<PAGE>
_______________________________________________________________________________
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
Commission file number 1-11803
-------------------
AMERICAN PAD & PAPER COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 04-3164298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (214) 733-6200
Commission file number 333-3006
-------------------
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 25-1512956
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 733-6200
Indicate by check mark whether each 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 each
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
American Pad & Paper Company Yes No X
----- -----
American Pad & Paper Company of Delaware, Inc. Yes No X
----- -----
As of August 10, 1996, American Pad & Paper Company had 27,399,809 shares
of Common Stock outstanding. As of August 10, 1996, American Pad & Paper
Company of Delaware, Inc. had 100 shares of Common Stock outstanding, all of
which are owned by American Pad & Paper Company.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
AMERICAN PAD & PAPER COMPANY
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
QUARTERLY PERIOD ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
-------
PART I FINANCIAL INFORMATION
<S> <C> <C>
Important Explanatory Note.............................. 1
Item 1. Financial Statements.......................... 2
Condensed Consolidated Balance Sheets as
of December 31, 1995 and June 30, 1996........ 2
Condensed Consolidated Statements of
Operations for the three months ended June 30,
1995 and 1996 and for the six months ended
June 30, 1995 and 1996........................ 3
Condensed Consolidated Statements of
Cash Flows for the six months ended June 30,
1995 and 1996................................. 4
Notes to Consolidated Financial Statements.... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 15
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security-Holders.............................. 17
Item 6. Exhibits and Reports on Form 8-K.............. 17
</TABLE>
PART I. FINANCIAL INFORMATION
IMPORTANT EXPLANATORY NOTE.
This integrated Form 10-Q is filed pursuant to the Securities Exchange
Act of 1934, as amended, for each of American Pad & Paper Company, a Delaware
corporation, and its wholly owned subsidiary, American Pad & Paper Company of
Delaware, Inc., a Delaware corporation. Unless the context requires otherwise,
references herein to the "Company" refer to both American Pad & Paper Company
and American Pad & Paper Company of Delaware, Inc. American Pad & Paper Company
is a holding company with no operations separate from its operating subsidiary,
American Pad & Paper Company of Delaware, Inc. No separate financial
information for American Pad & Paper Company of Delaware, Inc. has been provided
herein because management of the Company believes such information would not be
meaningful because (i) American Pad & Paper Company of Delaware, Inc. is the
only direct subsidiary of American Pad & Paper Company, which has no operations
other than those of American Pad & Paper Company of Delaware, Inc. and its
subsidiaries and (ii) all assets and liabilities of American Pad & Paper Company
are recorded on the books of American Pad & Paper Company of Delaware, Inc.
There is no material difference between American Pad & Paper Company and
American Pad & Paper Company of Delaware, Inc. for the disclosure required by
the instructions to Form 10-Q and therefore, unless otherwise indicated, the
responses set forth herein apply to each of American Pad & Paper Company and
American Pad & Paper Company of Delaware, Inc.
<PAGE>
ITEM I. FINANCIAL STATEMENTS
AMERICAN PAD & PAPER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA
EQUITY
DECEMBER 31, JUNE 30, JUNE 30,
ASSETS 1995 1996 1996
------ ------------ --------- ---------
<S> <C> <C> <C>
Current assets:
Cash $ 18,341 $ 3,141
Restricted cash 3,619 2,095
Accounts receivable, net 25,943 44,995
Refundable income taxes 3,657 --
Inventories 93,061 111,654
Prepaid expenses and other
current assets 927 2,735
Management services agreement -- 5,000
Assets held for sale 42,578 445
Deferred income taxes 15,009 6,856
--------- ---------
Total current assets 203,135 176,921
Property and equipment, net 106,768 132,478
Intangible assets, net 191,012 202,020
Other 3,441 2,256
--------- ---------
Total $ 504,356 $ 513,676
========= =========
LIABILITIES AND STOCKHOLDERS'
----------------------------
DEFICIT
-------
Current liabilities:
Current portion of long-term debt $ 11,834 $ 14,613
Accounts payable 37,048 36,479
Accrued expenses 44,835 45,874
Income taxes payable 494 181
--------- ---------
Total current liabilities 94,211 97,147
Long-term debt 443,794 447,806
Deferred income taxes 30,070 31,896
Other 2,702 3,726
--------- ---------
Total liabilities 570,777 580,576
--------- ---------
Stockholders' deficit
Preferred stock, 150,000 shares
authorized, 58,449 shares
issued and outstanding 113,887 113,887
Common stock, voting, $.01 par value,
2,000,000 shares authorized, 900,000
shares issued and outstanding on an
actual basis and 75,000,000 shares
authorized and 14,899,809 shares
issued and outstanding on a pro forma
basis 9 9 $ 149
Additional paid-in capital 14,240 14,240 127,987
Accumulated deficit (194,557) (195,036) (195,036)
--------- --------- ---------
Total stockholders' deficit (66,421) (66,900) $ (66,900)
--------- --------- =========
Total liabilities and
stockholders' deficit $ 504,356 $ 513,676
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN PAD & PAPER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- - --------------------------------------------------------------------------------------------------
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 44,772 $ 114,099 $ 92,222 $ 234,207
Cost of sales 36,848 89,168 79,001 185,748
----------- ----------- ----------- -----------
Gross profit 7,924 24,931 13,221 48,459
Operating expenses:
Selling and marketing 1,166 3,893 2,329 7,220
General and administrative 1,681 7,832 3,268 15,530
----------- ----------- ----------- -----------
Income from operations 5,077 13,206 7,624 25,709
Other income (expense):
Interest (2,132) (12,491) (3,788) (25,033)
Other income, net 94 500 159 770
----------- ----------- ----------- -----------
Income before income taxes 3,039 1,215 3,995 1,446
Provision for income taxes 1,164 524 1,531 625
----------- ----------- ----------- -----------
Income before extraordinary item 1,875 691 2,464 821
Extraordinary loss from extinguishment
of debt (net of income tax benefit of $989) - (1,300) - (1,300)
----------- ----------- ----------- -----------
Net income (loss) $ 1,875 $ (609) $ 2,464 $ (479)
=========== =========== =========== ===========
Pro forma income (loss) per share:
Income before extraordinary item $ .11 $ .04 $ .14 $ .05
Extraordinary item - (.08) - (.08)
----------- ----------- ----------- -----------
Net income (loss) $ .11 $ (.04) $ .14 $ (.03)
=========== =========== =========== ===========
Pro forma weighted average shares
outstanding 17,106,698 17,106,698 17,106,698 17,106,698
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
AMERICAN PAD & PAPER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,464 $ (479)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation 838 4,138
Amortization of intangible assets 61 2,131
Extraordinary loss on
extinguishment of debt - 1,300
Amortization of debt issuance costs 520 2,520
Gain on sale of assets (132) (49)
Changes in:
Restricted cash (19) 2,394
Accounts receivable (6,458) 11,178
Refundable income taxes 3,657
Inventories (10,001) (5,804)
Prepaid expenses and other
current assets (339) (1,413)
Deferred tax asset, net 1,552 8,249
Accounts payable (3,002) (6,398)
Accrued expenses (2,201) (8,543)
Other assets (103) 1,266
Other liabilities (43) 332
-------- --------
Net cash provided by (used in)
operating activities (16,863) 14,479
-------- --------
Cash flows from investing activities:
Purchase of Niagara, including
acquisition costs and services (52,376)
Purchases of property and equipment (877) (4,822)
Proceeds from sale of Personalizing
Division 47,890
Proceeds from sale of assets 132 913
Net cash used by assets held for sale - (2,515)
-------- --------
Net cash used in investing
activities (745) (10,910)
-------- --------
Cash flows from financing activities:
Repayment of old accounts receivable
facility (45,000)
Proceeds from new accounts receivable
facility 35,000
Repayment of new accounts receivable
facility (10,000)
Net borrowings under line of credit 18,991
Proceeds from long-term debt 33,272
Repayment of long-term debt (1,383) (30,379)
Debt issuance costs - (1,662)
-------- --------
Net cash provided by (used in)
financing activities 17,608 (18,769)
-------- --------
Net decrease in cash - (15,200)
Cash, beginning of period 4 18,341
-------- --------
Cash, end of period $ 4 $ 3,141
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
AMERICAN PAD & PAPER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- - -------------------------------------------------------------------------------
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS
Organization and Basis of Presentation
American Pad & Paper Company (the "Company") was incorporated on June
2, 1992 as a holding company to acquire all of the outstanding stock of Ampad
Corporation ("Ampad"), the surviving entity from the merger between Ampad
Acquisition Corporation and Ampad. The Company had no operations through July
31, 1992. All of the Company's operations are conducted through American Pad &
Paper Company of Delaware, Inc. and its wholly owned subsidiaries.
The financial statements of the Company present the accounts and
operations of the Company and its wholly-owned subsidiaries. Additionally, the
consolidated financial statements include the accounts of Notepad Funding
Corporation, a special purpose corporation utilized in the accounts receivable
facility. All significant intercompany balances have been eliminated. Certain
prior and current year amounts have been reclassified for comparative purposes.
Business
The Company is one of the largest manufacturers and marketers of
paper-based office products (excluding computer forms and copy paper) in North
America. It offers a broad assortment of products through two complementary
businesses: Ampad (writing pads, file folders and other paper-based office
products) and Williamhouse (envelopes). The Company's products are distributed
through large mass merchant retailers, office product superstores, warehouse
clubs, major contract stationers, office products wholesalers, independent
dealers and merchants. Substantially all sales are to customers within the
United States.
Interim Financial Information
The accompanying interim financial statements are unaudited. Certain
information and disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted, although the Company believes the disclosures included herein are
adequate to make the information presented not misleading. These interim
financial statements should be read in conjunction with the Company's financial
statements for the year ended December 31, 1995.
The accompanying interim financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the Company's financial position at June 30, 1996 and the
results of its operations and its cash flows for the six month periods ended
June 30, 1996 and 1995. The results of operations for the interim periods
presented are not necessarily indicative of results of the full fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed in the preparation of the
consolidated financial statements are as follows:
Earnings per share
Given the changes in the Company's capital structure to be effected in
connection with the initial public offering of the Company's common stock
completed on July 8, 1996, historical earnings per common share amounts are not
presented in the consolidated financial statements as they are not considered to
be meaningful. Pro forma earnings per share is presented and reflects conversion
of the preferred stock into common stock for the same periods outstanding as the
underlying common stock on which the preferred stock was issued.
The pro forma weighted average shares outstanding gives effect to the
8.1192-for-one stock split and has been adjusted to reflect as outstanding,
using the treasury stock method at the initial public offering price, all shares
issuable upon the exercise of stock options granted subsequent to April 25, 1995
(one year prior to the initial public offering filing date pursuant to the
Securities and Exchange Commission's rules).
5
<PAGE>
Pro Forma Equity Presentation
Pro forma stockholders' equity as of June 30, 1996 is presented to
reflect, upon the closing of the initial public offering of the Company's common
stock, the effect of the 8.1192-for-one stock split and the conversion of the
preferred stock into common stock at a conversion rate based on an initial
public offering price of $15.00 per share. The pro forma stockholders' equity
does not reflect the net offering proceeds.
3. SIGNIFICANT TRANSACTIONS
Niagara Envelope Company, Inc.
Effective June 28, 1996, the Company acquired the stock of Niagara
Envelope Company, Inc. ("Niagara"). This acquisition was accounted for under the
purchase method of accounting. Accordingly, the aggregate acquisition cost was
allocated to the net assets acquired based on the fair value of such net assets
in accordance with Accounting Principles Board Opinion (APB) No. 16. The
aggregate acquisition costs totaled $47,647 and consisted of cash of $44,620 and
direct acquisition costs of $3,027. Additionally, the company paid $5,000 at
closing under a one-year consulting services agreement. The Company principally
financed the acquisition through proceeds from the sale of the Regency division
described below. The aggregate acquisition cost has been preliminary allocated
to the assets acquired and liabilities assumed as follows: cash and restricted
cash of $1,141, accounts receivable of $10,230, inventories of $12,788, prepaid
and other assets of $1,519, management services agreement of $5,000, property
and equipment of $25,113, deferred income tax liability of $1,992, accounts
payable $5,828, accrued expenses $9,996, other noncurrent liabilities of $693
and assumed debt of $3,900. The aggregate acquisition costs exceeded fair market
value of the net assets acquired by $19,265. Accordingly, goodwill was recorded
in accordance with APB No. 16 and is being amortized over 40 years. The
operating results of this acquisition are not included in the accompanying
condensed consolidated financial statements.
WR Acquisition, Inc./Williamhouse-Regency
The Company acquired WR Acquisition, Inc. ("WR") and its wholly-owned
subsidiary Williamhouse-Regency of Delaware, Inc. ("Williamhouse") (later
renamed American Pad & Paper Company of Delaware, Inc.) through a merger
transaction effective October 31, 1995. The transaction was accounted for under
the purchase method of accounting. Accordingly, the aggregate acquisition cost
was allocated to the net assets acquired based on the fair market value of such
net assets in accordance with APB No. 16. The aggregate acquisition cost totaled
$147,853 and consisted of cash of $140,000 and direct acquisition costs of
$7,853. The acquisition was entirely financed through the Company's bank credit
agreement (the "Bank Credit Agreement") and an off-balance sheet accounts
receivable facility. The aggregate acquisition costs were allocated to the
assets acquired and liabilities assumed as follows: accounts receivable of
$39,174; inventories of $49,496; prepaid expenses and other assets of $8,699;
net assets held for sale of $40,851; property and equipment of $88,688;
identifiable intangible assets of $37,900; deferred income tax liability of
$27,644; accounts payable of $17,518; accrued expenses of $36,482; noncurrent
liabilities of $2,019 and assumed debt of $152,905. The aggregate acquisition
costs exceeded fair market value of the net assets acquired by $119,613.
Accordingly, goodwill was recorded in accordance with APB No. 16 and is being
amortized over 40 years. The operating results have been included in the
accompanying condensed consolidated financial statements since the date of
acquisition. The businesses acquired include the Williamhouse division, a
manufacturer of a wide range of mill branded, specialty and commodity envelopes;
and the Regency division, which provides custom imprinting services.
The Regency personalized stationery and invitations division (the
"Personalizing Division") acquired in the acquisition was identified by the
Company's management at the date of acquisition as a nonstrategic asset held for
sale. The purchase price allocated to the net assets acquired included the
expected proceeds from sale plus the net cash flows expected to be generated
from the Personalizing Division from date of acquisition through the expected
date of sale (the holding period), offset by interest expense incurred during
the holding period on debt incurred to finance the purchase of the Personalizing
Division. On June 27, 1996, the Personalizing Division was sold for net proceeds
of $51,807, subject to certain post-closing purchase price adjustments. The net
proceeds from the sale exceeded the carrying amount of the asset held for sale
at the date of sale by $3,664. As such, the preliminary purchase price
allocation was adjusted resulting in a $3,664 reduction to goodwill. During the
three month period and the six month period ended June 30, 1996, the
Personalizing Division had operating income of $1,752 and $2,369 respectively,
and interest carrying costs of $942 and $1,884, respectively, which have been
excluded from the statement of operations and included as adjustments to the
carrying amount of the net assets held for sale through the date of sale.
6
<PAGE>
Globe-Weis
Effective August 16, 1995, the Company acquired the inventories and
certain equipment of the file folder and hanging file folder product lines of
Globe-Weis's ("Globe") office products division from Globe's parent. For
financial reporting purposes, this acquisition was accounted for under the
purchase method of accounting. Accordingly, the aggregate acquisition cost was
allocated to the net assets acquired based on the fair value of such net assets
in accordance with APB No. 16. The aggregate acquisition costs totaled $19,958
and consisted of cash of $6,911, notes issued to the seller of $10,958 and
direct acquisition and financing costs of $2,089. The Company principally
financed the acquisition through its financing arrangement with a commercial
lender and notes issued to the seller. The allocation of the aggregate
acquisition costs was as follows: inventories of $12,848, equipment of $5,445,
and debt issuance costs of $1,665. The operating results of this acquisition
have been included in the accompanying consolidated financial statements since
the date of acquisition.
Initial Public Offering
Effective July 8, 1996, the Company completed an initial public
offering (the "Offering") of 12,500,000 shares of common stock. The net
proceeds to the Company from the Offering were $176.8 million. The Company used
such proceeds to (i) repay $95.8 million on the indebtedness incurred under the
Bank Credit Agreement, (ii) redeem $70 million aggregate principal amount of the
13% Senior Subordinated Notes (the "Notes") from the holders thereof on a pro
rata basis, (iii) pay $7.7 million in redemption premiums on the Notes and (iv)
pay approximately $3.3 million in fees associated with the Offering.
New Bank Credit Agreement
Contemporaneously with the Offering, the Company refinanced and
retired all remaining indebtedness under the Bank Credit Agreement with the
proceeds of the loans under a new bank credit agreement (the "New Bank Credit
Agreement"). As a result of the refinancing, effective July 8, 1996, the
Company borrowed $162 million in revolving loans and $6.5 million in Swingline
loans. The proceeds of these loans was used to (i) pay off the remaining $145
million in Term Loans, $5 million in revolver loans and $7.7 million in
swingline loans outstanding under the existing Bank Credit Agreement and (ii)
pay approximately $8.6 million in fees associated with the New Bank Credit
Agreement. The New Bank Credit Agreement provides a revolving credit facility
of $300 million. As a result of the New Bank Credit Agreement, the Company's
effective interest rate under its senior credit facility was reduced by
approximately 189 basis points contemporaneously with the Offering.
The following summary presents the results of operations for the six
months ended June 30, 1995 and 1996, on an unaudited pro forma basis, as if the
Niagara, Williamhouse and Globe acquisitions and the initial public offering and
the new bank credit agreement had occurred as of January 1, 1995 (with
appropriate adjustments for amortization of intangible assets, interest expense,
elimination of duplicate selling and administrative expenses and the related
income tax effects). The pro forma operating results are for illustrative
purposes only and do not purport to be indicative of the actual results which
would have occurred had the transactions been consummated as of those earlier
dates, nor are they indicative of results of operations which may occur in the
future.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1995 1996
------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales $ 293,818 $ 288,737
--------- ---------
Income before income taxes and
extraordinary item $ 10,095 $ 16,833
========= =========
Net income before extraordinary item $ 4,662 $ 9,696
========= =========
Net income from continuing operations
after extraordinary item $ 4,662 $ 8,396
========= =========
Net income per share $ .16 $ .28
========= =========
</TABLE>
7
<PAGE>
4. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
(unaudited)
<S> <C> <C>
Accounts receivable--trade $ 25,539 $ 39,736
Accounts receivable--other 2,013 7,168
Less allowance for doubtful accounts and
reserves for customer deductions and
cash discounts (1,609) (1,909)
--------- ---------
$ 25,943 $ 44,995
========= =========
</TABLE>
On May 29, 1996 the Company entered into a new $60 million Accounts
Receivable Facility to sell, on a revolving basis, an undivided interest in a
designated pool of trade accounts receivable. At June 30, 1996, $25 million of
receivables were sold and are excluded from receivables in the accompanying
balance sheets. The full amount of the allowance for doubtful accounts has been
retained because the Company has retained substantially the same risk of credit
loss as if the receivables had not been sold through the recourse provision of
the receivable sale agreement. Under the agreement, the maximum amount of the
purchaser's investment is subject to change based on the level of eligible
receivables and restrictions on concentrations of receivables.
5. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
(unaudited)
<S> <C> <C>
Raw material and semi-finished goods $ 36,129 $ 37,613
Work in process 7,114 9,941
Finished goods 60,266 72,006
--------- ---------
103,509 119,560
LIFO reserve (10,448) (7,906)
--------- ---------
$ 93,061 $ 111,654
========= =========
</TABLE>
6. PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment are
as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
(unaudited)
<S> <C> <C>
Property, plant and equipment $ 111,347 $ 141,195
Accumulated depreciation (4,579) (8,717)
--------- ---------
$ 106,768 $ 132,478
========= =========
</TABLE>
8
<PAGE>
7. INTANGIBLE ASSETS
The cost and accumulated amortization of intangible assets are as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ ----------
(unaudited)
<S> <C> <C>
Debt issuance costs $ 33,775 $ 33,447
Accumulated amortization (846) (3,366)
--------- ---------
32,929 30,081
--------- ---------
Goodwill 121,176 136,847
Accumulated amortization (793) (2,319)
--------- ---------
120,383 134,528
--------- ---------
Intangible assets 37,900 38,216
Accumulated amortization (200) (805)
--------- ---------
37,700 37,411
--------- ---------
$ 191,012 $ 202,020
========= =========
</TABLE>
8. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES
The 13% Senior Subordinated Notes are guaranteed by substantially all
of the subsidiaries of American Pad & Paper Company of Delaware, Inc.
("Delaware"), a wholly-owned subsidiary of the Company and formerly known as
Williamhouse-Regency of Delaware, Inc. The subsidiary guarantees are full,
unconditional and joint and several. Each of the guarantor subsidiaries are
wholly-owned. The Company is not a guarantor of the Notes. Separate financial
statements of the guarantor subsidiaries are not presented because management
has determined that they would not be material to investors. However, condensed
consolidating financial information as of December 31, 1995 and June 30, 1996
and for the three and six months ended June 30, 1996 are presented. The
condensed consolidating financial information of Delaware is as follows:
9
<PAGE>
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------------------------
GUARANTOR NONGUARANTOR CONSOLIDATED
DELAWARE SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
-------- ------------ ---------- ------------ -----
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 18,295 $ 33 $ 13 $ $ 18,341
Restricted cash 3,619 3,619
Accounts receivable (13,490) (154) 39,587 25,943
Intercompany receivable
(payable) 75,423 (72,255) (3,168)
Refundable income 3,657 3,657
taxes
Inventories 74,112 18,949 93,061
Assets held for sale 864 41,714 42,578
Deferred income taxes 17,395 (2,386) 15,009
Other current assets 879 48 - - 927
-------- -------- ------- ------------ --------
Total current assets 180,754 (14,051) 36,432 - 203,135
-------- -------- ------- ------------ --------
Property and equipment, net 69,659 37,109 106,768
Investment in subsidiaries 41,575 (41,575) -
Intangible assets, net 171,432 16,993 2,587 191,012
Other 3,311 130 - - 3,441
-------- -------- ------- ------------ --------
Total Assets $466,731 $ 40,181 $39,019 $ (41,575) $504,356
======== ======== ======= ============ ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Current portion of long-
term debt $ 1,652 $ 1,182 $ $ $ 11,834
Accounts payable and
accrued expenses 62,869 19,014 81,883
Income taxes payable 494 - - - 494
-------- -------- ------- ------------ --------
Total current liabilities 74,015 20,196 - - 94,211
-------- -------- ------- ------------ --------
Long-term debt 442,134 1,660 443,794
Other liabilities 2,702 2,702
Deferred income taxes 14,301 15,769 - - 30,070
-------- -------- ------- ------------ --------
Total liabilities 533,152 37,625 - - 570,777
-------- -------- ------- ------------ --------
Stockholders' equity (deficit):
Common stock 1 10 (11) -
Additional paid-in capital 28,998 37,370 (37,370) 28,998
Retained earnings (95,419) 2,555 1,639 (4,194) (95,419)
-------- -------- ------- ------------ --------
Total stockholders' equity
(deficit) (66,421) 2,556 39,019 (41,575) (66,421)
-------- -------- ------- ------------ --------
Total liabilities and
stockholders' equity
(deficit) $466,731 $ 40,181 $39,019 $ (41,575) $504,356
======== ======== ======= ============ ========
10
</TABLE>
<PAGE>
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------------------------------------
GUARANTOR NONGUARANTOR CONSOLIDATED
DELAWARE SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 2,834 $ 294 $ 13 $ $ 3,141
Restricted cash 1,225 870 2,095
Accounts receivable 24,041 10,181 10,773 44,995
Intercompany receivable
(payable) 17,540 (42,619) 25,079
Inventories 83,514 28,140 111,654
Assets held for sale 445 445
Deferred income taxes 6,166 690 6,856
Management services
agreement 5,000 5,000
Other current assets 2,311 424 - - 2,735
-------- -------- ------- ------------ --------
Total current assets 137,631 2,735 36,555 176,921
Property and equipment, net 70,786 61,692 132,478
Investment in subsidiaries 85,090 12,791 (97,881)
Intangible assets, net 166,242 35,339 439 202,020
Other 2,071 185 - - 2,256
-------- -------- ------- ------------ --------
Total assets $461,821 $112,742 $36,994 $ (97,881) $513,676
======== ======== ======= ============ ========
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long
term debt $ 13,133 $ 1,480 $ $ $ 14,613
Accounts payable and
accrued expenses 61,564 20,638 151 82,353
Income taxes payable (5,262) 5,139 304 - 181
-------- -------- ------- ------------ --------
Total current liabilities 69,436 27,257 455 97,147
Long term debt 443,026 4,780 447,806
Other liabilities 3,033 693 3,726
Deferred income taxes 13,226 18,670 - - 31,896
-------- -------- ------- ------------ --------
Total liabilities 528,721 51,400 455 580,576
Stockholders' equity (deficit):
Common stock 971 10 (981)
Additional paid-in capital 14,240 51,676 35,399 (87,075) 14,240
Retained earnings (81,140) 8,695 1,130 (9,825) (81,140)
-------- -------- ------- ------------ --------
Total stockholders' equity
(deficit) (66,900) 61,342 36,539 (97,881) (66,900)
-------- -------- ------- ------------ --------
Total liabilities and
stockholders' equity
(deficit) $461,821 $112,742 $36,994 $ (97,881) $513,676
======== ======== ======= ============ ========
11
</TABLE>
<PAGE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30, 1996
------------------------------------------------------------------------
GUARANTOR NONGUARANTOR CONSOLIDATED
DELAWARE SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 88,108 $32,610 $ - $(6,619) $114,099
Cost of sales 72,045 23,742 - (6,619) 89,168
-------- ------- ------- -------- --------
Gross profit 16,063 8,868 24,931
Operating expenses:
Selling and marketing 3,025 868 3,893
General and administrative 7,738 917 (823) - 7,832
-------- ------- ------- -------- --------
Income (loss) from operations 5,300 7,083 823 - 13,206
-------- ------- ------- -------- --------
Other income (expense):
Interest (12,289) (27) (175) (12,491)
Other income, net 2,287 (1,787) - - 500
-------- ------- ------- -------- --------
Income (loss) before income
taxes (4,702) 5,269 648 1,215
Provision (benefit) for income
taxes (311) 531 304 - 524
-------- ------- ------- -------- --------
Income (loss) before equity in
net earnings of subsidiaries
and extraordinary items (4,391) 4,738 344 691
Equity in net earnings of
subsidiaries 5,082 - - (5,082) -
-------- ------- ------- -------- --------
Income (loss) before
extraordinary item 691 4,738 344 (5,082) 691
Extraordinary loss from
extinguishment of debt, net (1,300) - (1,300) 1,300 (1,300)
-------- ------- ------- -------- --------
Net income (loss) $ (609) $ 4,738 $ (956) $(3,782) $ (609)
======== ======= ======= ======== ========
</TABLE>
12
<PAGE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
--------------------------------------------------------------------------
GUARANTOR NONGUARANTOR CONSOLIDATED
DELAWARE SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $174,384 $69,599 $ $(9,776) $234,207
Cost of sales 142,745 52,779 - (9,776) 185,748
-------- ------- ------- -------- --------
Gross profit 31,639 16,820 48,459
Operating expenses:
Selling and marketing 5,512 1,708 7,220
General and administrative 15,150 2,047 (1,667) - 15,530
-------- ------- ------- -------- --------
Income (loss) from Operations 10,977 13,065 1,667 - 25,709
Other income (expenses):
Interest (24,677) (83) (273) - (25,033)
Other income, net 2,941 (2,171) - - 770
-------- ------- ------- -------- --------
Income (loss) before income
taxes (10,759) 10,810 1,394 1,446
Provision (benefit) for income
taxes (4,647) 4,670 602 - 625
-------- ------- ------- -------- --------
Income (loss) before equity in
net earnings of subsidiaries
and extraordinary items (6,111) 6,140 792 821
Equity in net earnings of
subsidiaries 6,932 - - (6,932) -
-------- ------- ------- -------- --------
Income (loss) before
extraordinary items 821 6,140 792 (6,932) 821
Extraordinary loss from
extinguishment of debt, net (1,300) - (1,300) 1,300 (1,300)
-------- ------- ------- -------- --------
Net income (loss) $ (479) $ 6,140 $ (508) $(5,632) $ (479)
======== ======= ======= ======== ========
</TABLE>
13
<PAGE>
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
---------------------------------------------------------------------------------------
GUARANTOR NONGUARANTOR CONSOLIDATED
DELAWARE SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTAL
--------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $ 55,890 $(41,825) $ 414 $ - $ 14,479
Investing activities:
Proceeds of sale of assets 864 47,939 48,803
Acquisition of Niagara (52,647) 271 (52,376)
Other (1,776) (5,561) - - (7,337)
-------- -------- ----- ------- --------
Net cash provided by (used in)
investing activities (53,559) 42,649 (10,910)
-------- -------- ----- ------- --------
Financing activities
Proceeds from issuance of debt 33,272 33,272
Repayment of old accounts
receivable facility (45,000) (45,000)
Proceeds from new accounts
receivable facility 35,000 35,000
Repayment of new accounts
receivable facility (10,000) (10,000)
Repayment of long term debt (29,896) (483) (30,379)
Debt issuance costs (1,248) (414) (1,662)
Other - - - - -
-------- -------- ----- ------- --------
Net cash provided by (used in)
financing activities (17,872) (483) (414) - (18,769)
-------- -------- ----- ------- --------
Net increase (decrease) in cash (15,541) 341 0 (15,200)
Cash, beginning of period 18,295 33 13 18,341
-------- -------- ----- ------- ---------
Cash, end of period $ 2,754 $ 374 $ 13 $ - $ 3,141
======== ======== ===== ======= =========
14
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Net sales for the three months ended June 30, 1996 increased by $69.3
million, or 155%, to $114.1 million from $44.8 million for the three months
ended June 30, 1995. Of this net sales increase, $59.5 million is related to
the acquisition of Williamhouse and $12.9 million is related to the acquisition
of the Globe-Weis. Ampad division net sales decreased by $3.1 million in the
second quarter of 1996 compared to the unusually strong second quarter of 1995.
The strong 1995 second quarter was due to certain of the Company's customers
increasing inventory levels in anticipation of supply shortages.
Gross profit for the three months ended June 30, 1996 increased by $17
million, or 215%, to $24.9 million from $7.9 million for the three months ended
June 30, 1995. Approximately $16.3 million of the increase in gross profit is
attributable to the acquisition of Williamhouse. Gross profit margin increased
to 21.8% for the three months ended June 30, 1996 from 17.6% for the three
months ended June 30, 1995. The increase in gross profit margin is primarily
attributable to higher margins of the Williamhouse division.
SG&A expenses for the three months ended June 30, 1996 increased $8.9
million, or 318%, to $11.7 from $2.8 million for the three months ended June 30,
1995. Approximately $7.8 million is attributable to the acquisition of
Williamhouse and $1.1 million to amortization of goodwill and intangibles
related to the acquisitions.
Interest expense for the three months ended June 30, 1996 increased
$10.4 million to $12.5 million from $2.1 million for the three months ended June
30, 1995. The increase is attributable primarily to higher debt related to the
acquisitions.
The income tax provision for the three month period ended June 30,
1996 reflects an effective tax rate of 43.1% versus an effective tax rate of
38.3% for the three month period ended June 30, 1995. The increase is
attributable primarily to the nondeductible goodwill amortization resulting from
the Williamhouse acquisition.
Extraordinary item representing an after tax loss on extinguishment of
debt of $1.3 million ($2.3 million pretax) was recognized as a result of the
write off of unamortized deferred financing costs.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Net sales for the six months ended June 30, 1996 increased by $142.0
million, or 154%, to $234.2 million from $92.2 million for the six months ended
June 30, 1995. Of this net sales increase, $122.7 million is related to the
acquisition of Williamhouse and $28.1 million is related to the acquisition of
Globe-Weis. Ampad division net sales decreased by $8.8 million in the first
half of 1996 compared to the unusually strong first half of 1995. The strong
1995 first half was due to certain of the Company's customers increasing
inventory levels in anticipation of supply shortages.
Gross profit for the six months ended June 30, 1996 increased by $35.3
million, or 267%, to $48.5 million from $13.2 million for the six months ended
June 30 1995. Approximately $31.8 million of the increase in gross profit is
attributable to the acquisition of Williamhouse. Gross profit margin increased
to 20.7% for the six months ended June 30, 1996 from 14.3% for the six months
ended June 30, 1995. The increase in gross profit margin is primarily
attributable to higher margins of the Williamhouse division.
SG&A expenses for the six months ended June 30, 1996 increased $17.2
million, or 307%, to $22.8 from $5.6 million for the six months ended June 30,
1995. Approximately $15.1 million is attributable to the acquisition of
Williamhouse and $2.1 million to amortization of goodwill and intangibles
related to the acquisitions.
15
<PAGE>
Interest expense for the six months ended June 30, 1996 increased
$21.2 million to $25.0 million from $3.8 million for the six months ended June
30, 1995. The increase is attributable primarily to higher debt related to the
acquisitions.
The income tax provision for the six month period ended June 30, 1996
reflects an effective tax rate of 43.2% versus an effective tax rate of 38.3%
for the six month period ended June 30, 1995. The increase is attributable
primarily to the nondeductible goodwill amortization resulting from the
Acquisition.
Extraordinary item representing an after tax loss on extinguishment of
debt of $1.3 million ($2.3 million pretax) was recognized as a result of the
write off of unamortized deferred financing costs.
The first half of 1996 may not be indicative of future anticipated
operating results due to the Company's significant acquisition activity. See
Note 3 in Item 1.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended
June 30, 1996 was $14.5 million compared to a use of cash of $16.9 million for
the six months ended June 30, 1995.
Cash used in investing activities for the six months ended June 30,
1996 and 1995 was $10.9 million and $.7 million, respectively. The use of cash
for the six months ended June 30, 1996 was principally due to the Niagara
acquisition ($52.4 million) and purchases of equipment ($4.8 million), offset by
proceeds from the sale of the Personalizing Division ($47.9 million). The use
of cash for the six months ended June 30, 1995 was primarily due to purchases of
equipment.
Cash used in financing activities six months ended June 30, 1996 was
$18.8 million primarily due to refinancing of the $45 million accounts
receivable facility with a new $60 million accounts receivable facility. In
connection with this refinancing the Company received $35 million from the New
Bank Credit Agreement and repaid the $45 million under the existing Bank Credit
Agreement. Additionally, the Company repaid $10 million under the new facility
with proceeds from the sale of the Personalizing Division.
Effective July 8, 1996, the Company completed the Offering of
12,500,000 shares of common stock. The net proceeds to the Company from the
Offering were $176.8 million. The Company used proceeds to (i) repay $95.8
million on the indebtedness incurred under the Bank Credit Agreement, (ii)
redeem $70 million aggregate principal amount of the Notes (iii) pay $7.7
million in redemption premiums on the Notes and (iv) pay approximately $3.3
million in fees associated with the Offering.
Contemporaneously with the Offering, the Company refinanced and
retired all remaining indebtedness under the Bank Credit Agreement with the
proceeds of the loans under the New Bank Credit Agreement. As a result of the
refinancing, effective July 8, 1996, the Company borrowed $162 million in
revolving loans and $6.5 million in Swingline loans. The proceeds of these
loans were used to (i) pay off the remaining $145 million in Term Loans, $5
million in revolver loans and $7.7 million in swingline loans outstanding under
the Bank Credit Agreement and (ii) pay approximately $8.6 million in fees
associated with the New Bank Credit Agreement. The New Bank Credit Agreement
provides a revolving credit facility of $300 million subject to the following
principal terms: Loans made under the New Bank Credit Agreement bear interest
at a rate per annum equal to, at the Company's option, (i) the Base Rate plus
the Applicable Margin or (ii) the LIBOR Rate plus the Applicable Margin (as each
term is defined in the New Bank Credit Agreement). The Applicable Margin varies
from 0% to 1.75%, based on the Company's level of debt as compared to earnings
("Leverage Ratio"). The Company's margin is 1.50%. Availability under the New
Bank Credit Agreement is subject to an unused Commitment Fee which, like the
Applicable Margin, varies from .3% to .5% based on the Company's Leverage
Ratio. The Company's current rate is .45%. Availability under the New Bank
Credit Agreement will be reduced to the extent of the net proceeds of a sale of
assets by the Company, the net proceeds of an issuance of debt by the Company or
50% of the net proceeds of an issuance of equity by the Company. Availability
will also be reduced by $50 million in 1999 and $50 million in 2000. The New
Bank Credit Agreement will terminate in 2001. The Company will be permitted to
make acquisitions under the New Bank Credit Agreement up to an aggregate of $25
million without consent of the Agent (as defined) and up to $50 million if, on a
pro forma basis giving effect to such acquisition, the Company's Leverage Ratio
is less than 3.0:1.0. As a result of the New Bank Credit Agreement, the
Company's effective interest rate under its senior credit facility will be
reduced by 189 basis points contemporaneously with the Offering.
16
<PAGE>
On May 29, 1996, the Company refinanced its $45 million accounts receivable
facility with a new $60 million accounts receivable facility. Under the new
facility the Company may sell, on a revolving basis, an undivided interest in a
designated pool of trade accounts receivable. At June 30, 1996, $25 million of
accounts receivable were sold under the program. The agreement expires in 2000.
Management believes that based on current levels of operations and
anticipated internal growth, cash flow from operations, together with other
available sources of funds including borrowings under the New Bank Credit
Agreement and available cash on hand at June 30, 1996 of $3.1million, will be
adequate for the foreseeable future to make required payments of principal and
interest on the Company's indebtedness, to fund anticipated capital expenditures
and working capital requirements, including the aforementioned restructuring
costs, and to enable the Company and its subsidiaries to comply with the terms
of their debt agreements. However, actual capital requirements may change,
particularly as a result of any acquisitions which the Company may make. The
ability of the Company to meet its debt service obligations and reduce its total
debt will be dependent, however, upon the future performance of the Company and
its subsidiaries which, in turn, will be subject to general economic conditions
and to financial, business and other factors, including factors beyond the
Company's control. A portion of the consolidated debt of the Company bears
interest at floating rates; therefore, its financial condition is and will
continue to be affected by changes in prevailing interest rates. The Company has
entered into an interest rate protection agreement to minimize the impact from a
rise in interest rates.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Pursuant to Section 228 of the General Corporation Law of the State of
Delaware, on June 22, 1996, the stockholders of the Company, by written consent
without a meeting, adopted resolutions:
1. Approving the Restated Certificate of Incorporation of the Company.
2. Approving the Amended and Restated By-laws of the Company.
3. Approving the adoption of the 1996 Key Employee Stock Incentive Plan.
4. Approving the adoption of the 1996 Non-Employee Director Stock Option
Plan.
5. Approving the adoption of the Management Stock Purchase Plan.
6. Election (i) Gregory M. Benson and Jonathan S. Lavine as Class I
Directors, to serve until the annual meeting of stockholders in 1997;
(ii) Russell M. Gard and Marc B. Wolpow as Class II Directors, to serve
until the annual meeting of stockholders in 1998; and (iii) Charles G.
Hanson III and Robert C. Gay as Class III Directors, to serve until the
annual meeting of stockholders in 1999.
Votes Cast for the above matters: Common Stock - 900,000 and Preferred
Stock - 58,449.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following Exhibits are filed herewith and made a part
hereof:
Exhibit No. Description of Exhibit
- - ----------- ----------------------
3.1(i) Restates Certificate of Incorporation of the Company.
3.1(ii) Amended and Restated By-Laws of the Company.
4.1 Credit Agreement, dated as of July 8, 1996, among the Company,
WR Acquisition, Inc., American Pad & Paper Company of Delaware,
Inc., various Lending Institutions, Bank of Tokyo-Mitsubishi
Trust Company, Bank One, Texas, N.A., The Bank of Nova Scotia
and the First National Bank of Boston, as Co-Agents and Bankers
Trust Company, as Agent. (1)
17
<PAGE>
4.2 Security Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc.,
certain other subsidiaries of American Pad & Paper Company, and Bankers
Trust Company, as Collateral Agent. (1)
4.3 Pledge Agreement, dated as of July 8, 1996, among the Company, WR
Acquisition, Inc., American Pad & Paper Company of Delaware, Inc., the
Lenders from time to time party thereto, and Bankers Trust Company, as
Agent. (1)
4.4 Form of Revolving and Swingline Note of American Pad & Paper Company of
Delaware, Inc.
4.5 Subsidiary Guaranty, dated as of July 8, 1996, among each of the
Company's subsidiaries named therein and Bankers Trust Company, as Agent
for the Bank. (1)
10.1 1996 Key Employee Stock Incentive Plan of the Company.
10.2 1996 Non-Employee Director Stock Option Plan of the Company.
10.3 Management Stock Purchase Plan of the Company.
27.1 Financial Data Schedule.
- - ------------------------
(1) The Company agrees to furnish supplementally to the Commission a copy of
any omitted schedule or exhibit to such agreement upon request by the
Commission.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the period
presented.
18
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 13, 1996 American Pad & Paper Company
American Pad & Paper Company
Of Delaware, Inc.
By: /s/ Kevin W. McAleer
-------------------------
Kevin W. McAleer
Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page No.
- - ----------- ---------------------- --------
<C> <S> <C>
3.1(i) Restated Certificate of Incorporation of the Company.
3.1(ii) Amended and Restated By-Laws of the Company.
4.1 Credit Agreement, dated as of July 8, 1996, among the
Company, WR Acquisition, Inc., American Pad & Paper
Company of Delaware, Inc., various Lending Institutions,
Bank of Tokyo-Mitsubishi Trust Company, Bank One, Texas,
N.A., The Bank of Nova Scotia and The First National
Bank of Boston, as Co-Agents and Bankers Trust Company,
as Agent.(1)
4.2 Security Agreement, dated as of July 8, 1996, among the
Company, WR Acquisition, Inc., American Pad & Paper
Company of Delaware, Inc., certain other subsidiaries of
American Pad & Paper Company, and Bankers Trust Company,
as Collateral Agent.(1)
4.3 Pledge Agreement, dated as of July 8, 1996, among the
Company, WR Acquisition, Inc., American Pad & Paper
Company of Delaware, Inc., the lenders from time to time
party thereto, and Bankers Trust Company, as Agent.(1)
4.4 Form of Revolving and Swingline Note of American Pad &
Paper Company of Delaware, Inc.
4.5 Subsidiary Guaranty, dated as of July 8, 1996, among
each of the Company's subsidiaries named therein and
Bankers Trust Company, as Agent for the Bank.(1)
10.1 1996 Key Employee Stock Incentive Plan of the Company.
10.2 1996 Non-Employee Director Stock Option Plan of the
Company.
10.3 Management Stock Purchase Plan of the Company.
27.1 Financial Data Schedule.
</TABLE>
- - -----------------------
(1) The Company agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request of the
Commission.
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICAN PAD & PAPER COMPANY
ARTICLE I - Name
----------------
The name of the corporation is American Pad & Paper Company (hereinafter
referred to as the "Corporation").
ARTICLE II - Registered Office
------------------------------
The address of the registered office of the Corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, Dover, Delaware 19901. The name
of the registered agent of the Corporation at that address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III - Purpose
---------------------
The purpose of 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 IV - Capital Stock
--------------------------
Part A. General. The maximum number of shares of capital stock that the
Corporation is authorized to have outstanding at any one time is 75,150,000
shares, consisting of: (i) 150,000 shares of Preferred Stock, par value $0.01
per share (the "Preferred Stock"); and (ii) 75,000,000 shares of Common Stock,
par value $0.01 per share (the "Common Stock").
