margin equal to two
and one-half percent (2-1/2%) with respect to each Eurodollar
Rate Loan.
(d) Overdue principal and (to the extent permitted by
law) overdue interest in respect of each Loan shall bear
interest, payable on demand, after as well as before judgment,
at a rate per annum equal to 2% above the Prime Rate plus the
Borrowing Margin applicable to Prime Rate Loans as set forth in
paragraph (a) above (such rate of interest being the "Default
Rate").
(e) Interest shall accrue from and including the date of
any Borrowing to but excluding the date of any repayment
thereof. Interest on Eurodollar Rate Loans shall be payable by
the Borrower in arrears on the applicable Interim Maturity Date
and in the case of an Interim Maturity Date in excess of one
month at intervals of every month after the initial date of such
Interest Period. Interest on CD Rate Loans shall be payable by
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the Borrower in arrears on the Interim Maturity Date and, in the
case of an Interim Maturity Date in excess of 30 days, at
intervals of 30 days after the initial date of such Interest
Period. Notwithstanding the above, interest shall be payable on
any amount prepaid or reborrowed, as the case may be, on the
date of such prepayment or reborrowing, as the case may be, and
upon final maturity of such Loan and after maturity, on demand.
Interest on Prime Rate Loans shall be payable monthly in arrears
on the last Business Day of each calendar month, on maturity and
after maturity, on demand. Interest on all Loans shall be
computed on the basis of a year consisting of 360 days and
actual days elapsed.
(f) The Agent, upon determining the Eurodollar Rate or
the CD Rate for any Interest Period, shall promptly notify by
telephone or in writing the Borrower and the other Banks
thereof.
(g) If any interest payment or other charge or fee
payable hereunder exceeds the maximum amount then permitted by
applicable law, the Borrower shall be obligated to pay the
maximum amount then permitted by applicable law and the Borrower
shall continue to pay the maximum amount from time to time
permitted by applicable law until all such interest payments and
other charges and fees otherwise due hereunder (in the absence
of such restraint imposed by applicable law) have been paid in
full.
Section 2.8 Letters of Credit.
(a) Subject to due satisfaction at the time of the
applicable provisions of Article VI hereof, the Borrower may
request, in accordance with this Section 2.8, that the Agent
issue on behalf of the Banks commercial or standby letter(s) of
credit for the account of the Borrower, and the Agent and the
Banks agree that the Agent will issue such letter(s) of credit,
provided that:
(i) the Borrower shall not request the Agent to issue any
letter of credit if, after giving effect to such issuance
(A) the sum of the undrawn face amount of Revolving
Loan Letters of Credit then outstanding would exceed $30
million, provided that at no time shall the sum of the
undrawn face amounts of Revolving Loan Letters of Credit
exceed the aggregate of the otherwise unborrowed
Revolving Loan Commitments of the Banks then in effect,
and
(B) the sum of the undrawn face amount of the
Purchase Agreement Letters of Credit and Capital
Expenditure Letter of Credit and all Type A Advances then
outstanding would exceed the aggregate of the Standby
Letter of Credit Commitments of the Banks then in effect,
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(ii) in no event shall the Agent issue any letter of
credit having an expiration date later than one year from the
date of issuance; provided, however, that any such letter of
credit may be renewable at the option of the Agent on an
annual basis and provided further that in no event shall the
Agent issue any letter of credit having an expiration date
later than the Revolver Termination Date in the case of
Revolving Loan Letters of Credit and the Standby Letter of
Credit Loan Maturity Date in the case of Purchase Agreement
Letters of Credit and the Capital Expenditure Letter of
Credit, and
(iii) in no event shall the Borrower request the
issuance or renewal of any letter of credit if an Event of
Default has occurred and is continuing.
The issuance of a letter of credit pursuant to this Section 2.8
shall be deemed to be a Borrowing (except that no interest shall
accrue thereon) for purposes of, without limitation, the
satisfaction of the conditions set forth in Article VI, and in
the case of Revolving Loan Letters of Credit, shall reduce the
aggregate amount then available to be borrowed pursuant to the
Revolving Loan Commitments of the Banks then in effect by an
amount equal to the undrawn face amounts of such Revolving Loan
Letters of Credit.
No Purchase Agreement Letter of Credit or Capital
Expenditure Letter of Credit (other than a replacement of or
substitution for any such letter of credit), shall be issued
after the date hereof.
Immediately upon the issuance of each letter of credit,
each Bank shall be deemed to, and hereby agrees to, have
irrevocably purchased from the Agent a participation in such
letter of credit and drawings thereunder in an amount equal to
such Bank's Pro Rata Share of the maximum amount which is or at
any time may become available to be drawn thereunder. Promptly
following the issuance of each letter of credit, the Agent shall
send a copy of such letter of credit to each Bank.
Each letter of credit may provide that the Agent may (but
shall not be required to) pay the beneficiary thereof upon the
occurrence of an Event of Default and the declaration of the
Notes as being immediately due and payable 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 Agent (or, if all obligations under the letter
of credit shall have been indefeasibly paid in full, to the
Borrower) if no payment to the beneficiary has been made and the
final date available for drawings under the letter of credit has
passed. Each payment or deposit of funds by the Agent as
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provided in this paragraph shall be treated for all purposes of
this Agreement as a drawing duly honored by the Agent under the
related letter of credit.
(b) Whenever the Borrower desires the issuance or
renewal of a letter of credit, it shall deliver to the Agent a
written notice no later than 12:00 noon (New York time) at least
ten (10) days (or such shorter period as may be agreed to by the
Agent in any particular instance) in advance of the earlier of
(i) the date, if any, by which the Agent is required to give the
beneficiary notice of non-renewal pursuant to any particular
letter of credit, or (ii) the proposed date of issuance or
renewal. That notice shall specify the proposed date of
issuance or renewal (which shall be a Business Day), the face
amount of the letter of credit, the expiration date of the
letter of credit and the name and address of the beneficiary.
Prior to the date of issuance or renewal, the Borrower shall
specify a precise description of the documents and the verbatim
text of any certificate to be presented by the beneficiary
which, if presented by the beneficiary prior to the expiration
date of the letter of credit, would require the Agent to make
payment under the letter of credit; provided that the Agent, in
its sole judgment, may require changes in any such documents and
certificates; and provided further that each letter of credit
shall provide that payment against a conforming draft is not
required to be made thereunder prior to the close of business on
the third Business Day following presentment of such draft. In
determining whether to pay under any letter of credit, the Agent
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 comply on their face
with the requirements of that letter of credit. The Borrower
hereby requests that the Agent, until it shall receive written
notice from the Borrower to the contrary, renew on an annual
basis each of the Purchase Agreement Letters of Credit issued on
March 29, 1988 and each of the Revolving Loan Letters of Credit
outstanding on the date hereof and the Capital Expenditure
Letter of Credit.
(c) In the event of any request for drawing under any
letter of credit by the beneficiary thereof, the Agent shall
notify the Borrower and the Banks on or before the date which is
two Business Days prior to the date on which the Agent intends
to honor such drawing, and the Borrower shall reimburse the
Agent on the day on which such drawing is honored in an amount
in same day funds equal to the amount of such drawing, provided
that, anything contained in this Agreement to the contrary
notwithstanding (i) the Borrower shall be deemed to have given
a Notice of Borrowing to the Agent for the Banks to make a Prime
Rate Loan on the date on which such drawing is honored in an
amount equal to the amount of such drawing, and (ii) subject to
satisfaction or waiver of the conditions specified in Section
6.2 or Section 6.4, as applicable, the Banks shall, on the date
of such drawing, make a Prime Rate Loan in the amount of such
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drawing, the proceeds of which shall be applied directly by the
Agent for the amount of such drawing.
(d) In the event that the Borrower shall fail to
reimburse the Agent as provided in Section 2.8(c) in an amount
equal to the amount of any drawing honored by the Agent under a
letter of credit issued by it, the Agent shall promptly notify
each other Bank of the unreimbursed amount of such drawing and
of such Bank's respective participation therein. Each Bank
shall make available to the Agent an amount equal to its
respective participation in same day funds, at the office of the
Agent specified in such notice not later than 1:00 P.M. (New
York time) on the Business Day after the date notified by the
Agent. In the event that any Bank fails to make available to
the Agent the amount of such Bank's participation in such letter
of credit as provided in this Section 2.8(d), the Agent shall be
entitled to recover such amount on demand from the Bank together
with interest at the customary rate set by the Agent for the
correction of errors among banks for three Business Days and
thereafter at the Federal Funds Rate. The Agent shall
distribute to each other Bank which has paid all amounts payable
by it under this Section 2.8(d) with respect to any letter of
credit issued by the Agent such other Bank's Pro Rata Share of
all payments received by the Agent from the Borrower in
reimbursement of drawings honored by the Agent under such letter
of credit when such payments are received.
(e) The Borrower agrees to pay the Agent, monthly in
arrears, for the benefit of the Banks a letter of credit fee for
each Revolving Loan Letter of Credit, Purchase Agreement Letter
of Credit and Capital Expenditure Letter of Credit, equal to two
and one-half percent (2-1/2%) per annum of the undrawn face amount
of such letter of credit available for drawing from time to
time.
The Borrower agrees to pay such other fees and amounts
with respect to each letter of credit issued by the Agent which
the Borrower has so agreed to pay and to pay such other fees
which otherwise are mutually agreeable to the Borrower and to
the Required Banks.
(f) The obligation of the Borrower to reimburse the
Agent for drawings made under the letters of credit issued by it
shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under
all circumstances including, without limitation, 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 the Borrower 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
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acting), the Agent or any other Person, whether in connection
with this Agreement, the transactions contemplated herein or
any unrelated transaction (including any underlying transac-
tion between Borrower or one 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 the Agent 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 consti-
tute gross negligence or willful misconduct of the Agent as
finally determined by a court of competent jurisdiction;
(v) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that an Event of Default shall have
occurred and be continuing.
(g) 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, or (B) compliance by the Agent or any of
the Banks with any direction, request or requirement (whether or
not having the force of law) of any governmental or monetary
authority including, without limitation, Regulation D:
(i) the Agent or any Bank shall be subject to any tax,
levy, charge or withholding of any nature or to any variation
thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this Section 2.8, whether
directly or by such being imposed on or suffered by the Agent
or such Bank;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any
letters of credit issued by the Agent under this Section 2.8
and participated in by the Banks; or
(iii) there shall be imposed on the Agent any other
condition regarding any letter of credit issued pursuant to
this Section 2.8;
and the result of the foregoing is to directly or indirectly
increase the cost to the Agent or any Bank of issuing, making or
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maintaining any letter of credit, or to reduce the amount
receivable in respect thereof by the Agent or any Bank, then and
in any case the Agent may, and at the request of any affected
Bank, shall, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced,
notify the Borrower and the Borrower shall pay within two (2)
Business Days of such notification such amounts as the Agent may
specify to be necessary to compensate the Agent or any Bank for
such additional cost or reduced receipt, together with interest
on such amount from the date demanded until payment in full
thereof at a rate equal at all times to the Default Rate. The
determination by the Agent or any affected Bank, as applicable,
of any amount due pursuant to this Section 2.8(g) as set forth
in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest error, be
final and conclusive and binding on all of the parties hereto.
The Borrower's obligations under this Section 2.8(g) shall
survive payment in full of the Notes and termination of this
Agreement.
(h) In addition to amounts payable as elsewhere provided
in this Section 2.8 the Borrower hereby agrees to protect,
indemnify, pay and save the Agent and the Banks 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
the Agent and the Banks may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any
letters of credit, other than as a result of the gross
negligence or willful misconduct of the Agent or any Bank as
determined by a court of competent jurisdiction, or (ii) the
failure of the Agent 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 (1) the Borrower, and (2) the Agent and the
Banks, the Borrower assumes all risks of the acts and omissions
of, or misuse of any letters of credit issued by the Agent by,
the respective beneficiaries of such letters of credit. In
furtherance and not in limitation of the foregoing, neither the
Agent nor any of the Banks shall 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
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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 the Agent including, without limitation, any
Government Acts. None of the above shall affect, impair, or
prevent the vesting of any of the Agent's rights or powers
hereunder.
In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or
omitted by the Agent under or in connection with the letters of
credit issued by it or the related certificates, if taken or
omitted in good faith, shall not put the Agent under any
resulting liability to Borrower.
Notwithstanding anything to the contrary contained in
this Section 2.8(h), the Borrower shall have no obligation to
indemnify the Agent in respect of any liability incurred by the
Agent arising solely out of the gross negligence or willful
misconduct of the Agent, as determined by a court of competent
jurisdiction, or out of the wrongful dishonor by the Agent of a
proper demand for payment made under the letters of credit
issued by it. The Borrower's obligations under this Section
2.8(h) shall survive the repayment in full of the Notes and the
termination of this Agreement.
(i) Any monies required to be paid by the Borrower by
either of Sections 3.1 or 3.2 with respect to the amount by
which the aggregate undrawn face amount of the Revolving Loan
Letters of Credit plus the Revolving Loans outstanding exceeds
the aggregate of the Revolving Loan Commitments of the Banks or
the amount by which the aggregate undrawn face amount of Purchase
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Agreement Letters of Credit and the Capital Expenditure
Letter of Credit exceeds the aggregate of the Standby Letter of
Credit Commitments of the Banks, shall be held in trust by the
Agent for the Banks and such funds shall be used to reimburse
the Banks to the extent of draws by the beneficiaries on
outstanding Revolving Loan Letters of Credit, Purchase Agreement
Letters of Credit and the Capital Expenditure Letter of Credit
or shall be refunded to the Borrower to the extent that such
letters of credit expire without having been renewed and have
not been drawn upon by the beneficiaries thereof; provided,
however, that any funds held in such account shall be invested
by the Agent (to the extent the Agent is able to do so) on
behalf of the Borrower at the direction of the Borrower in
Permitted Investments selected by the Borrower and having a
maturity selected by the Borrower with the approval of the
Agent. Any such investments shall be held by the Agent or under
the control of the Agent. The interest accruing on such
investments and any profits realized from such investments shall
be, after giving effect to the reimbursement of the Banks for
draws under letters of credit as provided for above, paid to the
Borrower; provided that any loss resulting from such investments
shall be charged to and be payable by the Borrower within two
(2) Business Days after demand by the Agent.
Section 2.9 Interest Periods.
(a) At the time it gives any Notice of Borrowing, the
Borrower shall have the right to elect, by giving the Agent
written notice, the interest period (each an "Interest Period")
applicable to any Eurodollar Rate Loan and CD Rate Loan, which
Interest Period shall, at the option of the Borrower (i) in the
case of Eurodollar Rate Loans be a one, two, three, four or six
month period, and (ii) in the case of CD Rate Loans be a 30, 60,
90, 120 or 180 day period, provided that:
(A) the Interest Period for any Loan shall commence on
the date of such Borrowing and each Interest Period occurring
thereafter with respect to such Loan shall commence on the day
on which the next preceding Interest Period expires;
(B) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided, however,
that if any Interest Period with respect to a Eurodollar Rate
Loan would otherwise expire on a day which is not a Business
Day and after which no Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business
Day; and
(C) no Interest Period shall extend beyond the Term Loan
Maturity Date, the Revolver Termination Date, or the Standby
Letter of Credit Loan Maturity Date, as the case may be.
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The Interest Period applicable to Prime Rate Loans shall be the
period ending on the date on which such Prime Rate Loan is
repaid or, pursuant to a Notice of Borrowing in accordance with
Section 2.5, the Prime Rate Loan is converted into a Eurodollar
Rate Loan or CD Rate Loan.
(b) If the Borrower has selected an Interest Period with
respect to a CD Rate Loan or a Eurodollar Rate Loan which
extends beyond a date on which the Borrower is required to make
a prepayment of principal in respect thereof as a result of a
mandatory prepayment pursuant to Section 3.6, the Borrower shall
be deemed to have selected, with respect to the amount to be
repaid, an Interest Period which will expire on or prior to the
date on which such amount is required to be paid (the "Interest
Period Termination Date"). For the period, if any, commencing
on the Interest Period Termination Date and ending on the date
on which such prepayment is required to be made, the Borrower
shall be deemed to have reborrowed the CD Rate Loan or
Eurodollar Rate Loan, as the case may be, to the extent of the
amount to be repaid, as a Prime Rate Loan. The remainder, if
any, of such CD Rate Loan or Eurodollar Rate Loan, as the case
may be, shall have the same Interest Period as if no mandatory
prepayment was made during such Interest Period.
Section 2.10 Increased Costs, Illegality, etc.
(a) In the event that any Bank shall have determined
(which determination shall, absent manifest error, be final and
conclusive and binding upon all parties):
(i) on any date for determining the Eurodollar Rate or
CD Rate for any Interest Period, that by reason of any changes
arising after the date of this Agreement affecting the
Interbank Eurodollar market or the secondary certificate of
deposit market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis
provided for in the definition of Eurodollar Rate or CD Rate,
as the case may be; or
(ii) at any time, that by reason of (A) any change since
the date of this Agreement in any applicable law or govern-
mental rule, regulation, guideline or order (or any official
interpretation thereof and including the introduction of any
new law or governmental rule, regulation, guideline or order),
and/or (B) in the case of Eurodollar Rate Loans or CD Rate
Loans, other circumstances affecting such Bank, the Interbank
Eurodollar market or the secondary certificate of deposit
market or the position of such Bank in the relevant market
(such as, for example but not limited to, a change in official
reserve requirements, but excluding reserve requirements which
have been included in calculating the CD Rate or the
Eurodollar Rate for a given Interest Period) shall subject any
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Bank to any tax, duty or other charge with respect to its CD
Rate Loans or Eurodollar Rate Loans or its Notes or shall
change the basis of taxation of payments to any Bank (or its
applicable lending office) of the principal of or interest on
its CD Rate Loans or Eurodollar Rate Loans or any other
amounts due under this Agreement with respect to its CD Rate
Loans or Eurodollar Rate Loans (except for changes in the rate
of tax on the overall net income of such Bank or its
applicable lending office imposed by the jurisdiction in which
such Bank's principal executive office or lending office is
located) such that the CD Rate, or the Eurodollar Rate, as the
case may be, shall not represent the effective cost to such
Bank for funding or maintaining the affected CD Rate Loan or
Eurodollar Rate Loan; or
(iii) at any time, that the making or continuance of any
CD Rate Loan or Eurodollar Rate Loan has become unlawful by
compliance by such Bank in good faith with any law, govern-
mental rule, regulation, guideline or order, or has become
impracticable as a result of a contingency occurring after the
date of this Agreement; or
(iv) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any
Loans or commitments to make Loans (but excluding reserve
requirements which have been included in calculating any
interest rate with respect thereto);
then and in any such event, the Bank shall on such date give
notice (by telephone confirmed in writing) to the Borrower and
to the Agent of such determination (which notice the Agent shall
promptly transmit to each of the other Banks). Thereafter (A)
in the case of clauses (i) and (ii), the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts
(in the form of an increased rate of, or a different method of
calculating, interest or otherwise as the Bank in its sole
discretion shall determine) as shall be required to cause such
Bank to receive interest with respect to (x) its affected
Eurodollar Rate Loan at a rate per annum which shall be an
amount equal to the applicable Borrowing Margin then in effect
in excess of the effective cost to the Bank to make or maintain
such Eurodollar Rate Loan, and (y) its affected CD Rate Loan, at
a rate per annum which shall be an amount equal to the
applicable Borrowing Margin then in effect in excess of the
effective cost to the Bank to make or maintain such CD Rate Loan
(in the case of (x) and (y) a written notice as to additional
amounts owed such Bank, showing the basis for such calculation
thereof, shall be given to the Borrower by such Bank and shall,
absent manifest error, be final and conclusive and binding on
all of the parties hereto), and (B) in the case of clause (iii)
the Borrower shall take one of the actions specified in Section
2.10(b) as promptly as possible and, in any event, within the
time period required by law.
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(b) At any time that any of its CD Rate Loans or
Eurodollar Rate Loans are affected by the circumstances
described in Section 2.10(a), the Borrower may (and in the case
of a CD Rate Loan or Eurodollar Rate Loan affected pursuant to
Section 2.10(a)(iii) shall) either (i) if the affected CD Rate
Loans or Eurodollar Rate Loans are being made pursuant to a
Borrowing, withdraw the related Notice of Borrowing by giving
the Agent telephonic (confirmed in writing) notice thereof on
the same date that the Borrower was notified by the Bank
pursuant to Section 2.10(a), or (ii) if the affected CD Rate
Loan or Eurodollar Rate Loan or Loans are then outstanding,
reborrow each CD Rate Loan or Eurodollar Rate Loan so affected
(after the maturity thereof) as a Prime Rate Loan or Loans
provided that if more than one Bank is affected at any time,
then all affected Banks must be treated the same pursuant to
this Section 2.10(b).
(c) Promptly after giving any notice to the Borrower
pursuant to Section 2.10(a), any Bank giving such notice will
use its best efforts to take such action, including the
designation of one of its offices located at an address other
than that set forth in Section 9.3 as the office from which any
of its Pro Rata Share of any Borrowings will be made after such
designation, as may be necessary to avoid the need for, or
reduce the amount of, any payment to which such Bank would
otherwise be entitled pursuant to Section 2.10(a), provided that
such action will not, in the reasonable judgment of such Bank,
be otherwise disadvantageous to such Bank.
(d) Without limiting the foregoing, in the event that
any Bank shall have determined that the adoption of any law,
treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, or any change
therein or in the interpretation or application thereof, or
compliance by any Bank or any corporation controlling such Bank
with any request or directive regarding capital adequacy
(whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction, does or
shall have the effect of increasing the amount of capital
required to be maintained by such Bank or such corporation
(including, without limitation, with respect to any Bank's
Commitment), then the Borrower shall from time to time, within
five Business Days after written notice and demand from such
Bank (with a copy to the Agent), pay to the Agent, for the
account of such Bank, additional amounts sufficient to
compensate such Bank for the cost of such additional required
capital to the extent not otherwise reflected in the calculation
of the Prime Rate, CD Rate and the Eurodollar Rate, as
applicable. A certificate as to the amount of such cost,
submitted to the Borrower and the Agent by such Bank, shall,
absent manifest error, be final, conclusive and binding for all
purposes, such certificate to be prepared in good faith and to
set forth in reasonable detail a reasonable basis for the
calculation of such amount.
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(e) The Borrower's obligations under this Section 2.10
shall survive the payment in full of the Notes and the
termination of this Agreement.
Section 2.11 Compensation. The Borrower shall
compensate each Bank, upon its written request (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 such Bank to lenders of funds
borrowed by it to make or carry its CD Rate Loans or Eurodollar
Rate Loans to the extent not recovered by the Bank in connection
with the re-employment of such funds and including the
compensation payable by such Bank to a Person to which the Bank
has participated all or a portion of such Borrowing) and any
loss sustained by such Bank in connection with the re-employment
of such funds (including, without limitation, a return on such
re-employment that would result in such Bank receiving less than
it would have received had such CD Rate Loan or Eurodollar Rate
Loan remained outstanding until the last day of the Interest
Period applicable to such CD Rate Loans or Eurodollar Rate
Loans) which the Bank may sustain as a result of: (i) for any
reason (other than a default by such Bank or the Agent) a
Borrowing of CD Rate Loans or Eurodollar Rate Loans does not
occur on a date specified therefor in a Notice of Borrowing
(whether or not withdrawn); (ii) any payment, prepayment or
reborrowing of any of its CD Rate Loans or Eurodollar Rate Loans
occurring for any reason whatsoever on a date which is not the
last day of an Interest Period applicable thereto; (iii) any
prepayment of any of its CD Rate Loans or Eurodollar Rate Loans
not being made on the date specified in a notice of payment
given by the Borrower; or (iv) (A) any other failure by the
Borrower to repay its CD Rate Loans or Eurodollar Rate Loans
when required by the terms of this Agreement or (B) an election
made by the Borrower pursuant to Section 2.10(b); provided,
however, that so long as no Event of Default has occurred and is
continuing, the Borrower shall not incur any liability under
this Section 2.11 in the event that the action by the Borrower
which would otherwise require compensation of any Bank was taken
at the written request or demand of any Bank or the Agent.
Section 2.12 Responsibility for Making Loans. No Bank
shall be responsible for any default by any other Bank in its
obligation to make Loans hereunder and each Bank shall be
obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to fulfill its
Commitment hereunder.
Section 2.13 Swing Line Revolving Loans.
(a) Swing Line Revolving Loan Commitment. Subject to
the terms and conditions of this Agreement and in reliance upon
the representations and warranties of the Borrower set forth
herein and in the other Loan Documents, Swing Line Revolving Lender
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hereby agrees to make a portion of the total Revolving
Loan Commitments of the Banks available to the Borrower at any
time and from time to time and prior to the Revolver Termination
Date upon notice as set forth in Section 2.13(b) below in an
aggregate principal amount of up to $25 million by making Swing
Line Revolving Loans, notwithstanding the fact that the amount
of such Swing Line Revolving Loans, when aggregated with Swing
Line Revolving Lender's outstanding Revolving Loans and its Pro
Rata Share of the aggregate undrawn face amount of Revolving
Loan Letters of Credit, may exceed Swing Line Revolving Lender's
Revolving Loan Commitment in effect from time to time. Swing
Line Revolving Lender's commitment to make Swing Line Revolving
Loans pursuant to this Section 2.13(a) is herein called its
"Swing Line Revolving Commitment." In no event shall the
aggregate principal amount of Swing Line Revolving Loans
outstanding at any time exceed the Swing Line Revolving
Commitment and in no event shall the sum of the aggregate
principal amount of Revolving Loans, the aggregate undrawn face
amount of Revolving Loan Letters of Credit and the aggregate
principal amount of Swing Line Revolving Loans outstanding at
any one time exceed the total Revolving Loan Commitments of all
the Banks. In no event shall the Swing Line Revolving
Commitment exceed the total Revolving Loan Commitments of all
the Banks, and any reduction of the total Revolving Loan
Commitments which reduces the total Revolving Loan Commitments
below the then current amount of the Swing Line Revolving
Commitment shall result in an automatic corresponding reduction
of the Swing Line Revolving Commitment to the amount of the
total Revolving Loan Commitments as so reduced, without any
further action on the part of Swing Line Revolving Lender.
Swing Line Revolving Lender's Swing Line Revolving Commitment
shall expire on the Revolver Termination Date and all Swing Line
Revolving Loans shall be paid in full no later than the Revolver
Termination Date.
Amounts borrowed under this Section 2.13(a) may be repaid
and reborrowed provided that no amounts may be reborrowed on or
after the Revolver Termination Date. All Swing Line Revolving
Loans shall be made as Prime Rate Loans and shall not be
entitled to be converted into CD Rate Loans or Eurodollar Rate
Loans.
(b) Notice of Borrowing. Subject to Section 2.13(a),
whenever the Borrower desires to borrow under this Section 2.13,
it shall deliver to the Agent a notice of borrowing (a "Swing
Line Revolving Notice of Borrowing") no later than 12:00 noon
(New York time) on the proposed Borrowing date (which shall be
a Business Day). The Swing Line Revolving Notice of Borrowing
shall specify the amount of the proposed Swing Line Revolving
Loan. In lieu of delivering the above-described Swing Line
Revolving Notice of Borrowing, the Borrower may give the Agent
telephonic notice by the required time of any proposed Borrowing
under this Section 2.13, provided, that such notice shall be
promptly confirmed in writing by delivery of a Swing Line
Revolving Notice of Borrowing to the Agent on or prior to the
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proposed Borrowing date of the requested Swing Line Revolving Loan.
Neither the Agent nor Swing Line Revolving Lender shall
incur any liability to the Borrower in acting upon any
telephonic notice referred to above which the Agent believes in
good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of the Borrower or
for otherwise acting in good faith under this Section 2.13(b)
and, upon the making of Swing Line Revolving Loans by Swing Line
Revolving Lender in accordance with this Agreement pursuant to
any telephonic notice, the Borrower shall be deemed to have
borrowed Swing Line Revolving Loans hereunder.
Each Swing Line Revolving Notice of Borrowing given
pursuant to this Section 2.13 shall be deemed a representation
that, if such Borrowing is an Initial Borrowing, this Agreement
has become effective in accordance with Section 6.2 hereof, and
if such Borrowing is not an Initial Borrowing, that all
conditions to such Borrowing set forth in Section 6.4 shall have
been complied with.
(c) Disbursement of Funds. Promptly after receipt of a
Swing Line Revolving Notice of Borrowing pursuant to Section
2.13(b) (or telephonic notice in lieu thereof), the Agent shall
notify Swing Line Revolving Lender of the proposed Borrowing.
Swing Line Revolving Lender shall make the amount of its Swing
Line Revolving Loan available to the Agent, in same day funds,
at the Payment Office not later than 1:00 P.M. (New York time)
on the Borrowing date. Provided this Agreement has become
effective in accordance with Section 6.2 hereof (if such
Borrowing is an Initial Borrowing) and that the conditions
precedent specified in Section 6.4 have been satisfied or waived
(if such Borrowing is not an Initial Borrowing), the Agent shall
make the proceeds of such Swing Line Revolving Loans available
to the Borrower on such Borrowing date by causing an amount of
same day funds equal to the proceeds of all such Loans received
by Agent at the Payment Office located in New York, New York, to
be credited to the account of the Borrower at such office of the
Agent.
(d) Participation by Banks. Swing Line Revolving
Lender, at any time in its sole and absolute discretion may,
and after seven Business Days shall, on one Business Day's
notice, require each Bank, including Swing Line Revolving
Lender, to purchase from Swing Line Revolving Lender a
participation in such Swing Line Revolving Loan, and each Bank
hereby agrees to and shall be deemed to have irrevocably
purchased from Swing Line Revolving Lender, such participation
in an amount equal to such Bank's Pro Rata Share (such Pro
Rata Share to be determined, for purposes of this subsection
(d), with respect to each Bank's Revolving Loan Commitment) of
the amount of the Swing Line Revolving Loans. Each Bank's
participation in the amount of the Swing Line Revolving Loan
shall be purchased through the making of a Prime Rate
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Revolving Loan by such Bank in an amount equal to such Bank's
Pro Rata Share of the amount of such Swing Line Revolving Loan
and for which the Borrower shall be deemed to have given a
Notice of Borrowing pursuant to Section 2.6; provided,
however, that in no event shall any Bank be required to
purchase a participation in a Swing Line Revolving Loan if
such Bank's Pro Rata Share of the amount of such Swing Line
Revolving Loan plus its outstanding Revolving Loans, its Pro
Rata Share of all other Swing Line Revolving Loans outstanding
and its Pro Rata Share of the aggregate undrawn face amount of
Revolving Loan Letters of Credit outstanding would exceed such
Bank's Revolving Loan Commitment. In the event that such
purchases are made by Banks other than Swing Line Revolving
Lender under the two immediately preceding sentences, each
such Bank shall make available to Swing Line Revolving Lender
an amount equal to its respective participation in same day
funds, at the office of Swing Line Revolving Lender located at
One Bankers Trust Plaza, New York, New York, not later than
1:00 P.M. (New York time) on the Business Day after the date
notified by Swing Line Revolving Lender. Each Bank which
purchases such a participation shall be deemed to have the
same rights of set-off and obligation to share pursuant to
Section 9.7 as it would have had if it were an assignee of
Swing Line Lender hereunder. In the event that any Bank fails
to make available to Swing Line Revolving Lender the amount of
such Bank's participation in such Swing Line Revolving Loan as
provided in this Section 2.13(d), Swing Line Revolving Lender
shall be entitled to recover such amount on demand from such
Bank together with interest at the Federal Funds Rate. The
Borrower authorizes the Agent to, upon one day's prior written
or telephone notice, charge the Borrower's accounts with the
Agent (up to the amount available in each such account) in
order immediately to pay Swing Line Revolving Lender the
amount of such participations to the extent amounts received
from the Banks, including amounts deemed to be received from
Swing Line Revolving Lender, are not sufficient to repay in
full such Swing Line Revolving Loans. Each Bank's obligation
to purchase the participation referred to in this Section
2.13(d) 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 Bank may have against Swing Line
Revolving Lender, the Borrower or any other Person for any
reason whatsoever;
(ii) the occurrence or continuance of an Unmatured
Event of Default or an Event of Default;
(iii) any adverse change in the condition (financial
or otherwise) of the Borrower or any of its Subsidiaries;
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(iv) any breach of this Agreement by the Borrower or
any other Bank;
(v) the failure to satisfy any of the conditions set
forth in Section 6.2 (if such Borrowing is an Initial
Borrowing) or any of the conditions set forth in Section 6.4
(if such Borrowing is not an Initial Borrowing); or
(vi) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
A copy of each notice given by Swing Line Revolving
Lender to the Banks in respect of any Swing Line Revolving
Loan pursuant to the immediately preceding paragraph shall be
promptly delivered by Swing Line Revolving Lender to the
Borrower.
(e) Register.
(i) The Agent shall record in a register (the "Swing
Line Revolving Register") the Swing Line Revolving Loan
Commitment from time to time of Swing Line Revolving Lender,
the Swing Line Revolving Loans made by Swing Line Revolving
Lender and each repayment with respect to the principal
amount of the Swing Line Revolving Loans of Swing Line
Revolving Lender. Any such recordation shall be conclusive,
absent manifest error.
(ii) Swing Line Revolving Lender will record on its
internal records the amount of each Swing Line Revolving
Loan made by it and each payment in respect thereof.
Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligation in
respect of such Swing Line Revolving Loan. Any such
recordation shall be conclusive, absent manifest error.
(iii) In the event of any discrepancy between amounts
recorded in the Swing Line Revolving Register and amounts
recorded in the internal records of Swing Line Revolving
Lender, the amounts recorded in the Swing Line Revolving
Register shall be conclusive, absent manifest error.
ARTICLE III
TERMINATION OF COMMITMENTS, PREPAYMENTS AND FEES
Section 3.1 Mandatory Reduction of the Revolving
Loan Commitments. If at any time the sum of the aggregate
principal amount of the Revolving Loans plus the aggregate
undrawn face amount of Revolving Loan Letters of Credit plus
the aggregate outstanding Swing Line Revolving Loans exceeds
the aggregate of the Revolving Loan Commitments of the Banks
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then in effect, the Borrower shall immediately prepay the
Amended Revolving Notes in an aggregate principal amount,
together with such additional amount as may be necessary,
equal to such excess. If an Event of Default shall have
occurred and if pursuant to Section 7.1 the Total Maximum
Commitment is terminated or the Notes become immediately due
and payable, the Revolving Loan Commitment of each Bank shall
be automatically suspended and no Bank shall thereafter have
any obligation to make any additional Revolving Loans until
such time, if ever, as all Banks shall have agreed to waive
such Event of Default.
Section 3.2 Mandatory Reduction of the Standby
Letter of Credit Commitments. The aggregate of the Standby
Letter of Credit Commitments of the Banks hereunder shall be
automatically reduced to the amounts and on the dates
indicated on Schedule 3.2, in each case without any action on
the part of or the giving of notice to the Borrower by the
Banks. If at any time the sum of the aggregate principal
amount of the Standby Letter of Credit Loans plus the
aggregate undrawn face amount of Purchase Agreement Letters of
Credit and the Capital Expenditure Letter of Credit exceeds
the aggregate of the Standby Letter of Credit Commitments of
the Banks then in effect, the Borrower shall immediately
prepay the Amended Standby Letter of Credit Notes in an
aggregate principal amount, together with such additional
amount as may be necessary, equal to such excess or, with
respect to the Purchase Agreement Letters of Credit, deposit
with the trustee for the 1974 IRB sufficient cash collateral
to permit the release to the Agent of the 1974 IRB Letter of
Credit. If an Event of Default shall have occurred and if
pursuant to Section 7.1 the Total Maximum Commitment is
terminated or the Notes become immediately due and payable,
the Standby Letter of Credit Commitment of each Bank shall be
automatically reduced to $0.
Section 3.3 Voluntary Reduction of the Commitments.
The Borrower (or such Person as is designated in writing by
the Borrower to the Banks) shall have the right, upon at least
five (5) Business Days' prior written notice to the Banks,
without premium or penalty, to reduce or terminate the
unutilized portion of the Total Maximum Commitment, in whole
at any time or in part from time to time, in a minimum amount
of $5 million (unless the Total Maximum Commitment at such
time is less than $5 million, in which case, in an amount
equal to the Total Maximum Commitment at such time) and, if
such reduction is greater than $5 million, in an integral
multiple of $1 million, provided that any such reduction shall
apply proportionately to the Maximum Commitment of each of the
Banks and, within each such Maximum Commitment, at the
discretion of the Borrower, as to the Revolving Loan
Commitments and Standby Letter of Credit Commitments. The
Total Maximum Commitment shall not be so reduced below the
aggregate principal amount of outstanding Revolving Loan
Letters of Credit, Purchase Agreement Letters of Credit and
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Capital Expenditure Letter of Credit pursuant to Section 2.8
(calculated on the basis of undrawn face amounts), and the
aggregate outstanding principal balance of Prime Rate Loans,
CD Rate Loans and Eurodollar Rate Loans prior to the last day
of the applicable Interest Period with respect thereto.
Section 3.4 Voluntary Prepayments. The Borrower may
prepay or repay, as the case may be, the Amended Term Notes
and/or the Amended Standby Letter of Credit Notes in whole at
any time or in part from time to time, as hereinafter
provided, without penalty or premium. Any partial prepayment
or repayment of the Amended Term Notes and/or the Amended
Standby Letter of Credit Notes pursuant to this Section 3.4
shall be in a minimum aggregate amount of $5 million and in
integral multiples of $1 million above such minimum; provided
that the Borrower shall prepay or repay CD Rate Loans and
Eurodollar Rate Loans incurred in connection with any portion
of the Amended Term Notes and/or the Amended Standby Letter of
Credit Notes (and the Loans evidenced thereby) being repaid in
accordance with the provisions of Section 2.11. The Borrower
shall irrevocably give notice (by telex, telegram or
telecopier, or by telephone (confirmed in writing promptly
thereafter)) to the Agent (which shall promptly advise each
other Bank) of each proposed prepayment or repayment
hereunder, prior to 12:00 noon (New York time) on the second
Business Day prior to the proposed prepayment or repayment
date (or the first Business Day in the case of Prime Rate Loan
repayments or prepayments), which notice shall specify the
proposed prepayment or repayment date (which shall be a
Business Day) and the aggregate principal amount of the
proposed prepayment or repayment.
Section 3.5 Repayments of Amended Revolving Notes.
(a) The Borrower may repay the Amended Revolving Notes
in whole at any time or in part from time to time, as
hereinafter provided, without penalty or premium; provided
that the Borrower shall repay CD Rate Loans and Eurodollar
Rate Loans incurred in connection with Revolving Loans being
repaid in accordance with the provisions of Section 2.11. The
Borrower shall irrevocably give notice (by telex, telegram or
telecopier, or by telephone (confirmed in writing promptly
thereafter)) to the Agent (which shall promptly advise each
other Bank) of each proposed repayment hereunder, prior to
12:00 noon (New York time) on the second Business Day prior to
the proposed prepayment or repayment date (or the first
Business Day in the case of Prime Rate Loan repayments), which
notice shall specify the proposed repayment date (which shall
be a Business Day) and the aggregate principal amount of the
proposed repayment.
(b) All repayments of principal made by the Borrower
pursuant to this Section 3.5 shall be applied (i) first to the
payment of the outstanding principal amount of the Swing Line
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Revolving Loans and second to the payment of the outstanding
principal amount of the Revolving Loans, (ii) with respect to
the Revolving Loans, first to the payment of Prime Rate Loans,
second to the payment of CD Rate Loans and third to the
payment of Eurodollar Rate Loans, and (iii) within each of the
CD Rate Loans and Eurodollar Rate Loans in the order of
maturity of the applicable Interest Periods.
Section 3.6 Mandatory Prepayments.
(a) If the Borrower or any of its Subsidiaries
receives any proceeds (whether in cash or securities)
attributable to the sale of an asset (other than inventory
sold in the ordinary course or the sales of Accounts
Receivable permitted by Section 5.2(m)(ii) yielding Net Cash
Proceeds in excess of $3 million or to a series of related
transactions yielding Net Cash Proceeds in excess of
$3 million, then the Borrower shall prepay the Notes promptly
(but in any event within five Business Days) to the extent
such Net Cash Proceeds are in excess of $3 million, such
prepayments shall be applied as required by Section 3.8.
For purposes hereof, "Net Cash Proceeds" means the
excess, if any, of:
(i) the gross cash proceeds received by Borrower and
its Subsidiaries from the sale or disposition of any asset
plus, as and when received, all cash payments received
subsequent to such sale or disposition representing any
deferred portion of the purchase price therefor, over
(ii) as reflected in a certificate of a Responsible
Officer delivered to the Agent in connection therewith, the
sum of (A) a reasonable reserve for any liabilities payable
incident to such sale or disposition, (B) a reasonable
reserve for the after-tax cost of indemnification payments
(fixed or contingent) attributable to seller's indemnities
to the purchaser undertaken by Borrower or its Subsidiaries
in connection with such sale or disposition, (C) the direct
costs and expenses incurred by Borrower and/or its
Subsidiaries in connection with such sale or disposition,
(D) all payments actually made on any Indebtedness which is
secured by the assets subject to such sale or disposition
which is required to be repaid out of the proceeds from such
sale or disposition, and (E) actual tax payments made or to
be made in connection with such sale or disposition.
For the purposes of determining the amount of indemnification
payments pursuant to the immediately preceding clause (ii)(B)
above, payments that by the terms of the indemnities involved
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will not, under any circumstances, be made prior to June 30,
2000 shall be disregarded.
(b) Not later than December 31st of each year,
commencing with December 31, 1995 (or, if the first Excess
Cash Flow Period does not occur until after 1995, commencing
with December 31 of the year in which the first Excess Cash
Flow Period occurs), the Borrower shall provide the Agent with
a schedule setting forth the computation of Excess Cash Flow
for the most recent Fiscal Year then ended and shall prepay
the Term Loans by an amount equal to the amount of such Excess
Cash Flow. Such prepayment shall be applied to the Loans as
required by Section 3.8(b).