Part B. Preferred Stock. Authority is hereby expressly vested in the
Board of Directors of the Corporation, subject to the provisions of this ARTICLE
IV and to the limitations prescribed by law, to authorize the issuance from time
to time of one or more series of Preferred Stock. The authority of the Board of
Directors with respect to each series shall include, but not be limited to, the
determination or fixing of the following by resolution or resolutions adopted by
the affirmative vote of a majority of the total number of the Directors then in
office:
(1) The designation of such series;
<PAGE>
(2) The dividend rate of such series, the conditions and dates upon which
such dividends shall be payable, the relation which such dividends shall bear to
the dividends payable on any other class or classes or series of the
Corporation's capital stock and whether such dividends shall be cumulative or
non-cumulative;
(3) Whether the shares of such series shall be subject to redemption for
cash, property or rights, including securities of any other corporation, by the
Corporation or upon the happening of a specified event and, if made subject to
any such redemption, the times or events, prices, rates, adjustments and other
terms and conditions of such redemptions;
(4) The terms and amount of any sinking fund provided for the purchase or
redemption of the shares of such series;
(5) Whether or not the shares of such series shall be convertible into, or
exchangeable for, at the option of either the holder or the Corporation or upon
the happening of a specified event, shares of any other class or classes or of
any other series of the same class of the Corporation's capital stock and, if
provision be made for conversion or exchange, the times or events, prices,
rates, adjustments and other terms and conditions of such conversions or
exchanges;
(6) The restrictions, if any, on the issue or reissue of any additional
Preferred Stock;
(7) The rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(8) The provisions as to voting, optional and/or other special rights and
preferences, if any, including, without limitation, the right to elect one or
more Directors.
Part C. Common Stock. Except as otherwise provided by the Delaware
General Corporation Law, by this Restated Certificate of Incorporation (the
"Restated Certificate") and subject to the rights of holders of any series of
Preferred Stock, the holders of record of Common Stock shall share ratably in
all dividends payable in cash, stock or otherwise and other distributions,
whether in respect of liquidation or dissolution (voluntary or involuntary) or
otherwise and, are subject to all the powers, rights, privileges, preferences
and priorities of any series of Preferred Stock as provided herein or in any
resolution or resolutions adopted by the Board of Directors pursuant to
authority expressly vested in it by the provisions of Section B of this ARTICLE
IV.
(1) The Common Stock shall not be convertible into, or exchangeable for,
shares of any other class or classes or of any other series of the same of the
Corporation's capital stock.
(2) No holder of Common Stock shall have any preemptive, subscription,
redemption, conversion or sinking fund rights with respect to the Common Stock,
or to any obligations convertible (directly or indirectly) into stock of the
Corporation whether now or hereafter authorized.
-2-
<PAGE>
(3) Except as otherwise provided by the Delaware General Corporation Law,
by the Restated Certificate and subject to the rights of holders of any series
of Preferred Stock, all of the voting power of the stockholders of the
Corporation shall be vested in the holders of the Common Stock, and each holder
of Common Stock shall have one vote for each share held by such holder on all
matters voted upon by the stockholders of the Corporation.
Part D. Recapitalization.
(1) Stock Split. Immediately upon the filing of this Restated Certificate
with the Secretary of State of the State of Delaware (the "Effective Time"),
each share of Common Stock outstanding at the Effective Time shall be, without
further action by the Corporation or the holder thereof, changed and converted
into a number of shares of Common Stock equal to that number determined by
multiplying each outstanding share of Common Stock by 8.11918983 (the "Stock
Split Factor"). Each certificate then outstanding representing shares of Common
Stock shall automatically represent from and after the Effective Time that
number of shares of Common Stock equal to the number of shares shown on the face
of the certificate multiplied by the Stock Split Factor (8.11918983).
(2) Conversion of Old Preferred Stock. At the Effective Time and
immediately following the stock split as set forth above, each share of
Preferred Stock, par value $.01 per share, of the Corporation (the "Old
Preferred Stock"), outstanding immediately prior to the Effective Time shall be,
without further action by the Corporation or the holder thereof, reclassified
into that number of shares of Common Stock determined by dividing the per share
liquidation value of the Old Preferred Stock ($1,948.50) by the Public Offering
Price (the "Old Preferred Conversion Factor" and together with the Stock Split
Factor, the "Conversion Factors"). Each certificate representing shares of Old
Preferred Stock shall automatically represent from and after the Effective Time
that number of shares of Common Stock equal to the number of shares shown on the
face of the certificate multiplied by the Old Preferred Conversion Factor. For
purpose of this Part D of this ARTICLE IV, "Public Offering Price" shall mean
the initial public offering price per share of Common Stock set forth on the
cover page of the Company's Prospectus included in the Registration Statement on
Form S-1 (Registration No. 333-4000) relating to the initial public offering of
the Company's Common Stock and in the form first used to confirm sales of the
Common Stock, without deduction for any underwriting discounts or commissions or
any expenses incurred by the Corporation in connection with the initial public
offering.
(3) Fractional Shares. Notwithstanding the foregoing, in the event that
the conversions or reclassifications of the Common Stock or Old Preferred Stock
described above would result in any holder of shares of Common Stock or Old
Preferred Stock holding a share of Common Stock that is not an integral multiple
of one, the effect of the conversion or reclassification shall be such that the
shares of Common Stock issued as a result of the conversion or reclassification
shall be the integral multiple of one closest to the product of the applicable
Conversion Factor and the number of shares of Common Stock or Old Preferred
Stock held by such holder, with fractions of 0.50 and greater being rounded up
to the next higher integral multiple of one and fractions less than 0.50 being
rounded down to the next lower integral multiple of one. No consideration will
be paid in lieu of fractions that are rounded down.
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ARTICLE V - Existence
---------------------
The Corporation is to have perpetual existence.
ARTICLE VI - By-laws
--------------------
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors of the Corporation is
expressly authorized to make, alter, amend, change, add to or repeal the By-laws
of the Corporation by the affirmative vote of a majority of the total number of
Directors then in office. Any alteration or repeal of the By-laws of the
Corporation by the stockholders of the Corporation shall require the affirmative
vote of at least a majority of the voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote on such alteration or
repeal, subject to ARTICLE IX hereof and ARTICLE VII of the Corporation's By-
laws.
ARTICLE VII - Stockholders and Directors
----------------------------------------
Part A. Stockholder Action. Election of Directors need not be by written
ballot unless the By-laws of the Corporation so provide. Subject to any rights
of holders of any series of Preferred Stock, from and after the date on which
the Common Stock of the Corporation is registered pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (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 effected in lieu thereof by any consent in writing by such stockholders, (ii)
special meetings of stockholders of the Corporation may be called only by either
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 or by the chief
executive officer of the Corporation and (iii) advance notice of stockholder
nominations of persons for election to the Board of Directors of the Corporation
and of business to be brought before any annual meeting of the stockholders by
the stockholders of the Corporation shall be given in the manner provided in the
By-laws of the Corporation.
Part B. Number of Directors and Term of Office. Subject to any rights of
holders of any series of Preferred Stock to elect additional Directors under
specified circumstances, the number of Directors which shall constitute the
Board of Directors of the Corporation shall be fixed from time to time in the
manner set forth in the By-laws of the Corporation. The Directors of the
Corporation shall be divided into three classes: Class I, Class II and Class
III. Membership in such class shall be as nearly equal in number as possible.
The term of office of the initial Class I Directors shall expire at the annual
election of Directors by the stockholders of the Corporation in 1997, the term
of office of the initial Class II Directors shall expire at the annual election
of Directors by the stockholders of the Corporation in 1998 and the term of
office of the initial Class III Directors shall expire at the annual election of
Directors by the stockholders of the Corporation in 1999, or thereafter when
their respective successors in each case are elected by the stockholders and
qualified, subject however, to prior death, resignation, retirement,
disqualification or removal from office for cause. At each succeeding annual
election of Directors by the stockholders of the
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Corporation beginning in 1997, the Directors chosen to succeed those whose terms
then expire shall be identified as being of the same class as the Directors they
succeed and shall be elected for a term expiring at the third succeeding annual
election of Directors by the stockholders of the Corporation, or thereafter when
their respective successors in each case are elected by the stockholders and
qualified. If the number of Directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of Directors
in each class as nearly equal as possible, and any additional Director of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case shall a decrease in the number of Directors shorten the
term of any incumbent Director.
Part C. Removal and Resignation. No Director may be removed from office
without cause and without the affirmative vote of the holders of a majority of
the voting power of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of Directors voting
together as a single class; provided, however, that if the holders of any class
or series of capital stock are entitled by the provisions of this Restated
Certificate (it being understood that any references to this Restated
Certificate shall include any duly authorized certificate of designation) to
elect one or more Directors, such Director or Directors so elected may be
removed without cause only by the vote of the holders of a majority of the
outstanding shares of that class or series entitled to vote. Any Director may
resign at any time upon written notice to the Corporation.
Part D. Vacancies and Newly Created Directorships. Subject to any rights
of holders of any series of Preferred Stock to fill such newly created
Directorships or vacancies, any newly created Directorships resulting from any
increase in the authorized number of Directors and any vacancies in the Board of
Directors resulting from death, resignation, disqualification or removal from
office for cause shall, unless otherwise provided by law or by resolution
approved by the affirmative vote of a majority of the total number of Directors
then in office, be filled only by resolution approved by the affirmative vote of
a majority of the total number of Directors then in office. Any Director so
chosen shall hold office until the next election of the class for which such
Director shall have been chosen, and until his successor shall have been duly
elected and qualified, unless he shall resign, die, become disqualified or be
removed for cause.
ARTICLE VIII - General Provisions
---------------------------------
Part A. Dividends. The Board of Directors shall have authority from
time to time to set apart out of any assets of the Corporation otherwise
available for dividends a reserve or reserves as working capital or for any
other purpose or purposes, and to abolish or add to any such reserve or reserves
from time to time as said board may deem to be in the interest of the
Corporation; and said Board shall likewise have power to determine in its
discretion, except as herein otherwise provided, what part of the assets of the
Corporation available for dividends in excess of such reserve or reserves shall
be declared in dividends and paid to the stockholders of the Corporation.
Part B. Issuance of Stock. The shares of all classes of stock of the
Corporation may be issued by the Corporation from time to time for such
consideration as from time to time may be fixed by the Board of Directors of the
Corporation, provided that shares of stock
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having a par value shall not be issued for a consideration less than such par
value, as determined by the Board. At any time, or from time to time, the
Corporation may grant rights or options to purchase from the Corporation any
shares of its stock of any class or classes to run for such period of time, for
such consideration, upon such terms and conditions, and in such form as the
Board of Directors may determine. The Board of Directors shall have authority,
as provided by law, to determine that only a part of the consideration which
shall be received by the Corporation for the shares of its stock which it shall
issue from time to time, shall be capital; provided, however, that, if all the
shares issued shall be shares having a par value, the amount of the part of such
consideration so determined to be capital shall be equal to the aggregate par
value of such shares. The excess, if any, at any time, of the total net assets
of the Corporation over the amount so determined to be capital, as aforesaid,
shall be surplus. All classes of stock of the Corporation shall be and remain
at all times nonassessable.
The Board of Directors is hereby expressly authorized, in its discretion,
in connection with the issuance of any obligations or stock of the Corporation
(but without intending hereby to limit its general power so to do in other
cases), to grant rights or options to purchase stock of the Corporation of any
class upon such terms and during such period as the Board of Directors shall
determine, and to cause such rights to be evidenced by such warrants or other
instruments as it may deem advisable.
Part C. Inspection of Books and Records. The Board of Directors shall
have power from time to time to determine to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.
Part D. Location of Meetings, Books and Records. Except as otherwise
provided in the By-laws, the stockholders of the Corporation and the Board of
Directors may hold their meetings and have an office or offices outside of the
State of Delaware and, subject to the provisions of the laws of said State, may
keep the books of the Corporation outside of said State at such places as may,
from time to time, be designated by the Board of Directors.
ARTICLE IX - Amendments
-----------------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate in the manner now or
hereinafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding anything contained in this Restated Certificate to
the contrary, Parts A, B and C of ARTICLE IV, ARTICLE VII, ARTICLE X, and this
ARTICLE IX of this Restated Certificate 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 66 2/3% of the voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote on
such alteration, amendment or repeal, voting together as a single class (other
than any alteration or
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<PAGE>
amendment to Part A of ARTICLE IV that increases the authorized number of shares
of Preferred Stock or Common Stock).
ARTICLE X - Liability
---------------------
Part A. Limitation of Liability.
(1) 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), and except
as otherwise provided in the Corporation's By-laws, 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.
(2) 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 B. 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 (a "proceeding"), by reason of 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 (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, excise exercise 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 C of this
ARTICLE X 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 of the Corporation. The right
to indemnification conferred in this Part B of this ARTICLE X shall be a
contract right and shall include the obligation of the Corporation to pay the
expenses incurred in defending any such proceeding in advance of its final
disposition (an "advance of expenses"); provided, however, that, if and to the
extent that the Delaware General Corporation Law requires, an advance 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,
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<PAGE>
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (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 (a "final adjudication") that such indemnitee is not entitled to be
indemnified for such expenses under this Part B or otherwise. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation with the same or lesser scope and effect as the
foregoing indemnification of Directors and officers.
Part C. Procedure for Indemnification. Any indemnification of a Director
or officer of the Corporation or advance of expenses under Part B of this
ARTICLE X shall be made promptly, and in any event within forty-five days (or,
in the case of an advance of expenses, twenty days), upon the written request of
the Director or officer. If a determination by the Corporation that the Director
or officer is entitled to indemnification pursuant to this ARTICLE X is
required, and the Corporation fails to respond within sixty days to a written
request for indemnity, the Corporation shall be deemed to have approved the
request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE X shall be enforceable by the Director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of expenses where the undertaking required pursuant to
Part B of this ARTICLE X, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation. 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 such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. The procedure for indemnification of other employees and agents for
whom indemnification is provided pursuant to Part B of this ARTICLE X shall be
the same procedure set forth in this Part C for Directors or officers, unless
otherwise set forth in the action of the Board of Directors providing
indemnification for such employee or agent.
Part D. Insurance. The Corporation may purchase and maintain insurance on
its own behalf and on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation or was serving at the request of the
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss asserted against him or her and incurred by him or her in any
such capacity, 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.
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<PAGE>
Part E. Service for Subsidiaries. Any person serving as a Director,
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (a "subsidiary" for this ARTICLE
X) shall be conclusively presumed to be serving in such capacity at the request
of the Corporation.
Part F. 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, advance of expenses and other rights
contained in this ARTICLE X in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE X 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 G. Non-Exclusivity of Rights. The rights to indemnification and to
the advance of expenses conferred in this ARTICLE X shall not be exclusive of
any other right which any person may have or hereafter acquire under this
Restated Certificate or under any statute, by-law, agreement, vote of
stockholders or disinterested Directors or otherwise.
Part H. Merger or Consolidation. For purposes of this ARTICLE X,
references to the "Corporation" shall include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
Directors, officers and employees or agents, so that any person who is or was a
Director, officer, employee or agent of such constituent Corporation, or is or
was serving at the request of such constituent Corporation as a Director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this ARTICLE X
with respect to the resulting or surviving Corporation as he or she would have
with respect to such constituent Corporation if its separate existence had
continued.
ARTICLE XI - Business Combinations
----------------------------------
The Corporation expressly elects to be governed by Section 203 of the
Delaware General Corporation Law. Notwithstanding the terms of Section 203 of
the Delaware General Corporation Law, Bain Capital, Inc. and its affiliates (the
"Bain Entities") shall not be deemed at any time and without regard to the
percentage of voting stock of the Corporation owned by the Bain Entities to be
an "interested stockholder" as such term is defined in Section 203(c)(5) of the
Delaware General Corporation Law.
* * * * *
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AMENDED AND RESTATED BY-LAWS
OF
AMERICAN PAD & PAPER COMPANY
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the Corporation in
the State of Delaware shall be located at 32 Loockerman Square, Suite L-100, in
the City of Dover, County of Kent 19001. The name of the Corporation's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the Corporation may be
changed from time to time by action of the Board of Directors.
Section 2. Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Annual Meeting. An annual meeting of the stockholders shall
be held each year within 120 days after the close of the immediately preceding
fiscal year of the Corporation or at such other time specified by the Board of
Directors for the purpose of electing Directors and conducting such other proper
business as may come before the meeting. At the annual meeting, stockholders
shall elect Directors and transact such other business as properly may be
brought before the meeting pursuant to ARTICLE II, Section 11 hereof.
Section 2. Special Meetings. Special Meetings of the stockholders may
only be called in the manner provided in the Restated Certificate of
Incorporation.
Section 3. Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting. If no designation is made,
or if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the Corporation. If for any reason any annual
meeting shall not be held during any year, the business thereof may be
transacted at any special meeting of the stockholders.
<PAGE>
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than 10 nor more than 60 days before the date of the meeting. All such
notices shall be delivered, either personally or by mail, by or at the direction
of the Board of Directors, the chairman of the board, the president or the
secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of the
Corporation. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the Corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders, except as otherwise
provided by the General Corporation Law of the State of Delaware or by the
Restated Certificate of Incorporation. If a quorum is not present, the holders
of a majority of the shares present in person or represented by proxy at the
meeting, and entitled to vote at the meeting, may adjourn the meeting to another
time and/or place. When a specified item of business requires a vote by a class
or series (if the Corporation shall then have outstanding shares of more than
one class or series) voting as a class, the holders of a majority of the shares
of such class or series shall constitute a quorum (as to such class or series)
for the transaction of such item of business.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless (i) by express provisions of an applicable law or
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of the Restated Certificate of Incorporation a different vote is required, in
which case such express provision shall govern and control the decision of such
question, or (ii) the subject matter is the election of Directors, in which case
Section 2 of ARTICLE III hereof shall govern and control the approval of such
subject matter.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware, by the Restated Certificate of
Incorporation of the Corporation or any amendments thereto or these By-laws,
every stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of common stock held by such
stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Business Brought Before an Annual Meeting. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (ii)
brought before the meeting by or at the direction of the Board of Directors or
(iii) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days' notice or prior public announcement of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the date on which such notice of the date of
the annual meeting was mailed or such public announcement was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting, (ii) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder and (iv) any material
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interest of the stockholder in such business. Notwithstanding anything in these
By-laws to the contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this section. The
presiding officer of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this section; if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted. For purposes of this
section, "public announcement" shall mean disclosure in a press release reported
by Dow Jones News Service, Associated Press or a comparable national news
service. Nothing in this section shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
ARTICLE III
-----------
Directors
---------
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. In
addition to such powers as are herein and in the Restated Certificate of
Incorporation expressly conferred upon it, the Board of Directors shall have
and may exercise all the powers of the Corporation, subject to the provisions of
the laws of Delaware, the Restated Certificate of Incorporation and these By-
laws.
Section 2. Number, Election and Term of Office. Subject to any rights of
the holders of any series of Preferred Stock to elect additional Directors under
specified circumstances, the number of Directors which shall constitute the
Board of Directors shall be fixed from time to time by resolution adopted by the
affirmative vote of a majority of the total number of Directors then in office.
The Directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of Directors; provided that, whenever the holders of any class or
series of capital stock of the Corporation are entitled to elect one or more
Directors pursuant to the provisions of the Restated Certificate of
Incorporation of the Corporation (including, but not limited to, for purposes of
these By-laws, pursuant to any duly authorized certificate of designation), such
Directors shall be elected by a plurality of the votes of such class or series
present in person or represented by proxy at the meeting and entitled to vote in
the election of such Directors. The Directors shall be elected and shall hold
office only in the manner provided in the Restated Certificate of Incorporation.
Section 3. Removal and Resignation. No Director may be removed from
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock
entitled to vote generally in the election of Directors voting together as a
single class; provided, however, that if the holders of any class or series of
capital stock are entitled by the provisions of the Restated Certificate of
Incorporation (it being understood that any references to the Restated
Certificate of Incorporation shall include any duly authorized certificate of
designation) to elect one or more Directors, such Director or Directors so
elected may be removed without cause only by the vote of the holders of a
majority of the outstanding shares of
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<PAGE>
that class or series entitled to vote. Any Director may resign at any time upon
written notice to the Corporation.
Section 4. Vacancies. Vacancies and newly created directorships resulting
from any increase in the total number of Directors may be filled only in the
manner provided in the Restated Certificate of Incorporation.
Section 5. Nominations.
(a) Only persons who are nominated in accordance with the
procedures set forth in these By-laws shall be eligible to serve as Directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at a meeting of stockholders (i) by or at the direction of the Board
of Directors or (ii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of notice provided for in this By-law, who is
entitled to vote generally in the election of Directors at the meeting and who
shall have complied with the notice procedures set forth below in Section 5(b).
(b) In order for a stockholder to nominate a person for election
to the Board of Directors of the Corporation at a meeting of stockholders, such
stockholder shall have delivered timely notice of such stockholder's intent to
make such nomination in writing to the secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation (i) in the case of an annual
meeting, not less than 60 nor more than 90 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is changed by more than 30 days from such
anniversary date, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the earlier of the
day on which notice of the date of the meeting was mailed or public disclosure
of the meeting was made, and (ii) in the case of a special meeting at which
Directors are to be elected, not later than the close of business on the 10th
day following the earlier of the day on which notice of the date of the meeting
was mailed or public announcement of the meeting was made. Such stockholder's
notice shall set forth (i) as to each person whom the stockholder proposes to
nominate for election as a Director at such meeting all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a Director
if elected); (ii) as to the stockholder giving the notice (A) the name and
address, as they appear on the Corporation's books, of such stockholder and (B)
the class and number of shares of the Corporation which are beneficially owned
by such stockholder and also which are owned of record by such stockholder; and
(iii) as to the beneficial owner, if any, on whose behalf the nomination is
made, (A) the name and address of such person and (B) the class and number of
shares of the Corporation which are beneficially owned by such person. At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish to the secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
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(c) No person shall be eligible to serve as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
section. The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this section, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded. A
stockholder seeking to nominate a person to serve as a Director must also comply
with all applicable requirements of the Exchange Act, and the rules and
regulations thereunder with respect to the matters set forth in this section.
Section 6. Annual Meetings. The annual meeting of the Board of Directors
shall be held without other notice than this By-law immediately after, and at
the same place as, the annual meeting of stockholders.
Section 7. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the Board of Directors may be called by the
chairman of the board, the president (if the president is a Director) or, upon
the written request of at least a majority of the Directors then in office, the
secretary of the Corporation on at least 24 hours notice to each Director,
either personally, by telephone, by mail or by telecopy.
Section 8. Chairman of the Board, Quorum, Required Vote and Adjournment.
The Board of Directors shall elect, by the affirmative vote of a majority of the
total number of Directors then in office, a chairman of the board, who shall
preside at all meetings of the stockholders and Board of Directors at which he
or she is present. If the chairman of the board is not present at a meeting of
the stockholders or the Board of Directors, the president (if the president is a
Director and is not also the chairman of the board) shall preside at such
meeting, and, if the president is not present at such meeting, a majority of the
Directors present at such meeting shall elect one of their members to so
preside. A majority of the total number of Directors then in office shall
constitute a quorum for the transaction of business. Unless by express provision
of an applicable law, the Restated Certificate of Incorporation or these By-laws
a different vote is required, the vote of a majority of Directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
If a quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Committees. The Board of Directors may, by resolution passed by
a majority of the total number of Directors then in office, designate one or
more committees, each committee to consist of one or more of the Directors of
the Corporation, which to the extent provided in such resolution or these By-
laws shall have, and may exercise, the powers of the Board of Directors in the
management and affairs of the Corporation, except as otherwise limited by law.
The Board of Directors may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the Board
of Directors. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
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Section 10. Committee Rules. Each committee of the Board of Directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the Board of
Directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. Unless otherwise provided in such a
resolution, in the event that a member and that member's alternate, if
alternates are designated by the Board of Directors, of such committee is or are
absent or disqualified, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of any such absent or disqualified member.
Section 11. Communications Equipment. Members of the Board of Directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
and speak with each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 12. Waiver of Notice and Presumption of Assent. Any member of the
Board of Directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 13. Action by Written Consent. Unless otherwise restricted by the
Restated Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the Corporation shall be elected by
the Board of Directors and shall consist of a chief executive officer, a
president, one or more vice-presidents, a secretary, a chief financial officer
and such other officers and assistant officers as may be deemed
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necessary or desirable by the Board of Directors. Any number of offices may be
held by the same person, except that neither the chief executive officer nor the
president shall also hold the office of secretary. In its discretion, the Board
of Directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of president and secretary shall be filled as
expeditiously as possible.
Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as convenient.
Vacancies may be filled or new offices created and filled at any meeting of the
Board of Directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the Board of
Directors may be removed by the Board of Directors at its discretion, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise may be filled by the
Board of Directors.
Section 5. Compensation. Compensation of all executive officers shall be
approved by the Board of Directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a Director of the
Corporation.
Section 6. Chief Executive Officer. The chief executive officer shall have
the powers and perform the duties incident to that position. Subject to the
powers of the Board of Directors, he shall be in the general and active charge
of the entire business and affairs of the Corporation, and shall be its chief
policy making officer. He shall preside at all meetings of the Board of
Directors and stockholders and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or provided in these
By-laws. The chief executive officer is authorized to execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation.
Whenever the president is unable to serve, by reason of sickness, absence or
otherwise, the chief executive officer shall perform all the duties and
responsibilities and exercise all the powers of the president.
Section 7. The President. The president of the Corporation shall, subject
to the powers of the Board of Directors and the chairman of the board, have
general charge of the business, affairs and property of the Corporation, and
control over its officers, agents and employees. The president shall see that
all orders and resolutions of the Board of Directors are carried into effect.
The president is authorized to execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. The president
shall have such
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other powers and perform such other duties as may be prescribed by the chief
executive officer, the Board of Directors or as may be provided in these By-
laws.
Section 8. Vice-Presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the Board of Directors
or the chairman of the board, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the Board of Directors, the chief executive officer,
the president or these By-laws may, from time to time, prescribe. The vice-
presidents may also be designated as executive vice-presidents or senior vice-
presidents, as the Board of Directors may from time to time prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the Board of Directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose or shall ensure that
his or her designee attends each such meeting to act in such capacity. Under the
chairman of the board's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the chief
executive officer, the president or these By-laws may, from time to time,
prescribe; and shall have custody of the corporate seal of the Corporation. The
secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his or her signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, any of
the assistant secretaries, shall in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors, the
chief executive officer, the president, or secretary may, from time to time,
prescribe.
Section 10. The Chief Financial Officer. The chief financial officer shall
have the custody of the corporate funds and securities; shall keep full and
accurate all books and accounts of the Corporation as shall be necessary or
desirable in accordance with applicable law or generally accepted accounting
principles; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the chairman of the board
or the Board of Directors; shall cause the funds of the Corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the Board of Directors, at
its regular meeting or when the Board of Directors so requires, an account of
the Corporation; shall have such powers and perform such duties as the Board of
Directors, the chief executive officer, the president or these By-laws may, from
time to time, prescribe. If required by the Board of Directors, the chief
financial officer shall give the Corporation a bond (which shall be rendered
every six years) in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of the office of chief financial officer and for the restoration to the
Corporation, in case of death, resignation, retirement or removal from office of
all books, papers, vouchers, money and other property of whatever kind in the
possession or under the control of the chief financial officer belonging to the
Corporation.
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Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the Board of Directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may by resolution delegate the powers and
duties of such officer to any other officer or to any Director, or to any other
person selected by it.
ARTICLE V
---------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the chairman of the board, the chief executive officer or the president and the
secretary or an assistant secretary of the Corporation, certifying the number of
shares owned by such holder in the Corporation. If such a certificate is
countersigned (i) by a transfer agent or an assistant transfer agent other than
the Corporation or its employee or (ii) by a registrar, other than the
Corporation or its employee, the signature of any such chairman of the board,
chief executive officer, president, secretary or assistant secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
Corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the Corporation. Shares of stock of the Corporation
shall only be transferred on the books of the Corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the Corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization and other matters as
the Corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the Corporation to issue
a new certificate to the person entitled thereto, cancel the old certificate or
certificates and record the transaction on its books. The Board of Directors may
appoint a bank or trust company organized under the laws of the United States or
any state thereof to act as its transfer agent or registrar, or both in
connection with the transfer of any class or series of securities of the
Corporation.
Section 2. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the
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Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Corporation may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his or her legal representative, to
give the Corporation a bond sufficient to indemnify the Corporation against any
claim that may be made against the Corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than 60 nor less than 10 days
before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is first given. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Other Purposes. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than 60 days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 5. Registered Stockholders. Prior to the surrender to the
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 6. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
Board of Directors. Any call made by the Board of Directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.
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ARTICLE VI
----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the certificate of, if any, may be declared by the
Board of Directors at any regular or special meeting, in accordance with
applicable law. Dividends may be paid in cash, in property or in shares of the
capital stock, subject to the provisions of the Restated Certificate of
Incorporation. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or any other purpose
and the Directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts or other orders
for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the Board of Directors or a duly
authorized committee thereof.
Section 3. Contracts. In addition to the powers otherwise granted to
officers pursuant to ARTICLE IV hereof, the Board of Directors may authorize any
officer or officers, or any agent or agents, of the Corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiaries, including any officer or employee who is a
Director of the Corporation or its subsidiaries, whenever, in the judgment of
the Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this section shall be deemed to deny,
limit or restrict the powers of guaranty or warranty of the Corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 6. Corporate Seal. The Board of Directors may provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
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Section 7. Voting Securities Owned By Corporation. Voting securities in
any other Corporation held by the Corporation shall be voted by the chief
executive officer, the president or a vice-president, unless the Board of
Directors specifically confers authority to vote with respect thereto, which
authority may be general or confined to specific instances, upon some other
person or officer. Any person authorized to vote securities shall have the
power to appoint proxies, with general power of substitution.
Section 8. Inspection of Books and Records. The Board of Directors shall
have power from time to time to determine to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.
Section 9. Section Headings. Section headings in these By-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these By-laws is or becomes inconsistent with any provision of the Restated
Certificate of Incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these By-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VII
-----------
AMENDMENTS
----------
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is expressly authorized to make,
alter, amend, change, add to or repeal these By-laws by the affirmative vote of
a majority of the total number of Directors then in office. Any alteration or
repeal of these By-laws by the stockholders of the Corporation shall require the
affirma tive vote of a majority of the outstanding shares of the Corporation
entitled to vote on such alteration or repeal; provided, however, that Section
11 of ARTICLE II and Sections 2, 3, 4 and 5 of ARTICLE III and this ARTICLE VII
of these By-laws 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 66-2/3% of the outstanding shares of the Corporation
entitled to vote on such alteration or repeal.
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[Conformed Copy with Exhibits F,
G and H conformed as executed.]
________________________________________________________________________________
CREDIT AGREEMENT
among
AMERICAN PAD & PAPER COMPANY,
WR ACQUISITION, INC.,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
VARIOUS LENDING INSTITUTIONS,
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
BANK ONE, TEXAS, N.A.,
THE BANK OF NOVA SCOTIA
and
THE FIRST NATIONAL BANK OF BOSTON,
AS CO-AGENTS,
and
BANKERS TRUST COMPANY,
AS AGENT
________________________________
Dated as of July 8, 1996
________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 1. Amount and Terms of Credit..................................... 1
1.01 Commitments.................................................... 1
1.02 Minimum Borrowing Amounts, etc. ............................... 3
1.03 Notice of Borrowing............................................ 3
1.04 Disbursement of Funds.......................................... 4
1.05 Notes.......................................................... 5
1.06 Conversions.................................................... 6
1.07 Pro Rata Borrowings............................................ 6
1.08 Interest....................................................... 7
1.09 Interest Periods............................................... 7
1.10 Increased Costs, Illegality, etc. ............................. 9
1.11 Compensation................................................... 11
1.12 Change of Lending Office....................................... 12
1.13 Replacement of Banks........................................... 12
SECTION 2. Letters of Credit.............................................. 13
2.01 Letters of Credit.............................................. 13
2.02 Letter of Credit Requests; Notices of Issuance................. 15
2.03 Agreement to Repay Letter of Credit Drawings................... 15
2.04 Letter of Credit Participations................................ 16
2.05 Increased Costs................................................ 18
SECTION 3. Fees; Commitments.............................................. 19
3.01 Fees........................................................... 19
3.02 Voluntary Termination or Reduction of Total Unutilized
Revolving Loan Commitment..................................... 20
3.03 Mandatory Reduction of Revolving Loan Commitments.............. 21
SECTION 4. Payments....................................................... 23
4.01 Voluntary Prepayments.......................................... 23
4.02 Mandatory Prepayments.......................................... 24
4.03 Method and Place of Payment.................................... 25
4.04 Net Payments................................................... 25
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 5. Conditions Precedent........................................... 27
5.01 Execution of Agreement; Notes.................................. 27
5.02 No Default; Representations and Warranties..................... 27
5.03 Officer's Certificate.......................................... 28
5.04 Opinions of Counsel............................................ 28
5.05 Corporate Proceedings.......................................... 28
5.06 Adverse Change, etc. .......................................... 28
5.07 Litigation..................................................... 29
5.08 Approvals...................................................... 29
5.09 Consummation of the Transaction................................ 29
5.10 Existing Credit Agreement...................................... 29
5.11 Security Documents............................................. 30
5.12 Subsidiary Guaranty............................................ 31
5.13 Mortgages; Title Insurance..................................... 31
5.14 Existing Indebtedness Agreements; Tax Allocation Agreements.... 32
5.15 Solvency Certificate; Evidence of Insurance.................... 32
5.16 Pro Forma Balance Sheet........................................ 33
5.17 Projections.................................................... 33
5.18 Payment of Fees................................................ 33
5.19 Notice of Borrowing; Letter of Credit Request.................. 33
SECTION 6. Representations, Warranties and Agreements..................... 34
6.01 Corporate Status............................................... 34
6.02 Corporate Power and Authority.................................. 34
6.03 No Violation................................................... 34
6.04 Litigation..................................................... 35
6.05 Use of Proceeds; Margin Regulations............................ 35
6.06 Governmental Approvals......................................... 35
6.07 Investment Company Act......................................... 35
6.08 Public Utility Holding Company Act............................. 35
6.09 True and Complete Disclosure................................... 36
6.10 Financial Condition; Financial Statements...................... 36
6.11 Security Interests............................................. 37
6.12 Transaction.................................................... 38
6.13 Special Purpose Corporations................................... 38
6.14 Compliance with ERISA.......................................... 38
6.15 Capitalization................................................. 39
6.16 Subsidiaries................................................... 40
6.17 Intellectual Property.......................................... 40
</TABLE>
(ii)
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6.18 Compliance with Statutes, etc.................................. 40
6.19 Environmental Matters.......................................... 41
6.20 Properties..................................................... 41
6.21 Labor Relations................................................ 42
6.22 Tax Returns and Payments....................................... 42
6.23 Existing Indebtedness.......................................... 43
6.24 Senior Subordinated Notes...................................... 43
SECTION 7. Affirmative Covenants.......................................... 43
7.01 Information Covenants.......................................... 43
7.02 Books, Records and Inspections................................. 47
7.03 Insurance...................................................... 47
7.04 Payment of Taxes............................................... 47
7.05 Corporate Franchises........................................... 48
7.06 Compliance with Statutes, etc.................................. 48
7.07 Compliance with Environmental Laws............................. 48
7.08 ERISA.......................................................... 49
7.09 Good Repair.................................................... 50
7.10 End of Fiscal Years; Fiscal Quarters........................... 50
7.11 Additional Security; Further Assurances........................ 50
7.12 Register....................................................... 51
7.13 Foreign Subsidiaries Security.................................. 52
7.14 Contributions; Payments........................................ 52
7.15 Senior Subordinated Note Repurchases........................... 53
SECTION 8. Negative Covenants............................................. 53
8.01 Changes in Business............................................ 53
8.02 Consolidation, Merger, Sale or Purchase
of Assets, etc................................................. 54
8.03 Liens.......................................................... 58
8.04 Indebtedness................................................... 61
8.05 Designated Senior Debt......................................... 63
8.06 Advances, Investments and Loans................................ 63
8.07 Dividends, etc................................................. 67
8.08 Transactions with Affiliates................................... 69
8.09 Capital Expenditures........................................... 70
8.10 Minimum Consolidated EBITDA.................................... 71
8.11 Interest Coverage Ratio........................................ 71
8.12 Leverage Ratio................................................. 71
8.13 Limitation on Voluntary Payments and
Modifications of Indebtedness; Modifications
</TABLE>
(iii)
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Page
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of Certificate of Incorporation, By-Laws and Certain Other
Agreements; Issuances of Capital Stock; etc. ................. 71
8.14 Limitation on Certain Restrictions on Subsidiaries............. 73
8.15 Limitation on the Creation of Subsidiaries .................... 73
SECTION 9. Events of Default ............................................. 74
9.01 Payments ...................................................... 74
9.02 Representations, etc. ......................................... 74
9.03 Covenants ..................................................... 74
9.04 Default Under Other Agreements ................................ 74
9.05 Bankruptcy, etc. .............................................. 74
9.06 ERISA ......................................................... 75
9.07 Security Documents ............................................ 75
9.08 Guaranties .................................................... 76
9.09 Judgments ..................................................... 76
9.10 Ownership ..................................................... 76
9.11 Accounts Receivable Facility .................................. 76
SECTION 10. Definitions ................................................... 77
SECTION 11. The Agent ..................................................... 104
11.01 Appointment ................................................... 104
11.02 Delegation of Duties .......................................... 104
11.03 Exculpatory Provisions ........................................ 104
11.04 Reliance by Agent ............................................. 105
11.05 Notice of Default ............................................. 105
11.06 Nonreliance on Agent and Other Banks .......................... 106
11.07 Idemnification ................................................ 106
11.08 Agent in its Individual Capacity .............................. 107
11.09 Holders ....................................................... 107
11.10 Resignation of the Agent; Successor Agent ..................... 107
11.11 Intercreditor Agreement ....................................... 108
SECTION 12. Miscellaneous ................................................. 108
12.01 Payment of Expenses, etc. ..................................... 108
12.02 Right to Setoff ............................................... 109
12.03 Notices ....................................................... 109
12.04 Benefit of Agreement .......................................... 109
12.05 No Waiver; Remedies Cumulative ................................ 111
(iv)
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<TABLE>
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12.06 Payments Pro Rata ............................................ 111
12.07 Calculations; Computations ................................... 112
12.08 Governing Law; Submission to Jurisdiction; Venue ............. 113
12.09 Counterparts ................................................. 113
12.10 Effectiveness ................................................ 113
12.11 Headings Descriptive ......................................... 114
12.12 Amendment or Waiver; etc. .................................... 114
12.13 Survival ..................................................... 115
12.14 Domicile of Loans ............................................ 115
12.15 Confidentiality .............................................. 115
12.16 Waiver of Jury Trial ......................................... 116
SECTION 13. Parents Guaranty ............................................. 116
13.01 The Guaranty ................................................. 116
13.02 Bankruptcy ................................................... 117
13.03 Nature of Liability .......................................... 117
13.04 Independent Obligation ....................................... 118
13.05 Authorization ................................................ 118
13.06 Reliance ..................................................... 119
13.07 Subordination ................................................ 119
13.08 Waiver ....................................................... 120
ANNEX I List of Banks and Commitments
ANNEX II Bank Addresses
ANNEX III Existing Letters of Credit
ANNEX IV Real Properties
ANNEX V Existing Investments
ANNEX VI Subsidiaries
ANNEX VII Existing Indebtedness
ANNEX VIII Insurance
ANNEX IX Existing Liens
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of Revolving Note
EXHIBIT B-2 -- Form of Swingline Note
EXHIBIT C -- Form of Section 4.04(b)(ii) Certificate
</TABLE>
(v)
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EXHIBIT D -- Form of Opinion of Kirkland & Ellis
EXHIBIT E -- Form of Officers' Certificate
EXHIBIT F -- Form of Pledge Agreement
EXHIBIT G -- Form of Security Agreement
EXHIBIT H -- Form of Subsidiary Guaranty
EXHIBIT I -- Form of Solvency Certificate
EXHIBIT J -- Form of Subordination Provisions
EXHIBIT K -- Form of Assignment and Assumption Agreement
EXHIBIT L -- Form of Intercompany Note
EXHIBIT M -- Form of Shareholder Subordinated Note
</TABLE>
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of July 8, 1996, among AMERICAN PAD & PAPER
COMPANY, a Delaware corporation ("Holdings"), WR ACQUISITION, INC., a Delaware
corporation ("WR Acquisition"), AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
a Delaware corporation (the "Borrower"), the lenders from time to time party
hereto (each a "Bank" and, collectively, the "Banks"), and BANKERS TRUST
COMPANY, as Agent (in such capacity, the "Agent"). Unless otherwise defined
herein, all capitalized terms used herein and defined in Section 10 are used
herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available the credit facilities provided
for herein; and
WHEREAS, this Agreement refinances and replaces the Existing Credit
Agreement;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.011 Commitments. (a) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees, at any time and from time to time
on and after the Initial Borrowing Date and prior to the Final Maturity Date, to
make a revolving loan or loans (each a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower, which Revolving Loans (i) shall be
denominated in U.S. Dollars, (ii) except as hereinafter provided, shall, at the
option of the Borrower, be incurred and maintained as and/or converted into Base
Rate Loans or Eurodollar Loans, provided, that (x) all Revolving Loans made as
part of the same Borrowing shall, unless otherwise specifically provided herein,
con sist of Revolving Loans of the same Type and (y) unless the Agent has
determined that the Syndication Date has occurred (at which time this clause (y)
shall no longer be applicable), no more than three Borrowings of Revolving Loans
to be maintained as Eurodollar Loans may be incurred prior to the 90th day after
the Initial Borrowing Date (each of which Borrowings of Eurodollar Loans may
only have an Interest Period of one month, and the first of which Borrowings may
only be made on a single date on or after the Initial Borrowing Date and on or
before the sixth Business Day following the Initial Borrowing Date, the second
of which Borrowings may only be made on the last day of the Interest Period of
the first such Borrowing and the third of which Borrowings may only be made on
the last day of the
<PAGE>
Interest Period of the second such Borrowing), (iii) may be repaid and
reborrowed in accordance with the provisions hereof and (iv) shall not exceed
for any Bank at any time outstanding that aggregate principal amount which, when
combined with such Bank's Per centage of the Swingline Loans then outstanding
and the Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to
Letters of Credit which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) at such time,
equals the Revolving Loan Commitment of such Bank at such time.
(b) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time to time
on and after the Initial Borrowing Date and prior to the Swingline Expiry Date,
a loan or loans to the Borrower (each a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) shall be denominated in U.S. Dollars, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, (iv) shall not exceed
in aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans then outstanding and the
Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to Letters
of Credit which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time, an
amount equal to the Total Revolving Loan Commitment then in effect and (v) shall
not exceed in aggregate principal amount at any time outstanding the Maximum
Swingline Amount. BTCo shall not be obligated to make any Swingline Loans at a
time when a Bank Default exists unless BTCo has entered into arrangements
satisfactory to it and the Borrower to eliminate BTCo's risk with respect to the
Defaulting Bank's or Banks' participation in such Swingline Loans, including by
cash collateralizing such Defaulting Bank's or Banks' Percentage of the
outstanding Swingline Loans. BTCo will not make a Swingline Loan after it has
received written notice from the Borrower or the Required Banks stating that a
Default or an Event of Default exists until such time as BTCo shall have
received a written notice of (i) rescission of such notice from the party or
parties originally delivering the same or (ii) a waiver of such Default or Event
of Default from the Required Banks.
(c) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with a
Borrowing of Revolving Loans (provided that each such notice shall be deemed to
have been automatically given upon the occurrence of a Default or an Event of
Default under Section 9.05 or upon the exercise of any of the remedies provided
in the last paragraph of Section 9), in which case a Borrowing of Revolving
Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all
Banks pro rata based on each Bank's Percentage, and the proceeds thereof shall
be applied directly to repay BTCo for such outstanding Swingline Loans. Each
Bank hereby irrevocably agrees to make Base Rate Loans upon one Business
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<PAGE>
Day's notice pursuant to each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the date specified in writing
by BTCo notwithstanding (i) that the amount of the Mandatory Borrowing may not
comply with the Minimum Borrowing Amount otherwise required hereunder, (ii)
whether any conditions specified in Section 5 are then satisfied, (iii) whether
a Default or an Event of Default has occurred and is continuing, (iv) the date
of such Mandatory Borrowing and (v) any reduction in the Total Revolving Loan
Commitment after any such Swingline Loans were made. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code in respect of the Borrower), each Bank
(other than BTCo) hereby agrees that it shall forthwith purchase from BTCo
(without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the Banks to share in such Swingline Loans
ratably based upon their respective Percentages, provided that all interest
payable on the Swingline Loans shall be for the account of BTCo until the date
the respective assignment is purchased and, to the extent attributable to the
purchased assignment, shall be payable to the Bank purchasing same from and
after such date of purchase.
1.012 Minimum Borrowing Amounts, etc. The aggregate principal amount
of each Borrowing of Loans shall not be less than the Minimum Borrowing Amount
applicable to such Loans. More than one Borrowing may be incurred on any day,
provided, that at no time shall there be outstanding more than fifteen
Borrowings of Eurodollar Loans.