(c) Prepayments made pursuant to this Section 3.6,
pursuant to Section 5.1(i), pursuant to Section 5.2(k)(ii) or
pursuant to Section 5.2(l) shall be treated according to
Section 3.7 to the extent that they are to be applied to CD
Rate Loans or Eurodollar Rate Loans for which the relevant
Interest Period has not expired at the time of prepayment and
shall be treated according to Section 3.8(b) for determining
the order of the application of such prepayments to the Loans.
Section 3.7 Other Provisions With Respect to the
Notes. Except as otherwise provided herein, no prepayment of
a CD Rate Loan or Eurodollar Rate Loan shall be made prior to
the end of the applicable Interest Period for such Loan.
Subject to the obligations of the Agent provided for in this
Section, any monies otherwise required to be used to prepay
such CD Rate Loan or Eurodollar Rate Loan and which cannot be
so applied because the relevant Interest Period for such CD
Rate Loan or Eurodollar Rate Loan has not expired (the
"Deposited Monies") shall until the end of the applicable
Interest Period when the Deposited Monies shall be applied to
make such prepayment, be held in trust by the Agent for the
Banks in an interest-bearing account and the Borrower shall
have no right to or interest in such funds and such funds
shall be used to prepay such CD Rate Loan or Eurodollar Rate
Loan at the end of the applicable Interest Period; provided,
however, that any funds held in such account shall be invested
by the Agent (to the extent the Agent is able to do so) on
behalf of the Borrower at the direction of the Borrower in
Permitted Investments selected by the Borrower and having a
maturity not exceeding the Business Day prior to the end of
the relevant Interest Period. Interest on the applicable
Notes shall continue to accrue until the Deposited Monies are
applied to the prepayment thereof. Any such investments shall
be held by the Agent or under the control of the Agent. The
interest accruing on such investments and any profits realized
from such investments shall be, after giving effect to such
prepayment of such Loans with the Deposited Monies, paid to
the Borrower; provided that any loss resulting from such
investments shall be charged to and be immediately payable by
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the Borrower upon demand of the Agent. A prepayment so made
by the Agent from such Deposited Monies shall be treated as a
prepayment by the Borrower pursuant to Section 3.4 or 3.5 and
shall be otherwise governed by such Sections.
Notwithstanding the foregoing, the Borrower may, by
written notice delivered to each of the Banks, request that
any prepayment which would otherwise be subject to the terms
of Section 3.7 be used to prepay the CD Rate Loans or
Eurodollar Rate Loans, as applicable, prior to the end of the
applicable Interest Period. In such case, upon such
prepayment, the Borrower agrees to pay any and all fees, costs
and expenses of the Banks incurred pursuant to such prepayment
in accordance with Section 2.11 hereof.
Section 3.8 Order of Prepayments and Payments.
(a) All prepayments of principal made by the Borrower
pursuant to Section 3.4, Section 3.6, Section 5.1(i),
Section 5.2(k)(ii), or Section 5.2(l) shall be applied:
(i) to the payment of the unpaid principal amount of
the Term Loan and Type A Advances then outstanding pro rata
as a pro rata reduction to each installment of principal of
the Term Loan and all Type A Advances remaining unpaid;
(ii) within the Term Loan and Type A Advances (but
subject to the requirements of clause (i) immediately
foregoing), first to the payment of Prime Rate Loans, second
to the payment of CD Rate Loans and third to the payment of
Eurodollar Rate Loans; and
(iii) within each of the CD Rate Loans and Eurodollar
Rate Loans (but also subject to the requirements of clause
(ii) hereof), in the order of the maturities of the
applicable Interest Periods.
(b) All regular installment payments of principal on
the Notes shall be applied (i) first to the payment of Prime
Rate Loans, second to the payment of CD Rate Loans and third
to the payment of Eurodollar Rate Loans, and (ii) within each
of the CD Rate Loans and Eurodollar Rate Loans, in the order
of the maturities of the applicable Interest Periods.
(c) Notwithstanding anything else to the contrary
contained herein, payments made within ten (10) Business Days
prior to the due date of an installment of principal on any
Note or Notes, to the extent that the amount of such payment
is equal to or less than the amount of such regular
installment payment coming due within such ten (10) Business
Day period, shall be applied to the next regular installment
payment of principal due on such Note or Notes in accordance
with paragraph (d) above, and any excess of such payment over
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the amount of the regular installment payment of principal due
on such Note or Notes shall be treated for all purposes as a
prepayment of principal hereunder and applied as provided for
in paragraph (a) above.
Section 3.9 Commitment Fees.
(a) The Borrower shall pay to the Agent for pro rata
distribution to each Bank (based on its Pro Rata Share of the
Revolving Loan Commitment) a commitment fee (i) for the period
commencing on the date of this Agreement to but excluding the
date upon which the aggregate principal amount of all
Revolving Loans outstanding (without giving effect to any
outstanding Swing Line Revolving Loans) equals or exceeds $66
million (the "Increase Date") at a rate equal to three-eights
of one percent (3/8 of 1%) per annum of the aggregate of each
Bank's unused Revolving Loan Commitment (without giving effect
to any outstanding Swing Line Revolving Loans) and (ii) for
the period commencing on the Increase Date to and including
the Revolver Termination Date at a rate equal to one-half of
one percent (1/2 of 1%) per annum of the aggregate of each
Bank's unused Revolving Loan Commitment (without giving effect
to any outstanding Swing Line Revolving Loans).
(b) Unless otherwise specified, any accrued Commitment
Fee shall be due and payable monthly on the last Business Day
of each calendar month and on the Revolver Termination Date
or upon such earlier date as the Revolving Loan Commitment
shall be terminated. The Commitment Fees shall be computed on
the basis of a year consisting of 365/366 days (as applicable)
and actual days elapsed.
Section 3.10 Other Fees. The Borrower shall pay to
the Agent for distribution to each Bank the additional fees
provided for in the commitment letter and term sheet dated
May 17, 1995 between the Borrower and the Agent not paid prior
to the date hereof. The Borrower shall also pay to each Bank
such other fees (if any) as are provided for in any separate
letter agreements entered into by the Borrower with such Bank;
such payments to be made at the times specified in any such
letters.
Section 3.11 Net Payments.
(a) All payments by the Borrower under this Agreement
and the Notes shall be made without set-off or counterclaim
and, with respect to CD Rate Loans and Eurodollar Rate Loans,
in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of
any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any
political subdivision or taxing authority thereof, other than
any tax on or measured by the net income of a Bank pursuant to
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the income tax laws of the United States of America or the
jurisdictions where such Bank's principal or lending offices
are located (collectively the "Taxes")) shall not be less than
the amounts otherwise specified to be paid under this
Agreement and the Notes. A certificate as to any additional
amounts payable to a Bank under this Section submitted to the
Borrower by such Bank shall show in reasonable detail the
amount payable and the calculations used to determine in good
faith such amount and shall, absent manifest error, be final,
conclusive and binding upon all parties hereto. With respect
to each deduction or withholding for or on account of any
Taxes, the Borrower shall promptly furnish to each Bank such
certificates, receipts and other documents as may be
reasonably required (in the judgment of such Bank) to
establish any tax credit to which such Bank may be entitled.
(b) All payments (including prepayments) to be made by
the Borrower on account of principal and interest shall be
made to the Agent at its Payment Office in New York, New York
for the ratable account of the Banks not later than 12:00 noon
(New York time) on the date when due in each case in lawful
money of the United States of America and in immediately
available funds; provided, however, that if such payments or
prepayments are received by the Agent at its Payment Office
not later than 10:00 A.M. (New York time), such payment or
prepayment shall be deemed to constitute payment or prepayment
of the Banks and no further interest shall accrue thereon. If
any payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the
next succeeding Business Day, and, with respect to payments on
principal and interest thereon, interest thereon shall be
payable at the then applicable rate during such extension.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the
Borrower. The Borrower represents and warrants to the Agent
and to each Bank as follows:
(a) Organization, Standing, etc. Each of the Borrower
and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of the Borrower and its
Subsidiaries is duly qualified and in good standing as a
foreign corporation, and is duly authorized to do business, in
each jurisdiction in which the failure to so qualify would
have a material adverse effect, either individually or in the
aggregate, on the business, condition, assets or operations of
the Borrower and its Subsidiaries, either individually or
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taken as a whole. Each of the Borrower and its Subsidiaries
has all requisite corporate power and authority to own its
assets and to carry on its business as presently conducted and
as proposed to be conducted. The Borrower has all requisite
power and authority (corporate and otherwise):
(i) to execute, deliver and perform its obligations
under each of the Basic Agreements and the Notes;
(ii) to assign and grant a security interest or mort-
gage in the Collateral and the Mortgaged Property in the
manner and for the purpose contemplated by the Security
Agreement and the Mortgages, respectively;
(iii) to issue the Notes in the manner and for the
purposes contemplated by this Agreement; and
(iv) to execute, deliver and perform its obligations
under all other agreements and instruments executed and
delivered by it pursuant to or in connection with any Basic
Agreement to which it is a party or bound thereby.
The Borrower has no direct or indirect Subsidiaries other than
GMA, GCC, Gaylord de Mexico and the Gaylord Foundation.
(b) Stock of the Borrower. All shares of capital
stock of the Borrower have been duly authorized and validly
issued, are fully paid and non-assessable. No authorized but
unissued or treasury shares of capital stock of the Borrower
are subject to any option, warrant, right to call or
commitment of any kind or character, except as expressly set
forth in Schedule 4.1(b). The Borrower does not have any
outstanding stock or securities convertible into or
exchangeable for any shares of its capital stock, or any
rights issued to any Person (either preemptive or other) to
subscribe for or to purchase, or any options for the purchase
of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any
character relating to any of its capital stock or any stock or
securities convertible into or exchangeable for any of its
capital stock other than as expressly set forth in Schedule
4.1(b) or in the certificate of incorporation of the Borrower.
Except as disclosed in Schedule 4.1(b), pursuant to the
certificate of incorporation of the Borrower or as required
pursuant to incentive arrangements providing for the issuance
of up to 20% of the outstanding Common Stock of the Borrower
to its management or the management of any of its Subsidiaries
(which plans in no event will obligate the Borrower to
repurchase shares of Common Stock for a price in excess of the
aggregate net book value of the shares plus an amount
representing the cost of funds), neither the Borrower nor any
of its Subsidiaries is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any
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shares of its capital stock or any convertible securities,
rights or options of the type described in the preceding
sentence.
(c) Stock of Subsidiaries. All of the issued and
outstanding shares of capital stock of each of the
Subsidiaries of the Borrower are owned directly by the
Borrower. On the date of the Initial Borrowing hereunder and
at all times thereafter:
(i) all shares of capital stock of each of the
Subsidiaries of the Borrower will have been duly authorized
and validly issued, will be fully paid and non-assessable
and will be owned by the Borrower (except for less than one
percent (1%) of the capital stock of Gaylord de Mexico,
which shares are owned by certain employees of the Borrower
and its Subsidiaries), free and clear of all Liens other
than Permitted Liens arising other than as a result of a
voluntary act of the Borrower or the applicable Subsidiary;
and
(ii) no authorized but unissued or treasury shares of
capital stock of any Subsidiary of the Borrower are subject
to any option, warrant, right to call or commitment of any
kind or character. A complete and correct copy of each of
the certificate of incorporation and by-laws of each of GMA,
GCC, GRC and Gaylord de Mexico in effect on the date of this
Agreement has been delivered to the Agent.
(d) Conflicting Agreements and Other Matters. Except
as disclosed on Schedule 4.1(d), the execution, delivery and
performance by the Borrower of each of the Basic Agreements
and the Notes and all other agreements and instruments to be
executed and delivered by the Borrower pursuant hereto or
thereto or in connection herewith or therewith and the
assignment of, the grant of a security interest or mortgage
in, the Collateral or on the Mortgaged Property in the manner
and for the purpose contemplated by the Security Agreement and
the Mortgages, respectively, do not and will not:
(i) violate any provisions of any law, rule, regulation
(including, without limitation, Regulations G, T, X or U of
the Board), order, writ, judgment, decree, determination or
award presently in effect having applicability to the
Borrower or any of its Subsidiaries and material to the
business and operations of the Borrower and its Subsidiaries
taken as a whole;
(ii) to an extent material to the business or
operations of the Borrower and its Subsidiaries taken as a
whole, conflict with or result in a breach of or constitute
a default under the certificate of incorporation or by-laws
of the Borrower or any of its Subsidiaries or any indenture
or loan or credit agreement, or any other agreement or
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instrument, to which the Borrower or any of its Subsidiaries
is a party or by which the Borrower or any of its
Subsidiaries or any of their respective properties may be
bound or affected; or
(iii) result in (except for Permitted Liens or Liens
permitted by the Basic Agreements), or require, the creation
or imposition of any Lien of any nature upon or with respect
to any of the properties now owned or hereafter acquired by
the Borrower or any of its Subsidiaries.
Except as disclosed on Schedule 4.1(d), neither the Borrower
nor any of its Subsidiaries is in default under or in
violation of any such law, rule, regulation, order, writ,
judgment, decree, determination or award described in clause
(i) above or any indenture, agreement or instrument described
in clause (ii) above or under its certificate of incorporation
or by-laws, in each case the consequences of which default or
violation, either in any one case or in the aggregate, would
materially and adversely affect the condition (financial or
otherwise), properties, business or results of operations of
the Borrower and its Subsidiaries taken as a whole.
(e) Due Execution, etc. The execution and delivery of
each of the Basic Agreements and the Notes have been duly
authorized by the Board of Directors of the Borrower, and no
other corporate proceedings on the part of the Borrower are
necessary to authorize any of the Basic Agreements or the
Notes. Each of the Basic Agreements to which it is a party
and each Note constitutes and each other agreement or
instrument executed and delivered by the Borrower pursuant
hereto or thereto or in connection herewith or therewith
constitutes or will constitute a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower
in accordance with its respective terms subject, as to
enforcement, to bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors' rights
generally and equitable principles. The Security Agreement
creates in favor of the Banks, as security for the repayment
of the obligations secured thereby, a valid and perfected
first priority Lien (subject only to prior Permitted Liens)
upon and security interest in the Collateral, and each of the
Mortgages gives the Banks, as security for the repayment of
the obligations secured thereby, a valid and first priority
Lien (subject only to prior Permitted Liens) upon and security
interest in the respective Mortgaged Property.
(f) Indebtedness for Money Borrowed. Attached hereto
as Schedule 4.1(f) is a complete and correct list of all
Indebtedness for Money Borrowed of the Borrower and its
Subsidiaries having an outstanding balance at the date of this
Agreement equal to or greater than $350,000 (or which
aggregate more than $1 million with respect to a single
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Person or group of related Persons), showing the aggregate
principal amount which was outstanding on such date after
giving effect to the Loans. The Borrower has delivered or
caused to be delivered to the Agent a true and complete copy
of the form of each instrument evidencing Indebtedness for
Money Borrowed listed on Schedule 4.1(f) and of each
instrument pursuant to which such Indebtedness for Money
Borrowed was issued. Except as set forth in Schedule 4.1(f),
neither the Borrower nor any of its Subsidiaries, as the case
may be, is in default (either matured or unmatured) under any
agreement disclosed in Schedule 4.1(f) relating to
Indebtedness for Money Borrowed as of the date of this
Agreement or any date occurring after the date hereof as of
which this representation and warranty is deemed to be remade,
after giving effect to the transactions contemplated hereby
and thereby. The Notes constitute permitted indebtedness for
purposes of each of the Public Debt Indentures and Public
Notes.
(g) Fiscal Year. The Fiscal Year of each of the
Borrower and its Subsidiaries other than Gaylord de Mexico
ends on the last Sunday in September of each calendar year.
The fiscal year of Gaylord de Mexico ends on the last day of
December of each year.
(h) Title to Properties. Except as disclosed in
Schedule 1.1(d), the Borrower has good and marketable title
to, or a validly existing leasehold interest in, all material
items of real and personal property reflected in the most
recent balance sheet of the Borrower delivered to the Banks
pursuant to Section 4.1(k) of this Agreement or acquired by
the Borrower after September 30, 1994 except for:
(i) assets sold, transferred or otherwise disposed of
in the ordinary course of business since such date;
(ii) Permitted Liens and other Liens permitted by
Section 5.2; and
(iii) items of real and personal property not in excess
of $2 million in the aggregate.
Set forth on Schedule 4.1(h) is a list of locations which
includes (but is not necessarily limited to) all locations of
real property which is owned or leased by the Borrower and
used in the Borrower's manufacturing operations and which real
property and manufacturing operations are material to the
business of the Borrower and its Subsidiaries taken as a
whole. Except as disclosed in Schedule 4.1(h), to the
knowledge of the Borrower, there are no actual, threatened or
alleged defaults of a material nature with respect to any
leases of real property under which the Borrower is lessee or
lessor. As of the date hereof, GMA has good and marketable
title to all material assets purported to be owned by GMA, GCC
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has good and marketable title to all material assets purported
to be owned by GCC and Gaylord de Mexico has good and
marketable title to all material assets purported to be owned
by Gaylord de Mexico.
(i) Litigation, Proceedings, Licenses, Permits, etc.
Except as disclosed in Schedule 4.1(i), or as otherwise
disclosed in writing to the Agent there are no actions, suits,
proceedings or investigations pending or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or
any of its Subsidiaries, or any of its or their respective
properties or, to the actual knowledge of the Borrower after
diligent inquiry, any basis therefor (in the reasonable
judgment of the Borrower in the light of the facts and
circumstances then existing) before any court, governmental
agency or regulatory authority (Federal, state or local),
which, if determined adversely to the Borrower or any of its
Subsidiaries:
(i) would enjoin or otherwise materially interfere with
the transactions contemplated by the Basic Agreements or
have a material adverse affect on the condition (financial
or otherwise), properties, business, or results of
operations of the Borrower and its Subsidiaries taken as a
whole; or
(ii) would (individually or in the aggregate)
materially impair the Borrower's or any of its Subsidiaries'
ability to perform fully any obligations on a timely basis
which any of them has under or in connection with any Basic
Agreement or the Notes.
Neither the Borrower nor any of its Subsidiaries (1) is in
default with respect to any order of any court, arbitrator or
governmental body or is subject to or party to any order of
any court or governmental authority arising out of any action,
suit or proceeding under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair competition or
similar matters, or (2) has violated or is in violation of any
statute, rule or regulation of any governmental authority in
each case where such violation or default would materially and
adversely affect the condition (financial or otherwise),
properties, business, or results of operations of the Borrower
and its Subsidiaries taken as a whole. Except as disclosed in
Schedule 4.1(i), the Borrower and each of its Subsidiaries has
been and is current and in good standing with respect to all
governmental approvals, permits, certificates, licenses,
inspections, consents and franchises necessary to continue to
conduct its business and to own or lease and operate its
properties as heretofore conducted, owned, leased or operated,
except where failure to be so would not have a material
adverse effect on the business or properties of the Borrower
and its Subsidiaries taken as a whole.
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(j) Governmental Consents, etc. Except as disclosed
in Schedule 4.1(j) and other than those for which the pre-
scribed period of time for receipt has not expired and those
which have been obtained, no authorization, consent, approval,
license, qualification or formal exemption from, nor any
filing, declaration or registration with, any court,
governmental agency or regulatory authority or any securities
exchange is presently required in connection with the
execution, delivery and performance by the Borrower of each
Basic Agreement or the Notes or the issuance of its Notes or
the assignment of, and the grant of a security interest in or
mortgage on the Collateral or the Mortgaged Property, in the
manner and for the purpose contemplated by the Security
Agreement or the Mortgages, respectively.
(k) Financial Statements.
(i) (A) The Borrower has previously furnished to the
Agent (1) the audited consolidated statements of income and
cash flows of the Borrower and its Subsidiaries for the Fiscal
Year ended September 30, 1994 and (2) the audited consolidated
balance sheet of the Borrower and its Subsidiaries as of
September 30, 1994, in each case together with notes thereon
and the report of Deloitte & Touche L.L.P. (such statements
and balance sheet being collectively referred to herein as the
"1994 Financial Statements"). The 1994 Financial Statements
present fairly in all material respects the income and changes
in financial position of the Borrower on a consolidated basis
for the 1994 Fiscal Year ended and the financial position of
the Borrower on a consolidated basis as of September 30, 1994,
in conformity with generally accepted accounting principles
applied on a consistent basis.
(B) The Borrower has previously furnished to the
Agent (1) the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as of March 31, 1995 (the "Most
Recent Balance Sheet") and (2) the unaudited consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for the six month period and for the Fiscal
Quarter ended March 31, 1995. Except as disclosed on Schedule
4.1(k) hereto, such statements and balance sheet present
fairly in all material respects the income and changes in
financial position of the Borrower for the second Fiscal
Quarter of 1995 and the financial position of the Borrower on
a consolidated basis as of the end of the second Fiscal
Quarter of 1995, respectively, in each case, in conformity
with generally accepted accounting principles applied on a
consistent basis.
(ii) The Borrower has also previously furnished to the
Agent the audited consolidated statements of income and cash
flows and balance sheets of the Borrower for all other Fiscal
Years ended prior to the date hereof, together with notes thereon
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and the report thereon of Deloitte & Touche L.L.P.
Except as disclosed in Schedule 4.l(k), such statements of
income and cash flows present fairly in all material respects
the income and changes in financial position of the Borrower
for the Fiscal Years then ended and such balance sheets
present fairly in all material respects the financial position
of the Borrower on a consolidated basis as at the end of such
Fiscal Years, in each case, in conformity with generally
accepted accounting principles as then applied.
(iii) As of the date of the Most Recent Balance Sheet,
the Borrower had no material liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, of
a type required by generally accepted accounting principles to
be disclosed thereon or material unsatisfied judgments or
leases for a period in excess of five (5) years which either
individually or in the aggregate are material (herein called
"Material Liabilities"), except:
(1) Material Liabilities which are fully reflected or
reserved against on the Most Recent Balance Sheet;
(2) Material Liabilities consisting of operating
leases incurred in the ordinary course of business
consistent with past practice; and
(3) Material Liabilities incurred subsequent to the
date of the Most Recent Balance Sheet in the ordinary course
of business consistent with past practice.
The reserves reflected on the Most Recent Balance Sheet for
all Material Liabilities referred to in clause (1) above are
appropriate and reasonable.
(l) No Material Adverse Change. Except by reason of
the incurrence of Indebtedness under this Agreement or as
otherwise disclosed in Schedule 4.1(l), since September 30,
1994, there has been no material adverse change in the
condition (financial or otherwise), properties, business, or
results of operations of the Borrower and its Subsidiaries
taken as a whole. The making of this representation by the
Borrower in connection with Borrowings (except for Roll-Over
Borrowings) made after the date hereof shall be with respect
to the date of the Most Recent Balance Sheet until the time of
acceptance by the Required Banks of the audited financial
statements of the Borrower for the 1995 Fiscal Year, after
which time this representation shall be made with reference to
the date of such audited balance sheet until the time of
acceptance by the Required Banks of the next audited balance
sheet of the Borrower required to be delivered hereunder and
accepted by the Required Banks thereafter. In the event that
any such subsequent audited balance sheet is not accepted by
the Required Banks, the making of this representation by Borrower
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in connection with Borrowings (except Roll-Over Borrowings)
after the date hereof shall be made with respect
to the date of the most recent audited balance sheet of the
Borrower which has been accepted hereunder (or, if none has
been so accepted, the Most Recent Balance Sheet). The audited
financial statements of the Borrower shall, for the purposes
of this Section 4.1(1), be deemed accepted by the Required
Banks if not rejected by a notice given in writing to the
Borrower by the Agent on behalf of the Required Banks within
sixty (60) days of delivery of such financial statements to
each Bank. Each Bank shall, within forty-five (45) days of
delivery of such financial statements to such Bank, notify the
Agent in writing as to whether it accepts or rejects such
financial statements for purposes of this Section. The
absence of any notice by a Bank to the Agent within the
foregoing period shall be deemed to constitute acceptance by
such Bank of such financial statements.
(m) Tax Returns and Payments. Each of the Borrower
and its Subsidiaries has filed or caused to be filed all tax
returns which are required to be filed, and has paid all
material taxes shown to be due and payable on said returns or
on any assessments made against it or any of its property and
all other material taxes, fees or other charges imposed on it
or any of its property by any governmental authority (other
than those the amount or validity of which is contested in
good faith by appropriate proceedings and with respect to
which reserves in conformity with generally accepted
accounting principles have been provided on the books of the
Borrower or such Subsidiary as the case may be); and no tax
liens have been filed and no claims are being asserted with
respect to any such taxes, fees or other charges (other than
with respect to Crown Zellerbach Corporation as disclosed in
Section 2.14 of the Gaylord Purchase Agreement or such liens
or claims, the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with generally
accepted accounting principles have been provided).
(n) Patents, etc. Except as disclosed in the Gaylord
Purchase Agreement, without known conflict with the rights of
others, the Borrower and its Subsidiaries own all of their
respective patents, trademarks, permits, service marks, trade
names, copyrights, licenses and know-how, or have all rights
to use the foregoing, which failure to so own or have rights
to use, would have a material adverse effect on the present
and planned future conduct of their respective businesses.
(o) ERISA. No Plan and no trust created under any
Plan has been terminated as a result of which termination
Borrower or any Subsidiary has any material liability,
contingent or otherwise. All Plans have been operated and
administered in a manner so as not to result in any material
liability to the Borrower or any Subsidiary for failure to
comply with ERISA, and if intended to qualify under Section
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401(a) or 403(a) of the Code, in a manner so as not to result
in any material liability for failure to comply with the
applicable provisions thereof. Neither the Borrower nor any
of its Subsidiaries nor any of their respective Related
Persons has engaged in any transaction with respect to any
Plan pursuant to which the Borrower, any Subsidiary or any
such Related Person could be subjected to either a material
civil penalty assessed pursuant to Section 502(i) of ERISA or
a material tax imposed by Section 4975 of the Code. With
respect to each Plan, full payment has been made of all
amounts which the Borrower or any of its Subsidiaries or any
of their respective Related Persons is required under ERISA,
the Code or the terms of the Plan to have paid as a contri-
bution to such Plan as of the last day of the most recent
Fiscal Year of such Plan ended prior to the date hereof. None
of the Plans had an accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent Fiscal
Year of such Plan or as of the date any Plan was spun off from
its predecessor Plan. No material liability to the PBGC has
been or is expected by the Borrower or any of its Subsidiaries
or any of their respective Related Persons to be incurred with
respect to any Plan, and, to the knowledge of the Borrower
after diligent inquiry, with regard to the period prior to
this Agreement, there has been no Reportable Event and no
event or condition which presents a material risk of
termination of any Plan by the PBGC. Assuming that no portion
of the Loan proceeds to be advanced hereunder is attributable,
directly or indirectly, to the assets of any employee benefit
plan (within the meaning of Section 3(3) of ERISA) or plan
(within the meaning of Section 4975(e) of the Code), the
execution, performance and delivery of the Notes and the Basic
Agreements by any party thereto will not involve any
prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code for which an exemption
therefrom is not available. With respect to each Plan the
fair market value of the assets of which does not exceed the
present value of all accrued benefits thereunder, determined
in accordance with a nine percent interest rate and the other
applicable funding assumptions set forth in the most recent
actuarial valuation of such Plan (an "Underfunded Plan"), the
amount by which the aggregate present value of all accrued
benefits under all Underfunded Plans exceeds the aggregate
fair market value of all assets of such Underfunded Plans
excluding contributions payable for 1994 does not exceed $3
million. The aggregate employer contribution required to be
made to all Plans during 1995 for the 1994 Plan year is
reasonably believed by the Borrower not to exceed $2.5
million. No lien imposed under the Code or ERISA on the
assets of the Borrower, its Subsidiaries or any of their
respective Related Persons exists on any Plan; and neither
the Borrower nor any of its Subsidiaries maintains or
contributes to any employee welfare benefit plan (as defined
in Section 3 (1) of ERISA) which provides benefits to
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employees after termination of employment (other than as
required by Section 4980B of the Code) which could reasonably
be expected to have a material adverse effect on the ability
of the Borrower to perform its obligations hereunder.
No material liability has been or, to the best
knowledge of the Borrower, is expected to be incurred by the
Borrower or its Subsidiaries or any of their respective
Related Persons, with respect to any Multiemployer Plan.
Except as set forth on Schedule 4.1(o), no material withdrawal
liability has been or, to the best knowledge of the Borrower,
is expected to be incurred by the Borrower or its Subsidiaries
or any of their respective Related Persons, with respect to
any Multiemployer Plan if a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205, respectively,
of ERISA) from such Multiemployer Plan by any such Person were
to occur. Full payment has been made of all amounts which the
Borrower or its Subsidiaries or any of their respective
Related Persons is required under the terms of any
Multiemployer Plan to have paid as a contribution to such
Multiemployer Plan as of the last day of the most recent
fiscal year of such Multiemployer Plan ended prior to the date
hereof.
(p) Investment Company Act; Public Utility Holding
Company Act. Neither the Borrower nor any of its Subsidiaries
is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended; neither the Borrower nor any
of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company" or an "affiliate" of a
"holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(q) Federal Reserve Regulations. Neither the Borrower
nor any of its Subsidiaries is engaged, directly or
indirectly, principally, or as one of its important
activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying
any margin stock, within the meaning of Regulation G, T, X or
U of the Board.
(r) Disclosure. The Basic Agreements and any other
document, certificate or written statement furnished or to be
furnished to the Agent or any Bank by or on behalf of the
Borrower or any of its Subsidiaries in connection herewith or
therewith, do not contain any untrue statement of a material
fact and do not omit to state a material fact necessary in
order to make the statements made by the Borrower or such
Subsidiary contained herein and therein not misleading in
light of the circumstances in which made.
(s) Certain Fees. Except as disclosed in Schedule
4.1(s), no broker's or finder's fees or commissions will be
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payable by the Borrower or any of its Subsidiaries with
respect to the issuance of the Notes or any other transaction
contemplated hereby. Except as disclosed in Schedule 4.1(s),
no similar fees or commissions will be payable by the Borrower
or any of its Subsidiaries for any other services rendered to
the Borrower or any of its Subsidiaries in connection with the
transactions contemplated hereby. The Borrower covenants that
it will indemnify the Agent and each Bank against and hold the
Agent and each Bank harmless from any claim, demand or
liability for broker's or finder's fees or similar fees or
commissions alleged to have been incurred in connection with
any such issuance or offer, issue and sale, or the
transactions contemplated hereby.
(t) Employee Controversies. Except as disclosed in
Schedule 4.1(t) hereto or as disclosed in writing to the
Agent, there are no strikes, work stoppages or controversies
pending or, to the best of the Borrower's knowledge after
diligent inquiry, threatened, between the Borrower or any of
its Subsidiaries and any of their employees, other than
employee grievances and controversies arising in the ordinary
course of business which are not, in the aggregate, material
to the financial condition, results of operations or business
of the Borrower.
(u) Environmental Protection. Except for
circumstances specifically set forth in Schedule 4.1(u) or as
disclosed in writing to the Agent, the Borrower and each of
its Subsidiaries, as appropriate, has obtained all material
permits, licenses and other authorizations which are required
under federal, state and local laws relating to public health
and safety, worker health and safety and pollution or
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or
wastes into ambient air, surface water, ground water, or land,
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic
materials or wastes. Except for circumstances specifically
set forth in Schedule 4.1(u) or as disclosed in writing to the
Agent, the Borrower and each of its Subsidiaries, as
appropriate, is in material compliance with all material terms
and conditions of the required permits, licenses and
authorizations, and is also in material compliance with all
other material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules
and timetables contained in any federal, state or local law or
any regulations, code, plan, order, decree or judgment
relating to public health and safety, worker health and safety
and pollution or protection of the environment or any notice
or demand letter issued, entered, promulgated or approved
thereunder. Except for circumstances specifically set forth
in Schedule 4.1(u) or as disclosed in writing to the Agent,
neither the Borrower nor any Subsidiary of the Borrower has
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received notice, in writing or recorded in documents over
which such corporations have direct custody, in the form of
clear and credible information (whether written or oral),
specifying that certain facts, events or conditions,
materially interfere with or materially prevent continued
compliance with, or give rise to any material liability under
any law, common law or regulation, related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste.
(v) Deposit Accounts. The Borrower maintains no
deposit accounts (general or special) with any financial
institution other than those accounts identified on Schedule
4.1(v).
(w) Survival of Warranties. All representations and
warranties contained in his Agreement or any of the other
Basic Agreements shall survive the execution and delivery of
this Agreement and the termination hereof. Any modifications
or supplements to the disclosure contained in this Agreement
and provided by the Borrower after the date hereof shall not
be deemed a part of this Agreement until accepted in writing
by the Agent.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower.
The Borrower will:
(a) Financial Statements and Other Reports and
Information. Furnish to each Bank:
(i) Within three (3) Business Days after a Responsible
Officer of the Borrower shall have obtained knowledge of the
occurrence of an Event of Default and/or an Unmatured Event
of Default, the written statement of a Responsible Officer
of the Borrower setting forth the details of each such Event
of Default or Unmatured Event of Default which has occurred
and is continuing and the action which the Borrower proposes
to take with respect thereto.
(ii) Within forty-five (45) days after the end of each
of the first three Fiscal Quarters of each Fiscal Year of
the Borrower (a) unaudited financial statements consisting
of a consolidated balance sheet and statement of
stockholders' equity of the Borrower and its Subsidiaries as
at the end of such quarter and consolidated statements of
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income and cash flows of the Borrower and its Subsidiaries
for such quarter and for the Fiscal Year through such quar-
ter, all in reasonable detail and certified on behalf of the
Borrower by a Responsible Officer of the Borrower as having
been prepared in accordance with generally accepted account-
ing principles consistently applied (other than for normal
year-end adjustments and, unless then required by the
Borrower's reporting obligations to the Securities and
Exchange Commission or by generally accepted accounting
principles, footnote disclosure), accompanied by (b) a
certificate from such Responsible Officer addressed to the
Banks substantially in the form of Exhibit E hereto, to the
extent applicable, stating that no Event of Default and/or
no Unmatured Event of Default has come to his attention
which was continuing at the end of such quarter or on the
date of his certificate, or, if such an Event of Default or
Unmatured Event of Default has come to his attention and was
continuing at the end of such quarter or on the date of his
certificate, indicating the nature of such Event of Default
or Unmatured Event of Default and the action which the
Borrower proposes to take with respect thereto and also
setting forth detailed computations as to the Borrower's
compliance with the covenants set forth in Sections 5.1(j),
5.1(k), 5.1(1), 5.2(a), 5.2(b), 5.2(c), 5.2(e), 5.2(f),
5.2(j), 5.2(m), and 5.2(p).
(iii) Within ninety (90) days after the end of each
Fiscal Year of the Borrower (a) financial statements
consisting of a consolidated balance sheet and statement of
stockholder's equity, of the Borrower and its Subsidiaries
as at the end of such Fiscal Year and consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for such Fiscal Year, setting forth in
comparative form the corresponding figures for the preceding
Fiscal Year, certified (without adverse opinions, scope
limitations or qualifications with respect to departures
from generally accepted accounting principles other than
departures (x) which are not material, (y) which will not
cause the financial statements to fail to meet the
requirements of the Securities and Exchange Commission for
financial information to be contained or incorporated by
reference in registration statements, and (z) which do not
cause the financial statements to fail to accurately reflect
the financial condition of the Borrower) without
qualification as to scope of examination by independent
public accountants of recognized national standing and
reputation selected by the Borrower and together with a
letter from such independent public accountants to the Banks
in the form of Exhibit D (subject to modification reasonably
acceptable to the Agent), accompanied by (b) a certificate
from a Responsible Officer of the Borrower to the Banks
substantially in the form of Exhibit F, to the extent
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applicable, stating that no Event of Default and/or no
Unmatured Event of Default has come to his attention which
was continuing at the end of such Fiscal Year or on the date
of his certificate, or, if such an Event of Default or
Unmatured Event of Default has come to his attention, the
certificate shall indicate the nature of such Event of
Default or Unmatured Event of Default and the action which
the Borrower proposes to take with respect thereto, and
stating whether or not since the end of the prior Fiscal
Year there has been any material adverse change in the
condition (financial or otherwise), properties, business or
results of operations of the Borrower and its Subsidiaries
taken as a whole.
(iv) If requested by the Agent or any Bank, promptly
following their receipt by the Borrower, copies of all
financial or other written reports or statements submitted
to the Borrower or any Subsidiary of the Borrower by
independent public accountants relating to any annual or
interim audit of the books of the Borrower or any Subsidiary
of the Borrower.
(v) Promptly upon obtaining knowledge thereof, notice
of any action, suit, proceeding or investigation pending or
threatened against or affecting the Borrower or any Subsidi-
ary of the Borrower or any of its or their respective
properties before any court, governmental agency or
regulatory authority (Federal, state or local), which, if
determined adversely to the Borrower or any Subsidiary of
the Borrower, could reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise), business, properties (or affecting title
thereto) or results of operations of the Borrower and its
Subsidiaries taken as a whole, or could reasonably be
expected to materially impair the Borrower's ability to
perform its obligations under the Basic Agreements.
(vi) Promptly upon their distribution, copies of
financial statements, reports, notices and proxy statements
sent by the Borrower to any of its security holders (in
their capacity as security holders only) and all regular and
periodic reports and final registration statements or other
official statements (and all amendments or supplements
thereto) required to be filed by the Borrower or any of its
Subsidiaries with the Securities and Exchange Commission or
with any national securities exchange on which any of its
securities are listed with respect to its securities out-
standing or to be outstanding or furnished to a purchaser or
a prospective purchaser thereof, and copies of all press
releases and other statements made available generally by
the Borrower and its Subsidiaries to the public concerning
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material developments in the business of the Borrower and
its Subsidiaries.
(vii) Promptly upon receipt, copies of any notices
received or delivered pursuant to or in connection with the
Purchase Agreement, Gaylord Purchase Agreement and the
Public Debt Indentures.
(viii) Such other information respecting the
properties, business affairs, financial condition and/or
operations of the Borrower or any Subsidiary of the Borrower
as the Agent or any Bank may from time to time reasonably
request.
(ix) Within forty-five (45) days after the end of each
of the first three Fiscal Quarters of each Fiscal Year of
the Borrower and within ninety (90) days after the end of
each Fiscal Year of the Borrower, unaudited income
statements together with volume and cost breakdowns in
reasonable detail, with respect to (a) each mill of the
Borrower, (b) the consolidated container division of the
Borrower, (c) the consolidated multiwall division and
consolidated grocery bag division and (d) the consolidated
sheet feeder division of the Borrower.
(x) Within forty-five (45) days after the end of each
Fiscal Month of each Fiscal Quarter of the Borrower
(a) unaudited financial statements consisting of a
consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such month and a consolidated
statement of income and cash flows of the Borrower and its
Subsidiaries for such month and for the Fiscal Year through
such month and (b) unaudited statements of income, together
with volume and cost breakdowns in reasonable detail, with
respect to (w) each mill of the Borrower, (x) the
consolidated container division of the Borrower, (y) the
consolidated multiwall division and consolidated grocery bag
division and (z) the consolidated sheet feeder division of
the Borrower.
(b) Payment of Indebtedness, Liens, Claims, Etc. Pay
or discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, and cause
each of its Subsidiaries to pay or discharge or otherwise
satisfy at or before maturity or before they become
delinquent, as the case may be:
(i) all its and their Indebtedness which individually
or in the aggregate are material to the Borrower and its
Subsidiaries taken as a whole;
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(ii) all taxes, assessments and governmental charges or
levies imposed upon it or any of them or upon its or any of
their income or profits or any property belonging to it or
any of them prior to the date on which penalties attach
thereto except to the extent that all such taxes, assess-
ments, governmental charges, levies and penalties with
respect thereto not so paid, discharged or otherwise
satisfied do not exceed $2 million at any time outstanding
for the Borrower and its Subsidiaries taken as a whole; and
(iii) all lawful claims prior to the time they are
overdue and become a lien or charge upon any of its or any
of their property except to the extent that the aggregate of
all such claims not so paid, discharged or otherwise
satisfied do not exceed $2 million at any time outstanding
for the Borrower and its Subsidiaries taken as a whole;
provided, that neither the Borrower nor any Subsidiary of the
Borrower shall be required to pay or discharge any such tax,
assessment, charge, levy or claim while the same is being
contested by it in good faith and by appropriate proceedings
and so long as the Borrower or such Subsidiary, as the case
may be, shall have set aside on its books reserves (segregated
to the extent required by generally accepted accounting
principles) deemed by it to be adequate with respect thereto,
and provided further, that the Borrower shall not be required
to make any payment under the 12 % Indenture in violation of
Section 10.03(b) of the 12 % Indenture.
(c) Maintain Corporate Existence. Except in
connection with a Permitted Merger, preserve and maintain, and
cause its Material Subsidiaries to preserve and maintain, its
and their corporate existence, rights, privileges and
franchises in the jurisdiction of its or their incorporation,
and qualify and remain qualified, and cause its Subsidiaries
to qualify and remain qualified, as a foreign corporation
authorized to do business in each other jurisdiction in which
the failure to so qualify or remain qualified would have a
material adverse effect on its or their business or
operations.
(d) Compliance With Laws. Comply, and cause its
Subsidiaries to comply, with all laws, rules, regulations and
governmental orders (Federal, state and local) having
applicability to it or them or to the business or businesses
at any time conducted by it, where the failure to so comply
would have a material adverse effect, on the business,
condition (financial or otherwise), assets or operations of
the Borrower and its Subsidiaries taken as a whole.
(e) Perform Basic Agreements. Duly and punctually pay
and perform its obligations and cause its Subsidiaries to pay and
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perform their respective obligations under the Basic
Agreements in accordance with the terms thereof.
(f) Inspections. Permit, and cause each of its
Subsidiaries to permit, any Bank or its respective
representatives, at any reasonable time, and from time to time
upon written notice of such Bank, to visit and inspect its and
their respective properties, to examine and make copies of and
take abstracts from its and their respective records and books
of account, and to discuss its and their respective affairs,
finances and accounts with its and their respective principal
officers and, with the written consent of the Borrower, their
respective independent public accountants and other agents.