1.013 Notice of Borrowing. (a) Whenever the Borrower desires to
incur Revolving Loans hereunder (excluding Borrowings of Revolving Loans
incurred pursuant to Mandatory Borrowings), it shall give the Agent at its
Notice Office, prior to 11:00 A.M. (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of each Borrowing of Eurodollar Loans and at least one Business Day's prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Base Rate Loans to be made hereunder. Each such notice (each a
"Notice of Borrowing") shall, except as provided in Section 1.10, be
irrevocable, and, in the case of each written notice and each confirmation of
telephonic notice, shall be in the form of Exhibit A-1, appropriately completed
to specify (i) the aggregate principal amount of the Revolving Loans to be made
pursuant to such Borrowing, (ii) the date of such Borrowing (which shall be a
Business Day) and (iii) whether the respective Borrowing shall consist of Base
Rate Loans or, to the extent permitted hereunder, Eurodollar Loans and, if
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Agent shall promptly give each Bank 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.
-3-
<PAGE>
(b) (i) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give BTCo not later than 12:00 Noon (New York time) on the
day such Swingline Loan is to be made, written notice (or telephonic notice
promptly confirmed in writing) of each Swingline Loan to be made hereunder. Each
such notice shall be irrevocable and shall specify in each case (x) the date of
such Borrowing (which shall be a Business Day) and (y) the aggregate principal
amount of the Swingline Loan to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(c).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent or BTCo (in the case of a Borrowing of Swingline Loans) or the Letter of
Credit Issuer (in the case of the issuance of Letters of Credit), as the case
may be, may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent, BTCo or the Letter
of Credit Issuer, as the case may be, in good faith to be from an Authorized
Officer of the Borrower. In each such case, the Borrower hereby waives the right
to dispute the Agent's, BTCo's or the Letter of Credit Issuer's record of the
terms of such telephonic notice.
1.014 Disbursement of Funds. (a) Not later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than
12:00 Noon (New York time) on the date specified in Section 1.01(c)), each Bank
will make available its pro rata share, if any, of each Borrowing requested to
be made on such date (or in the case of Swingline Loans, BTCo shall make
available the full amount thereof) in the manner provided below. All amounts
shall be made available to the Agent in U.S. Dollars and in immediately
available funds at the Payment Office and the Agent promptly will make available
to the Borrower by depositing to its account at the Payment Office the aggregate
of the amounts so made available in the type of funds received. 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 its portion of the Borrowing
or Borrowings 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, in reliance upon such assumption, may (in its sole discretion and without
any obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made available same to the Borrower, the Agent shall be
entitled to recover such corresponding amount 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 corre-
-4-
<PAGE>
sponding amount to the Agent. The Agent shall also be entitled to recover from
the Bank or the Borrower, as the case may be, 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 (x) if paid by such Bank,
the overnight Federal Funds Rate or (y) if paid by the Borrower, the then applic
able rate of interest, calculated in accordance with Section 1.08.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.015 Notes. (a) The Borrower's obligation to pay the principal of,
and interest on, all the Loans made to it by each Bank shall be evidenced (i) if
Revolving Loans, by a promissory note substantially in the form of Exhibit B-1
with blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes") and (ii) if Swingline Loans, by
a promissory note substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (the "Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the Initial Borrowing Date, (iii) be in a stated principal amount equal
to the Revolving Loan Commitment of such Bank and be payable in the principal
amount of the outstanding Revolving Loans evidenced thereby, (iv) mature on the
Final Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.01, and mandatory repayment as provided in Section 4.02, and (vii)
be entitled to the benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to BTCo or its registered assigns and be dated the
Initial Borrowing Date, (iii) be in a stated principal amount equal to the
Maximum Swingline Amount and be payable in the principal amount of the
outstanding Swingline Loans evidenced thereby, (iv) mature on the Swingline
Expiry Date, (v) bear interest as provided in Section 1.08 in respect of the
Base Rate Loans evidenced thereby, (vi) be subject to voluntary prepayment as
provided in Section 4.01, and mandatory repayment as provided in Section 4.02,
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evi-
-5-
<PAGE>
denced thereby. Failure to make any such notation shall not affect the
Borrower's obligations in respect of such Loans.
1.016 Conversions. The Borrower shall have the option to convert on
any Business Day occurring on or after the Initial Borrowing Date, all or a
portion at least equal to the applicable Minimum Borrowing Amount of the
outstanding principal amount of Revolving Loans made pursuant to one or more
Borrowings of one or more Types of Revolving Loans into a Borrowing or
Borrowings of another Type of Revolving Loan; provided, that (i) except as
otherwise provided in Section 1.10(b), no partial conversion of a Borrowing of
Eurodollar Loans shall reduce the outstanding principal amount of the Eurodollar
Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount
applicable thereto, (ii) Base Rate Loans may only be converted into Eurodollar
Loans if no payment Default, or Event of Default, is in existence on the date of
the conversion, (iii) unless the Agent has determined that the Syndication Date
has occurred (at which time this clause (iii) shall no longer be applicable),
prior to the 90th day after the Initial Borrowing Date, conversions of Base Rate
Loans into Eurodollar Loans may only be made if any such conversion is effective
on the first day of the first, second or third Interest Period referred to in
clause (y) of the proviso to Section 1.01(a)(ii) and then only so long as such
conversion does not result in a greater number of Borrowings of Eurodollar Loans
prior to the 90th day after the Initial Borrowing Date as are permitted under
such Section 1.01(a)(ii) and (iv) Borrowings of Eurodollar Loans resulting from
this Section 1.06 shall be limited in number as provided in Section 1.02. Each
such conversion shall be effected by the Borrower by giving the Agent at its
Notice Office, prior to 11:00 A.M. (New York time), at least three Business
Days' (or one Business Day's in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing) (each
a "Notice of Conversion") specifying the Revolving Loans to be so converted, the
Borrowing(s) pursuant to which the Revolving Loans were made and, if to be
converted into a Borrowing of Euro dollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall give each Bank prompt notice of
any such proposed conversion affecting any of its Revolving Loans.
1.017 Pro Rata Borrowings. All Borrowings of Revolving Loans under
this Agreement shall be made by the Banks pro rata on the basis of their
Revolving Loan Commitments. It is understood that no Bank shall be responsible
for any default by any other Bank of its obligation to make Revolving Loans
hereunder and that each Bank shall be obligated to make the Revolving Loans to
be made by it hereunder, regardless of the failure of any other Bank to fulfill
its commitments hereunder.
1.018 Interest. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at a rate per annum
-6-
<PAGE>
which shall at all times be the Applicable Base Rate Margin in excess of the
Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and (ii)
the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section
1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at all
times be the Applicable Eurodollar Margin in excess of the relevant Eurodollar
Rate.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest at a rate per annum equal
to the greater of (x) the rate which is 2% in excess of the rate then borne by
such Loans and (y) the rate which is 2% in excess of the rate otherwise
applicable to Base Rate Loans from time to time. Interest which accrues under
this Section 1.08(c) shall be payable on demand.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date
of any prepayment or repayment thereof (on the amount prepaid or repaid), (y)
the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09
or 1.10(b), as applicable (on the amount converted) and (z) the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.019 Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower shall have the right to elect by
giving the Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower (but otherwise subject to clause (y)
of the proviso to Section 1.01(a)(ii)), be a one, two, three or six month period
or, to the extent
-7-
<PAGE>
approved by all of the Banks, a twelve month period. Notwithstanding anything to
the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall have the same
Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
(iii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iv) 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, that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period shall be elected which extends beyond the
Final Maturity Date;
(vi) no Interest Period may be elected at any time when a payment
Default, or any Event of Default, is then in existence; and
(vii) no Interest Period in respect of any Borrowing of Eurodollar
Loans shall be elected which extends beyond any date upon which a mandatory
prepayment of Revolving Loans is required to be made under Section 4.02(a),
as a result of reductions to the Total Revolving Loan Commitment pursuant
to Section 3.03(b), unless the aggregate principal amount of Revolving
Loans which are maintained as Base Rate Loans or which have Interest
Periods which will expire on or before such date will be sufficient to make
such required payment.
If upon the expiration of any Interest Period applicable to a Borrowing of
Eurodollar Loans, the Borrower has failed to elect, or is not permitted to elect
by virtue of the application of clause (vi) above, a new Interest Period to be
applicable to the respective Borrowing of Eurodollar Loans as provided above,
the Borrower shall be deemed to have elected to con-
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<PAGE>
vert such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank, shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that, by reason of any changes arising after the date of
this Agreement affect ing the interbank Eurodollar 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
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of net income taxes or similar charges) because of (x) any
change since the date of this Agreement in any applicable law, governmental
rule, regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited to, a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time since the date of this Agreement, that the making
or continuance of any Eurodollar Loan has become unlawful by compliance by
such Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but with which
such Bank customarily complies even though the failure to comply therewith
would not be unlawful), or has become impracticable as a result of a
contingency occurring after the date of this Agreement which materially
and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) within five Business Days after any such event and (y) within
five Business Days of the date on which such event no longer exists give notice
(by telephone confirmed in writing) to the Borrower and (except in the case of
clause (i)) to the Agent of such determination (which notice the Agent shall
promptly transmit to each of the other Banks). Thereafter, (x) in the case of
clause (i) above, Eurodollar Loans shall no longer be available until such
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time as the Agent notifies the Borrower and the Banks that the circumstances
giving rise to such notice by the Agent no longer exist, and any Notice of
Borrowing or Notice of Conversion given by the Borrower with respect to
Eurodollar Loans which have not yet been incurred shall be deemed rescinded by
the Borrower, (y) in the case of clause (ii) above, the Borrower agrees to pay
to such Bank, upon written demand therefor (accompanied by the written notice
referred to below), such additional amounts (in the form of an increased rate
of, or a different method of calculating, interest or otherwise as such Bank in
its sole discretion shall determine) as shall be required to compensate such
Bank for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof, submitted to the Borrower by such
Bank shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 1.10(b) as promptly as possible
and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii)), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan (which conversion, in the case of the
circumstances described in Section 1.10(a)(iii), shall occur no later than the
last day of the Interest Period then applicable to such Eurodollar Loan (or such
earlier date as shall be required by applicable law)); 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 1.10(b).
(c) If any Bank shall have determined that after the date hereof,
the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank or any corporation controlling such Bank
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Bank's or such
other corporation's capital or assets as a consequence of such Bank's Revolving
Loan Commitment or obligations hereunder to a level below that which such Bank
or such other corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Bank's or
such other corporation's policies with respect to capital adequacy), then from
time to time, upon written demand by such Bank (with a copy to the Agent),
accompanied by the notice referred to in the last sentence of this clause (c),
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the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such other corporation for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. The Borrower shall compensate each Bank, promptly
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding loss of anticipated profit
with respect to any Eurodollar Loans) which such Bank may sustain: (i) if for
any reason (other than a default by such Bank or the Agent) a Borrowing of
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment (including
any repayment made pursuant to Section 4.01 or 4.02 or as a result of an
acceleration of the Loans pursuant to Section 9) or conversion of any Eurodollar
Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any Eurodollar Loans is not made
on any date specified in a notice of prepayment given by the Borrower; or (iv)
as a consequence of (x) any other default by the Borrower to repay its
Eurodollar Loans when required by the terms of this Agreement or (y) an election
made pursuant to Section 1.10(b). Calculation of all amounts payable to a Bank
under this Section 1.11 shall be made as though that Bank had actually funded
its relevant Eurodollar Loan through the purchase of a Eurodollar deposit
bearing interest at the Eurodollar Rate in an amount equal to the amount of that
Loan, having a maturity comparable to the relevant Interest Period and through
the transfer of such Eurodollar deposit from an offshore office of that Bank to
a domestic office of that Bank in the United States of America; provided,
however, that each Bank may fund each of its Eurodollar Loans in any manner it
sees fit and the foregoing assumption shall be utilized only for the calculation
of amounts payable under this Section 1.11. It is further understood and agreed
that if any repayment of Eurodollar Loans pursuant to Section 4.01 or any
conversion of Eurodollar Loans pursuant to Section 1.06 in either case occurs on
a date which is not the last day of an Interest Period applicable thereto, such
repayment or conversion shall be accompanied by any amounts owing to any Bank
pursuant to this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans or Letters of
Credit affected by such event; provided,
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<PAGE>
that such designation is made on such terms that, in the sole judgment of such
Bank, such Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequences of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Bank provided in Section 1.10, 2.05 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
Bank, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Bank which results in such Bank charging to the Borrower
increased costs in excess of those being generally charged by the other Banks or
(z) in the case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Banks as provided in Section 12.12(b), the Borrower shall have
the right, if no payment Default, or Event of Default, then exists or, in the
case of clause (z) above, would exist after giving effect to such replacement,
to replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferee or Transferees, none of whom shall constitute a Defaulting Bank at
the time of such replacement (collectively, the "Replacement Bank") and each of
whom shall be reasonably acceptable to the Agent, provided that (i) at the time
of any replacement pursuant to this Section 1.13, the Replacement Bank shall
enter into one or more Assignment and Assumption Agreements pursuant to Section
12.04(b) (and with all fees payable pursuant to said Section 12.04(b) to be paid
by the Replacement Bank) pursuant to which the Replacement Bank shall acquire
the Revolving Loan Commitment and outstanding Revolving Loans of, and in each
case participations in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Revolving Loans of the Replaced Bank, (B)
an amount equal to all Unpaid Drawings that have been funded by (and not
reimbursed to) such Replaced Bank, together with all then unpaid interest with
respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01,
(y) each Letter of Credit Issuer an amount equal to such Replaced Bank's
Percentage of any Unpaid Drawing relating to Letters of Credit issued by such
Letter of Credit Issuer (which at such time remains an Unpaid Drawing) to the
extent such amount was not theretofore funded by such Replaced Bank and (z) BTCo
an amount equal to such Replaced Bank's Percentage of any Mandatory Borrowing to
the extent such amount was not theretofore funded by such Replaced Bank, and
(ii) all obligations of the Borrower then owing to the Replaced Bank (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid, but
including all amounts, if any, owing under Section 1.11) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Assumption Agreements, the payment of amounts
referred to in clauses (i) and (ii) above, recordation of the assignment on the
Register by the Agent pursuant to Section 7.12 and, if so requested by the
Replacement Bank, delivery to the Replacement Bank of the
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<PAGE>
appropriate Revolving Note or Revolving Notes executed by the Borrower, the
Replacement Bank shall become a Bank hereunder and the Replaced Bank shall cease
to constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 1.10,
1.11, 2.05, 4.04, 12.01 and 12.06), which shall survive as to such Replaced
Bank.
SECTION 2. Letters of Credit.
-----------------
1.021 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the Business Day (or the 30th day in the case of trade Letters of
Credit) preceding the Final Maturity Date to issue, for the account of the
Borrower and in support of (x) trade obligations of the Borrower or any of its
Subsidiaries that arise in the ordinary course of business and are in respect of
general corporate purposes of the Borrower or any of its Subsidiaries, as the
case may be, and/or (y) on a standby basis, L/C Supportable Indebtedness of the
Borrower or any of its Subsidiaries to any other Person, irrevocable letters of
credit in such form as may be approved by such Letter of Credit Issuer (each
such letter of credit, a "Letter of Credit" and, collectively, the "Letters of
Credit"). Annex III contains a description of all letters of credit issued by
BTCo pursuant to the Existing Credit Agreement and which remain outstanding on
the Initial Borrowing Date. Each such letter of credit, including any extension
thereof (each an "Existing Letter of Credit") shall constitute a "Letter of
Credit" for all purposes of this Agreement and shall be deemed issued for
purposes of Sections 2.04(a), 3.01(b) and 3.01(c) on the Initial Borrowing Date.
Notwithstanding the foregoing, no Letter of Credit Issuer shall be under any
obligation to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer is not otherwise compensated) not in effect on the
date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Letter of Credit Issuer as of the
date hereof and which such Letter of Credit Issuer in good faith deems
material to it; or
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(ii) such Letter of Credit Issuer shall have received notice from
the Borrower or the Required Banks prior to the issuance of such Letter of
Credit of the type described in clause (vi) of Section 2.01(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $40,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans and Swingline Loans then outstanding, the Total
Revolving Loan Commitment at such time; (ii) (x) each standby Letter of Credit
shall have an expiry date occurring not later than one year after such Letter of
Credit's date of issuance, provided, that any such Letter of Credit may be
automatically extendable for periods of up to one year so long as such Letter of
Credit provides that the respective Letter of Credit Issuer retains an option,
satisfactory to such Letter of Credit Issuer, to terminate such Letter of Credit
within a specified period of time prior to each scheduled extension date and (y)
each trade Letter of Credit shall have an expiry date occurring not later than
180 days after such Letter of Credit's date of issuance; (iii) (x) no standby
Letter of Credit shall have an expiry date occurring later than the Business Day
next preceding the Final Maturity Date and (y) no trade Letter of Credit shall
have an expiry date occurring later than 30 days prior to the Final Maturity
Date; (iv) each Letter of Credit shall be denominated in U.S. Dollars; (v) the
Stated Amount of each Letter of Credit shall not be less than $100,000 or such
lesser amount as is acceptable to the respective Letter of Credit Issuer; and
(vi) no Letter of Credit Issuer will issue any Letter of Credit after it has
received written notice from the Borrower or the Required Banks stating that a
Default or an Event of Default exists until such time as such Letter of Credit
Issuer shall have received a written notice of (x) rescission of such notice
from the party or parties originally delivering the same or (y) a waiver of such
Default or Event of Default by the Required Banks.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless the respective Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' Percentage of the Letter of Credit Outstandings, as the case
may be.
1.022 Letter of Credit Requests; Notices of Issuance. (a) Whenever
the Borrower desires that a Letter of Credit be issued, the Borrower shall give
the Agent and the respective Letter of Credit Issuer written notice (or
telephonic notice confirmed in writing) thereof prior to 12:00 Noon (New York
time) at least five Business Days (or such shorter period as may be acceptable
to the respective Letter of Credit Issuer) prior to the proposed date of
issuance (which shall be a Business Day) which written notice shall be in
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the form of Exhibit A-2 (each, a "Letter of Credit Request"). Each Letter of
Credit Request shall include any other documents as such Letter of Credit
Issuer customarily requires in connection therewith.
(b) Each Letter of Credit Issuer shall, promptly after each
issuance of, or amendment or modification to, a Letter of Credit issued by it,
give the Agent, each Bank and the Borrower written notice of the issuance of, or
amendment or modification to, such Letter of Credit, accompanied by a copy to
the Agent of the Letter of Credit or Letters of Credit issued by it and each
such amendment or modification thereto.
1.023 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse each Letter of Credit Issuer, by making payment to
the Agent in immediately available funds at the Payment Office, for any payment
or disbursement made by such Letter of Credit Issuer under any Letter of Credit
issued by it (each such amount so paid or disbursed until reimbursed, an "Unpaid
Drawing") no later than one Business Day following the date of such payment or
disbursement, with interest on the amount so paid or disbursed by such Letter of
Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (New York time)
on the date of such payment or disbursement, from and including the date paid or
disbursed to but not including the date such Letter of Credit Issuer is
reimbursed therefor at a rate per annum which shall be the Applicable Base Rate
Margin in excess of the Base Rate as in effect from time to time (plus an
additional 2% per annum if not reimbursed by the third Business Day after the
date of such payment or disbursement), such interest also to be payable on
demand. Each Letter of Credit Issuer shall provide the Borrower prompt notice of
any payment or disbursement made by it under any Letter of Credit issued by it,
although the failure of, or delay in, giving any such notice shall not release
or diminish the obligations of the Borrower under this Section 2.03(a) or under
any other Section of this Agreement.
(b) The Borrower's obligation under this Section 2.03 to reimburse
the respective Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower or any of its Subsidiaries may have or
have had against such Letter of Credit Issuer, the Agent or any Bank, including,
without limitation, any defense based upon the failure of any drawing under a
Letter of Credit issued by it to conform to the terms of the Letter of Credit or
any nonapplication or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that the Borrower shall not be obligated to
reimburse such Letter of Credit Issuer for any wrongful payment made by such
Letter of Credit Issuer under a Letter of Credit issued by it as a result of
acts or omissions constituting willful misconduct or gross negligence on the
part of such Letter of Credit Issuer.
1.024 Letter of Credit Participations. (a) Immediately upon the
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be
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deemed to have sold and transferred to each other Bank, and each such Bank (each
a "Participant") shall be deemed irrevocably and unconditionally to have
purchased and received from such Letter of Credit Issuer, without recourse or
warranty, an undivided interest and participation, to the extent of such
Participant's Percentage, in such Letter of Credit, each substitute Letter of
Credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto (although Letter of Credit Fees shall be
payable directly to the Agent for the account of the Banks as provided in
Section 3.01(b) and the Participants shall have no right to receive any portion
of any Facing Fees with respect to such Letters of Credit) and any security
therefor or guaranty pertaining thereto. Upon any change in the Revolving Loan
Commitments of the Banks pursuant to Section 1.13 or 12.04(b), it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings with respect thereto, there shall be an automatic adjustment to the
participations pursuant to this Section 2.04 to reflect the new Percentages of
the assigning and assignee Bank.
(b) In determining whether to pay under any Letter of Credit, no
Letter of Credit Issuer shall have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Letter of Credit Issuer under or in
connection with any Letter of Credit issued by it if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for such
Letter of Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Letter of Credit Issuer pursuant to
Section 2.03(a), such Letter of Credit Issuer shall promptly notify the Agent,
and the Agent shall promptly notify each Participant of such failure, and each
such Participant shall promptly and unconditionally pay to the Agent for the
account of such Letter of Credit Issuer, the amount of such Participant's
Percentage of such payment in U.S. Dollars and in same day funds; provided,
however, that no Participant shall be obligated to pay to the Agent its
Percentage of such unreimbursed amount for any wrongful payment made by such
Letter of Credit Issuer under a Letter of Credit issued by it as a result of
acts or omissions constituting willful misconduct or gross negligence on the
part of such Letter of Credit Issuer. If the Agent so notifies any Participant
required to fund a payment under a Letter of Credit prior to 11:00 A.M. (New
York time) on any Business Day, such Participant shall make available to the
Agent for the account of the respective Letter of Credit Issuer such
Participant's Percentage of the amount of such payment on such Business Day in
same day funds (and, to the extent such notice is given after 11:00 A.M. (New
York time) on any Business Day, such Participant shall make such payment on the
immediately following Business Day). If and to the extent such Participant shall
not have so made its Percentage of the amount of such payment available to the
Agent for the account of the respective Letter of Credit
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Issuer, such Participant agrees to pay to the Agent for the account of such
Letter of Credit Issuer, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Agent for the account of the Letter of Credit Issuer at the overnight Federal
Funds Rate. The failure of any Participant to make available to the Agent for
the account of the respective Letter of Credit Issuer its Percentage of any
payment under any Letter of Credit issued by it shall not relieve any other
Participant of its obligation hereunder to make available to the Agent for the
account of such Letter of Credit Issuer its applicable Percentage of any payment
under any such Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other Participant to
make available to the Agent for the account of such Letter of Credit Issuer such
other Participant's Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
such Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, such Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Percentage
thereof, in U.S. Dollars and in same day funds, an amount equal to such
Participant's Percentage of the principal amount thereof and interest thereon
accruing after the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the
Agent for the account of the respective Letter of Credit Issuer with respect to
Letters of Credit issued by it shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Letter of Credit Issuer, any Bank, or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between the Borrower or any of its Subsidiaries and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
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;
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(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
1.025 Increased Costs. If after the date hereof, the adoption or
effectiveness of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by such Letter
of Credit Issuer or such Participant's participation therein, or (ii) impose on
any Letter of Credit Issuer or any Participant any other conditions affecting
this Agreement, any Letter of Credit or such Participant's participation
therein; and the result of any of the foregoing is to increase the cost to such
Letter of Credit Issuer or such Participant of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Participant
hereunder, then, upon written demand to the Borrower by such Letter of Credit
Issuer or such Participant (a copy of which notice shall be sent by such Letter
of Credit Issuer or such Participant to the Agent), accompanied by the
certificate described in the last sentence of this Section 2.05, the Borrower
shall pay to such Letter of Credit Issuer or such Participant such additional
amount or amounts as will compensate such Letter of Credit Issuer or such
Participant for such increased cost or reduction. A certificate submitted to the
Borrower by such Letter of Credit Issuer or such Participant, as the case may be
(a copy of which certificate shall be sent by such Letter of Credit Issuer or
such Participant to the Agent), setting forth the basis for the determination of
such additional amount or amounts necessary to compensate such Letter of Credit
Issuer or such Participant as aforesaid shall be final and conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish the Borrower's obligations to
pay additional amounts pursuant to this Section 2.05 upon subsequent receipt of
such certificate.
SECTION 3. Fees; Commitments.
-----------------
1.031 Fees. (a) The Borrower shall pay to the Agent for distribution
to each Non-Defaulting Bank a commitment fee (the "Commitment Fee") for the
period from the Effective Date to but not including Final Maturity Date (or such
earlier date as the Total Revolving Loan Commitment shall have been terminated),
computed at a rate for each day equal to the Applicable Commitment Fee
Percentage on the daily average Unutilized Revolving Loan Commitment of such
Bank. Accrued Commitment Fees shall be due and
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payable quarterly in arrears on each Quarterly Payment Date and the date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrower shall pay to the Agent for the account of the
Banks pro rata on the basis of their Percentages, a fee in respect of each
Letter of Credit (the "Letter of Credit Fee") computed at a rate per annum equal
to the Applicable Eurodollar Margin then in effect on the daily Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and upon the first day on or
after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(c) The Borrower shall pay to the Agent for the account of each
Letter of Credit Issuer a fee in respect of each Letter of Credit issued by such
Letter of Credit Issuer (the "Facing Fee") computed at the rate of 1/4 of 1% per
annum on the daily Stated Amount of such Letter of Credit, provided, that in no
event shall the annual Facing Fee with respect to each Letter of Credit be less
than $500; it being agreed that, on the date of issuance of any Letter of Credit
and on each anniversary thereof prior to the termination of such Letter of
Credit, if $500 will exceed the amount of Facing Fees that will accrue with
respect to such Letter of Credit for the immediately succeeding 12-month period,
the full $500 shall be payable on the date of issuance of such Letter of Credit
and on each such anniversary thereof prior to the termination of such Letter of
Credit. Except as provided in the immediately preceding sentence, accrued Facing
Fees shall be due and payable quarterly in arrears on each Quarterly Payment
Date and upon the first day on or after the termination of the Total Revolving
Loan Commitment upon which no Letters of Credit remain outstanding.
(d) The Borrower shall pay directly to each Letter of Credit Issuer
upon each issuance of, payment under, and/or amendment of, a Letter of Credit
issued by such Letter of Credit Issuer such amount as shall at the time of such
issuance, payment or amendment be the administrative charge which such Letter of
Credit Issuer is customarily charging for issuances of, payments under or
amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Agent, for its own account, such
fees as may be agreed to from time to time between the Borrower and the Agent,
when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
1.032 Voluntary Termination or Reduction of Total Unutilized
Revolving Loan Commitment. (a) Upon at least two Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) to the Agent at its
Notice Office (which notice the Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right,
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without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment, provided that (x) any such termination or
partial reduction shall apply to proportionately and permanently reduce the
Revolving Loan Commitment of each of the Banks and (y) any partial reduction
pursuant to this Section 3.02(a) shall be in the amount of at least $1,000,000.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 12.12(b), the Borrower shall have the right, upon five Business Days'
prior written notice to the Agent at its Notice Office (which notice the Agent
shall promptly transmit to each of the Banks), to terminate the entire Revolving
Loan Commitment of such Bank, so long as all Revolving Loans, together with
accrued and unpaid interest, Fees and all other amounts, owing to such Bank
(including all amounts, if any, owing pursuant to Section 1.11) are repaid
concurrently with the effectiveness of such termination pursuant to Section
4.01(b) and the Borrower shall pay to the Agent at such time an amount in cash
and/or Cash Equivalents equal to such Bank's applicable Percentage of the
outstanding Letters of Credit (which cash and/or Cash Equivalents shall be held
by the Agent as security for the obligations of the Borrower hereunder in
respect of the outstanding Letters of Credit pursuant to a cash collateral
agreement to be entered into in form and substance reasonably satisfactory to
the Agent, which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Agent until the proceeds are applied to the secured
obligations) (at which time Annex I shall be deemed modified to reflect such
changed amounts), and at such time, such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05,
4.04, 12.01 and 12.06), which shall survive as to such repaid Bank.
1.033 Mandatory Reduction of Revolving Loan Commitments. (a) The
Total Revolving Loan Commitment (and the Revolving Loan Commitment of each Bank)
shall terminate in its entirety on July 15, 1996 unless the Initial Borrowing
Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment shall be
permanently reduced on the dates set forth below and by the amounts set forth
opposite such dates below:
Date Amount
---- ------
July 8, 1999 $50,000,000
July 8, 2000 $50,000,000
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(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on the third Business Day after each date on or
after the Initial Borrowing Date on which Holdings or any of its Subsidiaries
receives Cash Proceeds from any Asset Sale (or, in the case of an Asset Sale in
which payments to Holdings or any of its Subsidiaries originate from outside the
United States, within five Business Days after the date of receipt of such Cash
Proceeds), the Total Revolving Loan Commitment shall be permanently reduced by
an amount equal to 100% (or, if on the date of any Asset Sale (i) no Default or
Event of Default then exists and (ii) the Pro Forma Leverage Ratio is less than
3.00:1.00, 75%) of the Net Cash Proceeds from such Asset Sale, provided that
with respect to no more than $10,000,000 in the aggregate of such Net Cash
Proceeds in any fiscal year of the Borrower, such Net Cash Proceeds shall not
give rise to a reduction to the Total Revolving Loan Commitment on such date to
the extent that no Default or Event of Default then exists and the Borrower
delivers a certificate to the Agent on or prior to such date stating that such
Net Cash Proceeds shall be used to purchase assets used or to be used in the
businesses permitted pursuant to Section 8.01 (including, without limitation
(but only to the extent permitted by Section 8.02), the purchase of the capital
stock of a Person engaged in such businesses) within one year following the date
of receipt of such Net Cash Proceeds from such Asset Sale (which certificate
shall set forth the estimates of the proceeds to be so expended), and provided
further, that (1) if all or any portion of such Net Cash Proceeds are not so
used (or contractually committed to be used) within such one year period, the
Total Revolving Loan Commitment shall be permanently reduced on the last day of
such period by an amount equal to such remaining portion and (2) if all or any
portion of such Net Cash Proceeds are not so used within such one year period
referred to in clause (1) above because such amount is contractually committed
to be used and subsequent to such date such contract is terminated or expires
without such portion being so used, the Total Revolving Loan Commitment shall be
permanently reduced on the date of such termination or expiration by an amount
equal to such remaining portion.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Initial Borrowing
Date on which Holdings or any of its Subsidiaries receives any cash proceeds
from any incurrence of Indebtedness (other than Indebtedness permitted to be
incurred pursuant to Section 8.04 as in effect on the Effective Date) by
Holdings or any of its Subsidiaries, the Total Revolving Loan Commitment shall
be permanently reduced by an amount equal to 100% of the cash proceeds (net of
all underwriting discounts, fees and commissions and other costs and expenses
associated therewith) of the respective incurrence of Indebtedness.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Initial Borrowing
Date on which Holdings or any of its Subsidiaries receives any cash proceeds
from any sale or issuance of preferred or common equity of (or cash capital
contributions to) Holdings or any of its Subsidiaries (other than proceeds
received from (w) the sale by Holdings of Holdings Common Stock on the Initial
Borrowing Date as part of the IPO, (x) issuances of options to purchase
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Holdings Common Stock to management, directors and employees of Holdings and its
Subsidiaries, (y) issuances of Holdings Common Stock (including as a result of
the exercise of any options with regard thereto) to management, directors and
employees of Holdings and its Subsidiaries and (z) equity contributions to any
Subsidiary of Holdings made by Holdings or any other Subsidiary of Holdings),
the Total Revolving Loan Commitment shall be permanently reduced by an amount
equal to 50% of such cash proceeds (net of all underwriting discounts, fees and
commissions and other costs and expenses associated therewith) of the respective
equity issuance or capital contribution.
(f) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, within 10 days following each date on or after
the Initial Borrowing Date on which Holdings or any of its Subsidiaries receives
any cash proceeds from any Recovery Event, the Total Revolving Loan Commitment
shall be permanently reduced by an amount equal to 100% of such cash proceeds of
such Recovery Event (net of all costs, expenses and taxes incurred in connection
with such Recovery Event), provided that so long as no Default or Event of
Default then exists, and such proceeds do not exceed $35,000,000, such proceeds
shall not give rise to a reduction to the Total Revolving Loan Commitment on
such date to the extent that the Borrower has delivered a certificate to the
Agent on or prior to such date stating that such proceeds shall be used to
replace or restore any properties or assets in respect of which such proceeds
were paid within one year following the date of receipt of such proceeds (which
certificate shall set forth the estimates of the proceeds to be so expended),
and provided further, that (i) if the amount of such proceeds exceeds
$35,000,000, then the Total Revolving Loan Commitment shall be reduced by the
entire amount of such proceeds and not just the portion in excess of $35,000,000
as provided above in this Section 3.03(f), (ii) if all or any portion of such
proceeds are not so used (or contractually committed to be used) within such one
year period, the Total Revolving Loan Commitment shall be permanently reduced on
the last day of such period by an amount equal to such remaining portion and
(iii) if all or any portion of such proceeds are not so used within such one
year period referred to in clause (ii) above because such amount is
contractually committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, the Total Revolving
Loan Commitment shall be permanently reduced on the date of such termination or
expiration by an amount equal to such remaining portion.
(g) The Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate in its entirety on the earlier of (i)
the date on which a Change of Control Event occurs and (ii) the Final Maturity
Date.
(h) Each reduction to the Total Revolving Loan Commitment pursuant
to this Section 3.03 shall apply proportionately to reduce the Revolving Loan
Commitment of each Bank.
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SECTION 4. Payments.
--------
1.041 Voluntary Prepayments. (a) The Borrower shall have the right to
prepay the Loans, in whole or in part, without premium or penalty except as
otherwise provided in this Agreement, from time to time on the following terms
and conditions: (i) the Borrower shall give the Agent at its Notice Office
written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay the Loans, whether such Loans are Revolving Loans or Swingline
Loans, the amount of such prepayment and (in the case of Eurodollar Loans) the
specific Borrowing(s) pursuant to which made, which notice shall be given by the
Borrower prior to 11:00 A.M. (New York time) (x) at least one Business Day prior
to the date of such prepayment in the case of Revolving Loans maintained as Base
Rate Loans, (y) on the date of such prepayment in the case of Swingline Loans
and (z) at least three Business Days prior to the date of such prepayment in the
case of Eurodollar Loans, which notice shall, except in the case of Swingline
Loans, promptly be transmitted by the Agent to each of the Banks; (ii) each
prepayment shall be in an aggregate principal amount of at least $1,000,000 (or
$100,000 in the case of Swingline Loans), provided, that no partial prepayment
of Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Eurodollar Loans outstanding pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount applicable thereto; and
(iii) each prepay ment in respect of any Revolving Loans made pursuant to a
Borrowing shall be applied pro rata among such Revolving Loans, provided, that
at the Borrower's election in connection with any prepayment of Revolving Loans
pursuant to this Section 4.01(a), such prepayment shall not be applied to any
Revolving Loans of a Defaulting Bank.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 12.12(b), the Borrower shall have the right, upon five Business Days'
prior written notice to the Agent at its Notice Office (which notice the Agent
shall promptly transmit to each of the Banks) to repay all Revolving Loans of
such Bank (including all amounts, if any, owing pursuant to Section 1.11),
together with accrued and unpaid interest, Fees and all other amounts then owing
to such Bank in accordance with said Section 12.12(b) so long as (A) the
Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment pursuant to Section 3.02(b) (at which time Annex I shall be deemed
modified to reflect the changed Revolving Loan Commitments), (B) the Borrower
shall cash collateralize such Bank's applicable Percentage of the Letter of
Credit Outstandings in accordance with Section 3.02(b) and (C) in the case of
the repayment of Revolving Loans of such Bank, the consents required by Section
12.12(b) in connection with the repayment pursuant to this clause (b) shall have
been obtained.
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1.042 Mandatory Prepayments. (a) If on any date the sum of (i) the
aggregate outstanding principal amount of Revolving Loans and Swingline Loans
(after giving effect to all other repayments thereof on such date) plus (ii) the
Letter of Credit Outstandings on such date exceeds the Total Revolving Loan
Commitment as then in effect, the Borrower shall repay on such date the
principal of Swingline Loans, and if no Swingline Loans are or remain
outstanding, Revolving Loans in an aggregate amount equal to such excess. If,
after giving effect to the prepayment of all outstanding Swingline Loans and
Revolving Loans, the aggregate amount of Letter of Credit Outstandings exceeds
the Total Revolving Loan Commitment as then in effect, the Borrower shall pay to
the Agent on such date an amount in cash and/or Cash Equivalents equal to such
excess (up to the aggregate amount of Letter of Credit Outstandings at such
time) and the Agent shall hold such payment as security for the obligations of
the Borrower hereunder pursuant to a cash collateral agree ment to be entered
into in form and substance reasonably satisfactory to the Agent (which shall
permit certain investments in Cash Equivalents reasonably satisfactory to the
Agent until the proceeds are applied to the secured obligations).
(b) With respect to each repayment of Revolving Loans required by
this Section 4.02, the Borrower may designate the Types of Revolving Loans which
are to be repaid and, in the case of Eurodollar Loans, the specific Borrowing(s)
pursuant to which made; provided, that (i) Eurodollar Loans may be designated
for repayment pursuant to this Section 4.02 only on the last day of an Interest
Period applicable thereto unless all Eurodollar Loans with Interest Periods
ending on such date of required prepayment and all Base Rate Loans have been
paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans to an amount less
than the Minimum Borrowing Amount, such Borrowing shall be immediately converted
into Base Rate Loans; and (iii) each repayment of any Revolving Loans made
pursuant to a Borrowing shall be applied pro rata among such Revolving Loans. In
the absence of a designation by the Borrower as described in the preceding
sentence, the Agent shall, subject to the above, make such designation in its
sole discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11.
(c) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all then outstanding Revolving Loans shall
be repaid in full on the Final Maturity Date.
1.043 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or under any Note shall be
made to the Agent for the ratable account of the Banks entitled thereto, not
later than 12:00 Noon (New York time) on the date when due and shall be made in
immediately available funds and in U.S. Dollars at the Payment Office, it being
understood that written, telex or facsimile transmission notice by the Borrower
to the Agent to make a payment from the funds in the Borrower's account at the
Payment Office shall constitute the making of such payment to
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the extent of such funds held in such account. Any payments under this Agreement
or under any Note which are made later than 12:00 Noon (New York time) shall be
deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
1.044 Net Payments. (a) All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank pursuant to the laws
of the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such nonexcluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or net profits of such Bank pursuant to the laws
of the jurisdiction in which the principal office or applicable lending office
of such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Bank is located and for any withholding of taxes as such
Bank shall determine are payable by, or withheld from, such Bank in respect of
such amounts so paid to or on behalf of such Bank pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Bank
pursuant to this sentence. The Borrower will furnish to the Agent within 45 days
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Bank, and reimburse such
Bank upon its written request, for the amount of any Taxes so levied or imposed
and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Agent on or prior to the Effective Date, or in the case of a Bank that
is an assignee or transferee of an
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interest under this Agreement pursuant to Section 1.13 or 12.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if the Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit C (any such certificate, a "Section 4.04(b)(ii) Certificate") and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note. In addition, each
Bank agrees that from time to time after the Effective Date, when a lapse in
time or change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as
the case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note, or it shall immediately notify the Borrower and the
Agent of its inability to deliver any such Form or Certificate in which case
such Bank shall not be required to deliver any such Form or Certificate pursuant
to this Section 4,04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 4.04(a) hereof to gross-
up payments to be made to a Bank in respect of income or similar taxes imposed
by the United States if (I) such Bank has not provided to the Borrower the
Internal Revenue Service Forms required to be provided to the Borrower pursuant
to this Section 4.04(b) or (II) in the case of a payment, other than interest,
to a Bank described in clause (ii) above, to the extent that such Forms do not
establish a complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 4.04 and except as set forth in Section 12.04(b), the Borrower
agrees to pay additional amounts and to indemnify each Bank in the manner set
forth in Section 4.04(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any amounts deducted or
withheld by it as described in the immediately preceding sentence as a result
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of any changes after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.
SECTION 5. Conditions Precedent. The obligation of each Bank to make
each Loan to the Borrower hereunder, and the obligation of the Letter of Credit
Issuer to issue each Letter of Credit hereunder, is subject, at the time of each
such Credit Event (except as otherwise hereinafter indicated), to the
satisfaction of the following conditions:
1.051 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agent for the account of each Bank the appropriate
Revolving Note and to BTCo the Swingline Note, in each case executed by the
Borrower and in the amount, maturity and as otherwise provided herein.
1.052 No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
1.053 Officer's Certificate. On the Initial Borrowing Date, the Agent
shall have received a certificate dated such date signed by an appropriate
officer of the Borrower stating that all of the applicable conditions set forth
in Sections 5.02, 5.07, 5.08, 5.09 and 5.10 exist as of such date.
1.054 Opinions of Counsel. On the Initial Borrowing Date, the Agent
shall have received opinions, addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date, from (i) Kirkland & Ellis, counsel to the
Credit Parties, which opinion shall cover the matters contained in Exhibit D and
such other matters incident to the transactions contemplated herein as the Agent
may reasonably request and (ii) local and other counsel to the Credit Parties
and/or the Agent reasonably satisfactory to the Agent, which opinions shall
cover such matters incident to the transactions contemplated herein and in the
other Credit Documents as the Agent may reasonably request and shall be in form
and substance reasonably satisfactory to the Agent.
1.055 Corporate Proceedings. (a) On the Initial Borrowing Date, the
Agent shall have received from each Credit Party a certificate, dated the
Initial Borrowing Date, signed by the chairman, a vice chairman, the president
or any vice-president of such
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Credit Party, and attested to by the secretary or any assistant secretary of
such Credit Party, in the form of Exhibit E with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws of such
Credit Party and the resolutions of such Credit Party referred to in such
certificate and all of the foregoing (including each such Certificate of
Incorporation and By-Laws) shall be reasonably satisfactory to the Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
reasonably satisfactory in form and substance to the Agent, and the Agent shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates, bring-down certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Agent reasonably may have requested in connection therewith, such documents
and papers, where appropriate, to be certified by proper corporate or
governmental authorities.
1.056 Adverse Change, etc. On or prior to the Initial Borrowing Date,
nothing shall have occurred since December 31, 1995 (and neither the Banks nor
the Agent shall have become aware of any facts or conditions not previously
known) which the Required Banks or the Agent shall determine (a) has, or could
reasonably be expected to have, a material adverse effect on the rights or
remedies of the Banks or the Agent, or on the ability of any Credit Party to
perform its obligations to them hereunder or under any other Credit Document or
(b) has, or could reasonably be expected to have, a Material Adverse Effect.
1.057 Litigation. On the Initial Borrowing Date, there shall be no
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the Transaction or (b) which the Agent or the
Required Banks shall determine could reasonably be expected to (i) have a
Material Adverse Effect or (ii) have a material adverse effect on the
Transaction, the rights or remedies of the Banks or the Agent hereunder or under
any other Credit Document or on the ability of any Credit Party to perform its
respective obligations to the Banks or the Agent hereunder or under any other
Credit Document.
1.058 Approvals. On or prior to the Initial Borrowing Date, all
necessary governmental (domestic and foreign) and third party approvals in
connection with the Transaction, the transactions contemplated by the Documents
and otherwise referred to herein or therein shall have been obtained and remain
in effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes materially adverse conditions upon the consummation of the Transaction,
the transactions contemplated by the Documents and otherwise referred to herein
or therein. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint
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pending or notified prohibiting or imposing materially adverse conditions upon
the consummation of the Transaction or the making of Loans.
1.059 Consummation of the Transaction. On the Initial Borrowing Date,
(i) Holdings shall have received gross cash proceeds of at least $150,000,000 in
connection with the registered initial public offering (the "IPO") by Holdings
of Holdings Common Stock, (ii) Holdings shall have used the net cash proceeds
received from the IPO to make a cash common equity contribution to WR
Acquisition, and WR Acquisition shall have used such net cash proceeds to make a
cash common equity contribution to the Borrower, (iii) the Borrower shall have
delivered to the trustee for the Senior Subordinated Notes in accordance with
the terms thereof notice providing that the Borrower will repurchase $70,000,000
in aggregate principal amount of the Senior Subordinated Notes pursuant to
Section 6(b) of the Senior Subordinated Notes and (iv) the Agent shall have
received true and correct copies of the IPO Documents.
5.10 Existing Credit Agreement. (a) On the Initial Borrowing Date,
the commitments under the Existing Credit Agreement shall have been terminated,
all loans thereunder shall have been repaid in full, together with all accrued
and unpaid interest thereon, all accrued and unpaid fees thereon shall have been
repaid in full, all letters of credit issued thereunder shall have been
terminated or incorporated hereunder as Letters of Credit, and all other amounts
then owing pursuant to the Existing Credit Agreement shall have been repaid in
full, and the Agent shall have received evidence in form, scope and substance
reasonably satisfactory to it that the matters set forth in this Section 5.10(a)
have been satisfied at such time.
(b) On the Initial Borrowing Date, all security interests and Liens
created under the Existing Credit Agreement and the related security documents
on the capital stock of, and assets (including intercompany notes) owned by,
Holdings and its Subsidiaries shall have been terminated and released, and the
Agent shall have received all such releases as may have been requested by the
Agent, which releases shall be in form and substance reasonably satisfactory to
the Agent.
5.11 Security Documents. (a) On the Initial Borrowing Date, each
Credit Party shall have duly authorized, executed and delivered a Pledge
Agreement in the form of Exhibit F (as modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "Pledge
Agreement") and shall have delivered to the Collateral Agent, as pledgee
thereunder, all of the Pledged Securities referred to therein, endorsed in blank
in the case of promissory notes or accompanied by executed and undated stock
powers in the case of capital stock, and the Pledge Agreement shall be in full
force and effect.
(b) On the Initial Borrowing Date, each Credit Party shall have
duly authorized, executed and delivered a Security Agreement in the form of
Exhibit G (as
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modified, amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "Security Agreement") covering all of the Security
Agreement Collateral, together with:
(A) executed copies of Financing Statements (Form UCC-1) or
appropriate local equivalent in appropriate form for filing under the UCC
or appropriate local equivalent of each jurisdiction as may be necessary to
perfect the security interests purported to be created by the Security
Agreement;
(B) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of a recent date listing all effective
financing statements that name Holdings or any of its Domestic Subsidiaries
as debtor and that are filed in the jurisdictions referred to in clause (A)
above, together with copies of such financing statements that name Holdings
or any of its Domestic Subsidiaries as debtor (none of which shall cover
the Collateral except (x) those with respect to which appropriate
termination statements executed by the secured lender thereunder have been
delivered to the Agent and (y) to the extent evidencing Permitted Liens);
(C) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable, to perfect the
security interests purported to be created by the Security Agreement; and
(D) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable, to perfect the security
interests purported to be created by the Security Agreement have been
taken;
and the Security Agreement shall be in full force and effect.
5.12 Subsidiary Guaranty. On the Initial Borrowing Date, each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiary Guaranty in the form of Exhibit H (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Subsidiary Guaranty"), and the Subsidiary Guaranty shall be in full force
and effect.
5.13 Mortgages; Title Insurance. (a) On the Initial Borrowing Date,
the Collateral Agent shall have received fully executed counterparts of deeds of
trust, mortgages and similar documents in each case in form and substance
satisfactory to the Collateral Agent (as amended, modified or supplemented from
time to time in accordance with the terms thereof and hereof, each a "Mortgage"
and, collectively, the "Mortgages") with respect to each of the Mortgaged
Properties, and arrangements reasonably satisfactory to the Collateral Agent
shall be in place to provide that counterparts of such Mortgages shall be
recorded on the Initial Borrowing Date in all places to the extent necessary or
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desirable, in the judgment of the Collateral Agent, effectively to create a
valid and enforceable first priority mortgage Lien, subject only to Permitted
Encumbrances, on each such Mortgaged Property in favor of the Collateral Agent
(or such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors.
(b) On the Initial Borrowing Date, the Collateral Agent shall have
received mortgagee title insurance policies (or binding commitments to issue
such title insurance policies) issued by title insurers reasonably satisfactory
to the Collateral Agent (the "Mortgage Policies") in amounts reasonably
satisfactory to the Collateral Agent and assuring the Collateral Agent that the
Mortgages are valid and enforceable first priority mortgage Liens on the
respective Mortgaged Properties, free and clear of all defects and encumbrances
except Permitted Encumbrances. Such Mortgage Policies shall be in form and
substance reasonably satisfactory to the Collateral Agent and (i) shall include
(to the extent available in the respective jurisdiction of each Mortgaged
Property) an endorsement for future advan ces under this Agreement, the Notes
and the Mortgages, and for such other matters that the Collateral Agent in its
discretion may reasonably request, (ii) shall not include an exception for
mechanics' liens, and (iii) shall provide for affirmative insurance and such
reinsurance (including direct access agreements) as the Collateral Agent in its
discretion may reasonably request.
(c) The Collateral Agent also shall have received either (x) an
officer's certificate of the Borrower or the respective Subsidiary Guarantor
with respect to each Mortgaged Property owned by such Credit Party certifying
that there has been no material alterations or improvements to such Mortgaged
Property, which certificate shall be in form and substance reasonably
satisfactory to the Collateral Agent or (y) in the case of any Mortgaged
Property for which the foregoing certification cannot be made, an updated survey
for such Mortgaged Property, in form and substance reasonably satisfactory to
the Collateral Agent, certified by a licensed professional surveyor reasonably
satisfactory to the Collateral Agent.
5.14 Existing Indebtedness Agreements; Tax Allocation Agreements. On
or prior to the Initial Borrowing Date, there shall have been delivered to the
Agent copies, certified as true and correct by an appropriate officer of
Holdings, of:
(a) all agreements evidencing or relating to the Existing
Indebtedness that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Existing Indebtedness
Agreements"); and
(b) any tax sharing or tax allocation agreements entered into by
Holdings or any of its Subsidiaries (collectively, the "Tax Allocation
Agreements");
all of which Existing Indebtedness Agreements and Tax Allocation Agreements
shall be in full force and effect on the Initial Borrowing Date.
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5.15 Solvency Certificate; Evidence of Insurance. On the Initial
Borrowing Date, the Agent shall have received:
(a) a solvency certificate in the form of Exhibit I from the chief
financial officer of Holdings and dated the Initial Borrowing Date and
supporting the conclusions, that, after giving effect to the Transaction
and the incurrence of all financings contemplated herein, the Borrower (on
a stand-alone basis) and Holdings and its Subsidiaries (on a consolidated
basis) are not insolvent and will not be rendered insolvent by the
indebtedness incurred in connection herewith, will not be left with
unreasonably small capital with which to engage in their respective
businesses and will not have incurred debts beyond their ability to pay
such debts as they mature and become due; and
(b) evidence of insurance complying with the requirements of
Section 7.03 for the business and properties of Holdings and its
Subsidiaries, in scope, form and substance reasonably satisfactory to the
Agent and the Required Banks and naming the Collateral Agent as an
additional insured and/or loss payee, and stating that such insurance shall
not be cancelled or revised without at least 30 days' (or 10 days' in the
case of non-payment of premium) prior written notice by the insurer to the
Collateral Agent.
5.16 Pro Forma Balance Sheet. On or prior the Initial Borrowing
Date, there shall have been delivered to the Agent, an unaudited pro forma
consolidated balance sheet of Holdings and its Subsidiaries as of March 31, 1996
after giving effect to the Transaction and prepared in accordance with GAAP,
together with a related funds flow statement, which pro forma balance sheets and
funds flow statement shall be reasonably satisfactory in form and substance to
the Agent and the Required Banks.
5.17 Projections. On or prior to the Initial Borrowing Date, the
Banks shall have received the financial projections dated May 13, 1996 (the
"Projections"), which include the projected results of Holdings and its
Subsidiaries for at least the five fiscal years ended after the Initial
Borrowing Date.
5.18 Payment of Fees. On the Initial Borrowing Date, all costs, fees
and expenses, and all other compensation contemplated by this Agreement, due to
the Agent or the Banks (including, without limitation, legal fees and expenses)
shall have been paid to the extent due.
5.19 Notice of Borrowing; Letter of Credit Request. The Agent shall
have received a Notice of Borrowing satisfying the requirements of Section 1.03
with respect to each incurrence of Loans; and the Agent and the Letter of Credit
Issuer shall have received a Letter of Credit Request satisfying the
requirements of Section 2.02 with respect to each issuance of a Letter of
Credit.
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The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to the Agent and each of the
Banks that all of the applicable conditions specified above exist as of the date
of such Credit Event. All of the certificates, legal opinions and other
documents and papers referred to in this Section 5, unless otherwise specified,
shall be delivered to the Agent at its Notice Office for the account of each of
the Banks and, except for the Notes, in sufficient counterparts for each of the
Banks and shall be reasonably satisfactory in form and substance to the Agent
and the Required Banks.
SECTION 6. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans and issue
and/or partici pate in the Letters of Credit provided for herein, each of
Holdings, WR Acquisition and the Borrower makes the following representations,
warranties and agreements with the Banks in each case after giving effect to the
Transaction (other than the repurchase of the Senior Subordinated Notes with a
portion of the IPO proceeds), all of which shall survive the execution and
delivery of this Agreement, the making of the Loans and the issuance of the
Letters of Credit (with the occurrence of each Credit Event being deemed to
constitute a representation and warranty that the matters specified in this
Section 6 are true and correct in all material respects on and as of the date of
each such Credit Event, unless stated to relate to a specific earlier date in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date):
1.061 Corporate Status. Each of Holdings and each of its Subsidiaries
(i) is a duly organized and validly existing corporation in good standing under
the laws of the jurisdiction of its organization, (ii) has the corporate power
and authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing in all jurisdictions
where it is required to be so qualified and where the failure to be so qualified
would have a Material Adverse Effect.
1.062 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents to which it is a party. Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of such Credit
Party enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
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1.063 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Credit Documents to which it is a party nor compliance
by any Credit Party with the terms and provisions thereof, nor the consummation
of the transactions contemplated herein or therein, (i) will contravene any
applicable provision of any law, statute, rule or regulation, or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
(other than pursuant to the Security Documents and the Accounts Receivable
Facility Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of Holdings or
any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, loan agreement, credit agreement or any other material agreement or
instrument to which Holdings or any of its Subsidiaries is a party or by which
it or any of its property or assets are bound or to which it may be subject or
(iii) will violate any provision of the Certificate of Incorporation or By-Laws
of Holdings or any of its Subsidiaries.
1.064 Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of Holdings or any of its Subsidiaries, threatened, with
respect to Holdings or any of its Subsidiaries (i) that are likely to have a
Material Adverse Effect or (ii) that could reasonably be expected to have a
material adverse effect on the rights or remedies of the Agent or the Banks or
on the ability of any Credit Party to perform its respective obligations to the
Agent or the Banks hereunder and under the other Credit Documents to which it
is, or will be, a party. Additionally, there does not exist any judgment, order
or injunction prohibiting or imposing material adverse conditions upon the
occurrence of any Credit Event.
1.065 Use of Proceeds; Margin Regulations. (a) The proceeds of the
Loans shall be utilized to (i) consummate the Refinancing, (ii) pay fees and
expenses in connection with the Transaction and (iii) provide for the general
corporate and working capital purposes of the Borrower and its Subsidiaries
(including for the repurchase of Senior Subordinated Notes and to effect
acquisitions and Capital Expenditures, in each case to the extent permitted by
this Agreement).
(b) Neither the making of any Loan, nor the use of the proceeds
thereof, will violate the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System and no part of the proceeds of any Loan
will be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock.
1.066 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery
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and performance of any Credit Document or (ii) the legality, validity, binding
effect or enforceability of any Credit Document.
1.067 Investment Company Act. Neither Holdings 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.
1.068 Public Utility Holding Company Act. Neither Holdings nor any of
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
1.069 True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings
or any of its Subsidiaries in writing to the Agent or any Bank (including,
without limitation, all information contained in the Documents) for purposes of
or in connection with this Agreement or any transaction contemplated herein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of any such Persons in writing to the Agent or any Bank will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided, it being understood that the representation and
warranty made in this Section 6.09 with respect to the information contained in
the IPO Documents is only being made on and as of the Initial Borrowing Date.
6.10 Financial Condition; Financial Statements. (a) On and as of the
Initial Borrowing Date, on a pro forma basis after giving effect to the
Transaction and to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, by each Credit Party in connection therewith, with
respect to each of Holdings and its Subsidiaries (on a consolidated basis) and
of the Borrower (on a stand-alone basis) (x) the sum of the assets, at a fair
valuation, of each of Holdings and its Subsidiaries (on a consolidated basis)
and the Borrower (on a stand-alone basis) will exceed its debts, (y) it has not
incurred nor intended to, nor believes that it will, incur debts beyond its
ability to pay such debts as such debts mature and (z) it will have sufficient
capital with which to conduct its business. For purposes of this Section 6.10,
"debt" means any liability on a claim, and "claim" means (i) right to payment
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
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(b) The statements of financial condition of Holdings and its
Subsidiaries at December 31, 1995 and March 31, 1996 and the related statements
of income and cash flows and changes in shareholders' equity of Holdings and its
Subsidiaries for the fiscal year or three-month period, as the case may be,
ended as of said dates, copies of which have heretofore been furnished to each
Bank, present fairly in all material respects the consolidated financial
condition of Holdings and its Subsidiaries at the dates of said statements and
the results for the periods covered thereby. All such financial statements have
been prepared in accordance with GAAP consistently applied except to the extent
provided in the notes to said financial statements and subject, in the case of
the March 31, 1996 statements, to normal year-end audit adjustments and the
absence of footnotes.
(c) Since December 31, 1995, nothing has occurred that has had or
could reasonably be expected to have a Material Adverse Effect.
(d) Except as fully reflected in the financial statements described
in Section 6.10(b) and the Indebtedness incurred under this Agreement, (i) there
were as of the Initial Borrowing Date (and after giving effect to any Loans made
on such date), no liabilities or obligations (excluding current obligations
incurred in the ordinary course of business) with respect to Holdings or any of
its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent
or otherwise and whether or not due), and (ii) neither Holdings nor the Borrower
know of any basis for the assertion against Holdings or any of its Subsidiaries
of any such liability or obligation which, either individually or in the
aggregate, are or would be reasonably likely to have, a Material Adverse Effect.
(e) The Projections are based on good faith estimates and
assumptions made by the management of Holdings, and on the Initial Borrowing
Date such management believed that the Projections were reasonable and
attainable, it being recognized by the Banks, however, that projections as to
future events are not to be viewed as facts and that the actual results during
the period or periods covered by the Projections probably will differ from the
projected results and that the differences may be material. There is no fact
known to Holdings or any of its Subsidiaries which would have a Material Adverse
Effect, which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Banks for use in connection with
the transactions contemplated hereby.
6.11 Security Interests. On and after the Initial Borrowing Date,
each of the Security Documents creates (or after the execution and delivery
thereof will create), as security for the Obligations, a valid and enforceable
perfected security interest in and Lien on all of the Collateral subject
thereto, superior to and prior to the rights of all third Persons, and subject
to no other Liens (except that (i) the Security Agreement Collateral, the
Mortgaged Properties and the Additional Mortgaged Properties may be subject to
Permitted Liens relating thereto and (ii) the Pledge Agreement Collateral may be
subject to the Liens described in clauses (a) and (e) of Section 8.03), in favor
of the Collateral Agent. No filings or recordings are required in order to
perfect the security interests
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created under any Security Document except for filings or recordings required in
connection with any such Security Document which shall have been made on or
prior to the Initial Borrowing Date as contemplated by Section 5.11(b) or on or
prior to the execution and delivery thereof as contemplated by Sections 7.11 and
8.15.
6.12 Transaction. At the time of consummation thereof, the
Transaction shall have been consummated in accordance with the terms of the
respective Documents and all applicable laws. At the time of consummation
thereof, all consents and approvals of, and filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities or
instrumentalities required to make or consummate the Transaction have been
obtained, given, filed or taken or waived and are or will be in full force and
effect (or effective judicial relief with respect thereto has been obtained)
except where the failure to obtain, give, file, or take would not reasonably be
expected to have a Material Adverse Effect. All applicable waiting periods with
respect thereto have or, prior to the time when required, will have, expired
without, in all such cases, any action being taken by any competent authority
which restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or the occurrence of any Credit Event or the performance by
Holdings and its Subsidiaries of their obligations under the Documents and all
applicable laws. The Transaction has been consummated in accordance with the
respective Documents and all applicable laws.
6.13 Special Purpose Corporations. (a) Holdings has no significant
assets (other than the capital stock of WR Acquisition, immaterial assets used
for the performance of those activities permitted to be performed by Holdings
pursuant to Section 8.01(b) and any obligations held by it to the extent
permitted by Section 8.06(f)(i)) or liabilities (other than those liabilities
under this Agreement, the other Documents to which it is a party and, after the
issuance thereof in accordance with the terms of this Agreement, the Shareholder
Subordinated Notes).
(b) WR Acquisition has no significant assets (other than the
capital stock of the Borrower and immaterial assets used for the performance of
those activities permitted to be performed by WR Acquisition pursuant to Section
8.01(c)) or liabilities (other than those liabilities under this Agreement and
the other Documents to which it is a party).
6.14 Compliance with ERISA. (a) Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for a waiver of the minimum funding standard or an extension of any
amortization period within the meaning of Section 412 of the Code; all
contributions required to be made with respect to a Plan and a Foreign Pension
Plan have been timely made; neither Holdings nor any Subsidiary of Holdings nor
any ERISA Affiliate has
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incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or reasonably expects to
incur any material liability (including any indirect, contingent or secondary
liability) under any of the foregoing Sections with respect to any Plan (other
than liabilities of any ERISA Affiliate which could not, by operation of law or
otherwise, become a liability of Holdings or any of its Subsidiaries); no
proceedings have been instituted to terminate, or to appoint a trustee to
administer, any Plan; no condition exists which presents a material risk to
Holdings or any Subsidiary of Holdings or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; using actuarial assumptions and computation methods
consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all
Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the date of the most recent
Credit Event, would not result in a Material Adverse Effect; no lien imposed
under the Code or ERISA on the assets of Holdings or any Subsidiary of Holdings
or any ERISA Affiliate exists or is likely to arise on account of any Plan; and
Holdings and its Subsidiaries do not maintain or contribute to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) which provides
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or any employee pension benefit plan (as defined in
Section 3(2) of ERISA) the obligations with respect to which could reasonably be
expected to have a Material Adverse Effect.
(b) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither
Holdings nor any of its Subsidiaries has incurred any material obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The present value of the accrued benefit liabilities (whether or not vested)
under each Foreign Pension Plan which is funded, determined as of the end of the
most recently ended fiscal year of the Borrower on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan, and for each Foreign Pension Plan which
is not funded, the obligations of such Foreign Pension Plan are properly
accrued.
6.15 Capitalization. (a) On the Initial Borrowing Date and after
giving effect to the Transaction and the other transactions contemplated hereby,
the authorized capital stock of Holdings shall consist of (i) 75,000,000 shares
of common stock, $.01 par value per share (the "Holdings Common Stock") and (ii)
150,000 shares of preferred stock, $.01 par value per share, none of which
shares of preferred stock shall be issued and outstanding. All outstanding
shares of Holdings Common Stock have been duly and validly issued, and are fully
paid and nonassessable. Holdings does not have outstanding any
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securities convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock
except for options to purchase Holdings Common Stock issued or to be issued to
management of Holdings and its Subsidiaries.
(b) On the Initial Borrowing Date and after giving effect to the
Transaction and the other transactions contemplated hereby, the authorized
capital stock of WR Acquisition shall consist of 1,000 shares of common stock,
$.01 par value per share, all of which shares shall be issued and outstanding
and owned by Holdings. All such outstanding shares have been duly and validly
issued, and are fully paid and nonassessable. WR Acquisition does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights 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,
its capital stock.
(c) On the Initial Borrowing Date and after giving effect to the
Transaction and the other transactions contemplated hereby, the authorized
capital stock of the Borrower shall consist of 200 shares of common stock, $.01
par value per share, all of which shares shall be issued and outstanding and
owned by WR Acquisition. All such outstanding shares have been duly and validly
issued, and are fully paid and nonassessable. The Borrower does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights 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,
its capital stock.
6.16 Subsidiaries. On and as of the Initial Borrowing Date and after
giving effect to the consummation of the Transaction, Holdings has no
Subsidiaries other than WR Acquisition and its Subsidiaries, WR Acquisition has
no Subsidiaries other than the Borrower and its Subsidiaries and the Borrower
has no Subsidiaries other than those Subsidiaries listed on Annex VI. Annex VI
correctly sets forth, as of the Initial Borrowing Date and after giving effect
to the Transaction, the percentage ownership (direct and indirect) of Holdings
in each class of capital stock of each of its Subsidiaries and also identifies
the direct owner thereof.
6.17 Intellectual Property. Each of Holdings and each of its
Subsidiaries owns or holds a valid license to use all the material patents,
trademarks, permits, service marks, trade names, technology, know-how and
formulas or other rights with respect to the foregoing, free from restrictions
that are materially adverse to the use thereof, that are used in the operation
of the business of Holdings and each of its Subsidiaries as presently conducted.
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6.18 Compliance with Statutes, etc. Each of Holdings and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including compliance with all applicable Environmental Laws
with respect to any Real Property or governing its business and the requirements
of any permits issued under such Environmental Laws with respect to any such
Real Property or the operations of Holdings or any of its Subsidiaries), except
such non-compliance as is not likely to, individually or in the aggregate, have
a Material Adverse Effect.
6.19 Environmental Matters. (a) Each of Holdings and each of its
Subsidiaries has complied with, and on the date of each Credit Event is in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or, to the
best knowledge of Holdings and the Borrower, past or threatened Environmental
Claims against Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries. There are no facts,
circumstances, conditions or occurrences on any Real Property owned or operated
by Holdings or any of its Subsidiaries or, to the best knowledge of Holdings and
the Borrower, on any property adjoining or in the vicinity of any such Real
Property that would reasonably be expected (i) to form the basis of an
Environmental Claim against Holdings or any of its Subsidiaries or any such Real
Property or (ii) to cause any such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property by Holdings or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Holdings or any of its Subsidiaries where such generation, use,
treatment or storage has violated or would reasonably be expected to violate any
Environmental Law. Hazardous Materials have not at any time been Released on or
from any Real Property owned or operated by Holdings or any of its Subsidiaries.
There are not now any underground storage tanks located on any Real Property
owned or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 6.19,
the representations made in this Section 6.19 shall only be untrue if the
aggregate effect of all conditions, failures, noncompliances, Environmental
Claims, Releases and presence of underground storage tanks, in each case of the
types described above, would reasonably be expected to have a Material Adverse
Effect.
6.20 Properties. All Real Property owned by Holdings or any of its
Subsidiaries and all material Leaseholds leased by Holdings or any of its
Subsidiaries, in each case as of the Initial Borrowing Date and after giving
effect to the Transaction, and
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the nature of the interest therein, is correctly set forth in Annex IV. Each of
Holdings and each of its Subsidiaries has good and marketable title to, or a
validly subsisting leasehold interest in, all material properties owned or
leased by it, including all Real Property reflected in Annex IV or in the
financial statements referred to in Section 6.10(b), free and clear of all
Liens, other than Permitted Liens.
6.21 Labor Relations. Neither Holdings nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (i) no unfair labor practice complaint pending
against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings and the Borrower, threatened against any of them, before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against Holdings
or any of its Subsidiaries or, to the best knowledge of Holdings and the
Borrower, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against Holdings or any of its Subsidiaries or, to
the best knowledge of Holdings and the Borrower, threatened against Holdings or
any of its Subsidiaries and (iii) to the best knowledge of Holdings and the
Borrower, no union representation question existing with respect to the
employees of Holdings or any of its Subsidiaries and, to the best knowledge of
Holdings and the Borrower, no union organizing activities are taking place,
except (with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate) such as is not reasonably likely to
have a Material Adverse Effect.
6.22 Tax Returns and Payments. All Federal, material state and other
material returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of Holdings and/or any of its Subsidiaries have been timely filed with the
appropriate taxing authority. The Returns accurately reflect all liability for
taxes of Holdings and its Subsidiaries for the periods covered thereby. Holdings
and each of its Subsidiaries have paid all taxes payable by them other than
immaterial taxes and other taxes which are not yet due and payable, and other
than taxes contested in good faith and for which adequate reserves have been
established in accordance with GAAP. Except as disclosed in the financial
statements referred to in Section 6.10(b), there is no material action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
Holdings and the Borrower, threatened by any authority regarding any taxes
relating to Holdings or any of its Subsidiaries. As of the Initial Borrowing
Date, neither Holdings nor any of its Subsidiaries has entered into an agreement
or waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of taxes of
Holdings or any of its Subsidiaries, or is aware of any circumstances that
would cause the taxable years or other taxable periods of Holdings or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations. Neither Holdings nor any of its Subsidiaries has provided, with
respect to themselves or property held by them, any consent under Section 341 of
the Code. Neither Holdings nor any of its Subsidiaries has incurred, or will
incur, any
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material tax liability in connection with the Transaction and the other
transactions contemplated hereby.
6.23 Existing Indebtedness. Annex VII sets forth a true and complete
list of all Indebtedness of Holdings and its Subsidiaries (other than
Indebtedness which in the aggregate does not exceed $100,000) as of the Initial
Borrowing Date and which is to remain outstanding after giving effect to the
Transaction and the incurrence of Loans on such date (excluding the Loans, the
Letters of Credit, the Accounts Receivable Facility and the Senior Subordinated
Notes, the "Existing Indebtedness"), in each case showing the aggregate
principal amount thereof and the name of the respective borrower and any other
entity which directly or indirectly guaranteed such debt.
6.24 Senior Subordinated Notes. The subordination provisions
contained in the Senior Subordinated Note Indenture, the Senior Subordinated
Note Guarantees and the Senior Subordinated Notes are enforceable against the
Borrower, the respective Guarantors and the holders thereof, and all Obligations
and Guaranteed Obligations (as defined herein and in the Subsidiary Guaranty)
are within the definition of "Senior Debt" or "Guarantor Senior Debt," as the
case may be, included in such subordination provisions, and this Agreement
constitutes the "Bank Credit Agreement" under (and as defined in) the Senior
Subordinated Note Indenture.
SECTION 7. Affirmative Covenants. Holdings, WR Acquisition and the
Borrower hereby covenant and agree that as of the Effective Date and thereafter
for so long as this Agreement is in effect and until the Total Revolving Loan
Commitment has terminated, no Letters of Credit (other than Letters of Credit,
together with all Fees that have accrued and will accrue thereon through the
stated termination date of such Letters of Credit, which have been supported in
a manner satisfactory to the Letter of Credit Issuer in its sole and absolute
discretion) or Notes are outstanding and the Loans and Unpaid Drawings, together
with interest, Fees and all other Obligations (other than any indemnities
described in Section 12.13 which are not then due and payable) incurred
hereunder, are paid in full:
1.071 Information Covenants. Holdings will furnish to each Bank:
(a) Monthly Reports. Within 30 days after the end of each fiscal
month of Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income and retained earnings of cash flows for such fiscal month
and for the elapsed portion of the fiscal year ended with the last day of such
fiscal month, in each case setting forth comparative figures for the
corresponding fiscal month in the prior fiscal year (commencing with the monthly
reports delivered in respect of the fiscal month ending February 28, 1997) and
comparable budgeted figures for such fiscal month,
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all of which shall be certified by the chief financial
officer or other Authorized Officer of Holdings, subject to normal year-end
audit adjustments and the absence of footnotes.
(b) Quarterly Financial Statements. (i) Within 45 days after the
close of the first three quarterly accounting periods in each fiscal year of
Holdings, the consolidated balance sheet of Holdings and its Subsidiaries as at
the end of such quar terly accounting period and the related consolidated
statements of income and re tained earnings and of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly accounting period; all of which shall be in
reasonable detail and certified by the chief financial officer or other
Authorized Officer of Holdings that they fairly present in all material respects
the financial condition of Holdings and its Subsidiaries as of the dates
indicated and the results of their operations and changes in their cash flows
for the periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes.
(ii) Within 45 days after the close of the first three quarterly
accounting periods in each fiscal year of Holdings, the sales and operating
income (before corporate overhead) for each of the envelopes division and the
writing and file supplies division of the Borrower and its Subsidiaries for such
quarterly accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly accounting period; all of which shall be in
reasonable detail and certified by the chief financial officer or other
Authorized Officer of Holdings that they fairly represent in all material
respects the information contained therein for the periods indicated, subject to
normal year-end audit adjustments and the absence of footnotes.
(c) Annual Financial Statements. (i) Within 90 days after the close
of each fiscal year of Holdings, the consolidated balance sheet of Holdings and
its Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for such fiscal
year and setting forth comparative consolidated figures for the preceding fiscal
year and comparable budgeted figures for such fiscal year and (except for such
comparable budgeted figures) certified by Price Waterhouse L.L.P. or such other
independent certified public accountants of recognized national standing as
shall be reasonably acceptable to the Agent, in each case to the effect that
such statements fairly present in all material respects the financial condition
of Holdings and its Subsidiaries as of the dates indicated and the results of
their operations and changes, together with a certi ficate of such accounting
firm stating that in the course of its regular audit of the business of Holdings
and its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, no Default or Event of Default which has occurred
and is continuing has come to their attention insofar as such Default
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or Event of Default relates to financial and accounting matters or, if such a
Default or an Event of Default has come to their attention a statement as to the
nature thereof.
(ii) Within 90 days after the close of each fiscal year of Holdings,
the sales and operating income (before corporate overhead) for each of the
envelopes division and the writing and file supplies division of the Borrower
and its Subsidiaries for such fiscal year; all of which shall be in reasonable
detail and certified by the chief financial officer or other Authorized Officer
of Holdings that they fairly present in all material respects the information
contained therein for the periods indicated.
(d) Budgets, etc. Not more than 60 days after the commencement of
each fiscal year of Holdings, budgets of the Borrower and its Subsidiaries in
reasonable detail for each of the four fiscal quarters of such fiscal year and
for each of the four fiscal quarters of the immediately succeeding fiscal year,
in each case as customarily prepared by management for its internal use setting
forth, with appropriate discussion, the principal assumptions upon which such
budgets are based. Together with each delivery of financial statements pursuant
to Section 7.01(b) and (c), a comparison of the current year to date financial
results (other than in respect of the balance sheets included therein) against
the budgets required to be submitted pursuant to this clause (d) shall be
presented.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 7.01(b) and (c), a certificate of
the chief financial officer or other Authorized Officer of Holdings to the
effect that no Default or Event of Default exists or, if any Default or Event of
Default does exist, specifying the nature and extent thereof, which certificate
shall set forth the calculations required to establish whether Holdings and its
Subsidiaries were in compliance with the provisions of Sections 8.04(f), 8.05,
8.06 and 8.09 through and including 8.12, as at the end of such fiscal quarter
or year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any event
within five Business Days (or 10 Business Days in the case of clause (y) below)
after any executive or senior officer of Holdings, WR Acquisition or the
Borrower obtains knowledge thereof, notice of (x) the occurrence of any event
which constitutes a Default or an Event of Default, which notice shall specify
the nature thereof, the period of existence thereof and what action Holdings,
WR Acquisition or the Borrower proposes to take with respect thereto and (y) the
commencement of, or threat of, or any significant development in, any litigation
or governmental proceeding pending against Holdings or any of its Subsidiaries
which is likely to have a Material Adverse Effect, or a material adverse effect
on the ability of any Credit
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Party to perform its respective obligations hereunder or under any other Credit
Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of
each report or "management letter" submitted to Holdings or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of Holdings or any of its
Subsidiaries.
(h) Environmental Matters. Promptly after obtaining knowledge of
any of the following (but only to the extent that any of the following, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect), written notice of:
(i) any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned
or operated by Holdings or any of its Subsidiaries that (x) results in
material noncompliance by Holdings or any of its Subsidiaries with any
applicable Environmental Law or (y) could reasonably be anticipated to
form the basis of an Environmental Claim against Holdings or any of
its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by Holdings or any of its Subsidiaries that could
reasonably be anticipated to cause such Real Property to be subject to
any material restrictions on the ownership, occupancy, use or
transferability by Holdings or its Subsidiary, as the case may be, of
its interest in such Real Property under any Environmental Law; and
(iv) the taking of any material removal or remedial action in
response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by Holdings or any of its
Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Holdings'
or the Borrower's response thereto. In addition, Holdings agrees to provide the
Banks with copies of all material written communications by Holdings or any of
its Subsidiaries with any Person, government or governmental agency relating to
any of the matters set forth in clauses (i)-(iv) above, and such detailed
reports relating to any of the matters set forth in clauses (i)-(iv) above as
may reasonably be requested by the Agent or the Required Banks.
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(i) Other Information. Promptly upon transmission thereof, copies
of any filings and registrations with, and reports to, the SEC by Holdings
or any of its Subsidiaries and copies of all financial statements, proxy
statements, notices and reports as Holdings or any of its Subsidiaries
shall send generally to analysts, the holders of their capital stock or of
the or Senior Subordinated Notes in their capacity as such holders or the
purchasers under the Accounts Receivable Facility in their capacity as such
purchasers (in each case to the extent not theretofore delivered to the
Banks pursuant to this Agreement) and, with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its
own behalf or on behalf of the Required Banks may reasonably request from
time to time.
1.072 Books, Records and Inspections. Holdings will, and will cause
each of its Subsidiaries to, permit, upon notice to the chief financial officer
or other Authorized Officer of Holdings or the Borrower, officers and designated
representatives of the Agent or the Required Banks to visit and inspect any of
the properties or assets of Holdings and any of its Subsidiaries in whomsoever's
possession, and to examine the books of account of Holdings and any of its
Subsidiaries and discuss the affairs, finances and accounts of Holdings and of
any of its Subsidiaries with, and be advised as to the same by, their officers
and independent accountants, all at such reasonable times and intervals and to
such reas onable extent as the Agent or the Required Banks may desire.
1.073 Insurance. Holdings will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance with
reputable and solvent insurance carriers in such amounts, covering such risks
and liabilities and with such deductibles or self-insured retentions as are in
accordance with normal industry practice. Holdings will furnish to the Agent on
the Initial Borrowing Date and on each such later date as the Agent or the
Required Banks may reasonably request a summary of the insurance carried in
respect of Holdings and its Subsidiaries and the assets of Holdings and its
Subsidiaries together with certificates of insurance and other evidence of such
insurance, if any, naming the Collateral Agent as an additional insured and/or
loss payee.
1.074 Payment of Taxes. Holdings will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims for sums that have become due
and payable which, if unpaid, might become a Lien not otherwise permitted under
Section 8.03(a) or charge upon any properties of Holdings or any of its
Subsidiaries; provided, that neither Holdings nor any of its Subsidiaries shall
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP.
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1.075 Corporate Franchises. Holdings will do, and will cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises and authority to do business; provided, however, that any transaction
permitted by Section 8.02 will not constitute a breach of this Section 7.05.
1.076 Compliance with Statutes, etc. Holdings will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) except for
such noncompliance as would not have a Material Adverse Effect or a material
adverse effect on the ability of any Credit Party to perform its obligations
under any Credit Document to which it is a party.
1.077 Compliance with Environmental Laws. (a) Holdings will pay, and
will cause each of its Subsidiaries to pay, all costs and expenses incurred by
it in keeping in compliance with all Environmental Laws, and will keep or cause
to be kept all Real Prop erties owned or operated by Holdings or any of its
Subsidiaries free and clear of any Liens imposed pursuant to such Environmental
Laws; and (b) neither Holdings nor any of its Sub sidiaries will generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, release or disposal of, Hazardous Materials on any Real Property owned
or operated by Holdings or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, unless
the failure to comply with the requirements specified in clause (a) or (b)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If Holdings or any of its Subsidiaries, or
any tenant or occupant of any Real Property owned or operated by Holdings or any
of its Subsidiaries, cause or permit any intentional or unintentional act or
omission resulting in the presence or Release of any Hazardous Material (except
in compliance with applicable Environmental Laws), each of Holdings, WR
Acquisition and the Borrower agrees to undertake, and/or to cause any of its
Subsidiaries, tenants or occupants to undertake, at their sole expense, any
clean up, removal, remedial or other action required pursuant to Environmental
Laws to remove and clean up any Hazardous Materials from any Real Property
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect; provided that neither Holdings nor any of its
Subsidiaries shall be required to comply with any such order or directive which
is being contested in good faith and by proper proceedings so long as it has
maintained adequate reserves with respect to such compliance to the extent
required in accordance with GAAP.
1.078 ERISA. As soon as possible and, in any event, within 10 days
after Holdings or any Subsidiary of Holdings or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following events to the extent
that one or more of
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such events is reasonably likely to result in a material liability to Holdings
or any Subsidiary of Holdings, Holdings will deliver to each of the Banks a
certificate of the chief financial officer or other Authorized Officer of
Holdings setting forth details as to such occurrence and the action, if any,
which Holdings, such Subsidiary or such ERISA Affiliate is required or proposes
to take, together with any notices required or proposed to be given to or filed
with or by Holdings, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred, that an accumulated funding deficiency has been incurred or
an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a contribution required to be made
to a Plan or Foreign Pension Plan has not been timely made; that a Plan has been
or may be terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA; that a Plan has an Unfunded Current Liability giving rise to a lien
under ERISA or the Code; that proceedings may be or have been instituted to
terminate or appoint a trustee to administer a Plan; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that Holdings, any Subsidiary of Holdings or any ERISA Affiliate will
or may incur any material liability (including any contingent or secondary
liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409, 502(i) or 502(l) of ERISA; or that Holdings or any Subsidiary of
Holdings has or may incur any material liability under any employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) that provides
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or any employee pension benefit plan (as defined in
Section 3(2) of ERISA). At the request of any Bank, Holdings will deliver to
such Bank a complete copy of the annual report (Form 5500) of each Plan required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Banks pursuant to the first sentence hereof, at the
request of the Agent or any Bank, copies of annual reports and any notices
received by Holdings or any Subsidiary of Holdings or any ERISA Affiliate with
respect to any Plan or Foreign Pension Plan shall be delivered to the Banks no
later than 10 days after the date such report has been filed with the Internal
Revenue Service or received by Holdings or the Subsidiary or the ERISA
Affiliate.
1.079 Good Repair. Holdings will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, normal wear and
tear and damage by casualty excepted, and, subject to Section 8.09, that from
time to time there are made in such properties and equipment all needful and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
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7.10 End of Fiscal Years; Fiscal Quarters. Holdings will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.11 Additional Security; Further Assurances. (a) Holdings will, and
will cause each of its Domestic Subsidiaries (other than the Receivables Entity,
to the extent it becomes a Subsidiary) (and to the extent Section 7.13 is
operative, each of its Foreign Subsidiaries) to, grant to the Collateral Agent
security interests and mortgages in such assets and real property of Holdings
and its Subsidiaries as are not covered by the original Security Documents, and
as may be requested from time to time by the Agent or the Required Banks
(collectively, the "Additional Security Documents"). All such security interests
and mortgages shall be granted pursuant to documentation reasonably satisfactory
in form and substance to the Agent and shall constitute valid and enforceable
perfected security interests and mortgages superior to and prior to the rights
of all third Persons and subject to no other Liens except for Permitted Liens.
The Additional Security Documents or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall have
been paid in full.
(b) Holdings will, and will cause each of its Subsidiaries (other
than the Receivables Entity, to the extent it becomes a Subsidiary) to, at the
expense of Holdings, WR Acquisition and the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, Holdings
shall cause to be delivered to the Collateral Agent such opinions of counsel,
title insurance and other related documents as may be reasonably requested by
the Agent to assure themselves that this Section 7.11 has been complied with.
(c) If the Agent or the Required Banks determine that they are
required by law or regulation to have appraisals prepared in respect of the Real
Property of Holdings and its Subsidiaries constituting Collateral, the Borrower
shall provide to the Agent appraisals which satisfy the applicable requirements
of the Real Estate Appraisal Reform Amendments of the Financial Institution
Reform, Recovery and Enforcement Act of 1989 and which shall be in form and
substance reasonably satisfactory to the Agent.
(d) Holdings, WR Acquisition and the Borrower agree that each
action required above by this Section 7.11 shall be completed within 90 days
after such action is
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either requested to be taken by the Agent or the Required Banks or required to
be taken by Holdings and its Subsidiaries pursuant to the terms of this Section
7.11; provided that in no event shall Holdings, WR Acquisition or the Borrower
be required to take any action, other than using its best efforts, to obtain
consents from third parties with respect to its compliance with this Section
7.11.
7.12 Register. The Borrower hereby designates the Agent to serve as
the Borrower's agent, solely for purposes of this Section 7.12, to maintain a
register (the "Register") on which it will record the Revolving Loan Commitment
from time to time of each of the Banks, the Revolving Loans made by each of the
Banks and each repayment in respect of the principal amount of the Revolving
Loans of each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Revolving Loans. With respect to any Bank, the transfer of the Revolving Loan
Commitment of such Bank and the rights to the principal of, and interest on, any
Revolving Loan made pursuant to such Revolving Loan Commitment shall not be
effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Revolving Loan Commitment and Revolving
Loans and prior to such recordation all amounts owing to the transferor with
respect to such Revolving Loan Commitment and Revolving Loans shall remain owing
to the transferor. The registration of assignment or transfer of all or part of
any Revolving Loan Commitment and Revolving Loans shall be recorded by the Agent
on the Register only upon the acceptance by the Agent of a properly executed and
delivered Assignment and Assumption Agreement pursuant to Section 12.04(b).
Coincident with the delivery of such an Assignment and Assumption Agreement to
the Agent for acceptance and registration of assignment or transfer of all or
part of a Revolving Loan, or as soon thereafter as practicable, the assigning or
transferor Bank shall surrender the Revolving Note evidencing such Revolving
Loan, and thereupon one or more new Revolving Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Agent from and against any and
all losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Agent in performing its duties
under this Section 7.12.
7.13 Foreign Subsidiaries Security. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Agent does not within 30 days after a
request from the Agent or the Required Banks deliver evidence, in form and
substance mutually satisfactory to the Agent and the Borrower, with respect to
any Foreign Subsidiary of the Borrower which has not already had all of its
stock pledged pursuant to the Pledge Agreement that (i) a pledge (x) of 66-2/3%
or more of the total combined voting power of all classes of capital stock of
such Foreign Subsidiary entitled to vote, and (y) of any promissory note issued
by such Foreign Subsidiary to the Borrower or any of its Domestic Subsidiaries,
(ii) the entering into by such Foreign Subsidiary of a security agreement in
substantially the form of the Security
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Agreement and (iii) the entering into by such Foreign Subsidiary of a guaranty
in substantially the form of the Subsidiary Guaranty, in any such case could
reasonably be expected to cause (I) the undistributed earnings of such Foreign
Subsidiary as determined for Federal income tax pur poses to be treated as a
deemed dividend to such Foreign Subsidiary's United States parent for Federal
income tax purposes or (II) other material adverse Federal income tax
consequences to the Credit Parties, then in the case of a failure to deliver the
evidence described in clause (i) above, that portion of such Foreign
Subsidiary's outstanding capital stock or any promissory notes so issued by such
Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge
Agreement shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement
in substantially similar form, if needed), and in the case of a failure to
deliver the evidence described in clause (ii) above, such Foreign Subsidiary
shall execute and deliver the Security Agreement (or another security agreement
in substantially similar form, if needed), granting the Secured Creditors a
security interest in all of such Foreign Subsidiary's assets and securing the
Obligations of the Borrower under the Credit Documents and under any Interest
Rate Protection Agreement or Other Hedging Agreement and, in the event the Sub
sidiary Guaranty shall have been executed by such Foreign Subsidiary, the
obligations of such Foreign Subsidiary thereunder, and in the case of a failure
to deliver the evidence described in clause (iii) above, such Foreign Subsidiary
shall execute and deliver the Subsidiary Guaranty (or another guaranty in
substantially similar form, if needed), guaranteeing the Obligations of the
Borrower under the Credit Documents and under any Interest Rate Protection
Agreement or Other Hedging Agreement, in each case to the extent that the
entering into such Security Agreement or Subsidiary Guaranty is permitted by the
laws of the respective foreign jurisdiction and with all documents delivered
pursuant to this Section 7.13 to be in form and substance reasonably
satisfactory to the Agent.