In addition to the foregoing, the Borrower agrees that a
Responsible Officer will meet with the Banks at reasonable
times at the request of the Agent to report on the Borrower's
financial and business situation.
(g) Maintain Books and Records. Keep, or cause to be
kept, and cause its Subsidiaries to keep or cause to be kept,
adequate records and books of account, in which complete
entries are to be made reflecting its and their business and
financial transactions, such entries to be made in accordance
with generally accepted accounting principles consistently
applied.
(h) ERISA.
(i) Within thirty (30) days after it or any of its
Subsidiaries or Related Persons knows or has reason to know
that a Reportable Event has occurred with respect to any
Plan (whether or not the requirement for notice of such
Reportable Event has been waived by the PBGC), deliver, or
cause such Subsidiary or Related Persons to deliver, to the
Agent and each Bank a certificate of a Responsible Officer
of the Borrower or such Subsidiary or Related Person, as the
case may be, setting forth the details of such Reportable
Event;
(ii) upon the request of the Agent or any Bank made
from time to time and promptly confirmed in writing,
deliver, or cause such Subsidiary to deliver to the Agent
and each Bank a copy of the most recent actuarial report and
annual report completed with respect to any Plan;
(iii) within ten (10) days after it or any of its
Subsidiaries or Related Persons knows or has reason to know
that any of the following have occurred with respect to any
Plan and have resulted, or will result if such Plan is
terminated, in any liability in excess of $1 million of the
Borrower or any of its Subsidiaries or Related Persons:
(A) any such Plan has been terminated;
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(B) the Plan Sponsor notifies the PBGC or any Plan
participants that it intends to terminate any such
Plan; or
(C) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate
any such Plan, deliver, or cause such Subsidiary to
deliver, to the Agent and each Bank a written notice
thereof; and
(iv) within ten (10) days after it or any of its
Subsidiaries or Related Persons knows or has reason to know
that any of them has experienced a complete withdrawal or
partial withdrawal (within the meaning of Sections 4203 and
4205, respectively, of ERISA) from any Multiemployer Plan
and such withdrawal is reasonably expected to result in
liability of $1 million or more, deliver or cause such
Subsidiary to deliver to the Agent and each Bank a written
notice thereof.
For purposes of this Section, the Borrower shall be deemed to
have knowledge of all facts known by the Plan Administrator of
any Plan of which the Borrower or any Related Person to the
Borrower is the Plan Sponsor, and each Subsidiary of the
Borrower shall be deemed to have knowledge of all facts known
by the Plan Administrator of any Plan of which such Subsidiary
or any Related Person to such Subsidiary is a Plan Sponsor.
(i) Insurance. Maintain, at its expense, such public
liability and third party property damage insurance in at
least the amounts and with such deductibles shown on Schedule
5.1(i). The Borrower shall, or shall cause its Subsidiaries
to, at its or their expense, as the case may be, keep and
maintain its assets (and those of its Subsidiaries) insured
against loss or damage by fire, theft, explosion, spoilage and
all other hazards and risks ordinarily insured against by
other owners or users of such properties in similar businesses
and, except with respect to the Borrower's East Mill located
in Antioch, California, in amounts at least equal to the full
replacement value thereof and in any event not less than the
amounts shown on Schedule 5.1(i) (including six months'
business interruption insurance), provided that the Borrower
need only maintain insurance against loss or damage with
respect to the East Mill located in Antioch, California, in an
amount equal to the market value, if any, of the equipment and
other assets located at such mill. All such policies of
insurance shall be in form and substance satisfactory to the
Agent. The Borrower shall deliver to the Agent the original
(or a certified) copy of each policy of insurance and evidence
that such policies are not cancelable or subject to reduction
of coverage amount without 30 days' prior notice to the Agent.
Such policies of insurance shall contain an endorsement naming
the Agent (for the benefit of the Banks) as loss payee and
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additional insured. The Borrower hereby directs, or shall
cause each of its Subsidiaries to direct, all insurers under
such policies of insurance with respect to its assets or those
of its Subsidiaries to pay all proceeds of such insurance
policies to the Agent for the benefit of the Banks, provided
that so long as no Event of Default shall have occurred and be
continuing, all proceeds of such insurance in amounts less
than $5 million per occurrence shall be delivered to the
Borrower. With respect to occurrences giving rise to
insurance proceeds in excess of $5 million but less than $25
million, the Agent shall release such proceeds to the Borrower
when and as necessary to pay for the repair, replacement or
reconstruction of the assets subject to such casualty,
provided that:
(i) at the time of any requested release of funds no
Event of Default shall have occurred and be continuing;
(ii) the repair, replacement or reconstruction of such
assets shall be reasonably anticipated to be completed prior
to the termination of this Agreement; and
(iii) each release of funds shall be conditioned upon
receipt by the Agent of architect's certificates, completion
certificates, waivers of mechanic's liens, or such other
documentation as the Agent may reasonably request.
With respect to occurrences giving rise to insurance proceeds
in excess of $25 million, all proceeds may, at the direction
of the Required Banks, either be applied by the Agent to the
prepayment of the Notes or may be released to the Borrower
when and as necessary to pay for the repair, replacement or
reconstruction of the assets subject to such casualty as
provided for in the preceding paragraph.
If an Event of Default shall have occurred and be continuing
hereunder, the Borrower irrevocably makes, constitutes and ap-
points the Agent (and all officers, employees or agents
designated by the Agent) as the Borrower's true and lawful
attorney-in-fact for the purpose of making, settling and
adjusting claims under all such policies of insurance,
endorsing the name of the Borrower on any check, draft,
instrument or other item of payment received by the Borrower
or the Agent pursuant to any such policies of insurance and
for making all determinations and decisions with respect to
such policies of insurance. If the Borrower, at any time or
times hereafter, shall fail to obtain or maintain any of the
policies of insurance required above or to pay any premium in
whole or in part relating thereto, then the Agent, without
waiving or releasing any Indebtedness, Default or Event of
Default by the Borrower hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto which the Agent
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deems advisable. Except as to equipment no longer used or
useful to the business of the Borrower, the Borrower shall
keep and maintain its equipment (and shall cause each of its
Subsidiaries to keep and maintain its equipment) in good
operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof
and renewals thereto so that the value thereof and the
operating efficiency of the Borrower and such Subsidiary shall
at all times be maintained and preserved. The Borrower shall
not permit its equipment (or that of any of its Subsidiaries)
to be operated or maintained in material violation of any
applicable material law, statute, rule or regulation and, with
respect to all items of leased equipment, the Borrower shall
keep, maintain, repair, replace and operate such leased
equipment in accordance with the terms of the applicable
lease, in either case, to the extent necessary to avoid
material detriment to the Borrower.
(j) Adjusted Consolidated Net Worth. The Borrower's
Adjusted Consolidated Net Worth as of the end of each Fiscal
Quarter ending on or after the Fiscal Quarter ended in March,
1995 shall not decrease from the amount of the Borrower's
Adjusted Consolidated Net Worth as of the end of the Fiscal
Quarter ended in September, 1993 (the "Baseline Date") by more
than the applicable amount set forth in the table below:
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Maximum Permitted
Decrease in Adjusted
Consolidated Net Worth
from Adjusted Consoli-
dated Net Worth on
Fiscal Quarter Ended the Baseline Date
-------------------- ---------------------
Fiscal Quarter ended
in June, 1995 $140,000,000
Fiscal Quarter ended
in September, 1995 $140,000,000
Fiscal Quarter ended
in December, 1995 $140,000,000
Fiscal Quarter ended
in March, 1996 $130,000,000
Fiscal Quarter ended
in June, 1996 $115,000,000
Fiscal Quarter ended
in September, 1996 $ 95,000,000
Fiscal Quarter ended
in December, 1996 and
each Fiscal Quarter
ended thereafter Adjusted Consolidated Net
Worth shall not decrease
below the highest Adjusted
Consolidated Net Worth of
the Borrower as of the last
day of any Fiscal Quarter
ending after the Baseline
Date minus the greater
of (1) $25,000,000 or
(2) ten percent (10%) of
the highest Adjusted
Consolidated Net Worth of
the Borrower as of the last
day of any Fiscal Quarter
ending after the Baseline
Date.
(k) Current Ratio. Maintain at all times a Current
Ratio of not less than 1.0 to 1.0.
(l) Interest Coverage Ratio. Maintain for each Fiscal
Quarter, a ratio (the "Interest Coverage Ratio") of (i) EBITDA
minus Capital Expenditures in excess of $25 million for the
four Fiscal Quarters ending on the last day of the Fiscal
Quarter set forth below to (ii) (A) Cash Interest Expense of
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the Borrower for the same four Fiscal Quarters, which is equal
to or greater than those set forth below:
Fiscal Quarter Interest Coverage Ratio
- -------------- -----------------------
First Fiscal Quarter of each Fiscal Year 1.50 to 1.00
Second, Third and Fourth Fiscal Quarters
of Each Fiscal Year 1.80 to 1.00
(ii) For purposes of this Section 5.1(l), "Cash
Interest Expense" shall be equal to actual consolidated
interest expense of the Borrower (including capitalized
interest and including any discount applicable to the
Receivables Financing Transaction) net of interest income on
Permitted Investments and funds held in escrow accounts for
the benefit of the Banks referred to in Section 3.7, minus, to
the extent included in consolidated interest expense and
without duplication noncash interest expense other than
amortization of deferred financing fees.
(m) [Intentionally omitted.]
(n) Use of Proceeds. Use the proceeds of the Loans
only for the purposes specified in the introduction to this
Agreement.
(o) IRB Letters of Credit. At least 60 days prior to
the Standby Letter of Credit Maturity Date, take all actions
necessary to deposit with the applicable trustee or
appropriate escrow agent replacement letters of credit or
sufficient cash proceeds to allow the release to the Agent of
the 1974 IRB Letter of Credit.
(p) [Intentionally omitted.]
(q) [Intentionally omitted.]
(r) Title Insurance. The Borrower shall deliver to
the Agent (with copies for each Bank) updates of the
mortgagee's policies of title insurance previously delivered
to the Agent with respect to the properties listed on
Schedule 5.1(r) hereto, together with lien priority
endorsements reasonably acceptable to the Agent pursuant to
policies on the applicable ALTA or CLTA form which will insure
that the mortgagees thereunder have a valid first mortgage
Lien (subject to Permitted Liens) in an amount at least equal
to the amounts set forth on Schedule 5.1(r), which in the
aggregate shall be at least equal to the aggregate of the Term
Loan, Revolving Loan and Standby Letter of Credit Commitments
of the Banks, subject to such exceptions as are provided for
in the Mortgages.
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(s) Maintain Banks' Liens. Preserve and maintain in
full force and effect the Liens in favor of the Banks under
the Basic Agreements.
Section 5.2 Negative Covenants of the Borrower. The
Borrower will not nor will it permit any Subsidiary of the
Borrower to:
(a) Liens.
(i) Create, incur, assume or permit to exist any Lien
on any existing or future property, asset (including stock
of Subsidiaries) other than "Excluded Margin Stock" (as
defined below), income or rights in any thereof, other than
Permitted Liens; or
(ii) take, cause or permit to be taken or cause any
action to be taken, which could create a Lien (other than a
Permitted Lien), or suffer to exist any Lien (other than a
Permitted Lien), on the capital stock of any Subsidiary of
the Borrower which would require the sharing of an interest
in such capital stock with any Person; or
(iii) enter into or assume any agreement containing a
negative pledge which would require a sharing of an interest
in any Collateral or the Mortgaged Property or prohibits or
limits the grant of any such interest.
provided, however, that the Borrower may enter into sale and
leaseback arrangements which together with Financing Lease
Obligations and Indebtedness secured as provided in clause
(viii)(c) of the definition of Permitted Liens shall not at
any time exceed the amounts permitted by Section 5.2(b)
hereof. Until all of the Borrower's Indebtedness to the Banks
hereunder shall have been fully paid and satisfied, the Banks
shall be entitled to retain security in and Liens upon all
existing and future Collateral and Mortgaged Property (and
shall be entitled to obtain a Lien upon any real property
hereafter acquired by the Borrower or any Subsidiary) and all
of the Banks' rights and remedies shall continue. For
purposes of this Section 5.2(a), "Excluded Margin Stock" means
all 'margin stock' within the meaning of Regulations G, T, U
or X of the Board of Governors of the Federal Reserve System
held by the Borrower from time to time which margin stock was
either: (1) purchased by the Borrower, provided that the
aggregate purchase price for all such purchased margin stock
shall not exceed $5,000 at any time; or (2) obtained by the
Borrower in connection with a financial restructuring of the
issuer thereof in exchange for accounts receivable from such
issuer or any of its Affiliates.
If requested by a lender of Purchase Money Indebtedness in
connection with an extension of credit to Borrower which is
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otherwise permitted by this Agreement, any lien or security
interest of the Agent for the benefit of the Banks in or upon
the asset(s) being acquired by the Borrower and financed by
such lender of Purchase Money Indebtedness would be expressly
subordinated to the lien or security interest therein of such
lender of Purchase Money Indebtedness on terms and conditions
reasonably acceptable to the Agent and such lender of Purchase
Money Indebtedness, which terms may include an agreement by
the Agent not to foreclose upon the asset(s) being financed by
the lender of Purchase Money Indebtedness without the prior
written consent of such lender of Purchase Money Indebtedness,
and the Banks hereby severally authorize the Agent to enter
into such an agreement.
(b) Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness for Money Borrowed except for the
Public Notes, this Agreement, Financing Lease Obligations in
existence on the date hereof, the promissory notes issued by
the Borrower to Fibreboard pursuant to the Purchase Agreement,
the FINEX Drafts, Indebtedness in the original principal
amount of $17 million to the Export-Import Bank of the United
States in connection with the Capital Expenditure Letter of
Credit and the industrial development and pollution control
revenue bonds, Financing Lease Obligations and purchase money
obligations listed on Schedule 1.1(c), and Indebtedness
pursuant to the Receivables Financing Transaction.
Notwithstanding the foregoing, the Borrower may incur:
(i) Indebtedness for Money Borrowed consisting of
(x) Financing Lease Obligations, (y) Indebtedness consisting
of Leaseback Obligations (as defined in the definition of
Permitted Liens), and/or (z) incurred to finance the cost
(including the cost of construction) of acquisition of
property ("Purchase Money Indebtedness"), provided the
aggregate principal amount of all Indebtedness described in
sub-clauses (x), (y) and (z) (exclusive of the aggregate
principal amount of the bonds listed on Schedule 1.1(b),
letters of credit issued by the Agent on behalf of the
Borrower and the promissory notes issued to Fibreboard in
connection with the Purchase Agreement) shall not exceed at
any time $75 million; and
(ii) liabilities of an acquired or created Subsidiary
assumed prior to the date of this Agreement pursuant to and
in accordance with Section 5.2(h) of the Fourth Agreement,
which liabilities will be reflected on the Most Recent
Balance Sheet to the extent required by generally accepted
accounting principles, provided that the amount of any debt
assumed by the Borrower (or, in the case of an acquisition
of capital stock, the amount of any debt on the books of the
acquired Person) shall not exceed $25 million in the
aggregate.
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In addition, GCC may incur up to an aggregate amount of $3
million (the "GCC Credit Amount") of Indebtedness for Money
Borrowed in the form of:
(x) unsecured letters of credit or letters of credit
secured by the working capital of GCC; or
(y) letters of credit secured by a guaranty of the
Borrower;
provided, however, that in no event shall the total amount of
letters of credit issued pursuant to clauses (x) and (y)
above, plus any letters of credit issued by the Agent on
behalf of the Banks for the account of the Borrower pursuant
to Section 2.8, which letters of credit secure obligations of
GCC, exceed the GCC Credit Amount.
(c) Guaranties. Assume, guarantee or endorse (other
than for collection or deposit in the ordinary course of
business), or otherwise become directly or contingently liable
in respect of, any obligation of any other Person, except,
without duplication:
(i) guaranties of the Borrower of Indebtedness for
Money Borrowed constituting Financing Leases of the Borrower
or any Subsidiary of the Borrower permitted by Section
5.2(b);
(ii) guaranties by the Borrower in the ordinary course
of business of the Borrower of Indebtedness not exceeding
$2.5 million individually or $7 million in the aggregate at
any time outstanding;
(iii) in connection with the PG&E Agreements or the CZ
Indemnification Agreement (both as defined in the Gaylord
Purchase Agreement), as the case may be;
(iv) obligations outstanding on the date hereof
incurred in connection with acquisitions consummated prior
to the date of this Agreement pursuant to and in accordance
with Section 5.2(h) of the Fourth Agreement, or the
corresponding provisions of the Initial Agreement, the First
Agreement, the Second Agreement, or the Third Agreement; and
(v) guaranties by the Borrower of certain obligations
of a joint venture or a subsidiary of such joint venture in
which the Borrower is a joint venturer, which joint venture
has operations in Mexico, which in no event will exceed $7
million.
(d) Lines of Business. Engage in any business or
business activity except in the same or substantially similar
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lines of business (including incidental activities) as are
conducted by them as of the date of this Agreement; provided,
however, that GMA may engage in the business of owning and
operating an aircraft, GCC may engage in the business of the
production and sale of industrial and medical chemicals and
GRC may engage in the business of purchasing accounts
receivable from the Borrower and its Subsidiaries.
(e) Dividends; Distributions; Redemptions. Declare or
pay any dividend or distribution, or purchase or redeem any
shares of any class of capital stock of the Borrower or any
Warrants, or make any other payment or distribution on or in
respect of any class of capital stock of the Borrower or any
of its Subsidiaries or set aside any amounts for any such
purposes, except that:
(i) any Subsidiary may pay dividends to the Borrower;
(ii) the Borrower may distribute shares of its Common
Stock to holders of the same or another class of its Common
Stock as a stock dividend or in connection with a stock
split;
(iii) the Borrower may repurchase shares of its Common
Stock and/or Warrants, provided that the aggregate amount of
all such repurchases (exclusive of repurchases under clauses
(v) and (vii) below) shall not exceed $250,000 in the
aggregate;
(iv) the Borrower may issue shares of its Common Stock
in redemption of or exchange for Warrants;
(v) the Borrower may repurchase fractional shares of
its Common Stock and/or fractional Warrants in connection
with any exercise or redemption of or exchange for Warrants,
provided that the aggregate amount expended for all such
repurchases shall not exceed $100,000;
(vi) the Borrower may redeem Warrants and/or shares of
Common Stock in return for shares of capital stock of the
Borrower having priority to Common Stock, provided that all
terms and conditions of the issuance of such shares having
priority shall have first been approved by the Agent; and
(vii) the Borrower may issue, as a dividend, rights to
acquire shares of its Common Stock to holders of the
Borrower's Common Stock and may purchase or redeem from the
holders thereof such rights, pursuant to a plan adopted by
the Borrower after the date hereof and referred to on
Schedule 4.1(b) hereof, provided that the aggregate amount
expended for all such repurchases or redemptions shall not
exceed $1 million.
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(f) Investments. Have or make any loan or advance to
or make any Investment in any Subsidiary or other Affiliate or
any other Person except:
(i) Permitted Investments; provided, however, that for
the purposes of this Section 5.2(f), while there are no
outstanding Revolving Loans or Swing Line Revolving Loans,
Permitted Investments shall also include:
(A) debt securities issued by a corporation (other
than the Borrower or any Subsidiary of the Borrower or
any of their respective Affiliates) organized and
existing under the laws of any state within the United
States of America with a rating on its debt securities,
at the time as of which any determination thereof is to
be made, of "Baa" (or higher) according to Moody's
Investors Service or "BBB" (or higher) according to
Standard & Poor's, and
(B) preferred stock issued by a corporation (other
than the Borrower or any Subsidiary of the Borrower or
any of their respective Affiliates) organized and
existing under the laws of any state within the United
States of America with a rating on its preferred stock,
at the time as of which any determination thereof is to
be made, of ""baa"" (or higher) according to Moody's
Investors Service or "BBB" (or higher) according to
Standard & Poor's;
(ii) Investments by the Borrower in Persons as
permitted by Section 5.2(h);
(iii) guarantees permitted by Section 5.2(c);
(iv) loans outstanding at any one time to Responsible
Officers for the purchase of Common Stock of the Borrower
not to exceed $2 million in the aggregate;
(v) loans, in addition to loans referred to in clauses
(iv) and (vi) of this Section 5.2(f), outstanding at any one
time not to exceed $1 million in the aggregate to employees
and directors of the Borrower;
(vi) loans outstanding at any one time to employees of
the Borrower for purposes of relocation not to exceed $2
million in the aggregate;
(vii) loans or advances outstanding at any one time not
to exceed $5 million in the aggregate to GCC for working
capital purposes;
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(viii) loans or advances outstanding at any one time
not to exceed $500,000 in the aggregate to GMA for working
capital purposes; and
(ix) Investments at any one time not to exceed $100,000
in the aggregate in the common or preferred stock of
companies registered under the Securities Exchange Act of
1934, as amended, and engaged in the paper packaging
products business.