7.14 Contributions; Payments. Holdings will contribute as an equity
contribution to the capital of WR Acquisition, and WR Acquisition will
contribute as an equity contribution to the capital of the Borrower, in each
case upon its receipt thereof, any cash proceeds (net of reasonable costs
associated with any sale or issuance) received by Holdings and/or WR Acquisition
from any asset sale, any incurrence of Indebtedness, any Recovery Event, any
sale or issuance of its preferred or common equity or any cash capital
contributions received by Holdings and/or WR Acquisition.
7.15 Senior Subordinated Note Repurchases. The Borrower will, within
120 days following the Initial Borrowing Date, repurchase or redeem up to
$70,000,000 in aggregate principal amount of Senior Subordinated Notes pursuant
to Section 8.13(i) with a portion of the proceeds of the IPO.
SECTION 8. Negative Covenants. Holdings, WR Acquisition and the
Borrower hereby covenant and agree that as of the Effective Date and thereafter
for so long
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as this Agreement is in effect and until the Total Revolving Loan Commitment has
terminated, no Letters of Credit (other than Letters of Credit, together with
all Fees that have accrued and will accrue thereon through the stated
termination date of such Letters of Credit, which have been supported in a
manner satisfactory to the Letter of Credit Issuer in its sole and absolute
discretion) or Notes are outstanding and the Loans, together with interest, Fees
and all other Obligations (other than any indemnities described in Section 12.13
which are not then due and payable) incurred hereunder, are paid in full:
1.081 Changes in Business. (a) Holdings and its Subsidiaries will not
engage in any business other than the businesses in which Holdings and its
Subsidiaries are engaged in as of the Effective Date and activities directly
related thereto, and similar or related businesses.
(b) Notwithstanding the foregoing, Holdings will not engage in any
business other than its ownership of the capital stock of WR Acquisition and
those obligations of officers and employees of Holdings permitted by Section
8.06(f) and having those liabilities which it is responsible for under this
Agreement, the other Documents to which it is a party and under any Permitted
Holdings PIK Securities issued by it, provided that Holdings may engage in those
activities that are incidental to (x) the maintenance of its corporate existence
in compliance with applicable law, (y) legal, tax and accounting matters in
connection with any of the foregoing activities and (z) the entering into, and
performing its obligations under, this Agreement and the other Documents to
which it is a party.
(c) Notwithstanding the foregoing, WR Acquisition will not engage
in any business other than its ownership of the capital stock of the Borrower
and having those liabilities which it is responsible for under this Agreement
and the other Documents to which it is a party, provided that WR Acquisition may
engage in those activities that are incidental to (x) the maintenance of its
corporate existence in compliance with applicable law and (y) the entering into,
and performing its obligations under, this Agreement and the other Documents to
which it is a party.
(d) Notwithstanding the foregoing, the Receivables Entity will not
engage in any business other than purchasing accounts receivable and related
assets from the Designated Credit Parties and the related transactions pursuant
to the terms of the Accounts Receivable Facility Documents.
1.082 Consolidation, Merger, Sale or Purchase of Assets, etc.
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets (other than inventory in the ordinary course of business), or enter into
any partnerships, joint ventures or sale-leaseback transactions, or purchase or
otherwise
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acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of business) of any Person, except that the
following shall be permitted:
(a) the Borrower and its Subsidiaries may, as lessee or lessor,
enter into operating leases in the ordinary course of business with respect
to real or personal property;
(b) Capital Expenditures by the Borrower and its Subsidiaries to
the extent not in violation of Section 8.09;
(c) the advances, investments and loans permitted pursuant to
Section 8.06;
(d) the Borrower and its Subsidiaries may sell assets, provided
that (x) the aggregate sale proceeds from all assets subject to such sales
pursuant to this clause (d) shall not exceed $10,000,000 in any fiscal year
of the Borrower, (y) each such asset sale is for at least 85% cash and at
fair market value (as determined in good faith by the Borrower) and (z) the
Net Cash Proceeds therefrom are either applied to reduce the Total
Revolving Loan Commitment as provided in Section 3.03(c) or reinvested in
replacement assets to the extent permitted by Section 3.03(c);
(e) the Borrower and its Subsidiaries may sell other assets,
provided that the aggregate sale proceeds from all such asset sales
pursuant to this clause (e) does not exceed $500,000 in any fiscal year of
the Borrower;
(f) the Borrower and its Subsidiaries may sell or discount, in each
case without recourse, accounts receivable arising in the ordinary course
of business, but only in connection with the compromise or collection
thereof;
(g) the Borrower and its Subsidiaries may sell or exchange specific
items of equipment, so long as the purpose of each such sale or exchange is
to acquire (and results within 90 days of such sale or exchange in the
acquisition of) replacement items of equipment which are the functional
equivalent of the item of equipment so sold or exchanged;
(h) the Borrower and its Subsidiaries may, in the ordinary course
of business, license, as licensor or licensee, patents, trademarks,
copyrights and know-how to third Persons and to one another, so long as any
such license by the Borrower or its Subsidiaries in its capacity as
licensor is permitted to be assigned pursuant to the Security Agreement (to
the extent that a security interest in such patents, trademarks, copyrights
and know-how is granted thereunder) and does not
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otherwise prohibit the granting of a Lien by the Borrower or any of its
Subsidiaries pursuant to the Security Agreement in the intellectual
property covered by such license;
(i) any Foreign Subsidiary of the Borrower may be merged with and
into, or be dissolved or liquidated into, or transfer any of its assets to,
any Wholly-Owned Foreign Subsidiary of the Borrower (other than the
Receivables Entity) so long as (i) such Wholly-Owned Foreign Subsidiary is
the surviving corporation of any such merger, dissolution or liquidation
and (ii) in each case at least 65% of the total combined voting power of
all classes of capital stock of all first-tier Foreign Subsidiaries of the
Borrower are pledged pursuant to the Pledge Agreement;
(j) the assets of any Foreign Subsidiary of the Borrower may be
transferred to the Borrower or any of its Domestic Subsidiaries (other than
the Receivables Entity), and any Foreign Subsidiary of the Borrower may be
merged with and into, or be dissolved or liquidated into, the Borrower or
any of its Domestic Subsidiaries (other than the Receivables Entity) so
long as the Borrower or such Domestic Subsidiary is the surviving
corporation of any such merger, dissolution or liquidation;
(k) the Borrower or any of its Domestic Subsidiaries (other than
the Receivables Entity) may transfer to one or more Wholly-Owned Foreign
Subsidiaries of the Borrower those assets theretofore transferred to the
Borrower or such Domestic Subsidiary by a Foreign Subsidiary (whether by
merger, liquidation, dissolution or otherwise) pursuant to clause (j) of
this Section 8.02;
(l) the Borrower and its Domestic Subsidiaries (other than the
Receivables Entity) may sell or otherwise transfer inventory between or
among themselves in the ordinary course of business for resale by the
Borrower or such Domestic Subsidiaries, as the case may be, so long as the
security interest granted to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Security Agreement in the inventory so
transferred shall remain in full force and effect and perfected (to at
least the same extent as in effect immediately prior to such transfer);
(m) the Borrower and its Domestic Subsidiaries (other than the
Receivables Entity) may sell or otherwise transfer accounts receivable
between or among themselves in the ordinary course of business so long as
the security interest granted to the Collateral Agent for the benefit of
the Secured Creditors pursuant to the Security Agreement in the accounts
receivable so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to
such transfer);
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(n) any Domestic Subsidiary of the Borrower may transfer assets
(other than accounts receivable and inventory) to the Borrower or to any
other Domestic Subsidiary of the Borrower (other than the Receivables
Entity) so long as the security interests granted to the Collateral Agent
for the benefit of the Secured Creditors pursuant to the Security Documents
in the assets so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to
such transfer);
(o) any Domestic Subsidiary of the Borrower (other than the
Receivables Entity) may merge with and into, or be dissolved or liquidated
into, the Borrower so long as (i) the Borrower is the surviving corporation
of any such merger, dissolution or liquidation and (ii) the security
interests granted to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Security Documents in the assets of such Domestic
Subsidiary shall remain in full force and effect and perfected (to at least
the same extent as in effect immediately prior to such merger, dissolution
or liquidation);
(p) any Domestic Subsidiary of the Borrower (other than the
Receivables Entity) may merge with and into, or be dissolved or liquidated
into, any Wholly-Owned Domestic Subsidiary of the Borrower (other than the
Receivables Entity) so long as (i) such Wholly-Owned Domestic Subsidiary is
the surviving corporation of any such merger, dissolution or liquidation
and (ii) the security interests granted to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Security Documents in the
assets of such Domestic Subsidiary shall remain in full force and effect
and perfected (to at least the same extent as in effect immediately prior
to such merger, dissolution or liquidation);
(q) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower and its Wholly-Owned Subsidiaries may
acquire assets or the capital stock of any Person (any such acquisition
permitted by this clause (q), a "Permitted Acquisition"), provided, that
(i) such Person (or the assets so acquired) was, immediately prior to such
acquisition, engaged (or used) primarily in the business permitted pursuant
to Section 8.01(a), (ii) if such acquisition is structured as a stock
acquisition, then either (A) the Person so acquired becomes a Wholly-Owned
Subsidiary of the Borrower or (B) such Person is merged with and into the
Borrower or a Wholly-Owned Subsidiary of the Borrower (with the Borrower or
such Wholly-Owned Subsidiary being the surviving corporation of such
merger), and in any case, all of the provisions of Section 8.15 have been
complied with in respect of such Person and (iii) any Liens or Indebtedness
assumed or issued in connection with such acquisition are otherwise
permitted under Section 8.03 or 8.04, as the case may be; provided further,
that (x) any such Permitted Acquisition involving an expenditure
(including, without limitation, any earn-out, non-compete or deferred
compensation arrangements and the value of any Permitted Holdings
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PIK Securities) by the Borrower and its Wholly-Owned Subsidiaries in excess
of $25,000,000 and less than or equal to $50,000,000 shall not be
consummated without the prior written consent of the Required Banks unless
the Pro Forma Leverage Ratio on the date of such acquisition is less than
3.00:1.00 and (y) any such Permitted Acquisition involv ing an expenditure
(including, without limitation, any earn-out, non-compete or deferred
compensation arrangements and the value of any Permitted Holdings PIK
Securities) by the Borrower and its Wholly-Owned Subsidiaries in excess of
$50,000,000 shall not be consummated without the prior written consent of
the Required Banks;
(r) the Designated Credit Parties may transfer and reacquire
accounts receivable and related assets to and from the Receivables Entity
pursuant to, and in accordance with the terms of, the Accounts Receivable
Facility Document;
(s) the Receivables Entity may transfer and reacquire accounts
receivable and related assets (to the extent acquired from Designated
Credit Parties as provided in clause (r) above) pursuant to, and in
accordance with the terms of, the Accounts Receivable Facility Documents;
(t) leases or subleases granted by the Borrower or any of its
Subsidiaries to third Persons not interfering in any material respect with
the business of the Borrower or any of its Subsidiaries;
(u) the Permitted Sale-Leaseback Transactions shall be permitted so
long as (i) the Net Cash Proceeds therefrom are either applied to reduce
the Total Revolving Loan Commitment as provided in Section 3.03(c) or
reinvested in replacement assets to the extent permitted by Section 3.03(c)
and (ii) the lease obligations created thereby are otherwise permitted
under this Agreement;
(v) the Borrower may redeem or repurchase outstanding Senior
Subordinated Notes to the extent permitted by Section 8.13(i);
(w) the Borrower and its Subsidiaries may, in the ordinary course
of business, sell, transfer or otherwise dispose of patents, trademarks,
copyrights and know-how which, in the reasonable judgment of the Borrower
or such Subsidiary, are determined to be uneconomical, negligible or
obsolete in the conduct of business;
(x) Niagara Envelope may purchase the inventory of the joint
venture which it is a party to on the Initial Borrowing Date pursuant to,
and on the terms and conditions set forth in, the arrangements therefor as
in effect on the Initial Borrowing Date; and
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(y) WR Acquisition may merge with and into, or be dissolved or
liquidated into, the Borrower so long as (i) the Borrower is the surviving
corporation of any such merger, dissolution or liquidation and (ii) the
security interests granted to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Security Documents in the assets of WR
Acquisition shall remain in full force and effect and perfected (to at
least the same extent as in effect immediately prior to such merger,
dissolution or liquidation).
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.02, such Collateral
in each case shall be sold or otherwise disposed of free and clear of the Liens
created by the Security Documents and the Agent shall take such actions
(including, without limitation, directing the Collateral Agent to take such
actions) as are appropriate in connection therewith.
1.083 Liens. Holdings will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to Holdings or any of its Subsidiaries) or assign any right to receive
income, except for the following (collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges
or levies not yet due or Liens for taxes, assessments or governmental
charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves have been established in accordance
with GAAP;
(b) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law which were incurred in the ordinary
course of business and which have not arisen to secure Indebtedness for
borrowed money, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and which either (x) do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any of its
Subsidiaries or (y) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the Security
Documents;
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(d) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Annex IX, without
giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09;
(f) Liens incurred or deposits made (x) in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money); and (y) to
secure the performance of leases of Real Property, to the extent incurred
or made in the ordinary course of business consistent with past practices;
(g) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of the Borrower or
any of its Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by this Agreement;
(j) any interest or title of a licensor, lessor or sublessor under
any license or lease permitted by this Agreement;
(k) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(e);
(l) Permitted Encumbrances;
(m) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective
purchase) of assets acquired after the Initial Borrowing Date, provided
that (i) any such Liens attach only to the assets so purchased, (ii) the
Indebtedness secured by any such Lien does not exceed 100%, nor is less
than 70%, of the lesser of the fair market value or the purchase price of
the property being purchased at the time of the incurrence of such
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Indebtedness and (iii) the Indebtedness secured thereby is permitted to be
incurred pursuant to Section 8.04(e);
(n) Liens (i) granted by the Designated Credit Parties in favor of
the Receivables Entity consisting of UCC-1 financing statements filed to
effect the sale of accounts receivable and related assets pursuant to the
Accounts Receivable Facility Documents, (ii) granted by the Receivables
Entity on those accounts receivable and related assets acquired by it
pursuant to the Accounts Receivable Facility Documents to the extent that
such Liens are created by the Accounts Receivable Facility Documents and
(iii) consisting of the right of setoff granted to any financial
institution acting as a lockbox bank in connection with the Accounts
Receivable Facility;
(o) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, provided that (i) any Indebtedness that is secured by such
Liens is permitted to exist under Section 8.04(k), and (ii) such Liens are
not incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of the
Borrower or any of its Subsidiaries; and
(p) additional Liens incurred by the Borrower and its Subsidiaries
so long as the aggregate value of the property subject to such Liens, and
the Indebtedness and other obligations secured thereby, do not exceed
$1,000,000.
1.084 Indebtedness. Holdings will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Existing Indebtedness outstanding on the Initial Borrowing Date
and listed on Annex VII, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(c) Indebtedness of the Borrower and the Subsidiary Guarantors
incurred under the Senior Subordinated Notes and the other Senior
Subordinated Note Documents in an aggregate principal amount not to exceed
$200,000,000 (as reduced by any repayments or prepayments of principal
thereof);
(d) Indebtedness under Interest Rate Protection Agreements entered
into to protect the Borrower against fluctuations in interest rates in
respect of the Obligations;
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(e) Capitalized Lease Obligations and Indebtedness of the Borrower
and its Subsidiaries incurred pursuant to purchase money Liens permitted
under Section 8.03(m), provided, that (i) all such Capitalized Lease
Obligations are permitted under Section 8.09, and (ii) the sum of (x) the
aggregate Capitalized Lease Obligations outstanding at any time plus (y)
the aggregate principal amount of such purchase money Indebtedness
outstanding at such time (A) during the period (taken as one accounting
period) from the Effective Date and ending on December 31, 1996, shall not
exceed $16,000,000 and (B) during any fiscal year of the Borrower
thereafter shall not exceed the amount set forth opposite such fiscal year
as set forth below:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
December 31, 1997 $16,000,000
December 31, 1998 $17,000,000
December 31, 1999 $18,000,000
December 31, 2000 $19,000,000
December 31, 2001 $20,000,000
</TABLE>
(f) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.06(h);
(g) Indebtedness of Holdings under the Shareholder Subordinated
Notes;
(h) Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values in connection with the
Borrower's or any of its Subsidiaries' operations so long as management of
the Borrower or such Subsidiary, as the case may be, has determined that
the entering into of such Other Hedging Agreements are bona fide hedging
activities;
(i) Indebtedness of Foreign Subsidiaries to the Borrower or any of
its Domestic Subsidiaries (other than the Receivables Entity) as a result
of any investment made pursuant to Section 8.06(m);
(j) Indebtedness consisting of guaranties (x) by the Borrower of
Indebtedness, leases and other contractual obligations permitted to be
incurred by Domestic Subsidiaries of the Borrower (other than the
Receivables Entity), (y) by Domestic Subsidiaries of the Borrower (other
than the Receivables Entity) of Indebtedness, leases and other contractual
obligations permitted to be incurred by the Borrower or other Domestic
Subsidiaries of the Borrower and (z) by Foreign Subsidiaries of the
Borrower of Indebtedness, leases and other contractual obligations
permitted to be incurred by other Foreign Subsidiaries of the Borrower;
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(k) Indebtedness of a Subsidiary acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition
of an asset securing such Indebtedness), provided that (i) such
Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such Permitted Acquisition, (ii) such Indebtedness does
not constitute debt for borrowed money (other than debt for borrowed money
incurred in connection with industrial revenue or industrial development
bond financings), it being understood and agreed that Capitalized Lease
Obligations and purchase money Indebtedness shall not constitute debt for
borrowed money for purposes of this clause (k), and (iii) at the time of
such Permitted Acquisition such Indebtedness does not exceed 10% of the
total value of the assets of the Subsidiary so acquired, or of the asset so
acquired, as the case may be;
(l) Indebtedness of the Receivables Entity under the Accounts
Receivable Facility Documents;
(m) Indebtedness consisting of a guaranty by the Borrower of the
obligations of the other Designated Credit Parties under the Accounts
Receivable Facility Documents;
(n) Indebtedness of Foreign Subsidiaries of the Borrower under
lines of credit extended by third Persons to any such Foreign Subsidiary
the proceeds of which Indebtedness are to be used for such Foreign
Subsidiary's working capital purposes, provided that the aggregate
principal amount of all such Indebtedness outstanding at any time for all
Foreign Subsidiaries shall not exceed $5,000,000;
(o) Indebtedness of Holdings incurred under Permitted Holdings PIK
Securities, provided that the aggregate outstanding principal amount of
Permitted Holdings PIK Securities constituting Indebtedness, when added to
the liquidation preference of Permitted Holdings PIK Securities
constituting preferred stock, shall not exceed $10,000,000 (plus the amount
of interest or accrued dividends, as the case may be, on such Permitted
Holdings PIK Securities paid in kind or through accretion); and
(p) additional Indebtedness of the Borrower and its Subsidiaries
not otherwise permitted hereunder not exceeding $10,000,000 in aggregate
principal amount at any time outstanding.
1.085 Designated Senior Debt. Holdings will not, and will not permit
any of its Subsidiaries to, designate any Indebtedness (other than the
Obligations) as "Designated Senior Debt" for purposes of, and as defined in, the
Senior Subordinated Note Indenture.
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1.086 Advances, Investments and Loans. Holdings will not, and will
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any Person, or
purchase or own a futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or hold any cash, Cash Equivalents or Foreign Cash
Equivalents, except:
(a) the Borrower and its Subsidiaries may invest in cash and Cash
Equivalents, and Foreign Subsidiaries of the Borrower also may invest in
Foreign Cash Equivalents;
(b) the Borrower and its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms (including the dating of receivables) of the Borrower or such
Subsidiary;
(c) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into in compliance
with Section 8.04(d) shall be permitted;
(e) advances, loans and investments in existence on the Initial
Borrowing Date and listed on Annex V shall be permitted, without giving
effect to any additions thereto or replacements thereof (except those
additions or replacements which are existing obligations as of the Initial
Borrowing Date but only to the extent such further obligations are
described on such Annex V);
(f) (i) Holdings may acquire and hold obligations of one or more
officers or other employees of Holdings or its Subsidiaries in connection
with such officers' or employees' acquisition of shares of Holdings Common
Stock so long as no cash is paid by Holdings or any of its Subsidiaries in
connection with the acquisition of any such obligations and (ii) the
Borrower may lend up to $5,000,000 in aggregate outstanding principal
amount to officers and employees of Holdings and its Subsidiaries on or
after the date on which any such officers and employees exercise their
options to purchase capital stock of Holdings so long as the proceeds of
such loans are promptly used by such officers and employees to pay taxes
payable by them as a result of such exercise;
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(g) deposits made in the ordinary course of business consistent
with past practices to secure the performance of leases shall be permitted;
(h) the Borrower may make intercompany loans and advances to any of
its Subsidiaries (other than the Receivables Entity) and any Subsidiary of
the Borrower (other than the Receivables Entity) may make intercompany
loans and advances to the Borrower or any other Subsidiary of the Borrower
(other than the Receivables Entity) (collectively, "Intercompany Loans"),
provided, that (w) at no time shall the aggregate outstanding principal
amount of all Intercompany Loans made pursuant to this clause (h) by the
Borrower and its Domestic Subsidiaries and to Foreign Subsidiaries, when
added to the amount of contributions, capitalizations and forgiveness
theretofore made pursuant to Section 8.06(p), exceed $5,000,000 (determined
without regard to any write-downs or write-offs of such loans and
advances), (x) each Intercompany Loan made by a Foreign Subsidiary to the
Borrower or a Domestic Subsidiary of the Borrower shall contain the
subordination provisions set forth on Exhibit J, (y) each Intercompany Loan
shall be evidenced by an Intercompany Note and (z) each such Intercompany
Note (other than (1) Intercompany Notes issued by Foreign Subsidiaries of
the Borrower to the Borrower or any of its Domestic Subsidiaries and (2)
Intercompany Notes held by Foreign Subsidiaries of the Borrower, in each
case except to the extent provided in Section 7.13) shall be pledged to the
Collateral Agent pursuant to the Pledge Agreement;
(i) loans and advances by the Borrower and its Subsidiaries to
employees of Holdings and its Subsidiaries for moving and travel expenses
and other similar expenses, in each case incurred in the ordinary course of
business, in an aggregate outstanding principal amount not to exceed
$2,500,000 at any time (determined without regard to any write-downs or
write-offs of such loans and advances), shall be permitted;
(j) Other Hedging Agreements entered into in compliance with
Section 8.04(h) shall be permitted;
(k) Permitted Acquisitions shall be permitted;
(l) the Borrower and its Subsidiaries may acquire and hold
promissory notes and/or equity securities issued by the purchaser or
purchasers in connection with the sale of assets to the extent permitted
under Section 8.02(d);
(m) the Borrower and its Subsidiaries may make investments in their
respective Subsidiaries in connection with the transfers of those assets
permitted to be transferred pursuant to Sections 8.02(i), (j) and (k), it
being understood that the Borrower and its Subsidiaries may convert any
investment initially made as an
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equity investment to intercompany Indebtedness held by the Borrower or such
Subsidiary;
(n) Holdings may make equity contributions to the capital of WR
Acquisition, and WR Acquisition may make equity contributions to the
capital of the Borrower;
(o) the Borrower and its Subsidiaries may make transfers of assets
to their respective Subsidiaries in accordance with Sections 8.02(l), (m)
and (n);
(p) the Borrower and its Domestic Subsidiaries (other than the
Receivables Entity) may make cash capital contributions to Foreign
Subsidiaries of the Borrower, and may capitalize or forgive any
Indebtedness owed to them by a Foreign Subsidiary of the Borrower and
outstanding under clause (h) of this Section 8.06, provided that the
aggregate amount of such contributions, capitalizations and forgiveness,
when added to the aggregate outstanding principal amount of Intercompany
Loans made to Foreign Subsidiaries under such clause (h) (determined
without regard to any write-downs or write-offs thereof), shall not exceed
$5,000,000;
(q) the Borrower may contribute cash to one or more of its
Subsidiaries formed after the Initial Borrowing Date in accordance with
Section 8.15 so long as the aggregate amount of such cash so contributed to
all such Subsidiaries does not exceed $2,000,000;
(r) the Borrower and the other Designated Credit Parties may hold
one or more Receivables Purchase Money Notes issued by the Receivables
Entity and may maintain the Seller Account with the Receivables Entity and
may make extensions of credit to the Receivables Entity pursuant to such
Receivables Purchase Money Notes and Seller Account for the purpose of
enabling the Receivables Entity to purchase accounts receivable pursuant to
the Accounts Receivable Facility Documents so long as (x) such Receivables
Purchase Money Notes have been duly pledged and delivered to the Collateral
Agent pursuant to the Pledge Agreement and (y) the aggregate principal
amount of all such extensions of credit outstanding at any one time does
not exceed $20,000,000 (determined without regard to any write-downs or
write-off thereof);
(s) the Borrower may purchase those shares of capital stock of the
Receivables Entity that are not owned by the Borrower or any of the other
Designated Credit Parties on the Initial Borrowing Date so long as (i) the
Receivables Entity becomes a Wholly-Owned Domestic Subsidiary of the
Borrower as a result thereof and (ii) the aggregate amount expended for
such purchase does not exceed $100,000;
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(t) the Receivables Entity may invest those accounts receivable
purchased from the Designated Credit Parties in the master trust for the
Accounts Receivable Facility pursuant to, and in accordance with the terms
of, the Accounts Receivable Facility Documents; and
(u) in addition to investments permitted by clauses (a) through (t)
of this Section 8.06, the Borrower and its Subsidiaries (other than the
Receivables Entity) may make additional loans, advances and investments to
or in a Person not an Affiliate in an aggregate amount for all loans,
advances and investments made pursuant to this clause (u) (determined
without regard to any write-downs or write-offs thereof), net of cash
repayments of principal in the case of loans and cash equity returns
(whether as a dividend or redemption) in the case of equity investments,
not to exceed $7,500,000 provided, that neither Borrower nor any of its
Subsidiaries may make or own any investment in Margin Stock;
(v) Holdings may purchase shares of Holdings Common Stock and
Additional Permitted Preferred Stock to the extent permitted by Sections
8.07(ii), (iii) and (vi); and
(w) the Borrower may redeem or repurchase outstanding Senior
Subordinated Notes to the extent permitted by Section 8.13(i).
1.087 Dividends, etc. Holdings will not, and will not permit any of
its Subsidiaries to, declare or pay any dividends (other than dividends payable
solely in common stock of Holdings or any such Subsidiary, as the case may be)
or return any capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock, now or here
after outstanding (or any warrants for or options or stock appreciation rights
in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, and Holdings will not permit any of its Subsidiaries to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock of Holdings or any other Subsidiary, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(i) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) (a) Holdings may redeem or purchase shares of Holdings Common
Stock or Additional Permitted Preferred Stock or options to purchase
Holdings Common Stock or Additional Permitted Preferred Stock, as the case
may be, held by former employees (or their heirs) of Holdings or any of its
Subsidiaries
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following the termination of their employment, provided that (w) the only
consideration paid by Holdings in respect of such redemptions and/or
purchases shall be cash and Shareholder Subordinated Notes, (x) the sum of
(I) the aggregate amount paid by Holdings in cash in respect of all such
redemptions and/or purchases plus (II) the aggregate amount of all
principal and interest payments made on Shareholder Subordinated Notes
shall not exceed $2,000,000 in any fiscal year of Holdings, provided that
such amount shall be increased by an amount (not to exceed $5,000,000 for
purposes of this clause (ii)) equal to the proceeds received by Holdings
after the Initial Borrowing Date from the sale or issuance of Holdings
Common Stock or Additional Permitted Preferred Stock, as the case may be,
to management of Holdings or any of its Subsidiaries and (y) at the time of
any cash payment permitted to be made pursuant to this Section 8.07(ii),
including any cash payment under a Shareholder Subordinated Note, no
Default or Event of Default shall then exist or result therefrom and (b) so
long as no Default or Event of Default then exists or would result
therefrom, the Borrower may pay cash Dividends to WR Acquisition, which in
turn shall immediately use such cash proceeds to pay cash Dividends to
Holdings so long as the cash proceeds thereof are promptly used by Holdings
for the purposes described in clause (ii)(a) of this Section 8.07;
(iii) (a) Holdings may redeem or purchase shares of Holdings Common
Stock or Additional Permitted Preferred Stock or options to purchase
Holdings Common Stock or Additional Permitted Preferred Stock, as the case
may be, held by the two individuals holding the offices of Chief Executive
Officer and President of the Borrower as of the Effective Date following
the death of such individuals, provided that (x) the aggregate amount paid
by Holdings in respect of all such redemptions and/or purchases for each
such individual does not exceed $3,000,000 and (y) at the time of any
payment permitted to be made pursuant to this Section 8.07(iii), no Default
or Event of Default shall then exist or result therefrom and (b) so long as
no Default or Event of Default then exists or would result therefrom, the
Borrower may pay cash Dividends to WR Acquisition, which in turn shall
immediately use such cash proceeds to pay cash Dividends to Holdings so
long as the cash proceeds thereof are promptly used by Holdings for the
purposes described in clause (iii)(a) of this Section 8.07;
(iv) the Borrower may pay cash Dividends to WR Acquisition, which in
turn shall immediately use such cash proceeds to pay cash Dividends to
Holdings so long as the cash proceeds thereof are promptly used by Holdings
to pay operating expenses in the ordinary course of business (including,
without limitation, professional fees and expenses) and other similar
corporate overhead costs and expenses, provided that the aggregate amount
of cash Dividends paid pursuant to this clause (iv) shall at no time during
any fiscal year of the Borrower exceed $1,000,000;
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(v) the Borrower may pay cash Dividends to WR Acquisition, which in
turn shall immediately use such cash proceeds to pay cash Dividends to
Holdings in the amounts and at the times of any payment by Holdings in
respect of taxes, provided that (x) the amount of cash Dividends paid
pursuant to this clause (v) to enable Holdings to pay federal income taxes
at any time shall not exceed, when added to the amount of payments made
pursuant to the Holdings Tax Allocation Agreement for such purposes, the
lesser of (A) the amount of such federal income taxes owing by Holdings at
such time for the respective period and (B) the amount of such federal
income taxes that would be owing by the Borrower and its Subsidiaries on a
consolidated basis for such period if determined without regard to
Holdings' ownership of the Borrower and (y) any refunds shall promptly be
returned by Holdings to the Borrower;
(vi) the Borrower may pay cash Dividends to WR Acquisition, which in
turn shall immediately use such cash proceeds to pay cash Dividends to
Holdings, provided that Holdings promptly thereafter uses such cash
proceeds to pay cash Dividends to the holders of its capital stock and/or
to repurchase shares of its capital stock so long as (x) no Default or
Event of Default then exists or would result therefrom and (y) the
aggregate amount of cash Dividends paid and/or made pursuant to this clause
(vi) shall not exceed the sum of (1) $5,000,000 plus (2) the Cumulative
Income Amount at such time; and
(vii) Holdings may pay regularly scheduled Dividends on the Permitted
Holdings PIK Securities (to the extent issued as preferred stock) pursuant
to the terms thereof solely through the issuance of additional preferred
shares of such Permitted Holdings PIK Securities, provided that in lieu of
issuing additional preferred shares of such Permitted Holdings PIK
Securities as Dividends, Holdings may increase the liquidation preference
of the preferred shares of Permitted Holdings PIK Securities in respect of
which such Dividends have accrued.
1.088 Transactions with Affiliates. Holdings will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than in the ordinary course of business
and on terms and conditions substantially as favorable to Holdings or such
Subsidiary as would be reasonably expected to be obtainable by Holdings or such
Subsidiary at the time in a comparable arm's-length trans action with a Person
other than an Affiliate; provided, that the following shall in any event be
permitted: (i) the Transaction; (ii) the payment on the Initial Borrowing Date
of one time fees to Bain Capital and/or the Bain Affiliates in an aggregate
amount (for all such Persons taken together) not to exceed $5,000,000 (plus
reasonable out-of-pocket expenses incurred by Bain Capital and/or the Bain
Affiliates in connection with the IPO and performing management services to the
Borrower and its Subsidiaries; (iii) the payment, on a quarterly basis, of
management fees to Bain Capital and/or the Bain Affiliates in an aggregate
amount (for all such Persons taken together) not to exceed $500,000 in any
fiscal
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quarter of the Borrower, provided, that if during any fiscal quarter of the
Borrower a Default or an Event of Default exists, only one-half of such fee for
such fiscal quarter may be paid and the remaining one-half of such fee may
continue to accrue and may be paid at such time as all Defaults and Events of
Default have been cured or waived; (iv) the reimbursement of Bain Capital and/or
the Bain Affiliates for their reasonable out-of-pocket expenses incurred by them
in connection with performing management services to the Borrower and its
Subsidiaries; (v) Holdings and its Domestic Subsidiaries may enter into the
Holdings Tax Allocation Agreement and may make payments thereunder (subject to
the limitations set forth in Section 8.07(v)); (vi) transactions between or
among the Borrower and its Subsidiaries to the extent that such transactions are
otherwise permitted under this Agreement; (vii) the transactions contemplated by
the Accounts Receivable Facility Documents; and (viii) the payment by the
Borrower, in connection with any Permitted Acquisition, divestiture or financing
transaction that is consummated, of a transaction fee to Bain Capital and/or the
Bain Affiliates in an aggregate amount (for all such Persons taken together) not
to exceed 1% of the aggregate value of any such transaction.
1.089 Capital Expenditures. (a) Holdings will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
(x) during the period (taken as one accounting period) commencing on the Initial
Borrowing Date and ending on December 31, 1996, the Borrower and its
Subsidiaries may make Capital Expenditures so long as the aggregate amount does
not exceed $15,000,000 during such period and (y) during any fiscal year set
forth below (taken as one accounting period), the Borrower and its Subsidiaries
may make Capital Expenditures so long as the aggregate amount of such Capital
Expenditures does not exceed in any fiscal year set forth below the amount set
forth opposite such fiscal year below:
Fiscal Year Ending
------------------
Amount
------
December 31, 1997 $21,000,000
December 31, 1998 $22,000,000
December 31, 1999 $23,000,000
December 31, 2000 $24,000,000
December 31, 2001 $25,000,000
(b) In the event that the amount of Capital Expenditures permitted
to be made by the Borrower and its Subsidiaries pursuant to clause (a) above in
any fiscal year (before giving effect to any increase in such permitted
expenditure amount pursuant to this
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clause (b)) is greater than the amount of such Capital Expenditures made by the
Borrower and its Subsidiaries during such fiscal year, such excess (the
"Rollover Amount") may be carried forward and utilized to make Capital
Expenditures in succeeding fiscal years, provided that in no event shall the
aggregate amount of Capital Expenditures made by the Borrower and its
Subsidiaries during any fiscal year pursuant to Section 8.09(a) exceed 125% of
the amount set forth opposite such fiscal year as set forth in the table in such
Section 8.09(a).
(c) The Borrower and its Subsidiaries may make additional Capital
Expenditures with the Net Cash Proceeds of Asset Sales to the extent such
proceeds are not required to be applied to reduce the Total Revolving Loan
Commitment pursuant to Section 3.03(c) and such proceeds are reinvested as
required by Section 3.03(c).
(d) The Borrower and its Subsidiaries may make additional Capital
Expenditures with the insurance proceeds received by the Borrower or any of its
Subsidiaries from any Recovery Event so long as such Capital Expenditures are to
replace or restore any properties or assets in respect of which such proceeds
were paid within one year following the date of the receipt of such insurance
proceeds to the extent such insurance proceeds are not required to be applied to
reduce the Total Revolving Loan Commitment pursuant to Section 3.03(f).
(e) The Borrower and its Wholly-Owned Subsidiaries may make
additional Capital Expenditures constituting Permitted Acquisitions.
(f) The Borrower and its Subsidiaries may make additional Capital
Expenditures in an amount equal to the Cumulative Income Amount at such time.
8.10 Minimum Consolidated EBITDA. The Borrower will not permit
Consolidated EBITDA for any Test Period to be less than $75,000,000.
8.11 Interest Coverage Ratio. The Borrower will not permit the
Interest Coverage Ratio for any Test Period to be less than 2.50:1.00.
8.12 Leverage Ratio. The Borrower will not permit the Leverage
Ratio at any time to be more than 4.00:1.00.
8.13 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements; Issuances of Capital Stock; etc. Holdings will not, and will
not permit any of its Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of
(including,
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without limitation, by way of depositing with the trustee with respect
thereto or any other Person money or securities before due for the purpose
of paying when due) any Senior Subordinated Note or any Permitted Holdings
PIK Security; provided, that the Borrower may voluntarily or optionally
repurchase or redeem up to $70,000,000 in aggregate principal amount of
outstanding Senior Subordinated Notes pursuant to Section 6(b) of the
Senior Subordinated Notes with the proceeds of the IPO and (ii) the
Borrower may voluntarily or optionally repurchase or redeem additional
outstanding Senior Subordinated Notes so long as (x) no Default or Event of
Default then exists or would result therefrom and (y) the Modified Leverage
Ratio at the time of any such repurchase or redemption and after giving
effect to any Loans incurred to consummate any such repurchase or
redemption is less than 2.50:1.00.
(ii) make (or give any notice in respect of) any prepayment or
redemption of any Senior Subordinated Note as a result of any asset sale,
change of control or similar event (including, without limitation, by way
of depositing with the trustee with respect thereto or any other Person
money or securities before due for the purpose of paying when due any
Senior Subordinated Note);
(iii) make (or give any notice in respect of) any principal or
interest payment on, or any redemption or acquisition for value of, any
Shareholder Subordinated Note, except to the extent permitted by Section
8.07(ii);
(iv) amend or modify, or permit the amendment or modification of,
any provision of any Senior Subordinated Note Document;
(v) amend, modify or change in any way adverse to the interests of
the Banks, any Tax Allocation Agreement, its Certificate of Incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) or By-Laws;
(vi) amend or modify, or permit the amendment or modification of,
any provision of an Accounts Receivable Facility Document in a manner
adverse to the interests of the Banks;
(vii) issue any class of capital stock other than non-redeemable
common stock and, in the case of Holdings, Additional Permitted Preferred
Stock or the issuance of Permitted Holdings PIK Securities as consideration
for a Permitted Acquisition; and
(viii) amend or modify, or permit the amendment or modification of,
any provision of any Permitted Holdings PIK Security in any manner
inconsistent with the definition of Permitted Holdings PIK Security.
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Notwithstanding anything to the contrary contained in clause (vi) of
this Section 8.13, any changes to the Accounts Receivable Facility Documents
which relate to the Borrower's or any other Designated Credit Party's servicing
or origination of those accounts receivable and related assets that are
transferred to the Receivables Entity pursuant to the Accounts Receivable
Facility Documents shall be permitted.
8.14 Limitation on Certain Restrictions on Subsidiaries. Holdings
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Holdings or any Subsidiary of
Holdings, or pay any Indebtedness owed to Holdings or a Subsidiary of Holdings,
(b) make loans or advances to Holdings or any of Holdings' Subsidiaries or (c)
transfer any of its prop erties or assets to Holdings or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Borrower or a Subsidiary of the
Borrower, (iv) customary provisions restricting assignment of any licensing
agreement entered into by the Borrower or a Subsidiary of the Borrower in the
ordinary course of business, (v) the Senior Subordinated Note Documents, (vi)
the Existing Indebtedness Agreements, (vii) customary provisions restricting the
transfer of assets subject to Liens permitted under Sections 8.03(k), (m), (n)
and (o) and (vii) the Accounts Receivable Facility Documents.
8.15 Limitation on the Creation of Subsidiaries. Notwithstanding
anything to the contrary contained in this Agreement, Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Initial Borrowing Date any Subsidiary; provided that, (a) the Borrower and
its Wholly-Owned Subsidiaries (other than the Receivable Entity) shall be
permitted to establish or create (x) Subsidiaries as a result of investments
made pursuant to Section 8.06(u) and (y) Wholly-Owned Subsidiaries so long as,
in each case, (i) at least 15 days' prior written notice thereof is given to the
Agent (or such shorter period of time as is acceptable to the Agent), (ii) the
capital stock of such new Subsidiary is promptly pledged pursuant to, and to the
extent required by, this Agreement and the Pledge Agreement and the
certificates, if any, representing such stock, together with stock powers duly
executed in blank, are delivered to the Collateral Agent, (iii) such new
Subsidiary (other than a Foreign Subsidiary except to the extent otherwise
required pursuant to Section 7.13) promptly executes a counterpart of the
Subsidiary Guaranty, the Pledge Agreement and the Security Agreement, and (iv)
to the extent requested by the Agent or the Required Banks, takes all actions
required pursuant to Section 7.11 and (b) the Receivables Entity may become a
Subsidiary of the Borrower. In addition, each new Subsidiary (other than the
Receivable Entity) that is required to execute any Credit Document shall execute
and deliver, or cause to be executed and delivered, all other relevant
documentation of the type described in Section 5 as such new Subsidiary would
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have had to deliver if such new Subsidiary were a Credit Party on the Initial
Borrowing Date.
SECTION 9. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
1.091 Payments. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more days, in the payment when due of any Unpaid Drawing,
any interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document;
1.092 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made; or
1.093 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.11, 7.14, 7.15 or 8, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 9.01, 9.02 or clause (a) of this Section 9.03) contained in this
Agreement and such default shall continue unremedied for a period of at least 30
days after notice to the defaulting party by the Agent or the Required Banks; or
1.094 Default Under Other Agreements. (a) Holdings or any of its
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which Indebtedness was created or (ii) default in
the observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause any such Indebtedness to become due prior to its
stated maturity; or (b) any Indebtedness (other than the Obligations) of
Holdings or any of its Subsidiaries shall be declared to be due and payable, or
shall be required to be prepaid other than by a regularly scheduled required
prepayment or as a mandatory prepayment (unless such required prepayment or
mandatory prepayment results from a default thereunder or an event of the type
that constitutes an Event of Default), prior to the stated maturity thereof;
provided, that it shall not constitute an Event of Default pursuant to clause
(a) or (b) of this Section 9.04 unless the principal amount of any one issue of
such Indebtedness, or the aggregate amount of all such Indebtedness referred to
in clauses (a) and (b) above, exceeds $5,000,000 at any one time; or
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1.095 Bankruptcy, etc. Holdings or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Holdings or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of Holdings or any of its
Subsidiaries; or Holdings or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
its Subsidiaries; or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Holdings or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
1.096 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is likely to be terminated
or the subject of termination proceedings under ERISA, any Plan shall have an
Unfunded Current Liability, a contribution required to be made to a Plan or a
Foreign Pension Plan has not been timely made, Holdings or any Subsidiary of
Holdings or any ERISA Affiliate has incurred or is likely to incur a liability
to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or
4980 of the Code, or Holdings or any Subsidiary of Holdings has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) which provide benefits to retired
employees and other former employees (other than as required by Section 601 of
ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA)
or Foreign Pension Plans; (b) there shall result from any such event or events
the imposition of a lien, the granting of a security interest, or a liability or
a material risk of incurring a liability; and (c) which lien, security interest
or liability which arises from such event or events will have a Material Adverse
Effect; or
1.097 Security Documents. (a) Except in each case to the extent
resulting from the failure of the Collateral Agent to retain possession of the
applicable Pledged Securities, any Security Document shall cease to be in full
force and effect, or shall cease to give the Collateral Agent the Liens, rights,
powers and privileges purported to be created
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thereby in favor of the Collateral Agent, or (b) any Credit Party shall default
in the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any such Security Document and such
default shall continue beyond any cure or grace period specifically applicable
thereto pursuant to the terms of any such Security Document; or
1.098 Guaranties. The Guaranties or any provision thereof shall cease
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations
under any Guaranty or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any Guaranty; or
1.099 Judgments. One or more judgments or decrees shall be entered
against Holdings or any of its Subsidiaries involving a liability (to the extent
not paid or not fully covered by insurance) in excess of $5,000,000 for all such
judgments and decrees and all such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or
9.10 Ownership. A Change of Control Event shall have occurred; or
9.11 Accounts Receivable Facility. An early amortization event
shall occur under the Accounts Receivable Facility Documents;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against any Guarantor or the Borrower, except as otherwise
specifically provided for in this Agreement (provided, that if an Event of
Default specified in Section 9.05 shall occur with respect to the Borrower, the
result which would occur upon the giving of written notice by the Agent as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Revolving Loan Commitment
terminated, whereupon the Revolving Loan Commitment of each Bank shall forthwith
terminate immediately and any Commitment Fees shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans and all Obligations owing hereunder
(including Unpaid Drawings) to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; (iii) enforce, as
Collateral Agent (or direct the Collateral Agent to enforce), any or all of the
Liens and security interests created pursuant to the Security Documents; (iv)
terminate any Letter of Credit which may be terminated in accordance with its
terms; and (v) direct the Borrower to pay (and the Borrower hereby agrees upon
receipt of such notice, or upon the occurrence of any Event of Default specified
in Section 9.05, to pay) to the Collateral Agent at the Payment
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Office such additional amounts of cash, to be held as security for the
Borrower's reimbursement obligations in respect of Letters of Credit then
outstanding, equal to the aggregate Stated Amount of all Letters of Credit then
outstanding.