(g) Mergers and Consolidations. Merge or consolidate
with or into any Person except that any Subsidiary of the
Borrower may merge or consolidate with or into the Borrower.
(h) Acquisitions. Acquire any assets or capital stock
of any Person except as permitted by Section 5.2(e) and except
that:
(i) any of the Borrower, GRC, Gaylord de Mexico, GMA
or GCC may (A) acquire assets used in the ordinary course of
business and (B) make Capital Expenditures permitted by
Section 5.2(j); and
(ii) the Borrower (A) may acquire the assets or capital
stock of any Subsidiary, and (B) may acquire capital stock
of other corporations pursuant to and in accordance with
clause (ix) of the definition of Permitted Investments.
(i) Prepayments of Indebtedness.
(i) Make any voluntary prepayment of or defease any
Indebtedness for Money Borrowed, except (A) prepayments
described in subclauses (xiv) and (xv) of the definition of
"Permitted Investments," (B) the Notes, (C) mandatory
prepayments required pursuant to the instrument evidencing
such Indebtedness for Money Borrowed or pursuant to which
any such Indebtedness for Money Borrowed was issued, (D) the
purchase and retirement of industrial development and
pollution control bonds pursuant to and in accordance with
clause (x) of the definition of Permitted Investments, and
(E) repurchases permitted by Section 5.2(e);
(ii) except as permitted by Section 5.2(r), amend,
modify, cancel or issue any securities in exchange for any
Indebtedness for Money Borrowed;
(iii) except as permitted by Section 5.2(r), amend,
modify or grant any waiver with respect to any indenture,
note or any other instrument evidencing such Indebtedness
for Money Borrowed or pursuant to which any such
Indebtedness for Money Borrowed was issued; or
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(iv) except as permitted by clause (i) of this Section
5.2(i), make any payments on or in respect of the principal
of any Public Debt or pay interest on any Indebtedness for
Money Borrowed other than as such principal or interest
becomes due and payable.
(j) Capital Expenditures. Incur or expend any Capital
Expenditure if the aggregate amount of the Capital
Expenditures (exclusive of capitalized interest) expended by
the Borrower and its Subsidiaries would exceed the following
amounts during the following periods:
Period Amount
------ ------
Fiscal Year 1995 $100 million
Fiscal Year 1996 $75 million
Fiscal Year 1997 and
each Fiscal Year
ended thereafter $50 million
Any amount available for Capital Expenditures which is
not expended during any Fiscal Year, commencing with amounts
carried over from Fiscal Year 1994 (calculated pursuant to the
Fourth Agreement), may be expended during the succeeding
Fiscal Years. The amount available for carryover into a
subsequent period shall be calculated by subtracting the
amount of Capital Expenditures expended during the current
period first from the amount of any carryover available from
the prior periods and then from the amount of the Capital
Expenditures available for the current period.
(k) Capital Stock. Except for shares of Common Stock
and/or additional Warrants issued pursuant to exercise of
Warrants:
(i) issue or distribute any shares of the Borrower's
capital stock to any Person, except as permitted by Section
5.2(e), and except for issuances of Common Stock or of
preferred stock which will not permit mandatory redemption
while any Indebtedness remains outstanding under any of the
Notes and as to which no required dividends shall be payable
while any Indebtedness remains outstanding under any of the
Notes; or
(ii) permit any Subsidiary to issue, sell or otherwise
dispose of any shares of such Subsidiary's capital stock to
any Person except to the Borrower, other than sales which
comply with the other provisions hereof (including, without
limitation, the provisions of Section 5.2(o)), provided that
all Net Cash Proceeds of all such sales shall be applied to
the Loans in accordance with the requirements of Sections
3.6 and 3.8.
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(l) Dispositions of Assets. Sell, lease, assign,
transfer or otherwise dispose of any asset or assets
constituting Collateral or the Mortgaged Property other than:
(i) cash disposed of in the ordinary course of
business or in a manner which does not violate any other
provision of this Agreement;
(ii) inventory disposed of in the ordinary course of
business;
(iii) Accounts Receivable sold or assigned in accor-
dance with Section 5.2(m)(ii); and
(iv) equipment no longer used or useful to the business
of the Borrower;
provided that in the case of clauses (iii) and (iv) the Net
Cash Proceeds from such sales in excess of $3 million shall be
applied as provided in Section 3.6.
(m) Sales of Accounts Receivable. Sell or otherwise
dispose of any Account Receivable, except for:
(i) purposes of collection;
(ii) sales on a nonrecourse basis of up to $10 million
of Accounts Receivable during any ninety (90) day period;
provided that once the Borrower has sold $10 million of
Accounts Receivable during any given ninety (90) day period,
it may not sell any additional Accounts Receivable until
ninety (90) days have passed from the date of the last sale
during such given ninety (90) day period; or
(iii) dispositions of Accounts Receivables in the
Receivables Financing Transaction.
(n) Subsidiaries. Suffer to exist any Subsidiary
other than GMA, GCC, GRC, Gaylord de Mexico and the Gaylord
Foundation, or make any investment in any Subsidiary other
than Permitted Investments, except that the Borrower may
establish or create additional Subsidiaries provided that upon
such creation or establishment, the Basic Agreements shall be
amended to the extent necessary and such filings shall be made
with the appropriate authorities in order to grant to the
Agent a first-priority perfected Lien in any assets owned by
such Subsidiary and the capital stock of such Subsidiary,
subject only to Permitted Liens.
(o) Transactions with Affiliates. Except for shares
of Common Stock and/or additional Warrants issued pursuant to
the exercise of Warrants, and except for redemptions of and/or
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exchanges permitted by Section 5.2(e), neither the Borrower
nor any of its Subsidiaries will enter into any material
transaction with any Affiliate unless:
(i) the Borrower's board of directors has determined,
in its reasonable good faith judgment, that such transaction
is in the best interests of the Borrower or such Subsidiary
based on full disclosure of all relevant facts and
circumstances;
(ii) such transaction is upon terms no less favorable
to the Borrower or such Subsidiary than could be obtained in
a comparable arm's-length transaction with a person not an
Affiliate, or is otherwise permitted by Section 5.2(f); and
(iii) such transaction is reasonably necessary or
desirable for the Borrower or such Subsidiary in the conduct
of its business (including financings, acquisitions or
divestitures).
Notwithstanding the requirements of clause (i) above, transac-
tions with any Affiliate that constitute transactions in the
ordinary course of business of such Affiliate and the Borrower
or such Subsidiary need not be approved by, or disclosed to,
the Borrower's board of directors in advance so long as they
are periodically reported to the board of directors on at
least a quarterly basis and meet the requirements of clauses
(ii) and (iii) above. In addition, transactions between the
Borrower or any of its Subsidiaries and the Gaylord Foundation
shall not be deemed in violation of this Section.
(p) Take or Pay Contracts; Leases. Enter into or
suffer to exist:
(i) any so-called "take or pay" contractual obligation
(except for those set forth on Schedule 5.2(p) hereto and
such additional "take or pay" obligations which do not, in
the aggregate, provide for annual payments in excess of
$2.5 million); or
(ii) any leases (other than Financing Leases) providing
for aggregate payments by the Borrower in excess of $20
million per annum.
(q) Powers of Attorney. Except pursuant to this
Agreement, issue any power of attorney or other contract or
agreement giving any Person power or control over the day-to-
day operations of its business except as expressly
contemplated by the Security Agreement, the Pledge Agreement
and/or the Mortgages.
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(r) Changes to Certain Obligations.
(i) Amend, modify or grant any waiver with respect to
the Public Debt Indentures, the Gaylord Purchase Agreement,
the Purchase Agreement, or the Eight Year Note, except in
any case for changes thereto which do not adversely affect
the interests of the Banks, and except as may otherwise be
consented to by the Required Banks; or
(ii) appoint any Person as paying agent under any of
the Public Debt Indentures (other than the trustee
thereunder) or appoint any Person as paying agent under the
Initial Public Debt Indentures (other than the trustee
thereunder), unless the Borrower shall have given the Agent
30 days' prior written notice of such appointment and the
replacement paying agent is reasonably acceptable to the
Agent;
provided, however, the Borrower may amend the Public Debt
Indentures to comply with the requirements of the Securities
and Exchange Commission in qualifying the Public Debt
Indentures under the Trust Indenture Act of 1939, as amended,
or to cure any ambiguity, defect or inconsistency contained
therein, provided that such action will not be adverse to the
Borrower or the Banks; and provided further that any
determination made by the Agent pursuant to this Section
5.2(r) and set forth in a writing delivered to the Borrower
that any amendment to the Public Debt Indentures is not
adverse to the Borrower and the Banks shall be binding upon
the Banks.
(s) Charter Amendments. Amend its certificate of
incorporation, except:
(i) pursuant to a Permitted Merger (provided that such
amendment shall not violate any other provision of this
Agreement);
(ii) in the case of the Borrower, amendments solely to
increase the number of authorized shares of capital stock;
(iii) to make any other change thereto which, in the
reasonable opinion of the Agent obtained prior to the
effectiveness of such amendment, does not adversely affect
the interests of the Banks; and/or
(iv) as necessary to implement anti-takeover devices
incident to the rights plan referred to in Section
5.2(e)(vii), provided such amendment does not adversely
affect the interests, rights or remedies of the Banks under
this Agreement.
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(t) GMA. In the case of GMA, own or lease any asset
other than that certain aircraft owned by GMA on the date
hereof or any similar replacement thereof and immaterial
assets associated with such aircraft or replacement aircraft.
(u) Restrictions on Subsidiaries. Permit any
Subsidiary to enter into or otherwise be bound by or suffer to
exist any contract, agreement, provision of its by-laws or
charter documents or other obligation restricting such
Subsidiary's ability to pay cash dividends on its outstanding
shares of capital stock.
(v) Certain Matters Relating to the Public Debt
Indentures and Public Notes.
(i) Change in Control. Take any action (or permit any
Person within the Borrower's control to take any action)
which would result in a "Change in Control" under Section
4.15 of either of the Public Debt Indentures.
(ii) Asset Sales. Take any action which, pursuant to
the provisions of Section 4.16 of either of the Public Debt
Indentures would require the Borrower to repurchase any
Public Notes.
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 Intentionally omitted.
Section 6.2 Conditions Precedent to Effectiveness of
this Agreement. This Agreement shall become effective upon
satisfaction and fulfillment of each of the following
conditions:
(a) To the extent requested by the Agent, the Agent
shall have received copies of searches of financing statements
filed under the Uniform Commercial Code, lien and judgment
searches, title searches and surveys (which may be updates of
surveys done previously which have been furnished to and are
satisfactory to the Agent), as appropriate, with respect to
those portions of Collateral and the Mortgaged Property for
which the Agent requires judgment searches, title searches and
surveys, which searches and surveys are reasonably
satisfactory to the Agent.
(b) The Borrower shall have paid to the Agent for
distribution to the Banks (based on their applicable Pro Rata
Shares) the portion of the additional fee provided for in the
commitment letter and term sheet dated May 17, 1995 between
the Borrower and the Banks which is then payable.
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(c) To the extent not previously delivered to the
Agent, the Agent shall have received copies of all policies of
insurance required hereby, together with loss payable
endorsements on property insurance policies in favor of the
Agent, duly executed.
(d) The Borrower shall have executed and delivered to
each Bank its Amended Term Note, Amended Revolving Note and
Amended Standby Letter of Credit Note each in the form of
Exhibit A, Exhibit B and Exhibit C, respectively, hereto
(appropriately completed), against delivery by the Banks to
the Borrower of the Notes, if any, replaced thereby, marked
"replaced".
(e) The Borrower shall have executed and delivered to
the Agent such amendments to the Mortgages, the Security
Agreement, the Pledge Agreement and the other Basic Agreements
as the Agent shall reasonably request in connection with this
Agreement, in form and substance reasonably satisfactory to
the Agent (collectively, such amendments being herein referred
to as the "Amendments"), and this Agreement (including all
schedules, exhibits, certificates, opinions and financial
statements delivered pursuant hereto), the Amendments and all
of the other Basic Agreements shall be in full force and
effect (other than any which have terminated by their terms
prior to such date) and there shall be no Event of Default or
Unmatured Event of Default which shall have occurred and be
continuing under this Agreement.
(f) The Agent shall have received proof that the
Amendments, the Mortgages, the Security Agreement and the
Pledge Agreement and appropriate financing statements and
other documents covering the Mortgaged Property and the
Collateral, as required by the Basic Agreements, have been
executed and delivered by the Borrower, and filed and/or
recorded in such jurisdictions as the Agent shall have
specified; provided, however, that with respect to the
recordations of the Amendments in the real estate records of
any jurisdictions specified by the Agent, proof of recordation
shall not be required if the Agent receives the title
insurance or binders to assure the same in accordance with
subsection (h) of this Section 6.2. The Borrower shall have
pledged to the Agent for the benefit of the Banks all of the
outstanding shares of common stock owned by the Borrower of
each of GMA, GCC, and Gaylord de Mexico pursuant to the Pledge
Agreement.
(g) The Agent shall have received the updates of the
mortgagee's policies of title insurance required by Section
5.1(r).
(h) The Agent shall have received (with a signed copy
for each Bank):
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(i) the signed opinion of Messrs. Kirkland & Ellis,
special counsel to the Borrower, dated the date hereof, in
substantially the form of Exhibit H, with such changes (if
any) therein as shall be reasonably required by the Agent
and as to such other matters as the Agent may reasonably
request, in form and substance acceptable to the Agent and
accompanied by a letter from the Borrower to such counsel in
the form of Exhibit I; and
(ii) the signed opinions of local counsel to the
Borrower in all jurisdictions in which any of the Mortgaged
Property is located, dated the date hereof, substantially
similar in form and substance to the opinions of such local
counsel delivered in connection with the Third Agreement,
with such changes therein as shall be reasonably required by
the Agent and as to such other matters as the Agent may
reasonably request, in form and substance acceptable to the
Agent and accompanied by letter from the Borrower to each
such counsel in the form of Exhibit I.
(i) The Agent shall have received, with a counterpart
for each Bank, a copy of all of the resolutions (in form and
substance satisfactory to the Agent) adopted by the Board of
Directors of the Borrower authorizing or relating to, as
appropriate:
(i) the execution, delivery and performance of this
Agreement, the Amendments, the Notes and other Basic
Agreements and the other documents and instruments provided
for herein and therein;
(ii) the consummation of the transactions contemplated
hereby and thereby; and
(iii) the granting and confirmation of the Liens,
pledges, mortgages and security interests pursuant to the
Security Agreement, the Pledge Agreement and the Mortgages,
as amended by the Amendments;
all certified by the Secretary or Assistant Secretary of the
Borrower on the date hereof. Such certificate shall state
that the resolutions set forth therein have not been amended,
modified, revoked or rescinded as of such date and are at such
date in full force and effect.
(j) The Agent shall have received, with a signed
counterpart for each Bank, a certificate of the Secretary or
an Assistant Secretary of the Borrower, dated the date hereof,
as to the incumbency and signature of (A) the officers of the
Borrower executing any of this Agreement, the Amendments, the
Notes, any other Basic Agreement or any certificate or other
document or instrument to be delivered pursuant hereto or
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thereto by or on behalf of the Borrower, together with
evidence of the incumbency of such Secretary or Assistant
Secretary, as the case may be and (B) each officer of the
Borrower designated by the Borrower as a Responsible Officer
hereunder.
(k) No legislation, order, rule, ruling or regulation
shall have been enacted or made by or on behalf of any
governmental body, department or agency of the United States
of America, nor shall any legislation have been introduced and
favorably reported for passage to either House of Congress by
any committee of either such House to which such legislation
has been referred for consideration, nor shall any decision of
any court of competent jurisdiction within the United States
have been rendered, which, in the reasonable judgment of the
Agent, would materially and adversely affect, restrain,
prevent or change the transactions contemplated by this
Agreement, any of the Amendments, any of the Notes or any
other Basic Agreement.
(l) No action, suit or proceeding before any
arbitrator or any court or governmental authority or
administrative body shall be pending, and no investigation by
any governmental authority or administrative body shall be
pending or threatened and no action, suit or proceeding by any
governmental authority or administrative body shall be pending
or threatened, against or affecting the Borrower or any
Subsidiary of the Borrower or any of the respective properties
or any of their respective officers or directors which, in the
reasonable judgment of the Agent, would have a material
adverse effect on the condition (financial or otherwise),
business, properties or results of operations of the Borrower
and its Subsidiaries taken as a whole or its abilities to
perform its obligations under the Basic Agreements.
(m) No action, suit or proceeding before any
arbitrator or any court or governmental authority or
administrative body shall have been commenced, and no action,
suit or proceeding by any governmental authority or other
Person shall have been threatened, against or affecting any
Bank, any other party to this Agreement or any of the other
Basic Agreements, or any Affiliate of any of them or any of
the officers or directors of any such Person which, in the
reasonable judgment of the Agent, would have a material
adverse effect on the Agent or any of the Banks or any of
their officers or directors.
(n) Each Bank shall have received a copy of a
certificate of a Responsible Officer of the Borrower delivered
to the Agent, dated the date hereof and in substantially the
form of Exhibit G, stating that, to the best of his knowledge,
the conditions of this Section 6.2 have been fully satisfied.
(o) The Borrower shall have reaffirmed its obligations
under all collateral and/or security documents to which it is a
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party in connection with this Agreement in a manner
reasonably satisfactory to the Agent.
(p) The Agent shall have received (with a signed copy
for each Bank) the signed opinion of Messrs. Winston & Strawn,
counsel to the Banks, dated the date hereof, in form and
substance satisfactory to the Agent.
(q) All of the warranties and representations of the
Borrower contained herein shall be true and correct in all
material respects both before and after giving effect to the
financing contemplated hereby, the Initial Borrowing
constituting an affirmation by the Borrower of such truth and
correctness.
(r) The Agent shall have received:
(i) a copy of the articles or certificate of
incorporation, as amended, of the Borrower and each
Subsidiary of the Borrower, certified by the Secretary of
State of the jurisdiction in which each such corporation is
incorporated, dated as of a recent date;
(ii) a copy of the by-laws, as amended, of the
Borrower and each Subsidiary of the Borrower, certified by
the Secretary or an Assistant Secretary of the applicable
corporation; and
(iii) good standing certificates of the Borrower and
each Subsidiary of the Borrower (other than Gaylord de
Mexico and the Gaylord Foundation) in each state in which
each such corporation transacts business and is required to
be in good standing.
(s) All corporate and other proceedings taken in
connection with the transactions hereunder at or prior to the
date of this Agreement, and all documents incident thereto are
reasonably satisfactory in form and substance to the Agent.
(t) No Event of Default or Unmatured Event of Default
shall have occurred and be continuing.
Section 6.3 Leasehold Mortgages. The Borrower shall
use its reasonable best efforts from and after the date of
this Agreement to execute and record in the appropriate
offices mortgages on the interest of the Borrower in the
leased properties identified on Schedule 6.3 hereto and to
obtain the necessary consents and approvals of such third
parties as may be required in connection therewith.
Section 6.4 Conditions to Borrowings Other than
Roll-Over Borrowings. The right of the Borrower to make any
Borrowing other than Roll-Over Borrowings and the obligation of
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each Bank to make a Loan (including without limitation the
issuance of any Letter of Credit) in respect of any such
Borrowing hereunder in each case shall be subject to the
fulfillment at or prior to the time of the making of such
Borrowing of each of the following conditions:
(a) The representations and warranties contained in
Sections 4.l(a), (b), (c), (d), (e), (g), (h), (p) and (q) of
this Agreement shall each be true and correct in all material
respects at and as of the time of such Borrowing as though
made on and as of such time; each of the Basic Agreements and
the Notes shall be in full force and effect; and no material
adverse change shall have occurred or become known with
respect to the condition (financial or otherwise), business,
prospects or results of operations of the Borrower and its
Subsidiaries taken as a whole since the later of the date of
this Agreement and the date of the most recent balance sheet
delivered pursuant to Section 5.1(a)(ii) which have been
accompanied by a certificate of a Responsible Officer as
required thereunder, which certificate has been accepted in
writing by the Agent.
(b) No Event of Default or Unmatured Event of Default
shall have occurred and shall then be continuing on such date
or will occur after giving effect to such Borrowing.
(c) The Banks shall have received such other instru-
ments and documents as the Agent may reasonably request and
which the Borrower is able to obtain using all reasonable
efforts, and all such instruments and documents shall be
reasonably satisfactory in form and substance to the Agent.
(d) If so requested by the Agent, the Agent shall have
received endorsements to the mortgagee's policies of title
insurance required to be provided pursuant to Section 5.1(r),
which endorsements shall extend the effective date of such
policies to the date of such Borrowing and shall be subject to
no new exceptions unless specifically approved by the Agent.
Each such Borrowing by the Borrower shall be deemed to
constitute a representation and warranty by it to the effect
of paragraphs (a) (as applicable) and (b) of this Section 6.4.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default. If any of the
following events, acts, occurrences or state of facts (each
herein called an "Event of Default") shall occur or exist (for
any reason whatsoever, and whether such happening shall be
voluntary or involuntary or come about or be effected by
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operation of law pursuant to or in accordance with any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) The Borrower (i) shall default in the payment of
principal on any Note, (ii) shall default in the performance
of its obligations under Section 5.1(a)(i) within the time
period provided therein; or (iii) shall default in the payment
of interest on any Note or default in the payment of any other
amount owing hereunder when due and such default in payment of
interest or such other amount shall continue for a period of
three (3) Business Days; or
(b) Any representation or warranty on the part of the
Borrower or any of its Subsidiaries, as the case may be,
contained in any Basic Agreement or any document, instrument
or certificate delivered pursuant thereto shall have been
breached in any material respect when made and such breach
could reasonably be expected to have a material and adverse
effect on the business of the Borrower and its Subsidiaries
taken as a whole; or
(c) The Borrower shall default in the performance or
observance of any term, covenant, condition or agreement on
its part to be performed or observed under Section 5.1 (except
5.1(a) (other than subsection (i) thereof), 5.1(b), 5.1(d),
5.1(e), 5.1(f), 5.1(g) and 5.1(i)) or 5.2 and such default
shall continue unremedied for a period of five (5) Business
Days; or
(d) The Borrower shall default in the performance or
observance of any term, covenant, condition or agreement on
its part to be performed or observed hereunder or under any
Basic Agreement other than the Purchase Agreement (and not
constituting an Event of Default under any other clause of
this Section 7.1) and such default shall continue unremedied
for a period of fifteen (15) Business Days after written or
telephonic (immediately confirmed in writing) notice thereof
has been given to the Borrower by the Agent or any Bank; or
(e) The Borrower or any of its Material Subsidiaries
(i) shall become insolvent or generally fail to pay, or admit
in writing its inability to pay, its debts as they become due,
or (ii) shall voluntarily commence any proceeding or file any
petition under any bankruptcy, insolvency or similar law or
seeking dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for it or a
substantial portion of its property, assets or business or to
effect a plan or other arrangement with its creditors, or
shall file any answer admitting the jurisdiction of the court
and the material allegations of an involuntary petition filed
against it in any bankruptcy, insolvency or similar
proceeding, or shall be adjudicated bankrupt, or shall make a
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general assignment for the benefit of creditors, or shall
consent to, or acquiesce in the appointment of, a receiver,
trustee, custodian or liquidator for a substantial portion of
its property, assets or business or shall take any corporate
action authorizing any of the foregoing; or
(f) Involuntary proceedings or an involuntary petition
shall be commenced or filed against the Borrower or any of its
Material Subsidiaries under any bankruptcy, insolvency or
similar law or seeking the dissolution or reorganization of it
or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial part of its property,
assets or business, or any writ, judgment, warrant of
attachment, execution or similar process shall be issued or
levied against a substantial part of its property, assets or
business, and such proceedings or petition shall not be
dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or
fully bonded, within sixty (60) days after commencement,
filing or levy, as the case may be, or any order for relief
shall be entered in any such proceeding; or
(g) (i) The Borrower, or any of its Subsidiaries,
shall default in the payment when due, whether at stated
maturity or otherwise, of any Indebtedness for Money Borrowed
in an amount equal to or greater than $1 million, whether such
Indebtedness now exists or shall hereafter be created, (ii) an
event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there
may be secured or evidenced any such Indebtedness for Money
Borrowed in an amount equal to or greater than $1 million
(other than Indebtedness for Money Borrowed owed to the Banks
under the Basic Agreements and the Notes) whether such
Indebtedness for Money Borrowed now exists or shall hereafter
be created, shall occur, or (iii) any event or condition with
respect to any of the Public Notes shall occur and be
continuing or happen which permits such Indebtedness for Money
Borrowed to be declared due and payable prior to its stated
maturity or due date; or
(h) One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving,
individually or in the aggregate, the payment of money in the
amount of $1 million or more and all such judgments or decrees
remain undischarged for a period of more than 30 days during
which the execution thereof is not effectively stayed,
released or vacated; or
(i) Any of the Basic Agreements or the Notes shall
cease for any reason to be in full force and effect, other
than by action of the Agent or a Bank, or the Borrower or any
of its Subsidiaries shall disavow its obligations thereunder
(except with regard to indemnification payments by the
Borrower pursuant to the Gaylord Purchase Agreement or the
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Purchase Agreement), or shall deny that it has any or further
obligations thereunder (in each case other than by reason of
the satisfaction of all of the Borrower's, or any of its
Subsidiaries', obligations thereunder or the unlawful
disavowal by any other party to such agreements of their
respective obligations thereunder); or Liens aggregating $1
million or more purported to be granted pursuant to the
Security Agreement or the Mortgages for any reason shall cease
to be a legal, valid or enforceable lien and security interest
in the Collateral or the Mortgaged Property, as the case may
be, with the priority purported to be granted pursuant to such
agreements (except with regard to liens arising under Sections
9-306 through 9-308 of the Uniform Commercial Code and
Permitted Liens); or
(j) Either (i) any Reportable Event which the Required
Banks reasonably determine constitutes reasonable grounds for
the termination of any Plan or Multiemployer Plan by the PBGC
or for the appointment by the appropriate United States
District Court of a trustee to administer or liquidate any
Plan or Multiemployer Plan shall have occurred, (ii) a trustee
shall be appointed by a United States District Court to
administer any Plan or Multiemployer Plan, or (iii) the PBGC
shall institute proceedings to terminate any Plan or
Multiemployer Plan; and the aggregate outstanding liability of
the Borrower, all Related Persons to the Borrower, all
Subsidiaries of the Borrower and all Related Persons to each
such Subsidiary with respect to the Plans or Multiemployer
Plans will exceed $1 million if the Plan or Multiemployer Plan
is terminated; or
(k) Either (i) the Borrower or a Subsidiary of the
Borrower or a Related Person to the Borrower or a Related
Person to a Subsidiary of the Borrower shall become liable to
the PBGC pursuant to ERISA Sections 4063 or 4064, or to any
Multiemployer Plan pursuant to ERISA Section 4201; or (ii) any
such Plan or Multiemployer Plan shall be terminated; and
following such termination or withdrawal the aggregate
outstanding liability of the Borrower, all Related Persons to
the Borrower, all Subsidiaries of the Borrower and all Related
Persons to each such Subsidiary with respect to the Plans or
Multiemployer Plans exceeds $1 million; or
(l) All of the issued and outstanding shares of
capital stock of each Subsidiary of the Borrower (other than
Gaylord de Mexico), and all of the issued and outstanding
shares of Gaylord de Mexico owned by the Borrower on the date
hereof, shall not at all times be owned directly and
beneficially by the Borrower free and clear of any Lien other
than Liens in favor of the Agent and statutory nonconsensual
Permitted Liens arising other than as a result of a voluntary
act of the Borrower; or
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(m) There occurs any uninsured damage to, or loss,
theft, or destruction of, any of the Collateral or the
Mortgaged Property in excess of $5 million; or
(n) (i) The Borrower makes a payment or acquisition in
violation of Section 10.02(a) of any of the Public Debt
Indentures; or (ii) the Borrower becomes obligated to purchase
or redeem any Public Notes pursuant to the provisions of
Section 4.15 or 4.16 of either of the Public Debt Indentures; or
(o) any Change in Control shall occur;
then, upon the occurrence of any Event of Default described in
clause (e) or (f) of this Section 7.1, the Commitments shall
automatically and immediately terminate, and, upon any such
termination of the Commitments, the obligation of any Bank to
make any Loan hereunder or to issue any Letter of Credit shall
thereupon terminate and the unpaid principal amount of, and
any and all accrued interest on, the Loans and the Notes, and
all other obligations of the Borrower under the Basic
Agreements, shall automatically become immediately due and
payable, without presentment, demand, protest or other notice
or requirement of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of
intent to demand or accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrower. Upon
the occurrence of any other Event of Default, the Agent shall,
at the request of the Required Banks, or may, by written or
oral or telephonic notice (in the case of oral or telephonic
notice confirmed in writing immediately thereafter) to the
Borrower:
(A) declare the Total Maximum Commitment to be
terminated, whereupon the Total Maximum Commitment shall
forthwith terminate; and/or
(B) declare all sums then owing by the Borrower
hereunder and under the Notes, including, without
limitation, accrued interest, to be forthwith due and
payable, whereupon all such sums shall become and be
immediately due and payable without presentment, demand,
protest or other notice or requirement of any kind
(including, without limitation, valuation and appraisement,
diligence, presentment, notice of intent to demand or
accelerate or notice of acceleration), all of which are
hereby expressly waived by the Borrower, and the obligation
of any Bank to make any Loan hereunder or to issue any
Letter of Credit shall thereupon terminate.
Anything in this Section 7.1 to the contrary notwith-
standing, the Agent shall, at the request of the Required
Banks, rescind and annul any acceleration of the Notes by
written instrument filed with the Borrower; provided that at
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the time such acceleration is so rescinded and annulled: (A)
all past due interest and principal, if any, on the Notes and
all other sums payable under this Agreement (except any
principal and interest on any Notes which has become due and
payable by reason of such acceleration pursuant to this
Section 7.1) shall have been duly paid; and (B) no other Event
of Default shall have occurred and be continuing which shall
not have been waived pursuant to Section 9.1 hereof.
Section 7.2 No Waiver of Events of Default. Nothing
in this Agreement shall be deemed to be a waiver of any Event
of Default existing on the date hereof or occurring hereafter.
ARTICLE VIII
THE AGENT
In this Article VIII, the Banks agree among themselves
as follows:
Section 8.1 Appointment. The Banks hereby appoint
BT as Agent to act as herein specified. Each Bank hereby
irrevocably authorizes and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to
authorize the Agent to take such action on its behalf under
the provisions of this Agreement, the Notes and the Basic
Agreements (including, without limitation, to give notices and
take such actions on behalf of the Required Banks as are
consented to in writing by the Required Banks) and any other
instruments, documents and agreements referred to therein
(such Notes and Basic Agreements and other instruments,
documents and agreements being referred to in this Article
VIII as the "Loan Documents") and to exercise such powers
hereunder and thereunder as are specifically delegated to the
Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any
of its duties hereunder, or under the Loan Documents, by or
through its agents or employees.
Section 8.2 Nature of Duties. The Agent shall have
no duties or responsibilities except those expressly set forth
in this Agreement. The duties of the Agent shall be mechanical
and administrative in nature. The Agent shall not have by
reason of this Agreement a fiduciary relationship in respect
of any Bank. Nothing in this Agreement or any of the Loan
Documents, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in
respect of this Agreement or any of the Loan Documents except
as expressly set forth herein or therein. Each Bank shall make
its own independent investigation of the financial condition
and affairs of the Borrower in connection with the making and
the continuance of the Loans hereunder and shall make its own
appraisal of the creditworthiness of the Borrower and except
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for notices, reports and other documents and information
required to be furnished to the Banks by the Agent hereunder,
the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with
any credit or other information with respect thereto, whether
coming into its possession before making of the Loans or at
any time or times thereafter. The Agent will promptly notify
each Bank at any time that the Required Banks have instructed
it to act or refrain from acting pursuant to Article VII.
Section 8.3 Rights, Exculpation, etc. Neither the
Agent nor any of its officers, directors, employees or agents
shall be liable to any Bank for any action taken or omitted by
it hereunder or under any of the Loan Documents, or in
connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The Agent shall
not be responsible to any Bank for any recitals, statements,
representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of any of the Loan Documents or
any other Basic Agreement or the financial condition of the
Borrower. The Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any of
the Loan Documents or any other Basic Agreement or the
financial condition of the Borrower, or the existence or
possible existence of any Unmatured Event of Default or Event
of Default unless requested to do so by the Required Banks.
The Agent may at any time request instructions from the Banks
with respect to any actions or approvals which by the terms of
any of the Loan Documents the Agent is permitted or required
to take or to grant, and if such instructions are requested,
the Agent shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under
any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from
the Required Banks. Without limiting the foregoing, no Bank
shall have any right of action whatsoever against the Agent as
a result of the Agent acting or refraining from acting under
any of the Loan Documents in accordance with the instructions
of the Required Banks.
Section 8.4 Reliance. The Agent shall be entitled
to rely upon any written notice, statement, certificate, order
or other document or any telephone message reasonably believed
by it to be genuine and correct and to have been signed, sent
or made by the proper Person, and, with respect to all matters
pertaining to any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by
it.
Section 8.5 Indemnification. To the extent that the
Agent is not reimbursed and indemnified by the Borrower, the
Banks will reimburse and indemnify the Agent for and against any
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and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent, acting
pursuant hereto, in any way relating to or arising out of any
of the Loan Documents or any action taken or omitted by the
Agent under any of the Loan Documents, in proportion to each
Bank's respective Pro Rata Share of the Total Maximum
Commitment; provided, however, that no Bank shall be liable
for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
or disbursements resulting from the Agent's gross negligence
or willful misconduct. The obligations of the Banks under
this Section 8.5 shall survive the payment in full of the
Notes and the termination of this Agreement.
Section 8.6 The Agent Individually. With respect to
its Pro Rata Share of the Total Maximum Commitment hereunder,
the Loans made by it and any Notes issued to or held by it,
the Agent shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any
other Bank or holder of a Note. The terms "Banks," "Required
Banks" or "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the
Agent in its individual capacity as a Bank, one of the
Required Banks or a holder of a Note. The Agent may accept
deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Borrower or any
Subsidiary of the Borrower as if it were not acting as Agent
pursuant hereto.
Section 8.7 Resignation by the Agent.
(a) The Agent may resign from the performance of all
its functions and duties hereunder at any time by giving 30
Business Days' prior written notice to the Borrower and the
Banks. Such resignation shall take effect upon the acceptance
by a successor Agent of appointment pursuant to clauses (b)
and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required
Banks shall appoint a successor Agent who shall be
satisfactory to the Borrower and shall be an incorporated bank
or trust company.
(c) If a successor Agent shall not have been so
appointed within said 30 Business Day period, the Agent, with
the consent of the Borrower, shall then appoint a successor
Agent, which shall be a commercial bank with combined capital
and surplus of at least $250,000,000, who shall serve as Agent
until such time, if any, as the Required Banks, with the
consent of the Borrower, appoint a successor Agent as provided
above.
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(d) If no successor Agent has been appointed pursuant
to clause (b) or (c) by the 20th Business Day after the date
such notice of resignation was given by the Agent, the Agent's
resignation shall become effective and the Required Banks
shall thereafter perform all the duties of the Agent hereunder
until such time, if any, as the Required Banks, with the
consent of the Borrower, appoint a successor Agent as provided
above.
Section 8.8 Removal. The Agent may be removed with
cause at any time by the Required Banks.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver; Modifications in Writing. No
failure or delay on the part of the Agent or any Bank in
exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be
available to the Agent or any Bank at law or in equity or
otherwise. No amendment, modification, supplement, termination
or waiver of or to any provision of this Agreement, nor
consent to any departure by the Borrower or any of its
Subsidiaries therefrom, shall be effective unless the same
shall be in writing and signed by or on behalf of the Required
Banks; provided, however, that no such amendment,
modification, supplement, termination, waiver or consent, as
the case may be, which has the effect of:
(i) reducing the rate or amount, or extending the
stated maturity or due date, of any sum payable by the
Borrower to any Bank hereunder or under the Amended
Revolving Notes, Amended Term Notes and Amended Standby
Letter of Credit Notes;
(ii) changing this Section 9.1 or the definitions of
the terms "Required Banks" and "Pro Rata Share";
(iii) changing the Maximum Commitment of any Bank
hereunder; or
(iv) releasing all or substantially all of the
Collateral or Mortgaged Property;
shall be effective unless the same shall be signed by or on
behalf of each Bank hereunder; and provided, further, that no
such amendment, modification, supplement, termination, waiver
or consent, as the case may be, which has the effect of:
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(x) increasing the duties or obligations of the Agent
hereunder; or
(y) increasing the standard of care or performance
required on the part of the Agent hereunder; or
(z) reducing or eliminating the fees, indemnities or
immunities to which the Agent is entitled hereunder
(including, without limitation, any amendment or
modification of this Section 9.1), shall be effective unless
the same shall be signed by or on behalf of the Agent.
No amendment, modification, supplement, termination, waiver or
consent, as the case may be, which permits the Borrower to
incur any Indebtedness that is (a) pari passu in right of
payment with the Indebtedness of the Borrower evidenced by the
Notes and (b) secured by an assignment or security interest in
the Collateral and Mortgaged Property that is pari passu with
the interests of the Banks in the Collateral and Mortgaged
Property under the Basic Agreements (Indebtedness meeting the
conditions of (a) and (b) shall be referred to in this section
as "Pari Passu Indebtedness") shall be effective unless
consented to by each of the Banks, if as a result of the
incurrence of Pari Passu Indebtedness by the Borrower, the
Banks' interest in the Collateral and Mortgaged Property,
taken as a whole, shall be substantially and materially
diminished. Notwithstanding anything herein to the contrary,
the Borrower and the Banks hereby agree that any amendment,
modification, supplement, termination, waiver or consent, as
the case may be, which permits the Borrower to incur up to $50
million of Pari Passu Indebtedness, shall be effective if
consented to by the Required Banks. The Borrower and each of
the Banks hereby further agree that the $50 million amount
referred to in the previous sentence is not intended to define
"substantially and materially" as such phrase is used in the
first sentence of this section.
Notwithstanding the foregoing, the Agent, without the approval
of any Banks, may release or cause to be released the Banks'
liens on any item or items of Collateral:
(1) the sale or other disposition of which is expressly
permitted by this Agreement; or
(2) with respect to which the Banks have not previously
consented to such release and which has a book value of less
than $500,000 in any individual release transaction, which
Collateral is disposed of by the Borrower in the ordinary
course of business; provided, however, that in no event
shall the Agent release Collateral pursuant to this clause
(2) having a book value in excess of $10 million in the
aggregate. Any amendment, modification or supplement of or
to any provision of this Agreement, any waiver of any
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provision of this Agreement, and any consent to any
departure by the Borrower from the terms of any provision of
this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or
given.
Except where notice is specifically required by this Agreement
or any other Basic Agreement, no notice to or demand on the
Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances.
Section 9.2 Further Assurances. The Borrower agrees
to do such further acts and things and to execute and deliver
to the Agent such additional assignments, agreements, powers
and instruments, as the Agent may reasonably require or deem
advisable to carry into effect the purposes of this Agreement
or to better assure and confirm unto the Agent its rights,
powers and remedies hereunder.
Section 9.3 Notices, etc. Except where telephonic
instructions or notices are authorized herein to be given, all
notices, demands, instructions and other communications
required or permitted to be given to or made upon any party
hereto or any other Person shall be in writing and (except for
written confirmations of telephonic instructions) shall be
personally delivered or sent by registered or certified mail,
postage prepaid, return receipt requested, or by a reputable
courier delivery service, or by prepaid telex, TWX or telegram
(with messenger delivery specified in the case of a telegram),
or by telecopier, and shall be deemed to be given for purposes
of this Agreement on the earlier of the day that such writing
is delivered or five days after it was sent to the intended
recipient thereof in accordance with the provisions of this
Section. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this
Section 9.3, notices, demands, instructions and other
communications in writing shall be given to or made upon the
respective parties hereto at their respective addresses (or to
their respective telex, TWX or telecopier numbers) indicated
below and, in the case of telephonic instructions or notices,
by calling the telephone number or numbers indicated for such
party below:
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If to the Borrower:
Gaylord Container Corporation
Suite 400
500 Lake Cook Road
Deerfield, Illinois 60015
Attn: Treasury Department
Treasurer/Assistant Treasurer
Tel. No.: (708) 405-5500
Telecopier No.: (708) 405-5628
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Andrew Kaufman, Esq.
Tel. No.: (312) 861-2000
Telecopier No.: (312) 861-2356
If to Bankers Trust Company, in its individual
capacity and as Agent:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn: Credit Files, 8E
Tel. No.: (212) 454-1865
Telex No.: 62922
(Answerback: BANTRUS-NYK)
Telecopier No.: (212) 454-5071 or
(212) 454-5072
With copies to:
Bankers Trust Company
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Gaylord Relationship Manager
Tel. No.: (312) 993-8000
Telex No.: 210106
(Answerback: BTCI-UR)
Telecopier No.: (312) 993-8137
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Bruce A. Toth, Esq.
Tel. No.: (312) 558-5600
Telecopier No.: (312) 558-5700
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<PAGE>
If to the Bankers, to their respective addresses
(or at their respective telex, TWX, telecopier or
telephone numbers indicated under their respective
names on the signature pages hereof).