SECTION 10. Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Accounts Receivable Facility" shall mean the Series 1996-1 Supplement
to Pooling and Servicing Agreement, dated as of May 24, 1996, among the
Receivables Entity, as transferor, the Borrower, as servicer, and Manufacturers
and Traders Trust Company, as trustee, as the same may be amended, modified,
supplemented, increased, refinanced or replaced from time to time.
"Accounts Receivable Facility Documents" shall mean the Accounts
Receivable Facility Purchase Agreement, the Certificate Purchase Agreement
(Series 1996-1 Class A), the Certificate Purchase Agreement (Series 1996-1 Class
B), the Accounts Receivable Facility Pooling and Servicing Agreement and each of
the other documents and agreements entered into in connection therewith,
including all documents and agreements relating to the issuance, funding and/or
purchase of Investor Certificates and Purchased Interests, in each case as such
documents and agreements may be amended, modified, supplemented, refinanced or
replaced from time to time.
"Accounts Receivable Facility Pooling and Servicing Agreement" shall
mean the Pooling and Servicing Agreement, dated as of May 24, 1996, among the
Receivables Entity, as transferor, the Borrower, as servicer, and Manufacturers
and Traders Trust Company, as trustee, as the same may be amended, modified,
supplemented, refinanced or replaced from time to time.
"Accounts Receivable Facility Purchase Agreement" shall mean the
Receivables Purchase Agreement, dated as of May 24, 1996, among the Borrower and
the other Designated Credit Parties, as sellers, and the Receivables Entity, as
buyer, as the same may be amended, modified, supplemented, refinanced or
replaced from time to time.
"Acquired Entity or Business" shall have the meaning provided in the
definition of Consolidated Net Income.
"Additional Permitted Preferred Stock" shall mean preferred stock of
Holdings the terms of which shall be required to be reasonably acceptable to the
Agent.
"Additional Security Documents" shall have the meaning provided in
Section 7.11.
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"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by the Agent, by (y) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements as
specified in Regulation D applicable on such day to a three-month certificate of
deposit of a member bank of the Federal Reserve System in excess of $100,000
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves), plus (2) the then daily net annual assessment rate as
estimated by the Agent for determining the current annual assessment payable by
BTCo to the Federal Deposit Insurance Corporation for insuring three month
certificates of deposit.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise, it being understood that the
Receivables Entity shall not be an Affiliate of Holdings or any of its
Subsidiaries until such time as the Borrower and its Subsidiaries own 100% of
the capital stock of the Receivables Entity.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.10.
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall mean a percentage per annum equal
to .75%, less the then applicable Interest Reduction Discount, if any, provided
that in no event shall the Applicable Base Rate Margin be less than 0%.
"Applicable Commitment Fee Percentage" shall mean a percentage per
annum equal to .50%, provided, that (i) for the period from the Effective Date
through but not including the first day of the first Margin Reduction Period the
Applicable Commitment
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Fee Percentage shall be .45% and (ii) from and after any Start Date to and
including the corresponding End Date, the Applicable Commitment Fee Percentage
shall be the respective percentage per annum set forth in clause (A), (B), (C)
or (D) below if, but only if, as of the Test Date for such Start Date the
applicable conditions set forth in clause (A), (B), (C) or (D) below, as the
case may be, are met:
(A) .45% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 3.5:1.0 and none of the conditions set forth in clause (B), (C)
or (D) below are satisfied;
(B) .40% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 3.0:1.0 and neither of the conditions set forth in clause (C) or
(D) below, as the case may be, are satisfied;
(C) .35% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 2.5:1.0 and the condition set forth in clause (D) below is not
met; or
(D) .30% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 2.0:1.0.
Notwithstanding anything to the contrary contained above in this definition, the
Applicable Commitment Fee Percentage shall be .50% at all times when an Event of
Default shall exist.
"Applicable Eurodollar Margin" shall mean a percentage per annum equal
to 1.75%, less the then applicable Interest Reduction Discount, if any.
"Asset Sale" shall mean any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person other than the Borrower or any
Wholly-Owned Subsidiary of the Borrower of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding the sale by such Person of its own capital stock) of Holdings or such
Subsidiary other than (i) sales, transfers or other dispositions of inventory
made in the ordinary course of business and (ii) sales of assets pursuant to
Sections 8.02 (e), (f), (g), (h), (m), (r), (s) and (w).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
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"Authorized Officer" shall mean any senior officer of Holdings, WR
Acquisition or the Borrower designated as such in writing to the Agent by
Holdings, WR Acquisition or the Borrower, in each case to the extent reasonably
acceptable to the Agent.
"Bain Affiliates" shall mean any Affiliate of Bain Capital, provided
that for purposes of the definition of "Change of Control Event", the term Bain
Affiliate shall not include (x) any portfolio company of either Bain Capital or
any Affiliate of Bain Capital or (y) any officer or director of Holdings or any
of its Subsidiaries that is not also a partner or stockholder of Bain Capital on
the Effective Date.
"Bain Capital" shall mean Bain Capital, Inc., a Delaware corporation.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.04(c) or (ii) a Bank having notified the Agent and/or the
Borrower that it does not intend to comply with the obligations under Section
1.01(a), 1.01(c) or 2.04(c), in the case of either clause (i) or (ii) above as a
result of the appointment of a receiver or conservator with respect to such Bank
at the direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is
1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate and (y) the
Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean and include (i) the borrowing of Swingline
Loans from BTCo on a given date and (ii) the borrowing of one Type of Revolving
Loan from all of the Banks on a given date (or resulting from conversions on a
given date), having in the case of Eurodollar Loans the same Interest Period;
provided, that Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of any related Borrowing of Eurodollar Loans.
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"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with GAAP) and the amount of all Capitalized
Lease Obligations incurred by such Person.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided, that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (ii) U.S. dollar denominated
time deposits, certificates of deposit and bankers accept ances of (x) any Bank
or (y) any bank whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank or Bank, an "Approved Bank"), in each case with
maturities of not more than twelve months from the date of acquisition, (iii)
commercial paper issued by any Approved Bank or by the parent company of any
Approved Bank and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent of each thereof, from S&P or
Moody's, as the case may be, and in each case maturing within twelve months
after the date of acquisition, (iv) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any such
state or any public
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instrumentality thereof maturing within twelve months from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's and (v) investments in
money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by Holdings and/or any of its Subsidiaries from such
Asset Sale.
"Certificate Purchase Agreement (Series 1996-1 Class A)" shall mean
the Revolving Certificate Purchase Agreement (Series 1996-1 Class A), dated as
of May 24, 1996, among the Receivables Entity, the Borrower, as the initial
servicer, the purchasers party thereto, and BTCo, as Agent, as the same may be
amended, modified, supplemented, refinanced or replaced from time to time.
"Certificate Purchase Agreement (Series 1996-1 Class B)" shall mean
the Revolving Certificate Purchase Agreement (Series 1996-1 Class B), dated as
of May 24, 1996, among the Receivables Entity, the Borrower, as the initial
servicer, the purchasers party thereto, and BTCo, as Agent, as the same may be
amended, modified, supplemented, refinanced or replaced from time to time.
"Change of Control Event" shall mean (a) Holdings shall cease to own
directly 100% on a fully diluted basis of the economic and voting interest in WR
Acquisition's capital stock or (b) WR Acquisition shall cease to own directly
100% on a fully diluted basis of the economic and voting interest in the
Borrower's capital stock or (c) any Person or "group" (within the meaning of
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as in effect on
the (Effective Date), other than Bain Capital and/or the Bain Affiliates, shall
(A) have acquired beneficial ownership of 30% or more on a fully diluted basis
of the voting and/or economic interest in Holdings' capital stock or (B)
obtained the power (whether or not exercised) to elect a majority of Holdings'
directors or (d) the Board of Directors of Holdings shall cease to consist of a
majority of Continuing Directors or (e) a "change of control" or similar event
shall occur as provided in the Senior Subordinated Note Indenture.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
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"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Consolidated Debt" shall mean, at any time, all Indebtedness of the
Borrower and its Subsidiaries determined on a consolidated basis; provided, that
for purposes of this definition, the amount of Indebtedness in respect of
Interest Rate Protection Agreements shall be at any time the unrealized net loss
position, if any, of the Borrower and/or its Subsidiaries thereunder on a marked
to market basis determined no more than one month prior to such time.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income, before total interest expense (inclusive of amortization of deferred
financing fees, premiums on Interest Rate Protection Agreements and any original
issue discount) of the Borrower and its Subsidiaries determined on a
consolidated basis and provisions for taxes based on income, and determined (i)
without giving effect to any extraordinary gains or losses but with giving
effect to gains or losses from sales of assets sold in the ordinary course of
business, (ii) without giving effect to any impact from the LIFO method of
inventory accounting, (iii) without giving effect to any noncash charge deducted
in determining Consolidated Net Income for such period and related to the
issuance by Holdings or any of its Subsidiaries of stock, warrants or options to
management (or any exercise of any such warrants or options), (iv) without
giving effect to any compensation expense incurred in connection with the
Original Acquisition, and (v) without giving effect to nonrecurring charges and
noncash provisions and any documented cash charges, in each case deducted in
determining Consolidated Net Income for such period and related to the
Borrower's integration plan during the three year period following the
consummation of the Original Acquisition, provided that the aggregate amount of
charges and provisions added back pursuant to this clause (v) (for all periods)
shall not exceed $10,000,000.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation expense and
amortization expense that were deducted in determining Consolidated EBIT for
such period, it being understood and agreed, however, that Consolidated EBITDA
for the Borrower's fiscal quarter ending (i) December 31, 1995 shall be
$21,966,000, (ii) March 31, 1996 shall be $16,800,000 and (iii) June 30, 1996
shall be $20,049,000.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its Subsidiaries determined on a consolidated
basis with respect to all outstanding
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Indebtedness of the Borrower and its Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs or
benefits under Interest Rate Protection Agreements, but excluding, however,
amortization of any payments made to obtain any Interest Rate Protection
Agreement and deferred financing costs and any interest expense on deferred
compensation arrangements to the extent included in total interest expense;
provided, for that portion of any Test Period prior to the Initial Borrowing
Date, Consolidated Interest Expense shall be determined on a pro forma basis as
if (i) no loans were outstanding under the Existing Credit Agreement, (ii) Loans
in an aggregate principal amount equal to the amount outstanding on the Initial
Borrowing Date (after giving effect to the Transaction) had been outstanding at
all times since the first day of such Test Period and that such Loans had
accrued interest at a per annum rate equal to the Eurodollar Rate as in effect
on the Initial Borrowing Date plus 1.50% and (iii) Senior Subordinated Notes in
an aggregate principal amount equal to $70,000,000 had been repaid on the first
day of such Test Period.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss), after provision for taxes, of the Borrower and its Subsidiaries
(including as a Subsidiary for this purpose the Receivables Entity although the
definition of Subsidiary might require otherwise) on a consolidated basis for
such period taken as a single accounting period, but excluding any unrealized
losses and gains for such period resulting from mark-to-market of Other Hedging
Agreements; provided that (x) for purposes of Section 8.12 and the definitions
of Applicable Commitment Fee Percentage, Interest Reduction Discount and Pro
Forma Leverage Ratio, there shall be included (to the extent not already
included) in determining Consolidated Net Income for any period the net income
(or loss) of any Person, business, property or asset acquired during such period
pursuant to Section 8.02(q) and not subsequently sold or otherwise disposed of
by the Borrower or one of its Subsidiaries during such period (each such Person,
business, property or asset acquired and not subsequently disposed of during
such period, an "Acquired Entity or Business"), in each case based on the actual
net income (or loss) of such Acquired Entity or Business for the entire period
(including the portion thereof occurring prior to such acquisition) and (y) for
purposes of calculating Consolidated Net Income for any period, Consolidated Net
Income shall be adjusted for factually supportable and identifiable pro forma
cost savings for such period that are directly attributable to the acquisition
of an Acquired Entity or Business pursuant to a Permitted Acquisition (it being
understood that in order for the Borrower to adjust Consolidated Net Income
pursuant to this clause (y), the Borrower shall deliver to the Agent and the
Banks a certificate of an Authorized Officer demonstrating in reasonable detail
such factually supportable and identifiable cost savings).
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any man-
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ner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the pur pose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harm less the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection or standard contractual indemnities entered into, in each case in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director if such director's nomination for the
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors.
"Credit Documents" shall mean this Agreement, the Notes, the
Guaranties, each Security Document and the Intercreditor Agreement.
"Credit Event" shall mean the making of a Loan (other than a Revolving
Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of
Credit.
"Credit Party" shall mean Holdings, WR Acquisition, the Borrower and
each Subsidiary Guarantor.
"Cumulative Consolidated Net Income" shall mean, at any time for the
determination thereof, Consolidated Net Income for the period (taken as one
accounting period) commencing on the Initial Borrowing Date and ending on the
last day of the Borrower's fiscal quarter then last ended.
"Cumulative Income Amount" shall mean, at any time for the
determination thereof:
(A) the product of (i) 0.25 multiplied by (ii) Cumulative
Consolidated Net Income at such time minus
(B) (I) the aggregate amount of Capital Expenditures theretofore made
by the Borrower and its Subsidiaries pursuant to Section 8.09(f) and (II)
the aggregate
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amount of cash Dividends theretofore paid pursuant to Section 8.07(vi) in
excess of $5,000,000, it being understood that the Cumulative Income Amount
shall be reduced at the time of, and after giving effect to, any of the
events described in preceding clauses (I) and (II).
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated Credit Parties" shall mean the Borrower and those
Subsidiary Guarantors that are from time to time party to the Accounts
Receivable Facility Documents.
"Dividends" shall have the meaning provided in Section 8.07.
"Documents" shall mean the Credit Documents and the IPO Documents.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in the United States or any State or territory
thereof.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act).
"End Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by Holdings or any of its
Subsidiaries under any Environmental Law (hereafter "Claims") or any permit
issued to Holdings or any of its Subsidiaries under any such law, including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Law" shall mean any federal, state or local policy,
statute, law, rule, regulation, ordinance, code or rule of common law now or
hereafter in effect and
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in each case as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent, decree or
judgment (for purposes of this definition ("collectively, Laws")), relating to
the environment, or Hazardous Materials or health and safety to the extent such
health and safety issues arise under the Occupational Safety and Health Act of
1970, as amended, or any such similar Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100 of
1%) of the offered quotation to first-class banks in the interbank Eurodollar
market by BTCo for U.S. dollar deposits of amounts in same day funds comparable
to the outstanding principal amount of the Eurodollar Loan of BTCo for which an
interest rate is then being determined with maturities comparable to the
Interest Period to be applicable to such Eurodollar Loan, determined as of 10:00
A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period divided (and rounded upward to the next
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Existing Credit Agreement" shall mean the Credit Agreement, dated as
of October 31, 1995, among Holdings, WR Acquisition, the Borrower, the lenders
party thereto, and Bankers Trust Company, as Agent, together with all other
agreements, instruments and documents executed or delivered pursuant thereto or
in connection therewith (including, without limitation, all promissory notes,
guarantees and security documents).
"Existing Indebtedness" shall have the meaning provided in Section
6.23.
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"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.14.
"Existing Letters of Credit" shall have the meaning provided in Section
2.01(a).
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Final Maturity Date" shall mean July 8, 2001.
"Foreign Cash Equivalents" shall mean certificates of deposit or bankers
acceptances of any bank organized under the laws of Canada, Japan or any country
that is a member of the European Economic Community whose short-term commercial
paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's
is at least P-1 or the equivalent thereof, in each case with maturities of not
more than twelve months from the date of acquisition.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings or any one or more
of its Subsidiaries primarily for the benefit of employees of Holdings or such
Subsidiaries residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower other
than a Domestic Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time; it being understood and agreed
that deter-
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minations in accordance with GAAP for purposes of Section 8 and the definition
of Applicable Commitment Fee Percentage and Interest Reduction Discount,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 12.07(a).
"Guaranteed Creditors" shall mean and include each of the Agent, the
Collateral Agent, the Banks, each Letter of Credit Issuer and each party (other
than any Credit Party) party to an Interest Rate Protection Agreement or Other
Hedging Agreement to the extent that such party constitutes a Secured Creditor
under the Security Documents.
"Guaranteed Obligations" shall mean (i) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Note issued by the Borrower to each Bank, and
Loans made, under this Agreement and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit, together with all the other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Borrower to such Bank, the Agent and the Collateral Agent now existing or
hereafter incurred under, arising out of or in connection with this Agreement or
any other Credit Document and the due performance and compliance with all the
terms, conditions and agreements contained in the Credit Documents by the
Borrower and (ii) the full and prompt payment when due (whether by acceleration
or otherwise) of all obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due)
and liabilities of the Borrower or any of its Subsidiaries owing under any
Interest Rate Protection Agreement or Other Hedging Agreement entered into by
the Borrower or any of its Subsidiaries with any Bank or any affiliate thereof
(even if such Bank subsequently ceases to by a Bank under this Agreement for any
reason) so long as such Bank or affiliate participate in such Interest Rate
Protection Agreement or Other Hedging Agreement, and their subsequent assigns,
if any, whether now in existence or hereafter arising, and the due performance
and compliance with all terms, conditions and agreements contained therein.
"Guarantor" shall mean each Parent Guarantor and each Subsidiary
Guarantor.
"Guaranty" shall mean and include each of the Parents Guaranty and the
Subsidiary Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely
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hazardous wastes," "restrictive hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar meaning and
regulatory effect.
"Holdings" shall have the meaning provided in the first paragraph of this
Agreement.
"Holdings Common Stock" shall have the meaning provided in Section 6.15.
"Holdings Tax Allocation Agreement" shall mean the Tax Sharing Agreement,
dated as of October 31, 1995, among Holdings and its Domestic Subsidiaries.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person but excluding deferred rent as determined in
accordance with GAAP, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vii) all obligations under Interest Rate Protection Agreements and
Other Hedging Agreements and (viii) all Contingent Obligations of such Person,
provided, that Indebtedness shall not include trade payables and accrued
expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date upon which the initial
Borrowing of Loans occurs.
"Intercompany Loan" shall have the meaning provided in Section 8.06(h).
"Intercompany Notes" shall mean promissory notes, in the form of Exhibit
L, evidencing Intercompany Loans.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, dated
as of October 31, 1995, between Bankers Trust Company, as Collateral Agent, and
Manufacturers and Traders Trust Company.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense for such period.
"Interest Period," with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
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"Interest Rate Protection Agreement" shall mean any interest rate swap
agree ment, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agree ment or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean (i) for the period from the
Initial Borrowing Date through but not including the first day of the first
Margin Reduction Period, .25% and (ii) thereafter zero, provided that from and
after the first day of any Margin Reduction Period (the "Start Date") to and
including the last day of such Margin Reduction Period (the "End Date"), the
Interest Reduction Discount shall be the respective percentage per annum set
forth in clause (A), (B), (C) or (D) below if, but only if, as of the last day
of the most recent fiscal quarter or year, as the case may be, ended immediately
prior to such Start Date (the "Test Date"), the applicable conditions set forth
in clause (A), (B), (C), or (D) below, as the case may be, are met:
(A) .25% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 3.5:1.0 and none of the conditions set forth in clause (B), (C)
or (D) below, as the case may be, are satisfied;
(B) .50% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 3.0:1.0 and neither of the conditions set forth in clause (C) or
(D) below, as the case may be, are satisfied;
(C) .75% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 2.5:1.0 and the condition set forth in clause (D) below is not
satisfied; or
(D) 1% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be
less than 2.0:1.0.
Notwithstanding anything to the contrary contained above in this definition, the
Interest Reduction Discount shall be zero at any time when an Event of Default
shall exist.
"Investor Certificate" shall have the meaning provided in the Accounts
Receivable Pooling and Servicing Agreement.
"IPO" shall have the meaning provided in Section 5.09.
"IPO Documents" shall mean the Registration Statement relating to the
registration of the Holdings Common Stock, and all other documents or agreements
related to the consummation of the IPO, including, without limitation, all
underwriting or similar agreements and all documents filed with the SEC.
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"L/C Supportable Indebtedness" shall mean (i) obligations of the Borrower
or its Subsidiaries incurred in the ordinary course of business with respect to
insurance obligations and workers' compensation, surety bonds and other similar
statutory obligations and (ii) such other obligations of the Borrower or any of
its Subsidiaries as are reasonably acceptable to the Agent and the Letter of
Credit Issuer and otherwise permitted to exist pursuant to the terms of this
Agreement.
"Leasehold" of any Person shall mean all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fees" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean BTCo and any other Bank which, at
the request of the Borrower and with the consent of the Agent, agrees in such
Bank's sole discretion to become a Letter of Credit Issuer for purposes of
issuing Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Leverage Ratio" shall mean, at any time, the ratio of (x) Consolidated
Debt at such time (excluding any Indebtedness under the Accounts Receivable
Facility to the extent otherwise included in Consolidated Debt) to (y)
Consolidated EBITDA for the Test Period then last ended.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each Revolving Loan and each Swingline Loan.
"Mandatory Borrowing" shall have the meaning provided in Section 1.01(c).
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"Margin Reduction Period" shall mean each period which shall commence on
a date on which the financial statements are delivered pursuant to Section
7.01(b)(i) or (c)(i), as the case may be, and which shall end on the earlier of
(i) the date of actual delivery of the next financial statements pursuant to
Section 7.01(b)(i) or (c)(i), as the case may be, and (ii) the latest date on
which the next financial statements are required to be delivered pursuant to
Section 7.01(b)(i) or (c)(i), as the case may be, provided that the first Margin
Reduction Period shall commence on the date that the financial statements are
delivered for the Borrower's fiscal quarter ending September 30, 1996.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities, condition (financial or otherwise) or
prospects of Holdings, WR Acquisition, the Borrower, Holdings and its
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as a
whole.
"Maximum Swingline Amount" shall mean $10,000,000.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans, $1,000,000
and (ii) for Swingline Loans, $250,000.
"Modified Leverage Ratio" shall mean, at any time, the ratio of (x) the
Total Revolving Outstandings at such time to (y) Consolidated EBITDA for the
Test Period then last ended.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall have the meaning provided in Section 5.13(a).
"Mortgage Policies" shall have the meaning provided in Section 5.13(b).
"Mortgaged Properties" shall mean and include the Real Properties owned
or leased by the Borrower and its Domestic Subsidiaries to the extent designated
as such on Annex IV.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net of (a) cash expenses of sale (including
brokerage fees, if any, transfer taxes and payment of principal, premium and
interest of Indebtedness other than the Loans required to be repaid as a result
of such Asset Sale) and (b) incremental income taxes paid or payable as a result
thereof.
"Niagara Envelope" shall mean The Niagara Envelope Company, Inc., a
Delaware corporation.
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"Non-Defaulting Bank" shall mean each Bank other than a Defaulting Bank.
"Note" shall mean each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Agent located at One Bankers
Trust Plaza, New York, New York 10006 or such other office as the Agent may
designate to Holdings, the Borrower and the Banks from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Agent, the Col lateral Agent or any Bank pursuant to the terms of this Agreement
or any other Credit Document.
"Original Acquisition" shall mean the Acquisition under, and as defined
in, the Existing Credit Agreement.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
"Parent Guarantor" shall mean and include each of Holdings and WR
Acquisition.
"Parents Guaranty" shall mean the guaranty of the Parent Guarantors
pursuant to Section 13.
"Participant" shall have the meaning provided in Section 2.04(a)(i).
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to Holdings, the Borrower and the Banks from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean, at any time for each Bank, the percentage
obtained by dividing such Bank's Revolving Loan Commitment at such time by the
Total Revolving Loan Commitment then in effect, provided, that if the Total
Revolving Loan Commitment has been terminated, the Percentage of each Bank shall
be determined by dividing such
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Bank's Revolving Loan Commitment as in effect immediately prior to such
termination by the Total Revolving Loan Commitment as in effect immediately
prior to such termination.
"Permitted Acquisition" shall have the meaning provided in Section
8.02(q).
"Permitted Covenant" shall mean (i) any periodic reporting covenant, (ii)
any covenant restricting payments by Holdings with respect to any securities of
Holdings which are junior to the Permitted Holdings PIK Securities, (iii) any
covenant the default of which can only result in an increase in the amount of
any redemption price, repayment amount, dividend rate or interest rate, (iv) any
covenant the default of which gives rise only to rights or remedies which are
subject to subordination terms reasonably acceptable to the Agent, (v) any
covenant providing board observance rights with respect to Holdings' board of
directors and (vi) any other covenant that does not adversely affect the
interests of the Banks (as reasonably determined by the Agent).
"Permitted Encumbrances" shall mean (i) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the Mortgage
Policies in respect thereof and found reasonably acceptable by the Agent, (ii)
as to any particular Mortgaged Property at any time, such easements,
encroachments, covenants, rights of way, minor defects, irregularities or
encumbrances on title which do not, in the reasonable opinion of the Agent,
materially impair such Mortgaged Property for the purpose for which it is held
by the mortgagor thereof, or the lien held by the Collateral Agent, (iii) zoning
and other municipal ordinances which are not violated in any material respect by
the existing improvements and the present use made by the mortgagor thereof of
the Premises (as defined in the respective Mortgage), (iv) general real estate
taxes and assessments not yet delinquent, and (v) such other similar items as
the Agent may consent to (such consent not to be unreasonably withheld).
"Permitted Holdings PIK Securities" shall mean any preferred stock or
subordinated promissory note of Holdings (or any security of Holdings that is
convertible or exchangeable into any preferred stock or subordinated promissory
note of Holdings), so long as the terms of any such preferred stock,
subordinated promissory note or security of Holdings (i) do not provide any
collateral security, (ii) do not provide any guaranty or other support by any
Subsidiary of Holdings, (iii) do not contain any mandatory put, redemption,
repayment, sinking fund or other similar provision occurring before the sixth
anniversary of the Initial Borrowing Date, (iv) do not require the cash payment
of dividends or interest before the sixth anniversary of the Initial Borrowing
Date, (v) do not contain any covenants other than any Permitted Covenant, (vi)
do not grant the holders thereof any voting rights except for (x) voting rights
required to be granted to such holders under applicable law and (y) limited
customary voting rights on fundamental matters such as mergers, consolidations,
sales of substantial assets, or liquidations involving Holdings and (vii) are
otherwise reasonably satisfactory to the Agent.
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"Permitted Liens" shall have the meaning provided in Section 8.03.
"Permitted Sale-Leaseback Transactions" shall mean the sale and leaseback
by the Borrower or any of its Subsidiaries of their currently existing
facilities located in Salt Lake City, Utah, Westfield, Massachusetts and
Holyoke, Massachusetts so long as the aggregate Cash Proceeds received by the
Borrower or such Subsidiary from the sale thereof equals at least (i) $1,660,000
in the case of the Salt Lake City, Utah facility, (ii) $2,760,000 in the case of
the Westfield, Massachusetts facility, (iii) $2,400,000 in the case of Apple
Street facility in Holyoke, Massachusetts and (iv) $1,000,000 in the case of the
Jackson Street facility in Holyoke, Massachusetts.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as defined in
Section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) Holdings, any of its Subsidiaries or
any ERISA Affiliate and each such plan for the five calendar year period
immediately following the latest date on which Holdings, any of its Subsidiaries
or any ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5.11(a).
"Pledge Agreement Collateral" shall mean all "Collateral" as defined in
the Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined the
Pledge Agreement.
"Pro Forma Leverage Ratio" shall mean, at any time for the determination
thereof, the ratio of (x) Consolidated Debt at such time to (y) Consolidated
EBITDA for the Test Period then last ended, with such Pro Forma Leverage Ratio
to be determined on a pro forma basis as if such Asset Sale (and the application
of the Net Sale Proceeds therefrom) or such Permitted Acquisition (and the
incurrence, assumption and/or repayment of any Indebtedness in connection with
such Permitted Acquisition), as the case may be, had occurred on the first day
of such Test Period (and such Indebtedness, if any, had remained outstanding (or
had not been outstanding, as the case may be) throughout such Test Period). On
the date of any Asset Sale or Permitted Acquisition pursuant to which the Pro
Forma Leverage Ratio is to be calculated, the Borrower shall deliver to the
Agent a certificate of the Borrower's chief financial officer setting forth in
reasonable detail the pro forma calculations required to establish the Pro Forma
Leverage Ratio (with such pro forma calculations to be made on a basis
reasonably satisfactory to the Agent and to
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assume that the interest expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be computed
as if the rate in effect on the date of such Asset Sale or such Permitted
Acquisition (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement has a
remaining term in excess of 12 months) had been the applicable rate for the
entire period. It being understood that in calculating the Pro Forma Leverage
Ratio in connection with any Permitted Acquisition, Consolidated EBITDA shall
include the results of operations of the Person or assets acquired pursuant to
such Permitted Acquisition on a pro forma basis as if such acquisition had
occurred on the first day of the respective Test Period.
"Prime Lending Rate" shall mean the rate which BTCo announces from time
to time as its prime lending rate, the Prime Lending Rate to change when and as
such prime lending rate changes. The Prime Lending Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. BTCo may make commercial loans or other loans at rates of interest
at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 5.17.
"Purchased Interest" shall have the meaning provided in the Accounts
Receivable Pooling and Servicing Agreement.
"Quarterly Payment Date" shall mean the last Business Day of each
February, May, August and November.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Receivables Entity" shall mean Notepad Funding Corporation, a Delaware
corporation.
"Receivables Purchase Money Note" shall mean those purchase money notes
issued by the Receivables Entity to the Designated Credit Parties pursuant to
the terms of the Accounts Receivable Facility Documents.
"Receivable Stated Amount" shall mean, with respect to an Investor
Certificate or a Purchased Interest, the maximum amount of the funding
commitment with respect thereto.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of
theft, physical destruction or damage or any other similar event with respect to
any properties or
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assets of Holdings or any of its Subsidiaries, (ii) by reason any condemnation,
taking, seizing or similar event with respect to any properties or assets of
Holdings or any of its Subsidiaries and (iii) under any policy of insurance
required to be maintained under Section 7.03.
"Refinancing" shall mean the refinancing by the Borrower and the
termination by the Borrower, in full of all commitments under the Existing
Credit Agreement, together with the payment of all loans, accrued interest,
premiums, fees, commissions, expenses and other amounts owing in connection with
the refinancing of the Existing Credit Agreement.
"Refinancing Documents" shall mean each of the agreements, documents and
instruments entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 7.12.
"Registration Statement" shall mean Holdings' Registration Statement on
Form S-1 in the form delivered to the Banks pursuant to Section 5.09 as amended
from time to time.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or any portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from to time in effect and any successor to all or any
portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or any portion thereof.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
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"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean collectively (and not individually) Non-
Defaulting Banks the sum of whose Revolving Loan Commitments (or, if after the
Total Revolving Loan Commitment has been terminated, outstanding Revolving Loans
and Percentages of outstanding Swingline Loans and Letter of Credit
Outstandings) constitute greater than 50% of the Total Revolving Loan Commitment
less the aggregate Revolving Loan Commitments of Defaulting Banks (or, if after
the Total Revolving Loan Commitment has been terminated, the total outstanding
Revolving Loans of Non-Defaulting Banks and the aggregate Percentages of all
Non-Defaulting Banks of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 6.22.
"Revolving Loan" shall have the meaning provided in Section 1.01(a).
"Revolving Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "Revolving Loan Commitment," as the same may be reduced from time to
time pursuant to Section 3.02, Section 3.03 and/or Section 9.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"Rollover Amount" shall have the meaning provided in Section 8.09(b).
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security
Documents.
"Security Agreement" shall have the meaning provided in Section 5.11(b).
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"Security Agreement Collateral" shall mean all "Collateral" as defined in
the Security Agreement.
"Security Documents" shall mean and include the Security Agreement, the
Pledge Agreement, each Mortgage, and each Additional Security Document, if any.
"Seller Account" shall have the meaning provided in the Accounts
Receivable Facility Documents.
"Senior Subordinated Note Documents" shall mean and include the Senior
Subordinated Note Indenture, the Senior Subordinated Notes and the Senior
Subordinated Note Guarantees, as in effect on the Initial Borrowing Date, and as
the same may be modified, supplemented or amended from time to time pursuant to
the terms hereof and thereof.
"Senior Subordinated Note Guarantees" shall mean the guarantees issued by
the Subsidiaries of the Borrower pursuant to (or contained in) the Senior
Subordinated Note Indenture.
"Senior Subordinated Note Indenture" shall mean the Indenture, dated as
of December 1, 1995, by and between the Borrower and IBJ Schroder Bank & Trust
Company, as trustee thereunder, as in effect on the Initial Borrowing Date, and
as the same may be modified, amended or supplemented from time to time in
accordance with the terms hereof and thereof.
"Senior Subordinated Notes" shall mean the Borrower's 13% Senior
Subordinated Notes due 2005, as in effect on the Initial Borrowing Date, and as
the same may be modified, supplemented or amended from time to time pursuant to
the terms hereof and thereof (it being understood that all references herein to
the Senior Subordinated Notes shall be a reference to the Senior Subordinated
Notes issued under the Senior Subordinated Note Indenture and outstanding on the
Initial Borrowing Date as the same may be exchanged into the Series B Senior
Subordinated Notes pursuant to, and in accordance with the provisions of, the
Senior Subordinated Note Indenture).
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by Holdings (and not guaranteed or supported in any way
by WR Acquisition or any of its Subsidiaries) in the form of Exhibit M.
"S&P" shall mean Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc.
"Start Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
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"Stated Amount" of each Letter of Credit shall mean the maximum amount
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which such Person directly
or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower (other
than a Foreign Subsidiary except to the extent otherwise provided in Section
7.13) that is or becomes a party to the Subsidiary Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in Section 5.12.
"Swingline Expiry Date" shall mean the date which is five Business Days
prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(b).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean that date upon which the Agent determines
(and notifies the Borrower and the Banks) that the primary syndication (and
resultant addition of Persons as Banks pursuant to Section 12.04(b)) has been
completed.
"Tax Allocation Agreements" shall have the meaning provided in Section
5.14.
"Taxes" shall have the meaning provided in Section 4.04.
"Test Date" shall have the meaning provided in the definition of Interest
Reduction Discount.
"Test Period" shall mean (i) for any determination made on and prior to
September 30, 1996, the period from October 1, 1995 to the last day of the
fiscal quarter of the Borrower then last ended (taken as one accounting period),
and (ii) for any determination made thereafter, the four consecutive fiscal
quarters of the Borrower then last ended (taken as one accounting period).
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"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Revolving Outstandings" shall mean, at any time, the sum of (i)
the aggregate principal amount of all Revolving Loans outstanding at such time,
(ii) the aggregate principal amount of all Swingline Loans outstanding at such
time and (iii) the aggregate amount of all Letter of Credit Outstandings at such
time.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time, (i)
the Total Revolving Loan Commitment at such time less (ii) the sum of the
aggregate principal amount of all Revolving Loans and Swingline Loans
outstanding at such time plus the Letter of Credit Outstandings at such time.
"Transaction" shall mean, collectively, (i) the IPO, (ii) the
Refinancing, (iii) the incurrence of Revolving Loans hereunder on the Initial
Borrowing Date, (iv) the payment of fees and expenses in connection with the
foregoing and (v) the repurchase by the Borrower of $70,000,000 in aggregate
principal amount of Senior Subordinated Notes with a portion of the IPO
proceeds.
"Type" shall mean any type of Revolving Loan determined with respect to
the interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar
Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.03(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank at any
time shall mean such Bank's Revolving Loan Commitment at such time less the sum
of (i) the aggregate outstanding principal amount of all Revolving Loans made by
such Bank and (ii) such Bank's Percentage of the Letter of Credit Outstandings
at such time.
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
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"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
"WR Acquisition" shall have the meaning provided in the first paragraph
of this Agreement.
"Written" (whether lower or upper case) or "in writing" shall mean any
form of written communication or a communication by means of telex, facsimile
device, telegraph or cable.
SECTION 11. The Agent.
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11.01 Appointment. Each Bank hereby irrevocably designates and
appoints BTCo as Agent of such Bank (such term to include for purposes of this
Section 11, BTCo acting as Collateral Agent) to act as specified herein and in
the other Credit Documents, and each such Bank hereby irrevocably authorizes
BTCo as the Agent to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exer cise such powers and
perform such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. The Agent agrees to act as such upon the express
conditions contained in this Section 11. Notwithstanding any provision to the
contrary else where in this Agreement or in any other Credit Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein or in the other Credit Docu ments, or any fiduciary relationship with any
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or otherwise exist against the
Agent. The provisions of this Section 11 are solely for the benefit of the
Agent and the Banks, and neither Holdings nor any of its Subsidiaries shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and the Agent does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for Holdings or any of its Subsidiaries.
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11.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by Section 11.03.
11.03 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person in its capacity as Agent under or in connection with this Agreement or
the other Credit Documents (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by Holdings, any of
its Subsidiaries or any of their respective officers contained in this Agree
ment or the other Credit Documents, any other Document or in any certificate,
report, state ment or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Document
or for any failure of Holdings or any of its Subsidiaries or any of their
respective officers to perform its obligations hereunder or thereunder. The
Agent shall not be under any obligation to any Bank to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or the other Documents, or to inspect the
properties, books or records of Holdings or any of its Subsidiaries. The Agent
shall not be responsible to any Bank for the effectiveness, genuineness,
validity, enforceability, collectability or sufficiency of this Agreement or any
other Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the Agent to
the Banks or by or on behalf of Holdings or any of its Subsidiaries to the Agent
or any Bank or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default.
11.04 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to Holdings or any of its
Subsidiaries), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Credit Document unless it shall first receive
such advice or concurrence of the Required Banks as it deems appropriate or it
shall first be indemnified to its satisfaction by
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the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Credit Documents in accordance with a request of the
Required Banks, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks.
11.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has actually received notice from a Bank, Holdings, WR Acquisition or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Banks; provided, that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
11.06 Nonreliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of Holdings or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and infor mation as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other condition, prospects and credit worthiness of Holdings and
its Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Bank also represents that it will, indepen dently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other condition, prospects and creditworthiness of Holdings and its
Subsidiaries. The Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the business,
operations, assets, property, financial and other condition, prospects or
creditworthiness of Holdings or any of its Subsidiaries which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
11.07 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such ratably according to their respective "percentages" as used in
determining the Required Banks at such time (with such "percentages" to be
determined as if there are
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no Defaulting Banks), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, reasonable
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Agent under or in con nection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by Holdings or any of its
Subsidiaries; provided, that no Bank shall be liable to the Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agent. To the
extent any Bank would be required to indemnify the Agent pursuant to the
immediately preceding sentence but for the fact that it is a Defaulting Bank,
such Defaulting Bank shall not be entitled to receive any portion of any payment
or other distribution hereunder until each other Bank shall have been reimbursed
for the excess, if any, of the aggregate amount paid by such Bank under this
Section 11.07 over the aggregate amount such Bank would have been obligated to
pay had such first Bank not been a Defaulting Bank. If any indemnity furnished
to the Agent for any purpose shall, in the opinion of the Agent be insufficient
or become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The agreements in this Section 11.07 shall survive the payment of
all Obligations.
11.08 Agent in its Individual Capacity. The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with Holdings and its Subsidiaries as though the Agent were not the
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, the Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent and the terms
"Bank" and "Banks" shall include the Agent in its individual capacity.
11.09 Holders. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
11.10 Resignation of the Agent; Successor Agent. The Agent may resign
as the Agent upon 20 days' notice to the Banks. Upon the resignation of the
Agent, the Required Banks shall appoint from among the Banks a successor Agent
which is a bank or a trust company for the Banks subject to prior approval by
the Borrower (such approval not
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to be unreasonably withheld, provided that such approval shall not be required
if an Event of Default then exists), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall include such successor agent effective upon its appointment, and the
resigning Agent's rights, powers and duties as the Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement. After the resignation of the Agent hereunder,
the provisions of this Section 11 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
11.11 Intercreditor Agreement. Each Bank hereby agrees to be bound by
the terms and provisions of the Intercreditor Agreement.
SECTION 12. Miscellaneous.
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12.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent (including, without limitation,
the reasonable fees and disbursements of White & Case and local counsel) in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instru ments referred to therein and any
amendment, waiver or consent relating thereto and in connection with the Agent's
syndication efforts with respect to this Agreement; (ii) pay all reasonable out-
of-pocket costs and expenses of the Agent, each Letter of Credit Issuer and each
of the Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein and, after an Event of Default
shall have occurred and be continuing, the protection of the rights of the
Agent, each Letter of Credit Issuer and each of the Banks thereunder (including,
without limitation, the reasonable fees and disbursements of counsel (including
in-house counsel) for the Agent, for each Letter of Credit Issuer and for each
of the Banks); (iii) pay and hold each of the Banks harmless from and against
any and all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Banks harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iv)
indemnify the Agent, the Collateral Agent, each Letter of Credit Issuer and each
Bank, their respective officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other pro ceeding (whether or not the Agent, the
Collateral Agent, any Letter of Credit Issuer or any Bank is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among the Agent, the Collateral Agent, any Letter of Credit Issuer, any Bank,
any Credit Party or any third Person or otherwise) related to the entering into
and/or performance of this Agreement or any other Document or the use of the
proceeds of any Loans hereunder or the Transaction or the consummation of any
other
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transactions con templated in any Document (but excluding any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified), or (b)
the actual or alleged presence of Hazardous Materials in the air, surface water
or groundwater or on the surface or subsurface of any Real Property or any
Environmental Claim, in each case, including, without limitation, the reasonable
fees and disbursements of counsel and independent consultants incurred in
connection with any such investigation, litigation or other proceeding.
12.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, the Agent, each Letter
of Credit Issuer and each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
Holdings or any of its Subsidiaries or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held or
owing by the Agent, such Letter of Credit Issuer or such Bank (including,
without limitation, by branches and agencies of the Agent, such Letter of Credit
Issuer and such Bank wherever located) to or for the credit or the account of
Holdings or any of its Subsidiaries against and on account of the Obligations of
Holdings or any of its Subsidiaries to the Agent, such Letter of Credit Issuer
or such Bank under this Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations of Holdings or any
of its Subsidiaries purchased by such Bank pursuant to Section 12.06(b), and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not the
Agent, such Letter of Credit Issuer or such Bank shall have made any demand
hereunder and although said Obligations shall be contingent or unmatured.
Notwithstanding anything to the contrary contained in this Section 12.02, no
Bank shall exercise any such right of set-off without the prior consent of the
Agent or the Required Banks so long as the Obligations shall be secured by any
Real Property located in the State of California, it being understood and
agreed, however, that this sentence is for the sole benefit of the Letter of
Credit Issuers and the Banks and may be amended, modified or waived in any
respect by the Required Banks without the requirement of prior notice to or
consent by any Credit Party and does not constitute a waiver of any rights
against any Credit Party or against any Collateral.
12.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Annex II; or, at such other address as shall be designated by
any party in a written notice to the other parties hereto. All such notices and
communications shall be mailed, telegraphed, telexed, telecopied or cabled or
sent by overnight courier, and shall be effective when received.