Section 9.4 Costs, Expenses and Taxes. The Borrower
agrees (without duplication) to pay all reasonable fees, costs
and expenses of the Agent in connection with the negotiation,
preparation, printing, typing, reproduction, execution and
delivery of this Agreement, the Notes, and the other Basic
Agreements, any amendment or modifications of (or supplements
to) any of the foregoing and any and all other documents
furnished pursuant hereto or thereto or in connection herewith
or therewith, including, without limitation, the reasonable
fees and out-of-pocket expenses of Winston & Strawn, as
special counsel to the Agent, and any local counsel retained
by the Agent on behalf of the Banks relative thereto or (but
not as well as) the reasonable allocated costs of staff
counsel as well as the reasonable fees and out-of-pocket
expenses of counsel, independent public accountants and other
outside experts retained by the Agent in connection with the
administration of this Agreement, and all search fees,
appraisal fees and expenses, title insurance policy fees,
costs and expenses and filing and recording fees. In
addition, the Borrower agrees (without duplication) to pay all
costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses or (but not as well as) the
reasonable allocated costs of staff counsel), if any, of the
Agent and the Banks in connection with the enforcement of this
Agreement, the Notes or any other Basic Agreement or any other
agreement furnished pursuant hereto or thereto or in
connection herewith or therewith. In addition, the Borrower
shall pay any and all stamp, transfer and other similar taxes
payable or determined to be payable in connection with the
execution and delivery of this Agreement or any Basic
Agreement, or the issuance of any Note or the making of any
Loan, and each agrees to save and hold the Agent and each Bank
harmless from and against any and all liabilities with respect
to or resulting from any delay in paying, or omission to pay,
such taxes. Any portion of the foregoing fees, costs and
expenses which remains unpaid following any Bank's statement
and request for payment thereof shall bear interest from the
date which is ten Business Days after the date of such
statement and request to the date of payment at the Default
Rate. The Borrower will indemnify and hold harmless each Bank
and the Agent and each director, officer, employee and
Affiliate of each Bank and the Agent from and against all
losses, claims, damages, expenses or liabilities to which such
Bank or the Agent or such director, officer, employee or
affiliated Person may become subject, insofar as such losses,
claims, damages, expenses or liabilities (or actions, suits or
proceedings including any inquiry or investigation or claims
in respect thereof) arise out of, in any way relate to, or
result from the transactions contemplated by this Agreement,
-112-
<PAGE>
and to reimburse each of the Banks and the Agent and each such
director, officer, employee or affiliated Person, within two
(2) Business Days after their demand therefor, for any
reasonable legal or other expenses (or (but not as well as)
the reasonable allocated costs of staff counsel) incurred in
connection with investigating, preparing to defend or
defending any such loss, claim, damage, liability, action or
claim; provided, however:
(i) that none of the Banks, the Agent or any director,
officer, employee or affiliated Person of any of the Banks
or the Agent shall have the right to be so indemnified
hereunder for its own gross negligence or willful misconduct
or bad faith as finally determined by a court of competent
jurisdiction after all appeals and the expiration of time to
appeal; and
(ii) that nothing contained herein shall affect the
obligations and liabilities of the Banks to the Borrower
contained herein.
If any action, suit or proceeding arising from any of the
foregoing is brought against the Agent, any Bank or any other
Person indemnified or intended to be indemnified pursuant to
this Section 9.4, the Borrower will, if requested by the
Agent, any Bank or any such indemnified Person, resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel reasonably satisfactory to
the Person or Persons indemnified or intended to be indemni-
fied. Each indemnified person shall, unless the Agent, a Bank
or other indemnified Person has made the request described in
the preceding sentence and such request has been complied
with, have the right to employ its own counsel (or (but not as
well as) staff counsel) to investigate and control the defense
of any matter covered by such indemnity and the reasonable
fees and expenses of such counsel shall be at the expense of
the indemnifying party, provided, however, that the
indemnifying party shall not, in connection with any one such
action, suit or proceeding or separate but substantially
similar related actions, suits or proceedings in the same
jurisdiction and arising out of the same general allegations
or circumstances, as determined by the Agent, be liable for
the reasonable fees and expenses of more than one counsel for
all such indemnified parties, which counsel shall be
designated by the Agent. If the Borrower shall fail to do any
act or thing which it has covenanted to do hereunder or any
representation or warranty on the part of the Borrower
contained herein shall be breached, the Agent may (but shall
not be obligated to) do the same or cause it to be done or
remedy any such breach, and may expend its funds for such
purpose, and will use its best efforts to give prompt written
notice to the Borrower that it proposes to take such action.
Any and all amounts so expended by the Agent shall be
repayable to it by the Borrower promptly within two (2)
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<PAGE>
Business Days after the Agent's demand therefor, with interest
at the Default Rate in effect from time to time during the
period including the date so expended by the Agent to the date
of repayment. The obligations of the Borrower under this
Section 9.4 shall survive the termination of this Agreement
and the discharge of the Borrower's other obligations
hereunder and under the Notes.
Section 9.5 Confirmations. Each of the Borrower and
each holder of a Note agree from time to time, upon written
request received by it from the other, to confirm to the other
in writing (with a copy of each such confirmation to the
Agent) the aggregate unpaid principal amount of the Loan or
Loans then outstanding under such Note; and each such holder
agrees from time to time, upon written request received by it
from the Borrower, to make the Note held by it (including the
schedule attached thereto) available for reasonable inspection
by the Borrower at the office of such holder.
Section 9.6 Transfers of Notes. In the event that
the holder of any Note (including any Bank) shall transfer
such Note, it shall immediately advise the Agent and the
Borrower of such transfer, and the Agent and the Borrower
shall be entitled conclusively to assume that no transfer of
any Note has been made by any holder (including any Bank)
unless and until the Agent and the Borrower shall have
received written notice to the contrary. Except as otherwise
provided in this Agreement or as otherwise expressly agreed in
writing by all of the other parties hereto, no Bank shall, by
reason of the transfer of a Note or otherwise, be relieved of
any of its obligations hereunder. Each transferee of any Note
shall take such Note subject to the provisions of this
Agreement and to any request made, waiver or consent given or
other action taken hereunder, prior to the receipt by the
Agent and the Borrower of written notice of such transfer, by
each previous holder of such Note, and, except as expressly
otherwise provided in such transfer by each previous holder of
such Note, and, except as expressly otherwise provided in such
notice, the Agent and the Borrower shall be entitled
conclusively to assume that the transferee named in such
notice shall thereafter be vested with all rights and powers
under this Agreement with respect to the Pro Rata Share of the
Loans of the Bank named as the payee of the Note which is the
subject of such transfer. Notwithstanding any transfers
pursuant to this Section, payments of principal and interest
on the Notes by the Borrower to the Agent shall be deemed to
constitute payments on the Notes to the Banks.
Section 9.7 Adjustment; Set-Off.
(a) If any Bank (a "benefitted Bank") shall at any
time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to
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<PAGE>
events or proceedings of the nature referred to in Section
7.1(e) or 7.1(f), or otherwise) in a greater proportion than
any such payment to and collateral received by any other Bank
in respect of such other Bank's Loans or interest thereon,
such benefitted Bank shall purchase for cash from the other
Banks such portion of each such other Bank's Loans, or shall
provide such other Banks with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to
cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of
the Banks; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from
such benefitted Bank, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of
such recovery, but without interest. The Borrower agrees that
each Bank so purchasing a portion of another Bank's Loans may
exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if
such Bank were the direct holder of such portion.
(b) In addition to any rights and remedies of the
Banks provided by law or at equity, each Bank shall have the
right, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower, upon the filing of a
petition under any of the provisions of the Bankruptcy Code,
by or against, or the occurrence of an Event of Default with
respect to, the making of an assignment for the benefit of
creditors by, the application for the appointment, or the
appointment, of any receiver of, or of any of the property of,
the issuance of any execution against any of the property of,
the issuance of a subpoena or order, in supplementary
proceedings, against or with respect to any of the property
of, or the issuance of a warrant of attachment against the
property of, the Borrower, to set-off and apply against any
Indebtedness, whether matured or unmatured, of the Borrower to
such Bank, any amount owing from such Bank to the Borrower, at
or at any time after, the happening of any of the above
mentioned events, and the aforesaid right of set-off may be
exercised by such Bank against the Borrower or against any
trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receivers, or execution, judgment or
attachment creditor of the Borrower, or against anyone else
claiming through or against, the Borrower or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment
creditor, notwithstanding the fact that such right of set-off
shall not have been exercised by such Bank prior to the
making, filing or issuance, or service upon such Bank of, or
of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or
warrant. Each Bank agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such
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<PAGE>
Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
The Borrower expressly agrees that to the extent the
Borrower makes a payment or payments and such payment or
payments, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside or are
required to be repaid to a trustee, receiver, or any other
party under the Bankruptcy Code, state or federal law, common
law or equitable cause, then to the extent of such payment or
repayment, the Indebtedness to the Banks or part thereof
intended to be satisfied shall be revived and continued in
full force and effect as if said payment or payments had not
been made.
Section 9.8 Execution in Counterparts. This
Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be
deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Agreement.
Section 9.9 Binding Effect; Assignment; Addition and
Substitution of Banks.
(a) This Agreement shall be binding upon, and inure to
the benefit of, the Borrower, the Agent, the Banks, all future
holders of the Notes and their respective successors and
assigns; provided, however, that the Borrower may not assign
its rights or obligations hereunder or in connection herewith
or any interest herein (voluntarily, by operation of law or
otherwise) without the prior written consent of the holders of
at least 66-2/3% of the aggregate of (x) the principal amount
of the Loans then outstanding and(y) the Total Unused Maximum
Commitment at that time.
(b) Each Bank may at any time transfer, grant or
assign to one or more banks or other entities ("Participants")
participations in all or any part of such Bank's interest and
obligations hereunder pursuant to this clause (b) (in respect
of any such Bank, its "Credit Exposure"), provided that:
(i) such Bank remains a "Bank" for all purposes of this
Agreement, the transferee of such participation shall not
constitute a Bank hereunder, such Bank's obligations under
this Agreement shall remain unchanged, such Bank shall
remain solely responsible for the performance thereof, such
Bank shall remain the holder of any such Notes for all
purposes under this Agreement, and the Borrower and the
Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations
under this Agreement; and
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<PAGE>
(ii) no Participant under any such Participation shall
have rights to approve any amendment to or waiver of this
Agreement or any other Basic Agreement except to the extent
such amendment or waiver would:
(x) extend the final scheduled maturity of any of
the Loan(s) or the Commitment(s) in which such
Participant is participating (it being understood that
a waiver of a mandatory reduction in the Total
Commitment or a mandatory prepayment shall not
constitute the extension of the final scheduled
maturity of any Loan),
(y) reduce the interest rate (other than as a
result of waiving the applicability of any post-default
increases in interest rates) or fees applicable to any
of the Loan(s), Commitment(s) or letters of credit or
postpone the payment of any thereof, or
(z) release all or substantially all of the
Collateral or any other security supporting any of the
Loans, the Commitments or the letters of credit (except
as expressly provided in the Basic Agreements).
The Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due and unpaid, or shall have been
declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank
under this Agreement or any Note, provided that such right of
set-off shall be subject to the obligation of such Participant
to share with the Banks, and the Banks agree to share with
such Participant, as provided in Section 9.7. The Borrower
also agrees that each Participant shall be entitled to the
benefits of Sections 2.10 and 2.11 with respect to its
participation in the Loans outstanding from time to time.
Each Bank agrees that any agreement between such Bank and any
such Participant in respect of such participating interest
shall not restrict such Bank's right to agree to any
amendment, supplement or modification to the Agreement or any
of the Loan Documents except as set forth in clauses (ii)(x),
(ii)(y) and (ii)(z) hereof, and except that, with respect to
any agreement with any Participant entered into prior to the
date hereof, the applicable provisions of whichever of the
Initial Agreement, the Second Agreement, the Third Agreement
or the Fourth Agreement was in effect at such time shall
govern and any such agreement which was entered into in
compliance with such provisions shall not be deemed to violate
this Section 9.9.
(c) Any Bank may at any time assign to one or more
banks or other entities reasonably acceptable to the Borrower
-117-
<PAGE>
and to the Agent ("Assignees") all or any part of its Credit
Exposure, provided that, except as may be provided below with
respect to assignments to Affiliates or to other Banks:
(i) it assigns its Credit Exposure in an amount not
less than $10 million; and
(ii) if such Bank assigns less than all of its Credit
Exposure, after giving effect to such assignment, such Bank
together with its Affiliates has Credit Exposure in an
aggregate amount of at least $5 million;
provided further that notwithstanding the foregoing
limitations set forth in clauses (i) and (ii) above, any Bank
may at any time assign all or any part of its Credit Exposure
to any Affiliate of such Bank. Further, notwithstanding the
foregoing, any Bank may at any time assign all or a part of
its Credit Exposure to any other Bank provided that such
assigning Bank complies with the limitations in clause (ii)
above. Any Assignee pursuant to this Section 9.9(c) shall
become a party to this Agreement as a Bank by execution of an
Assignment Agreement in the form of Exhibit L. Further, the
Borrower and the Banks agree that to the extent of any
assignment, the Assignee shall be deemed to have the same
rights and benefits with respect to the Borrower under this
Agreement and any Notes and the same rights of set-off and
obligation to share pursuant to Section 9.7 as it would have
had if it were a Bank hereunder, provided that the Borrower
and the Agent shall be entitled to continue to deal solely and
directly with the assignor Bank in connection with the
interests so assigned to the Assignee until written notice of
such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall
have been given to the Borrower and the Agent by the assignor
Bank and the Assignee.
(d) The Borrower authorizes each Bank to disclose to
any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial information in
such Bank's possession concerning the Borrower and any
Subsidiary of the Borrower which has been delivered to such
Bank by the Borrower pursuant to this Agreement or which has
been delivered to such Bank by the Borrower in connection with
such Bank's credit evaluation of the Borrower prior to
entering into this Agreement.
(e) Notwithstanding any other provision set forth in
this Agreement, any Bank may at any time pledge or assign all
or any portion of its rights under this Agreement and the
other Basic Agreements (including without limitation, the
Notes held by it) to any Federal Reserve Bank in accordance
with Regulation A of the Federal Reserve Board without notice
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<PAGE>
to, or the consent of, the Borrower. No such pledge or
assignment shall release the assignor Bank from its
obligations hereunder.
(f) The Agent shall be entitled, upon any assignment
pursuant to this Section 9.9, to receive from the assignor
Bank or the Assignee, the payment of a non-refundable fee of
(i) $3,500 for any assignment to any Assignee that is not, at
such time, a Bank or an Affiliate of the assignor Bank and
(ii) $1,500 for any assignment to any other Bank.
Section 9.10 Consent to Jurisdiction. (a) The
Borrower hereby irrevocably submits to the nonexclusive
jurisdiction of any United States Federal or New York State
court sitting in New York City in any action or proceeding
arising out of or relating to this Agreement or any other
Basic Agreement, and the Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be
heard and determined in any such United States Federal or New
York State court and the Borrower irrevocably waives any
objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing
of any such action or proceeding in such respective
jurisdictions. As a method of service, the Borrower also
irrevocably consents to the service of any and all process in
any such action or proceeding brought in any court in or of
the State of New York by the delivery of copies of such
process to the Borrower, at its address specified in Section
9.4 hereof or by certified mail direct to such address.
(b) Each of the parties to this Agreement hereby
irrevocably waives any right it may have to trial by jury in
any court or jurisdiction in respect of any matter arising out
of or relating to this Agreement and other Basic Agreements or
the transactions contemplated hereby or thereby.
Section 9.11 Mortgage Covenants of Agent and Banks.
If and for so long as any amounts shall be outstanding under
this Agreement, the Agent and each Bank under each Mortgage
and the Security Agreement shall comply with and perform those
obligations set forth in the respective Agreement to be
performed or complied with by such Agent and each such Bank;
provided, however, that the Agent's and any Bank's liability
under any Basic Agreement or Subsidiary Document shall not
survive any assignment or transfer thereof to any party except
for obligations accruing prior to such transfer, and in all
events the Agent's or any such Bank's liability under the
respective Basic Agreement shall not exceed at any time its
interest therein.
Section 9.12 Release of Collateral. The Mortgaged
Property and the Collateral shall be released from any
security interest or Lien created by the Security Agreement
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<PAGE>
and the Mortgages at such time that no Commitment by any Bank
remains outstanding to the Borrower hereunder and after the
Borrower or its Subsidiaries, as the case may be, shall have
no Indebtedness of any kind outstanding to the Banks under
this Agreement, the Notes, the Security Agreement, or any of
the Mortgages; then the Agent and the Banks shall deliver to
the Borrower all Mortgaged Property and/or Collateral and
related documents then in the custody or possession of the
Agent and, if requested by the Borrower, shall execute and
deliver to the Borrower for filing in each office in which any
financing statement relative to the Collateral or Mortgaged
Property, or any part thereof, shall have been filed, a
termination statement under the Uniform Commercial Code
releasing the Agent's interest therein or a release of
mortgage in each office in which a Mortgage was filed
releasing the lien of such Mortgage on the Mortgaged Property
covered thereby, and such other documents and instruments as
the Borrower may reasonably request, all without recourse
upon, or warranty whatsoever by, the Agent, and at the cost
and expense of the Borrower. Notwithstanding the foregoing,
unless requested by the Agent the Borrower shall not be
required to perfect the Banks' security interest in
automobiles, vans, trucks and similar moving vehicles where
perfection is obtained by legending the vehicle title and the
Borrower may sell and transfer such vehicles to third parties
without obtaining the prior written consent of the Banks
provided such sales are in the ordinary course and on an
arm's-length basis.
Section 9.13 Governing Law. THIS AGREEMENT AND EACH
NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 9.14 Severability of Provisions. Any
provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
Section 9.15 Headings. The Table of Contents and
Article and Section headings used in this Agreement are for
convenience of reference only and shall not affect the
construction of this Agreement.
Section 9.16 No Association. Nothing contained in
this Agreement and no action taken by the Agent or any Bank
pursuant hereto shall be deemed to constitute the Agent or the
Banks a partnership, an association, a joint venture or other
entity.
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<PAGE>
[Signature pages follow: balance of page left intentionally
blank.]
-121-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
GAYLORD CONTAINER CORPORATION
By: /s/ Jeffrey B. Park
Its: Vice President - Corporate
Controller
BANKERS TRUST COMPANY, in its
individual capacity, as
Agent and as Co-Manager
By: /s/ Robert R. Telesca
Its: Assistant Vice President
WELLS FARGO BANK,
NATIONAL ASSOCIATION, in its
individual capacity and as
Co-Manager
By: /s/ Matthew Harvey
Title: Assistant Vice President
Notice Address:
WELLS FARGO BANK, NATIONAL
ASSOCIATION
420 Montgomery Street
9th Floor
San Francisco, CA 94163
Attn: Gary M. Orr
Tel. No.: (415) 396-7765
Telecopier No.: (415) 421-1352
with copies to:
WELLS FARGO BANK, N.A.
Mid America Plaza
Suite 800
South Oak Brook Terrace, IL 60181
Attn: Charles Hiatt
Tel. No.: (708) 954-2230
Telecopier No: (708) 954-2231
<PAGE>
THE BANK OF NEW YORK
By: /s/ John C. Lambert
Its: Assistant Vice President
Notice Address:
THE BANK OF NEW YORK
One Wall Street
Central Division
19th Floor
New York, New York 10286
Attn: John C. Lambert
Tel. No.: (212) 635-8044
Telecopier No.: (212) 635-1208
BANKERS TRUST (DELAWARE)
By: /s/ James Stallkamp
Its: President
Notice Address:
BANKERS TRUST (DELAWARE)
1001 Jefferson Street
Suite 550
Wilmington, Delaware 19801
Attn: Donna G. Mitchell
Tel. No.: (302) 576-3310
Telecopier No.: (302) 576-3333
CAISSE NATIONALE DE CREDIT
AGRICOLE
By: /s/ Dean Balice
Its: Senior Vice President
Branch Manager
Notice Address:
CAISSE NATIONALE DE CREDIT
AGRICOLE
55 East Monroe Street
Suite 4700
Chicago, Illinois 60603
Attn: Susan Knight
Tel. No.: (312) 917-7446
Telecopier No.: (312) 372-2830
<PAGE>
HARRIS TRUST AND SAVINGS
BANK
By: /s/ John R. Smart
Its: Vice President
Notice Address:
HARRIS TRUST AND SAVINGS
BANK
111 West Monroe Street
Chicago, Illinois 60690
Attn: John Smart
Tel. No.: (312) 461-6022
Telecopier No.: (312) 461-2591
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ Michael O. Lincoln
Its: Senior Vice President
Notice Address:
NATIONSBANK, N.A. (CAROLINAS)
233 S. Wacker Drive
Suite 2800
Chicago, IL 60606
Attn: Mike O. Lincoln
Tel. No.: (312) 234-5612
Telecopier No.: (312) 234-5601
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 7,200
<SECURITIES> 0
<RECEIVABLES> 157,900
<ALLOWANCES> 4,500
<INVENTORY> 85,300
<CURRENT-ASSETS> 262,900
<PP&E> 1,002,100
<DEPRECIATION> 363,900
<TOTAL-ASSETS> 940,100
<CURRENT-LIABILITIES> 169,400
<BONDS> 689,000
<COMMON> 172,300
0
0
<OTHER-SE> (114,900)
<TOTAL-LIABILITY-AND-EQUITY> 940,100
<SALES> 782,700
<TOTAL-REVENUES> 782,700
<CGS> 565,700
<TOTAL-COSTS> 637,000
<OTHER-EXPENSES> 100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,500
<INCOME-PRETAX> 81,100
<INCOME-TAX> 2000
<INCOME-CONTINUING> 79,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,100
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