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12.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, the Borrower may not assign or
transfer any of its rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of the Banks and, provided
further, that, although any Bank may transfer, assign or grant participations in
its rights hereunder, such Bank shall remain a "Bank" for all purposes hereunder
(and may not transfer or assign all or any portion of its Revolving Loan
Commitment hereunder except as provided in Section 12.04(b)) and the transferee,
assignee or participant, as the case may be, shall not constitute a "Bank"
hereunder and, provided further, that no Bank shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Final Maturity Date) in which such participant is
partici pating, or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of applicability of any post-
default increase in interest rates) or reduce the principal amount thereof, or
increase the amount of the participant's participation over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default or of a mandatory reduction in the Total Revolving Loan Commitment shall
not constitute a change in the terms of such participation, and that an increase
in any Revolving Loan Commitment or Loan shall be permitted without the consent
of any participant if the participant's participation is not increased as a
result thereof), (ii) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement or (iii) release all or
substantially all of the Collateral under all of the Security Documents (except
as expressly provided in the Credit Documents) supporting the Loans hereunder in
which such participant is participating. In the case of any such participation,
the participant shall not have any rights under this Agreement or any of the
other Credit Documents (the participant's rights against such Bank in respect of
such participation to be those set forth in the agreement executed by such Bank
in favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) to its parent company
and/or any affiliate of such Bank which is at least 50% owned by such Bank or
its parent company or to one or more Banks or (y) assign all, or if less than
all, a portion equal to at least $5,000,000 in the aggregate for the assigning
Bank or assigning Banks, of such Revolving Loan Commitment (and related
outstanding Obligations hereunder) to one or more Eligible Transferees, each of
which assignees shall become a party to this Agreement as a Bank by execution of
an Assignment and Assumption Agreement, provided that (i) at such time Annex I
shall be deemed modified to reflect the Revolving Loan Commitments of such new
Bank and of the existing Banks, (ii) upon surrender of the old Revolving Notes,
new
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Revolving Notes will be issued, at the Borrower's expense, to such new Bank
and to the assigning Bank, such new Revolving Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifications) to the extent
needed to reflect the revised Revolving Loan Commitments, (iii) the consent of
the Agent shall be required in connection with any such assignment pursuant to
clause (y) of this Section 12.04(b) (which consent shall not be unreasonably
withheld) and (v) the Agent shall receive at the time of each such assignment,
from the assigning or assignee Bank, the payment of a non-refundable assignment
fee of $3,500 and, provided further, that such transfer or assignment will not
be effective until recorded by the Agent on the Register pursuant to Section
7.12. To the extent of any assignment pursuant to this Section 12.04(b), the
assigning Bank shall be relieved of its obligations hereunder with respect to
its assigned Revolving Loan Commitment. At the time of each assignment
pursuant to this Section 12.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrower and the Agent the appropriate
Internal Revenue Service Forms (and, if applicable a Section 4.04(b)(ii)
Certificate) described in Section 4.04(b). To the extent that an assignment of
all or any portion of a Bank's Revolving Loan Commitment and related outstanding
Obligations pursuant to Section 1.13 or this Section 12.04(b) would, at the time
of such assignment, result in increased costs under Section 1.10, 1.11, 2.05 or
4.04 from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Agent or any Bank in exercising any right, power or privilege hereunder
or under any other Credit Document and no course of dealing between any Credit
Party and the Agent or any Bank shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Agent or any Bank would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Agent or the Banks to any other or
further action in any circumstances without notice or demand.
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12.06 Payments Pro Rata. (a) The Agent agrees that promptly after its
receipt of each payment from or on behalf of any Credit Party in respect of any
Obligations of such Credit Party, it shall, except as otherwise provided in this
Agreement, distribute such payment to the Banks (other than any Bank that has
consented in writing to waive its pro rata share of such payment) pro rata based
upon their respective shares, if any, of the Obligations with respect to which
such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the princi pal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; provided, that if
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by Holdings or
the Borrower to the Banks); provided, that except as otherwise specifically
provided herein, all computations determining compliance with Sections 3.03 and
8, including definitions used therein, and in determining the Applicable
Commitment Fee Percentage and the Interest Reduction Discount shall, in each
case, utilize accounting principles and policies in effect at the time of the
preparation of, and in conformity with those used to prepare, the December 31,
1995 financial statements delivered to the Banks pursuant to Section 6.10(b),
but shall not give effect to (without duplication) (i) purchase accounting
adjustments required or permitted by APB 16 (including non-cash write-ups and
non-cash charges relating to inventory, fixed assets and in-process research and
development, in each case arising in connection with the Original Acquisition or
any Permitted Acquisition) and APB 17 (including non-cash charges relating to
intangibles and goodwill arising in connection with the Original Acquisition or
any Permitted Acquisition), (ii) the restructuring and compensation costs
incurred pursuant to the Original Acquisition, (iii) the restructuring costs
incurred pursuant to (x) the sale by the Borrower of its personalizing business
and (y) the acquisition by the Borrower of Niagara Envelope, (iv) the fees paid
to Bain and/or the Bain Affiliates pursuant to Section 8.08(ii) of this
Agreement and Section 8.08(ii) of the Existing Credit Agreement, (v) any items
classified as extraordinary losses resulting from the consummation of the
Transaction,
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(vi) up to $1,200,000 of payments made by the Borrower on or prior to the
Initial Borrowing Date in connection with certain change of control payments
under pre-existing employment agreements and (vii) any non-cash charges.
(b) All computations of interest and Fees hereunder shall be made on the
actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Credit Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Credit Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or any
other Credit Document brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Credit Party. Each Credit Party irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Credit Party, at its address for notices pursuant to Section 12.03, such
service to become effective 30 days after such mailing. Each Credit Party hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
the Agent, any Bank or the holder of any Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
12.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts executed by all the parties hereto shall be lodged with Holdings,
the Borrower and the Agent.
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12.10 Effectiveness. This Agreement shall become effective on the date
(the "Effective Date") on which Holdings, WR Acquisition, the Borrower, the
Agent and each of the Banks shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered the same to the Agent
at the Notice Office or, in the case of the Banks, shall have given to the Agent
telephonic (confirmed in writing), written, telex or facsimile notice (actually
received) at such office that the same has been signed and mailed to it. The
Agent will give Holdings, WR Acquisition, the Borrower and each Bank prompt
written notice of the occurrence of the Effective Date.
12.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby in the case of the following clause
(i)), (i) extend the final scheduled maturity of any Loan or Note or extend the
stated maturity of any Letter of Credit beyond the Final Maturity Date, or
reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof (it being understood that any amendment or
modification to the financial definitions in this Agreement shall not constitute
a reduction in any rate of interest or fees for purposes of this clause (i)),
(ii) release all or substantially all of the Collateral (except as expressly
provided in the Security Documents) under all the Security Documents, (iii)
amend, modify or waive any provision of this Section 12.12, (iv) reduce the
percentage specified in the definition of Required Banks (it being understood
that, with the consent of the Required Banks, additional extensions of credit
pursuant to this Agreement may be included in the determination of the Required
Banks on substantially the same basis as the extensions of Revolving Loan
Commitments are included on the Effective Date) or (v) consent to the assignment
or transfer by the Borrower of any of its rights and obligations under this
Agreement; provided further, that no such change, waiver, discharge or
termination shall (w) increase the Revolving Loan Commitments of any Bank over
the amount thereof then in effect without the consent of such Bank (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in the Total Revolving
Loan Commitment shall not constitute an increase of the Revolving Loan
Commitment of any Bank, and that an increase in the available portion of any
Revolving Loan Commitment of any Bank shall not constitute an increase in the
Revolving Loan Commitment of such Bank), (x) without the consent of each Letter
of Issuer, amend, modify or waive any provision of Section 2 or alter its rights
or obligations with respect to Letters of Credit or Swingline Loans, (y) without
the consent of the Agent, amend, modify or waive any provision of Section 11 as
same applies to the
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Agent or any other provision as same relates to the rights or obligations of the
Agent and (z) without the consent of the Collateral Agent, amend, modify or
waive any provision relating to the rights or obligations of the Collateral
Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 12.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clause (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks with one or more
Replacement Banks pursuant to Section 1.13 so long as at the time of such
replacement, each such Replacement Bank consents to the proposed change, waiver,
discharge or termination or (B) terminate such non-consenting Bank's Revolving
Loan Commitment and repay in full its out standing Revolving Loans and cash
collateralize its applicable Percentage of the Letter of Credit of Outstandings
in accordance with Sections 3.02(b) and/or 4.01(b), provided that, unless the
Revolving Loan Commitment which is terminated and Revolving Loans which are
repaid pursuant to preceding clause (B) are immediately replaced in full at such
time through the addition of new Banks or the increase of the Revolving Loan
Commitments and/or outstanding Revolving Loans of existing Banks (who in each
case must specifically consent thereto), then in the case of any action pursuant
to preceding clause (B) the Required Banks (determined before giving effect to
the proposed action) shall specifically consent thereto, provided further, that
the Borrower shall not have the right to replace a Bank solely as a result of
the exercise of such Bank's rights (and the withholding of any required consent
by such Bank) pursuant to the second proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.07 or 12.01, shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank; provided, that the Borrower shall not be responsible for costs arising
under Section 1.10, 1.11, 2.05 or 4.04 resulting from any such transfer (other
than a transfer pursuant to Section 1.12) to the extent such costs would not
otherwise be applicable to such Bank in the absence of such transfer.
12.15 Confidentiality. (a) Each of the Banks agrees that it will use
its reasonable efforts not to disclose without the prior consent of the Borrower
(other than to its directors, employees, auditors, counsel or other professional
advisors, to affiliates or to another Bank if the Bank or such Bank's holding or
parent company in its sole discretion determines that any such party should have
access to such information) any information
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with respect to Holdings, WR Acquisition, the Borrower or any of its
Subsidiaries which is furnished pursuant to this Agreement; provided, that any
Bank may disclose any such information (a) as has become generally available to
the public, (b) as may be required or appropriate (x) in any report, statement
or testimony submitted to any municipal, state or Federal regulatory body having
or claiming to have jurisdiction over such Bank or to the Federal Reserve Board
or the Federal Deposit Insurance Corporation or similar organizations (whether
in the United States or elsewhere) or their successors or (y) in connection with
any request or requirement of any such regulatory body, (c) as may be required
or appropriate in response to any summons or subpoena or in connection with any
litigation, (d) to comply with any law, order, regulation or ruling applicable
to such Bank, and (e) to any prospective transferee in connection with any
contemplated transfer of any of the Notes or any interest therein by such Bank;
provided, that such prospective transferee agrees to be bound by this Section
12.15 to the same extent as such Bank.
(b) Each of Holdings, WR Acquisition and the Borrower hereby acknow
ledges and agrees that each Bank may share with any of its affiliates any
information related to Holdings or any of its Subsidiaries (including, without
limitation, any nonpublic customer information regarding the creditworthiness of
Holdings and its Subsidiaries), provided that such Persons shall be subject to
the provisions of this Section 12.15 to the same extent as such Bank.
12.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 13. Parents Guaranty.
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13.01 The Guaranty. In order to induce the Banks to enter into this
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by each Parent Guarantor from the proceeds of the Loans
and the issuance of the Letters of Credit, each Parent Guarantor hereby agrees
with the Banks as follows: Each Parent Guarantor hereby unconditionally and
irrevocably, jointly and severally, guarantees, as primary obligor and not
merely as surety the full and prompt payment when due, whether upon maturity,
acceleration or otherwise, of any and all of the Guaranteed Obligations of the
Borrower to the Guaranteed Creditors. If any or all of the Guaranteed
Obligations of the Borrower to the Guaranteed Creditors becomes due and payable
hereunder, each Parent Guarantor, jointly and severally, and unconditionally
promises to pay such indebtedness to the Guaranteed Creditors, or order, on
demand, together with any and all expenses (including reasonable legal fees and
expenses) which may be incurred by the Guaranteed Creditors in collecting or
enforcing any of the Guaranteed Obligations. If
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claim is ever made upon any Guaranteed Creditor for repayment or recovery of any
amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid pay ees repays all or part of said amount
by reason of (i) any judgment, decree or order of any court or administrative
body having jurisdiction over such payee or any of its property or (ii) any
settlement or compromise of any such claim effected by such payee with any such
claimant (including the Borrower), then and in such event each Parent Guarantor
agrees that any such judgment, decree, order, settlement or compromise shall be
binding upon such Parent Guarantor, notwithstanding any revocation of this
Guaranty or any other instrument evidencing any liability of the Borrower, and
each Parent Guarantor shall be and remain jointly and severally liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.
This is a guaranty of payment and not of collection.
13.02 Bankruptcy. Additionally, each Parent Guarantor unconditionally
and irrevocably, jointly and severally, guarantees the payment of any and all of
the Guaranteed Obligations of the Borrower to the Guaranteed Creditors whether
or not due or payable by the Borrower upon the occurrence of any of the events
specified in Section 9.05, and unconditionally, and jointly and severally,
promises to pay such indebtedness to the Guaranteed Creditors, or order, on
demand, in lawful money of the United States.
13.03 Nature of Liability. (a) The liability of each Parent Guarantor
hereunder is joint and several and exclusive and independent of any security for
or other guaranty of the Guaranteed Obligations of the Borrower whether executed
by such Parent Guarantor, any other Parent Guarantor, any other guarantor or by
any other party, and the liability of each Parent Guarantor hereunder is not
affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of the Borrower, or (c) any payment on or in reduction of
any such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any payment
made to the Guaranteed Creditors on the Guaranteed Obligations which any such
Guaranteed Creditor repays to the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Parent Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
(b) It is the desire and intent of each Parent Guarantor and the
Guaranteed Creditors that this Guaranty shall be enforced against each Parent
Guarantor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If, however, and
to the extent that, the obligations of any Parent Guarantor under this Guaranty
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of
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such Parent Guarantor shall be deemed to be reduced and such Parent Guarantor
shall pay the maximum amount of the Guaranteed Obligations which would be
permissible under applicable law.
13.04 Independent Obligation. The obligations of each Parent Guarantor
hereunder are independent of the obligations of any other Parent Guarantor, any
other guarantor, any other party or the Borrower, and a separate action or
actions may be brought and prosecuted against each Parent Guarantor whether or
not action is brought against any other Parent Guarantor, any other guarantor,
any other party or the Borrower and whether or not any other guarantor, any
other party or the Borrower be joined in any such action or actions. Each Parent
Guarantor waives, to the full extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to any Parent Guarantor.
13.05 Authorization. Each Parent Guarantor authorizes the Guaranteed
Creditors without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter, any
of the Guaranteed Obligations (including any increase or decrease in the
rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed
or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or
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indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or
not) of the Borrower to its creditors other than the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document or
any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
any Parent Guarantor from its liabilities under this Guaranty.
13.06 Reliance. It is not necessary for the Guaranteed Creditors to
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
13.07 Subordination. Any of the indebtedness of the Borrower now or
hereafter owing to any Parent Guarantor is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Guaranteed Creditors; and if the Agent
so requests at a time when an Event of Default exists, all such indebtedness of
the Borrower to any Parent Guarantor shall be collected, enforced and received
by such Parent Guarantor for the benefit of the Guaranteed Creditors and be paid
over to the Agent on behalf of the Guaranteed Creditors on account of the
Guaranteed Obligations of the Borrower to the Guaranteed Creditors, but without
affecting or impairing in any manner the liability of any Parent Guarantor under
the other provisions of this Guaranty. Prior to the transfer by any Parent
Guarantor of any note or negotiable instrument evidencing any of the
indebtedness of the Borrower to such Parent Guarantor, such Parent Guarantor
shall mark such note or negotiable instrument with a legend that the same is
subject to this subordination. Without limiting the generality of the
foregoing, each Parent Guarantor hereby agrees with the Guaranteed Creditors
that it will not exercise any right of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have
been irrevocably paid in full in cash.
13.08 Waiver. (a) Each Parent Guarantor waives any right (except as
shall be required by applicable statute and cannot be waived) to require any
Guaranteed Creditor
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to (i) proceed against the Borrower, any other Parent Guarantor, any other
guarantor or any other party, (ii) proceed against or exhaust any security held
from the Borrower, any other Parent Guarantor, any other guarantor or any other
party or (iii) pursue any other remedy in any Guaranteed Creditor's power
whatsoever. Each Parent Guarantor waives any defense based on or arising out of
any defense of the Borrower, any other Parent Guarantor, any other guarantor or
any other party, other than payment in full of the Guaranteed Obligations, based
on or arising out of the disability of the Borrower, any other Parent Guarantor,
any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Bor rower other than payment in full of the
Guaranteed Obligations. The Guaranteed Creditors may, at their election,
foreclose on any security held by the Agent, the Collateral Agent or any other
Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any Parent
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid. Each Parent Guarantor waives any defense arising out of any such election
by the Guaranteed Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such Parent Guarantor against the Borrower or any other party or any security.
(b) Each Parent Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Each Parent Guarantor assumes all
responsibility for being and keeping itself informed of the Bor rower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks which each Parent Guarantor assumes and incurs hereunder,
and agrees that the Guaranteed Creditors shall have no duty to advise any Parent
Guarantor of information known to them regarding such circumstances or risks.
(c) Each Parent Guarantor understands, is aware and hereby acknowledges
that to the extent the Guaranteed Obligations are secured by real property
located in the State of California, such Parent Guarantor shall be liable for
the full amount of its liability hereunder notwithstanding foreclosure on such
real property by trustee sale or any other reason impairing such Parent
Guarantor's or any Guaranteed Creditor's right to proceed against any Credit
Party. Each Parent Guarantor hereby waives, to the fullest extent permitted by
law, all rights and benefits under Section 2809 of the California Civil Code
purporting to reduce a guarantor's obligation in proportion to the principal
obligation. Each Parent Guarantor hereby waives all rights and benefits under
Section 580a of the California Code of Civil Procedure purporting to limit the
amount of any deficiency judgment which
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might be recoverable following the occurrence of a trustee's sale under a deed
of trust and all rights and benefits under Section 580b of the California Code
of Civil Procedure stating that no deficiency may be recovered on a real
property purchase money obligation. Each Parent Guarantor further understands,
is aware and hereby acknowledges that if the Guaranteed Creditors elect to
nonjudicially foreclose on any real property security located in the State of
California any right of subrogation of such Parent Guarantor against the
Guaranteed Creditors may be impaired or extinguished and that as a result of
such impairment or extinguishment of subrogation rights, such Parent Guarantor
may have a defense to a deficiency judgment arising out of the operation of (i)
Section 580d of the California Code of Civil Procedure which states that no
deficiency may be recovered on a note secured by a deed of trust on real
property in case such real property is sold under the power of sale contained in
such deed of trust, and (ii) related principles of estoppel. To the fullest
extent permitted by law, each Parent Guarantor waives all rights and benefits
and any defense arising out of the operation of Section 580d of the California
Code of Civil Procedure and related principles of estoppel, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of such Parent Guarantor against any Credit
Party or any other party or any security. In addition, each Parent Guarantor
hereby waives, to the fullest extent permitted by applicable law, without
limiting the generality of the foregoing or any other provision hereof, all
rights and benefits which might otherwise be available to such Parent Guarantor
under Section 726 of the California Code of Civil Procedure and all rights and
benefits which might otherwise be available to such Parent Guarantor under
California Civil Code Sections 2809, 2810, 2815, 2819, 2821, 2839, 2845, 2848,
2849, 2850, 2899 and 3433.
(d) Each Parent Guarantor hereby further waives (to the fullest extent
permitted by applicable law): (1) all rights and defenses arising out of an
election of remedies by the Guaranteed Creditors, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
Guaranteed Obligation, has destroyed such Parent Guarantor's rights of
subrogation and reimbursement against the principal by the operation of Section
580d of the California Code of Civil Procedure or otherwise; (2) such Parent
Guarantor's rights of subrogation and reimbursement and any other rights and
defenses available to such Parent Guarantor by reason of the California Civil
Code Sections 2787 to 2855, inclusive, including, without limitation, (i) any
defenses such Parent Guarantor may have to the Guaranteed Obligations by reason
of an election of remedies by the Guaranteed Creditors and (ii) any rights or
defenses such Parent Guarantor may have by reason of protection afforded to the
principal borrower with respect to the obligation so guaranteed pursuant to the
antideficiency or other laws of the State of California limiting or discharging
the borrower's indebtedness, including, without limitation, California Code of
Civil Procedure Sections 580a, 580b, 580d or 726.
-118-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
Address:
- - -------
17304 Preston Road AMERICAN PAD & PAPER
Suite 700 COMPANY
Dallas, Texas 75252-516
Telephone No.: (214) 733-6200
Facsimile No.: (214) 733-6298 By /s/ Gregory M. Benson
Attention: Gregory M. Benson -----------------------------------
Title: Chief Financial Officer
17304 Preston Road WR ACQUISITION, INC.
Suite 700
Dallas, Texas 75252-516
Telephone No.: (214) 733-6200 By /s/ Gregory M. Benson
Facsimile No.: (214) 733-6298 -----------------------------------
Attention: Gregory M. Benson Title: President
17304 Preston Road AMERICAN PAD & PAPER
Suite 700 COMPANY OF DELAWARE, INC
Dallas, Texas 75252-516
Telephone No.: (214) 733-6200
Facsimile No.: (214) 733-6298
Attention: Gregory M. Benson By /s/ Gregory M. Benson
-----------------------------------
Title: Chief Administrative Officer
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Christopher Kinslow
-----------------------------------
Title: Vice President
<PAGE>
ABN AMRO BANK N.V.
HOUSTON AGENCY
BY: ABN AMRO NORTH
AMERICA, INC., AS AGENT
By /s/ Ronald A. Mahle
-------------------------------
Title: Group Vice President and
Director
By /s/ Lila Jordan
-------------------------------
Title: Vice President and Director
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
-------------------------------
Title: Senior Manager Loan
Operations
THE BANK OF NEW YORK
By /s/ Steven Ross
-------------------------------
Title: Assistant Vice President
BANK ONE, TEXAS, N.A.
By /s/ J. Paul Voorhies
-------------------------------
Title: Assistant Vice President
<PAGE>
BANK POLSKA KASA OPIEKI,
S.A., NEW YORK BRANCH
By /s/ William A. Shea
--------------------------
Title: Vice President
Senior Lending Officer
BANK OF SCOTLAND
By /s/ Catherine M. Oniffrey
--------------------------
Title: Vice President
BANK OF TOKYO - MITSUBISHI
TRUST COMPANY
By /s/ Randy Szuch
-------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Ann C. Pifer
-------------------------
Title: Vice President
By /s/ Duane P. Helkowski
-------------------------
Title: Assistant Vice President
<PAGE>
CHRISTIANIA BANK OG
KREDITKASSE, NEW YORK
BRANCH
By /s/ Carl-Petter Svendsen
-----------------------------
Title: First Vice President
By /s/ Peter M. Dodge
-----------------------------
Title: Vice President
CIBC INC.
By /s/ Gary C. Gaskill
-----------------------------
Title: Authorized Signatory
THE FIRST NATIONAL BANK OF
BOSTON
By /s/ Diane J. Exter
-----------------------------
Title: Director
GUARANTY FEDERAL BANK,
F.S.B.
By /s/ Bruce Leib
-----------------------------
Title: Vice President
THE INDUSTRIAL BANK OF
JAPAN, LIMITED
By /s/ Junri Oda
-----------------------------
Title: Senior Vice President and
Senior Manager
<PAGE>
THE LONG TERM CREDIT BANK
OF JAPAN, LIMITED, NEW
YORK BRANCH
By /s/ Frank H. Madden
-------------------
Title: Vice President
SANWA BUSINESS CREDIT
CORPORATION
By /s/ John P. Thacker
-------------------
Title: Vice President
SOCIETE GENERALE
By /s/ John J. Wagner
------------------
Title: Vice President
<PAGE>
ANNEX I
-------
LIST OF BANKS AND COMMITMENTS
-----------------------------
<TABLE>
<CAPTION>
Revolving Loan
Bank Commitment
- - ---- --------------
<S> <C>
ABN AMRO Bank N.V., Houston Agency $ 10,000,000
Bankers Trust Company 35,000,000
The Bank of Nova Scotia 30,000,000
The Bank of New York 10,000,000
Bank One, Texas, N.A. 30,000,000
Bank Polska Kasa Opieki, S.A., New York Branch 5,000,000
Bank of Scotland 10,000,000
Bank of Tokyo - Mitsubishi Trust Company 30,000,000
Banque Paribas 10,000,000
Christiania Bank og Kreditkasse, New York Branch 10,000,000
CIBC Inc. 20,000,000
The First National Bank of Boston 30,000,000
Guaranty Federal Bank, F.S.B. 20,000,000
The Industrial Bank of Japan, Limited 10,000,000
The Long Term Credit Bank of Japan, Limited, 10,000,000
New York Branch
Sanwa Business Credit Corporation 10,000,000
Societe Generale 20,000,000
----------------
Total: $300,000,000
</TABLE>
<PAGE>
ANNEX II
--------
BANK ADDRESSES
--------------
Bank Address
- - ---- -------
ABN AMRO Bank N.V., Three Riverway
Houston Branch Suite 1700
Houston, TX 77056
Attention: Lila Jordan
Telephone No.: (713) 964-3356
Facsimile No.: (713) 629-7533
Bankers Trust Company One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094
Facsimile No.: (212) 250-7218
The Bank of Nova Scotia Notices and Execution Documents:
Atlanta Agency
600 Peachtree Street N.E.
Atlanta, Georgia 30308
Attention: F.C.H. Ashby,
Senior Assistant Agent
Telephone No.: (404) 877-1500
Facsimile No.: (404) 888-8998
With a copy to:
Houston Representative Office
1100 Louisiana
Suite 3000
Houston, Texas 77002
Attention: Rosine Mathews
Telephone No.: (713) 759-3432
Facsimile No.: (713) 752-2425
<PAGE>
ANNEX II
Page 2
The Bank of New York One Wall Street, 22nd Floor
New York, New York 10005
Attention: Steven Ross
Telephone No.: (212) 635-6724
Facsimile No.: (212) 635-6434
Bank One, Texas, N.A. 1717 Main Street - 3rd Floor
Dallas, Texas 75201
Attention: Paul Voorhies
Telephone No.: (214) 290-2472
Facsimile No.: (214) 290-2683
Bank Polska Kasa Opieki, S.A., 470 Park Avenue South - 15th Floor
New York Branch New York, New York 10016
Attention: William Shea
Telephone No.: (212) 251-1203
Facsimile No.: (212) 679-5910
Bank of Scotland One Post Office Square
Suite 3750
Boston, Massachusetts 02109
Attention: Bill Boland
Telephone No.: (617) 426-1059
Facsimile No.: (617) 426-1353
Bank of Tokyo-Mitsubishi 1251 Avenue of the Americas
Trust Company 12th Floor
New York, New York 10020
Attention: Randy Szuch
Telephone No.: (212) 782-4268
Facsimile No.: (212) 782-4935
Banque Paribas 787 Seventh Avenue - 32nd Floor
New York, New York 10019
Attention: Anne Pifer
Telephone No.: (212) 841-2383
Facsimile No.: (212) 841-2333
<PAGE>
ANNEX II
Page 3
Christiania Bank og 11 West 42nd Street - 7th Floor
Kreditkasse, New York New York, New York 10036
Branch Attention: Ron Anderson
Telephone No.: (212) 827-4815
Facsimile No.: (212) 827-4888
CIBC Inc. Execution Documents:
2 Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta,GA 30339
Attention: Joan Mosely
Telephone No.: (770) 319-4828
Facsimile No.: (770) 319-4950
All other communications and with a copy
to:
909 Fannin Street
Suite 1200
Houston, TX 77010
David Balderach
Telephone No.: (713) 655-5218
Facsimile No.: (713) 650-3727
The First National Bank of Diversified Finance
Boston MS 01-08-05
100 Federal Street
Boston, Massachusetts 02110
Attention: Diane Exter
Telephone No.: (617) 434-1442
Facsimile No.: (617) 434-4929
Guaranty Federal Bank, F.S.B. 8333 Douglas Avenue
Dallas, Texas 75225
Attention: Bruce Leib
Telephone No.: (214) 360-8896
<PAGE>
ANNEX II
Page 4
Facsimile No.: (214) 369-1004
The Industrial Bank of Japan, 245 Park Avenue - 23rd Floor
Limited New York, New York 10167
Attention: Atsushi Kawai,
Senior Vice President
Credit Administration Department
Telephone No.: (212) 309-6449
Facsimile No.: (212) 949-0134
With a copy to:
Attention: Jennifer McNamara
Telephone No.: (212) 309-6541
Facsimile No.: (212) 682-2870
The Long Term Credit Bank 165 Broadway
of Japan, Limited, New York Branch 49th Floor
New York, New York 10006
Attention: Frank Madden
Telephone No.: (212) 335-4550
Facsimile No.: (212) 608-2371
Sanwa Business Credit One South Wacker Drive, Suite 2800
Corporation Chicago, Illinois 60606
Attention: Barry Davis
Telephone No.: (212) 782-8080
Facsimile No.: (212) 782-6035
Societe Generale 1221 Avenue of the Americas
New York, New York 10020
Attention: Jack Wagner
Telephone No.: (212) 278-6736
Facsimile No.: (212) 278-6178
<PAGE>
SECURITY AGREEMENT
among
AMERICAN PAD & PAPER COMPANY,
WR ACQUISITION, INC.,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
CERTAIN OTHER SUBSIDIARIES
OF AMERICAN PAD & PAPER COMPANY,
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of July 8, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE I SECURITY INTERESTS ........................................... 2
1.1. Grant of Security Interests .................................. 2
1.2. Power of Attorney ............................................ 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS .................................................... 3
2.1. Necessary Filings ............................................ 3
2.2. No Liens ..................................................... 3
2.3. Other Financing Statements ................................... 4
2.4. Chief Executive Office; Records .............................. 4
2.5. Location of Inventory and Equipment .......................... 4
2.6. Recourse ..................................................... 5
2.7. Trade Names; Change of Name .................................. 5
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS .................... 5
3.1. Additional Representations and Warranties .................... 5
3.2. Maintenance of Records ....................................... 6
3.3. Direction to Account Debtors; Contracting Parties; etc ....... 6
3.4. Modification of Terms; etc ................................... 6
3.5. Collection ................................................... 7
3.6. Instruments .................................................. 7
3.7. Further Actions .............................................. 7
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS ..................... 7
4.1. Additional Representations and Warranties .................... 7
4.2. Licenses and Assignments ..................................... 8
4.3. Infringements ................................................ 8
4.4. Preservation of Marks ........................................ 8
4.5. Maintenance of Registration .................................. 8
4.6. Future Registered Marks ...................................... 9
4.7. Remedies ..................................................... 9
ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS ........................ 9
5.1. Additional Representations and Warranties .................... 9
5.2. Licenses and Assignments ..................................... 10
5.3. Infringements ................................................ 10
5.4. Maintenance of Patents ....................................... 10
5.5. Prosecution of Patent Application ............................ 10
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
5.6. Other Patents and Copyrights ................................. 10
5.7. Remedies ..................................................... 11
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL ......................... 11
6.1. Protection of Collateral Agent's Security .................... 11
6.2. Warehouse Receipts ........................................... 12
6.3. Further Actions .............................................. 12
6.4. Financing Statements ......................................... 12
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT
OF DEFAULT ................................................... 12
7.1. Remedies; Obtaining the Collateral Upon Default .............. 12
7.2. Remedies; Disposition of the Collateral ...................... 14
7.3. Waiver of Claims ............................................. 14
7.4. Application of Proceeds ...................................... 15
7.5. Remedies Cumulative .......................................... 16
7.6. Discontinuance of Proceedings ................................ 17
ARTICLE VIII INDEMNITY .................................................... 17
8.1. Indemnity .................................................... 17
8.2. Indemnity Obligations Secured by Collateral; Survival ........ 18
ARTICLE IX DEFINITIONS .................................................. 18
ARTICLE X MISCELLANEOUS ................................................ 23
10.1. Notices ...................................................... 23
10.2. Waiver; Amendment ............................................ 24
10.3. Obligations Absolute ......................................... 24
10.4. Successors and Assigns ....................................... 24
10.5. Headings Descriptive ......................................... 24
10.6. Governing Law ................................................ 24
10.7. Assignor's Duties ............................................ 25
10.8. Termination; Release ......................................... 25
10.9. Counterparts ................................................. 25
10.10. The Collateral Agent ......................................... 26
ANNEX A Schedule of Chief Executive Offices and other Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Trade and Fictitious Names
ANNEX D List of Marks
ANNEX E List of Patents and Applications
ANNEX F List of Copyrights and Applications
ANNEX G Grant of Security Interest in United States Trademarks and Patents
ANNEX H Grant of Security Interest in United States Copyrights
</TABLE>
(ii)
<PAGE>
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of July 8, 1996, among each of the
undersigned (each an "Assignor" and, together with any other entity that becomes
a party hereto pursuant to Section 10.11 hereof, the "Assignors") and Bankers
Trust Company, as Collateral Agent (the "Collateral Agent"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement (as defined below) shall
be used herein as therein defined.
W I T N E S S E T H :
-------------------
WHEREAS, American Pad & Paper Company ("Holdings"), WR Acquisition,
Inc. ("WR Acquisition"), American Pad & Paper Company of Delaware, Inc. (the
"Borrower"), the lenders from time to time party thereto (the "Banks"), and
Bankers Trust Company, as Agent, (together with any successor agent, the
"Agent," and together with the Collateral Agent, each Letter of Credit Issuer
and the Banks, the "Bank Creditors"), have entered into a Credit Agreement,
dated as of July 8, 1996, (as amended, modified or supplemented from time to
time, the "Credit Agreement"), providing for the making of Loans to the Borrower
and the issuance of, and participation in, Letters of Credit for the account of
the Borrower, all as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors", and together with the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Parents Guaranty, Holdings and WR Acquisition
have jointly and severally guaranteed to the Secured Creditors the payment when
due of all obligations and liabilities of the Borrower under or with respect to
the Credit Documents and the Interest Rate Protection Agreements or Other
Hedging Agreements;
<PAGE>
WHEREAS, pursuant to the Subsidiary Guaranty, each Assignor (other
than Holdings, WR Acquisition and the Borrower) has jointly and severally
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the Borrower under or with respect to the Credit Documents and
the Interest Rate Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower under the Credit Agreement that the Assignors shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest of first priority in, all of the
right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired: (i)
each and every Receivable, (ii) all Contracts (other than Excluded Contracts
except to the extent provided in the definition thereof), together with all
Contract Rights arising thereunder, (iii) all Inventory, (iv) all Equipment, (v)
all Marks, together with the registrations and right to all renewals thereof,
and the goodwill of the business of such Assignor symbolized by the Marks, (vi)
all Patents and Copyrights, (vii) all computer programs of such Assignor and all
intellectual property rights therein (to the extent not constituting Excluded
Contracts) and all other proprietary information of such Assignor, including,
but not limited to, trade secrets, (viii) all other Goods, General Intangibles,
Chattel Paper, Documents and Instruments, (ix) the Cash Collateral Account and
all monies, securities and instruments deposited or required to be deposited in
such Cash Collateral Account, and (x) all Proceeds and products of any and all
of the foregoing (all of the above, collectively, the "Collateral").
Notwithstanding the foregoing, the term "Collateral" shall not include (i) any
Equipment that, as of the date hereof, serves as security for any Existing
Indebtedness but only to the extent that (and so long as) the terms of such
Existing Indebtedness specifically prohibit the granting of a prior, pari passu
or junior Lien and security interest in such Equipment, and then only so long as
any such Existing Indebtedness remains outstanding after which time such
Equipment shall be subject to the security interests and Liens created
-2-
<PAGE>
by this Agreement nor (ii) any Specified Asset that is transferred to the
Receivables Entity pursuant to the Accounts Receivable Facility Documents.
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be reasonably necessary or advisable to
protect the interests of the Secured Creditors, which appointment as attorney is
coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been or will be accomplished and the security interest granted
to the Collateral Agent pursuant to this Agreement in and to the Collateral
creates a perfected security interest therein prior to the rights of all other
Persons therein and subject to no other Liens (other than Permitted Liens) and
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by filing a financing statement under the Uniform Commercial Code as enacted in
any relevant jurisdiction or in the United States Patent and Trademark Office or
United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of, or
has rights in, all Collateral free from any Lien, security interest, encumbrance
or other right, title or interest of any Person (other than Permitted Liens),
and such Assignor shall defend the Collateral to the extent of its rights
therein against all claims and demands of all Persons at any time claiming the
same or any interest therein adverse to the Collateral Agent.
-3-
<PAGE>
2.3. Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Total Revolving Loan Commitment has not
been terminated or any Note remains unpaid or any of the Obligations remain
unpaid or any Interest Rate Protection Agreement or Other Hedging Agreement or
Letter of Credit remains in effect (other than Letters of Credit, together with
all Fees that have accrued and will accrue thereon through the stated
termination date of such Letters of Credit, which have been supported in a
manner satisfactory to the Letter of Credit Issuer in its sole and absolute
discretion) or any Obligations are owed with respect thereto, such Assignor will
not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except (a) financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as permitted by the Credit
Agreement and (b) financing statements with respect to Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive office of
such Assignor is located at the address or addresses indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office except
to such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. The originals of all documents evidencing all
Receivables and Contract Rights of such Assignor and the only original books of
account and records of such Assignor relating thereto are, and will continue to
be, kept at such chief executive office, at one or more of the locations set
forth on Annex A hereto or at such new locations as such Assignor may establish
in accordance with the last sentence of this Section 2.4. All Receivables and
Contract Rights of such Assignor are, and will continue to be, maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from, the office locations described above or such new
location established in accordance with the last sentence of this Section 2.4.
No Assignor shall establish new locations for such offices unless (i) it shall
have given to the Collateral Agent written notice within 10 days of such
relocation, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new location, it shall have taken all
action, reasonably satisfactory to the Collateral Agent, to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor (other than (i) immaterial
portions of Inventory (x) sold on consignment or held on display for
demonstration purposes or (y) that have been transferred to another location in
connection with a sale of such Inventory in the ordinary course of business, so
long as such sale occurs within 60 days from the date of such transfer and (ii)
various spare parts held for maintenance or repair of Equipment). Each Assignor
agrees that all Inventory and Equipment now held or subsequently acquired by it
shall be kept at (or shall be in transport to) any one of the locations shown on
Annex B hereto, or such new location as such Assignor may establish in
accordance with the last sentence of this Section
-4-
<PAGE>
2.5 (other than (i) immaterial portions of Inventory (x) sold on consignment or
held on display for demonstration purposes or (y) that have been transferred to
another location in connection with a sale of such Inventory in the ordinary
course of business, so long as such sale occurs within 30 days from the date of
such transfer or (ii) various spare parts held for maintenance or repair of
Equipment). Any Assignor may establish a new location for Inventory and
Equipment only if (i) it shall have given to the Collateral Agent written notice
within 10 days of such relocation, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may request and (ii) with respect to such new location, it shall have taken all
action reasonably satisfactory to the Collateral Agent to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.6. Recourse. This Agreement is made with full recourse to each
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection Agreements or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates in any
jurisdiction under, or in the preceding 12 months has had or has operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex C
hereto. No Assignor shall change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex C hereto and new names established in accordance with the last sentence
of this Section 2.7. No Assignor shall assume or operate in any jurisdiction
under any new trade, fictitious or other name unless (i) it shall have given to
the Collateral Agent written notice within 10 days of any such name change,
clearly describing such new name and the jurisdictions in which such new name
shall be used and providing such other information in connection therewith as
the Collateral Agent reasonably may request and (ii) with respect to such new
name, it shall have taken all action requested by the Collateral Agent, to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and that all
papers and documents (if any) relating thereto will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein (other than copies created for general accounting purposes).
-5-
<PAGE>
3.2. Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense accurate records of its Receivables and Contracts,
records of all payments received, all credits granted thereon, all merchandise
returned and all other dealings therewith, and such Assignor will make the same
available on such Assignor's premises to the Collateral Agent for inspection, at
such Assignor's own cost and expense, at any and all reasonable times upon prior
notice to an Authorized Officer of such Assignor. Upon the occurrence and during
the continuance of an Event of Default and at the request of the Collateral
Agent, such Assignor shall, at its own cost and expense, deliver all tangible
evidence of its Receivables and Contract Rights (including, without limitation,
all documents evidencing the Receivables and all Contracts) and such books and
records to the Collateral Agent or to its representatives (copies of which
evidence and books and records may be retained by such Assignor). Upon the
occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs, such Assignor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, the Receivables and the
Contracts, as well as books, records and documents (if any) of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon
the occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
which application shall be effected in the manner provided in Section 7.4 of
this Agreement. The costs and expenses (including reasonable attorneys' fees) of
collection, whether incurred by the Assignor or the Collateral Agent, shall be
borne by the relevant Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the relevant Assignor;
provided, that the failure by the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.3.
3.4. Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify in
any material respect any term thereof or make any material adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.5 hereof or in the
Credit Agreement. Each Assignor will duly fulfill all obligations on its part to
be fulfilled under or in connection with the Receivables and Contracts and will
do nothing to impair the rights of the Collateral Agent in the Receivables or
Contracts.
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3.5. Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
prior to the occurrence of an Event of Default, any Assignor may allow in the
ordinary course of business as adjustments to amounts owing under its
Receivables and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument
constituting Collateral, such Assignor will within 10 Business Days notify the
Collateral Agent thereof, and upon request by the Collateral Agent will promptly
deliver such Instrument to the Collateral Agent appropriately endorsed to the
order of the Collateral Agent as further security hereunder.
3.7. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments (in each case to the
extent constituting Collateral) and other property or rights covered by the
security interest hereby granted, as the Collateral Agent may reasonably
require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the registered Marks listed in Annex D hereto for such Assignor
and that said listed Marks constitute all the United States marks and
applications for United States marks registered in the United States Patent and
Trademark Office that such Assignor presently owns or uses in connection with
its business. Each Assignor represents and warrants that it owns, is licensed to
use or otherwise has the right to use all Marks that it uses. Each Assignor
further warrants that it has no knowledge of any third party claim that any
aspect of such Assignor's present or contemplated business operations infringes
or will infringe any
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trademark, service mark or trade name. Each Assignor represents and warrants
that it is the true and lawful owner of or otherwise has the right to use all
U.S. trademark registrations and applications listed in Annex D hereto and that
said registrations are valid, subsisting, have not been cancelled and that such
Assignor is not aware of any third-party claim that any of said registrations is
invalid or unenforceable, or is not aware that there is any reason that any of
said registrations is invalid or unenforceable, or is not aware that there is
any reason that any of said applications will not pass to registration. Each
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of an Event of Default, any
document which may be required by the United States Patent and Trademark Office
in order to effect an absolute assignment of all right, title and interest in
each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any Mark absent prior written approval of the
Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor's rights in and to any
Mark, or with respect to any party claiming that such Assignor's use of any Mark
violates in any material respect any property right of that party. Each Assignor
further agrees, unless otherwise agreed by the Collateral Agent, to prosecute
any Person infringing any Mark owned by such Assignor in accordance with
reasonable business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks in
interstate commerce during the time in which this Agreement is in effect,
sufficiently to preserve such Marks as trademarks or service marks under the
laws of the United States; provided, that, to the extent permitted by the Credit
Agreement, no Assignor shall be obligated to preserve any Mark in the event such
Assignor determines, in its reasonable business judgment, that the preservation
of such Mark is no longer desirable in the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. (S)(S) 1051 et seq. to maintain trademark registrations, including but
not limited to affidavits of use and applications for renewals of registration
in the United States Patent and Trademark Office for all of its registered Marks
pursuant to 15 U.S.C. (S)(S) 1058(a), 1059 and 1065, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent; provided, that no Assignor shall be obligated to maintain
registration of any Mark in the event that such Assignor determines, in its
reasonable business judgment, that such maintenance of such Mark is no longer
necessary or desirable in the conduct of its business. Each Assignor agrees to
notify the Collateral Agent three (3) months prior to the dates on which the
affidavits of use or the applications for renewal registration are due
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with respect to any registered Mark that the affidavits of use or the renewal is
being processed or being abandoned, as the case may be.
4.6. Future Registered Marks. If any Mark registration issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral Agent
a copy of such certificate, and an assignment for security in such Mark, to the
Collateral Agent and at the expense of such Assignor, confirming the assignment
for security in such Mark to the Collateral Agent hereunder, the form of such
security to be substantially the same as the form hereof or in such other form
as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (ii) take and use or sell the Marks and the goodwill of
such Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to refrain, in which event such
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor's
corporate name to eliminate therefrom any use of any Mark and execute such other
and further documents that the Collateral Agent may request to further confirm
this and to transfer ownership of the Marks and registrations and any pending
trademark application in the United States Patent and Trademark Office to the
Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in (i) all material United States trade secrets and proprietary
information necessary to operate the business of the Assignor (the "Trade Secret
Rights"), (ii) the Patents listed in Annex E hereto for such Assignor and that
said Patents constitute all the United States patents and applications for
United States patents that such Assignor now owns and (iii) the Copyrights
listed in Annex F hereto for such Assignor and that said Copyrights constitute
all registrations of United States copyrights and applications for United States
copyright registrations that such Assignor now owns. Each Assignor further
warrants that it has no knowledge of any third party claim that any aspect of
such Assignor's present or contemplated business operations
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infringes or will infringe any patent or any copyright or such Assignor has
misappropriated any trade secret or proprietary information. Each Assignor
hereby grants to the Collateral Agent an absolute power of attorney to sign,
upon the occurrence and during the continuance of any Event of Default, any
document which may be required by the United States Patent and Trademark Office
or the United States Copyright Office in order to effect an absolute assignment
of all right, title and interest in each Patent and Copyright, and to record the
same.
5.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreement, each Assignor hereby agrees not to divest itself of any right
under any Patent or Copyright absent prior written approval of the Collateral
Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement to infringe any of such
Assignor's rights in and to any Patent or Copyright or to any claim that such
Assignor's practice of any Patent or use of any Copyright violates any property
right of a third party, or with respect to any misappropriation of any Trade
Secret Right or any claim that such Assignor's practice of any Trade Secret
Right violates any property right of a third party. Each Assignor further
agrees, absent direction of the Collateral Agent to the contrary, diligently to
prosecute any Person infringing any Patent or Copyright or any Person
misappropriating any Trade Secret Right in accordance with commercially
reasonable business practices.
5.4. Maintenance of Patents. At its own expense, each Assignor shall
make timely payment of all post-issuance fees required pursuant to 35 U.S.C. (S)
41 to maintain in force rights under each Patent, absent prior written consent
of the Collateral Agent; provided, that, to the extent permitted by the Credit
Agreement, no Assignor shall be obligated to maintain any Patent in the event
such Assignor determines, in its reasonable business judgment, that the
maintenance of such Patent is no longer necessary or desirable in the conduct of
its business.
5.5. Prosecution of Patent Application. At its own expense, each
Assignor shall diligently prosecute all applications for United States Patents
listed in Annex E hereto for such Assignor and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies,
absent written consent of the Collateral Agent; provided, that, to the extent
permitted by the Credit Agreement, no Assignor shall be obligated to prosecute
any application in the event such Assignor determines, in its reasonable
business judgment, that the prosecuting of such application is no longer
necessary or desirable in the conduct of its business.
5.6. Other Patents and Copyrights. Within 30 days of the acquisition
or issuance of a United States Patent, registration of a Copyright, or
acquisition of a registered Copyright, or of filing of an application for a
United States Patent or Copyright, the relevant Assignor shall deliver to the
Collateral Agent a copy of said Copyright or certificate or registration of, or
application therefor, said Patents, as the case may be, with an assignment for
security as to such Patent or Copyright, as the case may be, to the
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Collateral Agent and at the expense of such Assignor, confirming the assignment
for security, the form of such assignment for security to be substantially the
same as the form hereof or in such other form as may be reasonably satisfactory
to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such other
and further documents as the Collateral Agent may request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral except
with the consent of the Required Banks. Each Assignor will at all times keep its
Inventory and Equipment insured in favor of the Collateral Agent, at such
Assignor's own expense to the extent and in the manner provided in the Credit
Agreement; all policies or certificates with respect to such insurance (and any
other insurance maintained by such Assignor) (i) shall be endorsed to the
Collateral Agent's reasonable satisfaction for the benefit of the Collateral
Agent (including, without limitation, by naming the Collateral Agent as
additional insured and loss payee) and (ii) shall state that such insurance
policies shall not be cancelled or revised without 30 days' prior written notice
thereof by the insurer to the Collateral Agent; and certified copies of such
policies or certificates shall be deposited with the Collateral Agent. If any
Assignor shall fail to insure its Inventory and Equipment in accordance with the
preceding sentence, or if any Assignor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no obligation) to procure such insurance and such
Assignor agrees to promptly reimburse the Collateral Agent for all costs and
expenses of procuring such insurance. Except as otherwise permitted to be
retained by the relevant Assignor pursuant to the Credit Agreement, the
Collateral Agent shall, at the time such proceeds of such insurance are
distributed to the Secured Creditors, apply such proceeds in accordance with
Section 7.4 hereof. Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such
Assignor to pay the Obligations shall in no way be affected or diminished by
reason of the fact that such Collateral may be lost, destroyed, stolen, damaged
or for any reason whatsoever unavailable to such Assignor.
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6.2. Warehouse Receipts. Each Assignor agrees that if any warehouse
receipt or receipt in the nature of a warehouse receipt is issued with respect
to any of its Inventory, such warehouse receipt or receipt in the nature thereof
shall not be "negotiable" (as such term is used in Section 7-104 of the Uniform
Commercial Code as in effect in any relevant jurisdiction or under other
relevant law) or, if such warehouse receipt or receipt in the nature of a
warehouse receipt is "negotiable" (as such term is used in Section 7-104 of the
Uniform Commercial Code as in effect in any relevant jurisdiction or under other
relevant law) then the respective Assignor shall promptly take all action as may
be required under the relevant jurisdiction to grant a perfected security
interest in such Collateral to the Collateral Agent for the benefit of the
Secured Creditors.
6.3. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law. Each Assignor will pay any applicable filing fees, recordation
taxes and related expenses relating to its Collateral. Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and
may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for
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that purpose may enter upon such Assignor's premises where any of the
Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof, or
direct the relevant Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral Agent,
in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by the
Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for such
term and on such conditions and in such manner as the Collateral Agent
shall in its sole judgment determine (taking into account such provisions
as may be necessary to protect and preserve such Marks, Patents or
Copyrights);
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Agent or the Collateral Agent, in each case acting upon the instructions
of the Required Banks (or, after the date on which all Credit Document
Obligations have been paid in full, the holders of at least the majority
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of the outstanding Other Obligations) and that no other Secured Creditor shall
have any right individually to seek to enforce or to enforce this Agreement or
to realize upon the security to be granted hereby, it being understood and
agreed that such rights and remedies may be exercised by the Agent or the
Collateral Agent or the holders of at least a majority of the outstanding
Interest Rate Obligations, as the case may be, for the benefit of the Secured
Creditors upon the terms of this Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent may bid for and become the purchaser of
the Collateral or any item thereof, offered for sale in accordance with this
Section without accountability to the relevant Assignor. If, under mandatory
requirements of applicable law, the Collateral Agent shall be required to make
disposition of the Collateral within a period of time which does not permit the
giving of notice to the relevant Assignor as hereinabove specified, the
Collateral Agent need give such Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION
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OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and each Assignor hereby
further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement, the Mortgages or
Additional Security Documents require proceeds of collateral under such Security
Documents to be applied in accordance with the provisions of this Agreement, the
Pledgee or Mortgagee under such other Security Document) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (iii) and (iv) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors as provided in Section
7.4(c) hereof with each Secured Creditor receiving an amount equal to its
outstanding Obligations or, if the proceeds are insufficient to pay in full
all such Obligations, its Pro Rata Share of the amount remaining to be
distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 10.8 hereof, to the
relevant Assignor or, to the extent directed by such Assignor or a court of
competent jurisdiction, to whomever may be lawfully entitled to receive
such surplus.
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(b) For purposes of this Agreement, "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Obligations and the
denominator of which is the then outstanding amount of all Obligations.
(c) All payments required to be made to the Bank Creditors
hereunder shall be made to the Agent under the Credit Agreement for the account
of the Bank Creditors and all payments required to be made to the Other
Creditors hereunder shall be made directly to the respective Other Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Other Creditors for a
determination (which the Agent, each Other Creditor and the Secured Creditors
agree (or shall agree) to provide upon request of the Collateral Agent) of the
outstanding Obligations owed to the Bank Creditors or the Other Creditors, as
the case may be. Unless it has actual knowledge (including by way of written
notice from a Bank Creditor or an Other Creditor) to the contrary, the Agent
under the Credit Agreement, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that (x) no Credit Document Obligations other than principal, interest
and regularly accruing fees are owing to any Bank Creditor and (y) no Interest
Rate Protection Agreement or Other Hedging Agreement, or Other Obligations in
respect thereof, are in existence.
(e) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clause (a) of this Section 7.4 with respect to the relevant Assignor.
7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other
Credit Documents or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. No notice to or demand on any Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable
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expenses, including attorneys' fees, and the amounts thereof shall be included
in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including attorneys' fees and expenses) (for the purposes of this Section 8.1
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Credit Document or any other
document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for losses, damages or
liabilities to the extent caused by the gross negligence or willful misconduct
of such Indemnitee. Each Assignor agrees that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty, claim, demand, action, suit or judgment, the relevant Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify the relevant Assignor of any such
assertion of which such Indemnitee has knowledge.
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(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by any Assignor in this Agreement, any Interest
Rate Protection Agreement or Other Hedging Agreement, any other Credit Document
or in any writing contemplated by or made or delivered pursuant to or in
connection with this Agreement, any Interest Rate Protection Agreement or Other
Hedging Agreement or any other Credit Document.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Agent" shall have the meaning provided in the recitals to this
Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
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"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Borrower" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract (including each
Excluded Contract to the extent provided in the definition thereof).
"Contracts" shall mean all contracts (other than Excluded Contracts
except to the extent provided in the definition thereof) between any Assignor
and one or more additional parties (including, without limitation, any Interest
Rate Protection Agreements or Other Hedging Agreements).
"Copyrights" shall mean any United States or foreign copyright owned
by any Assignor, including any registrations of any Copyrights, in the United
States Copyright Office or the equivalent thereof in any foreign country, as
well as any application for a United States copyright registration now or
hereafter made with the United States Copyright Office by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals to
this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
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"Default" shall mean any event which, with notice or lapse of time, or
both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Excluded Contracts" shall mean one or more Contracts which constitute
a Specified Asset or which by their terms would be breached by the grant of the
security interests created therein pursuant to the terms of this Agreement (it
being understood and agreed, however, that notwithstanding the foregoing, all
rights to payment for money due or to become due pursuant to any Excluded
Contract shall be subject to the security interests created pursuant to this
Agreement (except to the extent that such right constitutes a Specified Asset)).
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
"Holdings" shall have the meaning provided in the recitals to this
Agreement.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection Agreements or Other Hedging Agreements"
shall have the meaning provided in the recitals to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in
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manufacturing, processing, packaging or shipping same; in all stages of
production -- from raw materials through work-in-process to finished
goods -- and all products and proceeds of whatever sort and wherever located and
any portion thereof which may be returned, rejected, reclaimed or repossessed by
the Collateral Agent from any Assignor's customers, and shall specifically
include all "inventory" as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York, now or hereafter owned
by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any United
States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration of any trademarks
and service marks, or the equivalent thereof in any foreign country in the
United States Patent and Trademark Office and any trade dress including logos
and/or designs used by any Assignor in the United States or any foreign country.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document to which such Assignor is a party and the
due performance and compliance by each Assignor with the terms of each such
Credit Document (all such obligations and liabilities under this clause (i),
except to the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
of each Assignor now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement including, in the case of Assignors other than the Borrower, all
obligations of such Assignor under its Guaranty in respect of Interest Rate
Protection Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the "Other
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Assignor referred to in
clauses (i) and (ii), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights here under, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
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"Other Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Other Obligations" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a United States or foreign patent now or
hereafter made by any Assignor.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or any Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of
this Agreement.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services per formed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing, provided that the term Receivable shall not
include any Receivable that is transferred to the Receivables Entity pursuant to
the Accounts Receivable Facility Documents.
"Requisite Creditors" shall have the meaning provided in Section 10.2
of this Agreement.
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"Secured Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Specified Asset" shall have the meaning provided in the Accounts
Receivable Facility Documents.
"Termination Date" shall have the meaning provided in Section 10.8 of
this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
"WR Acquisition" shall have the meaning provided in the recitals to
this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at its address set forth opposite its
signature below;
(b) if to the Collateral Agent:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094
Facsimile No.: (212) 250-7218
(c) if to any Bank Creditor (other than the Collateral Agent), at
such address as such Bank Creditor shall have specified in the Credit
Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
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10.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby and the
Collateral Agent (with the consent of (x) either the Required Banks or, to the
extent required by Section 12.12 of the Credit Agreement, all of the Banks at
all times prior to the time on which all Credit Document Obligations have been
paid in full or (y) the holders of at least a majority of the outstanding Other
Obligations at all times after the time on which all Credit Document Obligations
have been paid in full); provided, that any change, waiver, modification or
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement the term "Class" shall mean each
class of Secured Creditors, i.e., whether (x) the Bank Creditors as holders of
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
amendment to or modification of any Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement or any security for any of the
Obligations; whether or not any Assignor shall have notice or knowledge of any
of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns; provided, that no Assignor
may transfer or assign any or all of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by each Assignor herein or in any
certificate or other instrument delivered by such Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements or Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
or on their behalf.
10.5. Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
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ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of each Assignor under or with
respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Revolving Loan Commitment and all Inter est Rate Protection Agreements or Other
Hedging Agreements have been terminated, no Note or Letter of Credit is
outstanding (other than Letters of Credit, together with all Fees that have
accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Letter of Credit Issuer in its sole and absolute discretion) and all other
Obligations (other than any indemnities described in Section 8.1 hereof and in
Section 12.13 of the Credit Agreement which are not then due and payable) have
been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise
disposed in connection with a sale or other disposition permitted by Section
8.02 of the Credit Agreement or is otherwise released at the direction of the
Required Banks (or all the Banks if required by Section 12.12 of the Credit
Agreement), the Collateral Agent, at the request and expense of such Assignor,
will duly release from the security interest created hereby and assign, transfer
and deliver to such Assignor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in the possession of the Collateral Agent and has not
theretofore been released pursuant to this Agreement.
(c) At any time that the respective Assignor desires that Collateral
be released as provided in the foregoing Section 10.8(a) or (b), it shall
deliver to the Collateral Agent a certificate signed by an Authorized Officer
stating that the release of the respective Collateral is permitted pursuant to
Section 10.8(a) or (b) hereof.
10.9. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which
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when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A set of counterparts executed
by all the parties hereto shall be lodged with the Borrower and the Collateral
Agent.
10.10. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Collateral Agent as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement, are
only those expressly set forth in this Agreement and those contained in the
Uniform Commercial Code as enacted in the State of New York. The Collateral
Agent shall act hereunder on the terms and conditions set forth in Section 11 of
the Credit Agreement.
10.11. Additional Assignors. It is understood and agreed that any
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.13 and/or 8.15 of the
Credit Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Agent.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Address: AMERICAN PAD & PAPER
17304 Preston Road COMPANY,
Suite 700 as an Assignor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: Secretary
Address: WR ACQUISITION, INC.,
17304 Preston Road as an Assignor
Suite 700
Dallas, TX 75252-5613
By /s/ Gregory M. Benson
Attention: Gregory M. Benson --------------------------
Title: President
Address: AMERICAN PAD & PAPER
17304 Preston Road COMPANY OF DELAWARE, INC.,
Suite 700 as an Assignor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: Secretary
Address: AMERICAN OFFICE PRODUCTS,
17304 Preston Road INC.,
Suite 700 as an Assignor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: President
Address: NIAGARA ENVELOPE COMPANY,
17304 Preston Road INC.,
Suite 700 as an Assignor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: President
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Address: REGENCY THERMOGRAPHERS, INC.,
17304 Preston Road as an Assignor
Suite 700
Dallas, TX 75252-5613
By /s/ Gregory M. Benson
Attention: Gregory M. Benson --------------------------
Title: President
REGENCY THERMOGRAPHERS, OF
Address: CALIFORNIA, INC.,
17304 Preston Road as an Assignor
Suite 700
Dallas, TX 75252-5613
By /s/ Gregory M. Benson
Attention: Gregory M. Benson --------------------------
Title: President
Address: WENTED COMPANY,
17304 Preston Road as an Assignor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: President
Address: WENTED COMPANY OF TEXAS,
17304 Preston Road as an Assignor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: President
Address: WILLIAMHOUSE OF CALIFORNIA,
17304 Preston Road INC.,
Suite 700 as an Assignor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
--------------------------
Title: President
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BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ Christopher Kinslow
-------------------------
Title: Vice President
-29-
<PAGE>
ANNEX A
to
SECURITY
AGREEMENT
---------
SCHEDULE OF CHIEF EXECUTIVE OFFICES
-----------------------------------
AND OTHER RECORD LOCATIONS
--------------------------
-30-
<PAGE>
ANNEX B
to
SECURITY
AGREEMENT
---------
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
---------------------------------------------
-31-
<PAGE>
ANNEX C
to
SECURITY
AGREEMENT
---------
TRADE AND FICTITIOUS NAMES
--------------------------
-32-
<PAGE>
ANNEX D
to
SECURITY
AGREEMENT
---------
LIST OF MARKS
-------------
-33-
<PAGE>
ANNEX E
to
SECURITY
AGREEMENT
---------
LIST OF PATENTS AND APPLICATIONS
--------------------------------
-34-
<PAGE>
ANNEX F
to
SECURITY
AGREEMENT
---------
LIST OF COPYRIGHTS AND APPLICATIONS
-----------------------------------
-35-
<PAGE>
ANNEX G
-------
GRANT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
---------------------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, [Name of Grantor], a _______________ corporation ("the
Grantor") with principal offices at_______________________________, hereby
grants to Bankers Trust Company, as Collateral Agent, with principal offices at
One Bankers Trust Plaza, New York, New York 10006 (the "Grantee"), a security
interest in (i) all of the Grantor's right, title and interest in and to the
United States trademarks, trademark registrations and trademark applications
(the "Marks") set forth on Schedule A attached hereto, (ii) all of the Grantor's
rights, title and interest in and to the United States patents (the "Patents")
set forth on Schedule B attached, in each case together with (iii) all Proceeds
(as such term is defined in the Security Agreement referred to below) and
products of the Marks and Patents, (iv) the goodwill of the businesses with
which the Marks are associated and (v) all causes of action arising prior to or
after the date hereof for infringement of any of the Marks and Patents or unfair
competition regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment
of all the Obligations of the Grantor, as such term is defined in the Security
Agreement, dated as of July 8, 1996, among Grantor, the other assignors from
time to time party thereto and the Grantee (as amended from time to time, the
"Security Agreement"). Upon the occurrence of the Termination Date (as defined
in the Security Agreement), the Grantee shall, upon such satisfaction, execute,
acknowledge, and deliver to the Grantor an
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<PAGE>
ANNEX G
Page 2
instrument in writing releasing the security interest in the Marks and Patents
acquired under this Grant.
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to the security interest granted herein are without
prejudice to, and are in addition to those set forth in the Security Agreement,
all terms and provisions of which are incorporated herein by reference. In the
event that any provisions of this Grant are deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the
______ day of ____________, _____.
[NAME OF GRANTOR],
Grantor
By
-----------------------------
Title:
BANKERS TRUST COMPANY,
as Collateral Agent, Grantee
By
-----------------------------
Title:
-37-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ______ day of __________, _____, before me personally came
________________ who, being by me duly sworn, did state as follows: that he is
_______________ of [Name of Grantor], that he is authorized to execute the
foregoing Grant on behalf of said corporation and that he did so by authority of
the Board of Directors of said corporation.
-----------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _______, _____, before me personally came
_____________________ who, being by me duly sworn, did state as follows: that he
is __________________ of Bankers Trust Company, that he is authorized to execute
the foregoing Grant on behalf of said corporation and that he did so by
authority of the Board of Directors of said corporation.
-----------------------------
Notary Public
-38-
<PAGE>
SCHEDULE A
----------
MARK REG. NO. REG. DATE
- - ---- -------- ---------
-39-
<PAGE>
SCHEDULE B
----------
PATENT PATENT NO. ISSUE DATE
- - ------ ---------- ----------
-40-
<PAGE>
ANNEX H
-------
GRANT OF SECURITY
INTEREST IN UNITED STATES COPYRIGHTS
------------------------------------
WHEREAS, [Name of Grantor], a _______________ corporation (the
"Grantor"), having its chief executive office at _____________________________,
____________________________, is the owner of all right, title and interest in
and to the United States copyrights and associated United States copyright
registrations and applications for registration set forth in Schedule A attached
hereto;
WHEREAS, BANKERS TRUST COMPANY, as Collateral Agent, having its
principal offices at One Bankers Trust Plaza, New York, New York 10006 (the
"Grantee"), desires to acquire a security interest in said copyrights and
copyright registrations and applications therefor; and
WHEREAS, the Grantor is willing to grant to the Grantee a security
interest in and lien upon the copyrights and copyright registrations and
applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of July 8, 1996, made by the Grantor, the other
assignors from time to time party thereto and the Grantee (as amended from time
to time, the "Security Agreement"), the Grantor hereby grants to the Grantee a
security interest in the copyrights and copyright registrations and applications
therefor set forth in Schedule A attached hereto.
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to the security interest granted herein are without
prejudice to, and are in addition to those set forth in the Security Agreement,
all terms and provisions of which are incorporated herein by reference. In the
event that any provisions of this Grant are deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall govern.
-41-
<PAGE>
ANNEX H
Page 2
Executed at New York, New York, as of the ____ day of _______________,
____.
[NAME OF GRANTOR],
Grantor
By
-----------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Collateral Agent, Grantee
By
-----------------------------
Name:
Title:
-42-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ______ day of _________, _____ before me personally came
_______________, who being duly sworn, did depose and say that he is
___________________ of [Name of Grantor], that he is authorized to execute the
foregoing Grant on behalf of said corporation and that he did so by authority of
the Board of Directors of said corporation.
-----------------------------
Notary Public
-43-
<PAGE>
SCHEDULE A
----------
U.S. COPYRIGHTS
---------------
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
- - ------------ ----------- ---------------
-44-
<PAGE>
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of July 8, 1996 (as amended, modified or
supplemented from time to time, this "Agreement"), made by each of the
undersigned (each a "Pledgor" and, together with any other entity that becomes a
party hereto pursuant to Section 22 hereof, the "Pledgors"), in favor of BANKERS
TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the benefit of the
Secured Creditors (as defined below). Except as otherwise defined herein, terms
used herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, American Pad & Paper Company ("Holdings"), WR Acquisition, Inc.
("WR Acquisition"), American Pad & Paper Company of Delaware, Inc. (the
"Borrower"), the lenders from time to time party thereto (the "Banks"), and
Bankers Trust Company, as Agent (together with any successor agent, the "Agent",
and together with the Pledgee, each Letter of Credit Issuer and the Banks, the
"Bank Creditors"), have entered into a Credit Agreement, dated as of July 8,
1996 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), providing for the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit for the account of the Borrower, all
as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more (i)
interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors," and together with Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Parents Guaranty, Holdings and WR Acquisition
have jointly and severally guaranteed to the Secured Creditors the payment when
due of all obligations and liabilities of the Borrower under or with respect to
the Credit Documents and the Interest Rate Protection Agreements or Other
Hedging Agreements;
WHEREAS, pursuant to the Subsidiary Guaranty, each Pledgor (other than
Holdings, WR Acquisition and the Borrower) has jointly and severally guaranteed
to the
<PAGE>
Secured Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower under the Credit Agreement that each Pledgor shall have executed and
delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for
the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and liabilities
(including obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due) of such Pledgor, now
existing or hereafter incurred under, arising out of or in connection with
any Credit Document to which such Pledgor is a party and the due
performance and compliance by such Pledgor with the terms of each such
Credit Document (all such obligations and liabilities under this clause
(i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection Agreements or Other Hedging Agreements,
being herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor, now
existing or hereafter incurred under, arising out of or in connection with
any Interest Rate Protection Agreement or Other Hedging Agreement
including, in the case of Pledgors other than the Borrower, all obligations
of such Pledgor under its Guaranty in respect of Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the
"Other Obligations");
-2-
<PAGE>
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations, or liabilities referred to in clauses
(i), (ii) and (iii) above, after an Event of Default (such term, as used in
this Agreement, shall mean any Event of Default under, and as defined in,
the Credit Agreement, or any payment default by the Borrower under any
Interest Rate Protection Agreement or Other Hedging Agreement and shall in
any event include, without limitation, any payment default (after the
expiration of any applicable grace period) on any of the Obligations (as
hereinafter defined)) shall have occurred and be continuing, the rea
sonable expenses of retaking, holding, preparing for sale or lease, selling
or otherwise disposing or realizing on the Collateral, or of any exercise
by the Pledgee of its rights hereunder, together with reasonable attorneys'
fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such Secured
Creditor has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein: (i) the
term "Stock" shall mean (x) with respect to corporations incorporated under the
laws of the United States or any State or territory thereof (each a "Domestic
Corporation"), all of the issued and outstanding shares of capital stock of any
Domestic Corporation at any time owned by each Pledgor and (y) with respect to
corporations not Domestic Corporations (each a "Foreign Corporation"), all of
the issued and outstanding shares of capital stock at any time owned directly by
any Pledgor of any Foreign Corporation, provided that, except as provided in the
last sentence of this Section 2, such Pledgor shall not be required to pledge
hereunder more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Corporation entitled to vote; (ii) the term "Notes"
shall mean (x) all Intercompany Notes at any time issued to each Pledgor and (y)
all other promissory notes from time to time issued to, or held by, each
Pledgor, provided, that, except as provided in the last sentence of this Section
2, no Pledgor shall be required to pledge hereunder any promissory notes issued
to such Pledgor by any Subsidiary of such Pledgor which is a Foreign Corporation
and (iii) the term "Securities" shall mean all of the Stock and Notes; provided
that, notwithstanding the foregoing, the term "Securities" shall not include any
Stock or Notes listed in Annex D hereto. Each Pledgor represents and warrants
that on the date hereof (i) each Subsidiary of such Pledgor, and the direct
ownership thereof, is listed in Annex A hereto; (ii) the Stock held by such
Pledgor consists of the number and type of shares of the stock of the
corporations as described in Annex B hereto; (iii) such Stock constitutes that
percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex B hereto; (iv)
-3-
<PAGE>
the Notes held by such Pledgor consist of the promissory notes described in
Annex C hereto where such Pledgor is listed as the Lender; and (v) on the date
hereof, such Pledgor owns no other Securities. In the circumstances and to the
extent provided in Section 7.13 of the Credit Agreement, the 65% limitation set
forth in clause (i)(y) and the limitation in the proviso of clause (ii) in each
case of this Section 2 and in Section 3.2 hereof shall no longer be applicable
and such Pledgor shall duly pledge and deliver to the Pledgee such of the
Securities not theretofore required to be pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes set forth
in Section 1 hereof, each Pledgor hereby: (i) grants to the Pledgee a security
interest in all of the Collateral owned by such Pledgor; (ii) pledges and
deposits as security with the Pledgee the Securities owned by such Pledgor on
the date hereof, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor in the case of Stock, or
such other instruments of transfer as are acceptable to the Pledgee; and (iii)
assigns, transfers, hypothecates, mortgages, charges and sets over to the
Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall acquire (by
purchase, stock dividend or otherwise) any additional Securities at any time or
from time to time after the date hereof, such Pledgor will forthwith pledge and
deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and deliver to the Pledgee certificates
therefor or instruments thereof, duly endorsed in blank in the case of Notes and
accompanied by undated stock powers duly executed in blank in the case of Stock,
or such other instruments of transfer as are acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by any
Authorized Officer of such Pledgor describing such Securities and certifying
that the same have been duly pledged with the Pledgee hereunder. Subject to the
last sentence of Section 2 hereof, no Pledgor shall be required at any time to
pledge hereunder (x) any Stock which is more than 65% of the total combined
voting power of all classes of capital stock of any Foreign Corporation entitled
to vote or (y) any promissory notes (including Intercompany Notes) issued to
such pledgor by any Subsidiary of such Pledgor which is a Foreign Corporation.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the respective
Pledgor shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of the
New York UCC, if applicable). Each Pledgor further agrees to take such
-4-
<PAGE>
actions as the Pledgee deems reasonably necessary or desirable to effect the
foregoing and to permit the Pledgee to exercise any of its rights and remedies
hereunder, and agrees to provide an opinion of counsel reasonably satisfactory
to the Pledgee with respect to any such pledge of uncertificated Securities
promptly upon request of the Pledgee.
3.4 Definition of Pledged Stock, Pledged Notes, Pledged Securities and
Collateral. All Stock at any time pledged or required to be pledged hereunder
is hereinafter called the "Pledged Stock," all Notes at any time pledged or
required to be pledged hereunder are hereinafter called the "Pledged Notes," all
of the Pledged Stock and Pledged Notes together are hereinafter called the
"Pledged Securities," which together with all proceeds thereof, including any
securities and moneys received and at the time held by the Pledgee hereunder, is
hereinafter called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have
the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of such Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee. The Pledgee agrees to promptly notify the
relevant Pledgor after the appointment of any sub-agent; provided, however, that
the failure to give such notice shall not affect the validity of such
appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until (i) an
Event of Default shall have occurred and be continuing and (ii) written notice
thereof shall have been given by the Pledgee to the relevant Pledgor (provided,
that if an Event of Default specified in Section 9.05 of the Credit Agreement
shall occur, no such notice shall be required), each Pledgor shall be entitled
to exercise any and all voting and other consensual rights pertaining to the
Pledged Securities and to give all consents, waivers or ratifications in respect
thereof; provided, that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate or be inconsistent
with any of the terms of this Agreement, any other Credit Document or any
Interest Rate Protection Agreement or Other Hedging Agreement (collectively, the
"Secured Debt Agreements"), or which would have the effect of impairing the
position or interests of the Pledgee or any other Secured Creditor except to the
extent such violation, inconsistency or impairment should be waived in
accordance with the terms of Section 20 hereof. All such rights of such Pledgor
to vote and to give consents, waivers and ratifications shall cease in case an
Event of Default shall occur and be continuing, and Section 7 hereof shall
become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default shall
have occurred and be continuing, all cash dividends payable in respect of the
Pledged Stock and all payments in respect of the Pledged Notes shall be paid to
the respective Pledgor; provided, that all cash dividends payable in respect of
the Pledged Stock
-5-
<PAGE>
which are determined by the Pledgee to represent in whole or in part an
extraordinary, liquidating or other distribution in return of capital shall be
paid, to the extent so determined to represent an extraordinary, liquidating or
other distribution in return of capital, to the Pledgee and retained by it as
part of the Collateral. Subject to the last sentence of Section 3.2 hereof, the
Pledgee shall also be entitled to receive directly, and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock by way
of stock-split, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of Default
shall have occurred and be continuing, the Pledgee shall be entitled to exercise
all of the rights, powers and remedies (whether vested in it by this Agreement
or by any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, and the Pledgee shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
payable to such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities into the
Pledgee's name or the name of its nominee or nominees (the Pledgee agrees
to promptly notify the relevant Pledgor after such transfer; provided,
however, that the failure to give such notice shall not affect the validity
of such transfer);
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon any
Pledged Note (includ ing, without limitation, to make any demand for
payment thereon);
(iv) subject to the giving of written notice to the relevant Pledgor
in accordance with clause (ii) of Section 5 hereof (to the extent required
by such Section 5), to vote all or any part of the Pledged Stock (whether
or not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in
-6-
<PAGE>
respect of the Collateral and otherwise act with respect thereto as though
it were the outright owner thereof (each Pledgor hereby irrevocably
constituting and appointing the Pledgee the proxy and attorney-in-fact of
such Pledgor, with full power of substitution to do so); and
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at least 10 days' written
notice of the time and place of any such sale shall be given to such
Pledgor. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any Secured Creditor shall be liable
for failure to collect or realize upon any or all of the Collateral or for
any delay in so doing nor shall any of them be under any obligation to take
any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concur rent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. The Secured Creditors agree that
this Agreement may be enforced only by the action of the Agent or the Pledgee,
in each case acting upon the instructions of the Required Banks (or, after the
date on which all Credit Document Obligations have been paid in full, the
holders of at least the majority of the outstanding Other Obligations) and that
no other Secured Creditor shall have any right individually to seek to enforce
or to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Agent or the Pledgee or the holders of at least a majority of
the outstanding Other
-7-
<PAGE>
Obligations, as the case may be, for the benefit of the Secured Creditors upon
the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain jointly
and severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor from and against any and all claims, demands, losses, judgments and
liabilities of whatso ever kind or nature, and (ii) to reimburse the Pledgee and
each other Secured Creditor for all costs and expenses, including attorneys'
fees, growing out of or resulting from this Agreement or the exercise by the
Pledgee of any right or remedy granted to it hereunder or under any other
Secured Debt Agreement except, with respect to clauses (i) and (ii) above, for
those arising from the Pledgee's or such other Secured Creditor's gross
negligence or willful misconduct. In no event shall the Pledgee be liable, in
the absence of gross negligence or willful misconduct on its part, for any
matter or thing in connection with this Agreement other than to account for
moneys actually received by it in accordance with the terms hereof. If and to
the extent that the obligations of the Pledgors under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. FURTHER ASSURANCES. Each Pledgor agrees that it will join with the
Pledgee in executing and, at such Pledgor's own expense, file and refile under
the applicable UCC or appropriate local equivalent, such financing statements,
continuation statements and other documents in such offices as the Pledgee may
deem reasonably necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the
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<PAGE>
Collateral without the signature of such Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably re quire or deem advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed that the obligations of the Pledgee as
holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Section 11 of the Credit Agreement.
14. TRANSFER BY PLEDGORS. Except for sales or dispositions of
Collateral permitted pursuant to the Credit Agreement, no Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except for the
Liens and security interests created by this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Each Pledgor
represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement and liens permitted under
clauses (a) and (e) of Section 8.03 of the Credit Agreement; (ii) it has full
power, authority and legal right to pledge all the Securities pledged by it
pursuant to this Agreement; (iii) this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable in accordance with its terms,
except to the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by equitable prin ciples (regardless
of whether enforcement is sought in equity or at law); (iv) no consent of any
other party (including, without limitation, any stockholder or creditor of such
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor in connection with the execution, delivery or performance of this
Agreement, or in connection with the exercise of its rights and remedies
pursuant to this Agreement, except as may be required in connection with the
disposition of the Securities by laws affecting the offering and sale of
securities generally; (v) the execution, delivery and performance of this
Agreement by such Pledgor does not violate any provision of any applicable law
or regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority,
-9-
<PAGE>
domestic or foreign, or of the certificate of incorporation or by-laws of such
Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries,
or of any mortgage, indenture, lease, deed of trust, agreement, instrument or
undertaking to which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or upon any
of their respective assets and will not result in the creation or imposition of
any lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement; (vi) all the shares of
Stock of Subsidiaries of Holdings have been duly and validly issued, are fully
paid and non assessable; (vii) each of the Pledged Notes constituting
Intercompany Notes, when executed by the obligor thereof, will be the legal,
valid and binding obligation of such obligor, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (viii)
the pledge and assignment of the Securities pursuant to this Agreement, together
with the delivery of the Securities pursuant to this Agreement (which delivery
has been made), creates a valid and perfected first security interest in such
Securities and the proceeds thereof, subject to no prior lien or encumbrance or
to any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Securities. Each
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and such Pledgor covenants and
agrees that it will have like title to and right to pledge any other property at
any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument or this Agreement; (iii) any furnishing of any
additional security to the Pledgee or its assignee or any acceptance thereof or
any release of any security by the Pledgee or its assignee; (iv) any limitation
on any party's liability or obligations under any such instrument or agreement
or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to such Pledgor or any Subsidiary of such Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such
-10-
<PAGE>
proceeding, whether or not such Pledgor shall have notice or knowledge of any of
the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall have occurred
and be continuing and any Pledgor shall have received from the Pledgee a written
request or requests that such Pledgor cause any registration, qualification or
compliance under any Federal or state securities law or laws to be effected with
respect to all or any part of the Pledged Stock, such Pledgor as soon as
practicable and at its expense will use its reasonable efforts to cause such
registration to be effected (and be kept effective) and will use its reasonable
efforts to cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Stock, including, without limitation, registration
under the Securities Act of 1933 as then in effect (or any similar statute then
in effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other government
requirements; provided, that the Pledgee shall furnish to such Pledgor such
information regarding the Pledgee as such Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Such Pledgor will cause the Pledgee to be kept reasonably advised
in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of the Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, such Pledged Securities or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration; provided, that
at least 10 days' notice of the time and place of any such sale shall be given
to such Pledgor. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion: (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Securities or part thereof shall have been filed
under such Securities Act; (ii) may approach and negotiate with a
-11-
<PAGE>
single possible purchaser to effect such sale; and (iii) may restrict such sale
to a purchaser who will represent and agree that such purchaser is purchasing
for its own account, for investment, and not with a view to the distribution or
sale of such Pledged Securities or part thereof. In the event of any such sale,
the Pledgee shall incur no responsibility or liability for selling all or any
part of the Pledged Securities at a price which the Pledgee, in its sole and
absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the respective
Pledgor, will promptly execute and deliver to such Pledgor a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement,
and will duly release from the security interest created hereby and assign,
transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Pledgee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Revolving Loan Commitment and all
Interest Rate Protection Agreements or Other Hedging Agreements have been
terminated, no Note (as defined in the Credit Agreement) or Letter of Credit is
outstanding (other than Letters of Credit, together with all Fees that have
accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Letter of Credit Issuer in its sole and absolute discretion) and all other
Obligations (other than indemnities described in Section 11 hereof and in
Section 12.13 of the Credit Agreement which are not then due and payable) have
been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise
disposed in connection with a sale or other disposition permitted by Section
8.02 of the Credit Agreement or is otherwise released at the direction of the
Required Banks (or all the Banks if required by Section 12.12 of the Credit
Agreement), the Pledgee, at the request and expense of such Pledgor will duly
release from the security interest created hereby and assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in possession of the Pledgee and has not theretofore been
released pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing Section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by an Authorized Officer of such Pledgor stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b).
-12-
<PAGE>
19. NOTICES, ETC. All notices and other communications hereunder shall
be in writing and shall be delivered or mailed by first class mail, postage
prepaid, addressed:
(a) if to any Pledgor, at its address set forth opposite its signature
below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094 Telecopier No.: (212) 250-7218
(c) if to any Bank (other than the Pledgee), at such address as such
Bank shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Pledgor directly affected thereby and the
Pledgee (with the written consent of either (x) the Required Banks (or all the
Banks if required by Section 12.12 of the Credit Agreement) at all times prior
to the time on which all Credit Document Obligations have been paid in full or
(y) the holders of at least a majority of the outstanding Other Obligations at
all times after the time on which all Credit Document Obligations have been paid
in full); provided, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors (as defined below) of
such Class. For the purpose of this Agreement, the term "Class" shall mean each
class of Secured Creditors, i.e., whether (i) the Bank Creditors as holders of
the Credit Document Obligations or (ii) the Other Creditors as holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (i) with respect to the Credit
Document Obligations, the Required Banks and (ii) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
-13-
<PAGE>
21. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of each Pledgor and shall inure to the benefit of and be enforceable
by the Pledgee and its successors and assigns. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK. The headings in this Agreement are for purposes of reference only
and shall not limit or define the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be an orig inal, but
all of which shall constitute one instrument.
22. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.13 and/or 8.15 of the
Credit Agreement shall automatically become a Pledgor hereunder by executing a
counterpart hereof and delivering the same to the Pledgee.
* * *
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<PAGE>
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement
to be executed by their duly elected officers duly authorized as of the date
first above written.
Address: AMERICAN PAD & PAPER COMPANY,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: Secretary
Address: WR ACQUISITION, INC.,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
Address: AMERICAN PAD & PAPER COMPANY OF
17304 Preston Road DELAWARE, INC.,
Suite 700 as a Pledgor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: Secretary
Address: AMERICAN OFFICE PRODUCTS, INC.,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
<PAGE>
Address: NIAGARA ENVELOPE COMPANY, INC.,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
Address: REGENCY THERMOGRAPHERS, INC.,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
Address: REGENCY THERMOGRAPHERS OF
17304 Preston Road CALIFORNIA, INC.,
Suite 700 as a Pledgor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
<PAGE>
Address: WENTED COMPANY,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
Address: WENTED COMPANY OF TEXAS, INC.,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
Address: WILLIAMHOUSE OF CALIFORNIA, INC.,
17304 Preston Road as a Pledgor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
---------------------------
Title: President
BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ Christopher Kinslow
---------------------------
Title: Vice President
<PAGE>
ANNEX A
to
PLEDGE AGREEMENT
----------------
LIST OF SUBSIDIARIES
--------------------
<PAGE>
ANNEX B
to
PLEDGE AGREEMENT
----------------
LIST OF STOCK
-------------
<PAGE>
ANNEX C
to
PLEDGE AGREEMENT
----------------
LIST OF NOTES
-------------
<PAGE>
EXHIBIT B-1
-----------
FORM OF REVOLVING NOTE
----------------------
$___________ New York, New York
________ __, 1996
FOR VALUE RECEIVED, AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to __________ or
its registered assigns (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Agent") located at One Bankers Trust Plaza, New York, New York 10006 on
the Final Maturity Date (as defined in the Agreement referred to below) the
principal sum of _____________ DOLLARS ($__________) or, if less, the unpaid
principal amount of all Revolving Loans (as defined in the Agreement) made by
the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of July 8, 1996, among American Pad & Paper Company, WR
Acquisition, Inc., the Borrower, the lenders from time to time party thereto
(including the Bank) and the Agent (as amended, modified or supplemented from
time to time, the "Agreement") and is entitled to the benefits thereof and of
the other Credit Documents (as defined in the Agreement). This Note is secured
by the Security Documents (as defined in the Agreement) and is entitled to the
benefits of the Guaranties (as defined in the Agreement). This Note is subject
to voluntary prepayment and mandatory repayment prior to the Final Maturity
Date, in whole or in part, as provided in the Agreement, and Revolving Loans may
be converted from one Type (as defined in the Agreement) into another Type to
the extent provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may become
or be declared to be due and payable in the manner and with the effect provided
in the Agreement.
<PAGE>
EXHIBIT B-1
Page 2
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC.
By____________________________
Title:
<PAGE>
EXHIBIT B-2
-----------
FORM OF SWINGLINE NOTE
----------------------
$10,000,000 New York, New York
________ __, 1996
FOR VALUE RECEIVED, AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to BANKERS TRUST
COMPANY or its registered assigns (the "Bank"), in lawful money of the United
States of America in immediately available funds, at the office of Bankers Trust
Company (the "Agent") located at One Bankers Trust Plaza, New York, New York
10006 on the Swingline Expiry Date (as defined in the Agreement referred to
below) the principal sum of TEN MILLION DOLLARS ($10,000,000) or, if less, the
unpaid principal amount of all Swingline Loans (as defined in the Agreement)
made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is the Swingline Note referred to in the Credit Agreement,
dated as of July 8, 1996, among American Pad & Paper Company, WR Acquisition,
Inc., the Borrower, the lenders from time to time party thereto (including the
Bank) and the Agent (as amended, modified or supplemented from time to time, the
"Agreement") and is entitled to the benefits thereof and of the other Credit
Documents (as defined in the Agreement). This Note is secured by the Security
Documents (as defined in the Agreement) and is entitled to the benefits of the
Guaranties (as defined in the Agreement). This Note is subject to voluntary
prepayment and mandatory repayment prior to the Swingline Expiry Date, in whole
or in part, as provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may become
or be declared to be due and payable in the manner and with the effect provided
in the Agreement.
<PAGE>
EXHIBIT B-2
Page 2
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
AMERICAN PAD & PAPER COMPANY
OF DELAWARE, INC.
By________________________________
Title:
<PAGE>
SUBSIDIARY GUARANTY
-------------------
GUARANTY, dated as of July 8, 1996 (as amended, modified or supplemented
from time to time, this "Guaranty"), made by each of the undersigned (each a
"Guarantor" and, together with any other entity that becomes a party hereto
pursuant to Section 26 hereof, the "Guarantors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, American Pad & Paper Company ("Holdings"), WR Acquisition, Inc.,
American Pad & Paper Company of Delaware, Inc. ("Borrower"), the lenders from
time to time party thereto (the "Banks"), and Bankers Trust Company, as Agent
(together with any successor agent, the "Agent"), have entered into a Credit
Agree ment, dated as of July 8, 1996 (as amended, modified or supplemented from
time to time, the "Credit Agreement"), providing for the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for the
account of the Borrower, all as contemplated therein (the Banks, each Letter of
Credit Issuer, the Agent and the Collateral Agent are herein called the "Bank
Creditors");
WHEREAS, the Borrower may from time to time be party to one or more (i)
interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors," and together with the Bank Creditors, are herein called the
"Creditors");
WHEREAS, each Guarantor is a Subsidiary of the Borrower;
WHEREAS, it is a condition to the making of Loans under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty;
and
<PAGE>
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans
by the Borrower under the Credit Agreement and the entering into of Interest
Rate Protection Agreements or Other Hedging Agreements and, accordingly, desires
to execute this Guaranty in order to satisfy the conditions described in the
preceding paragraph and to induce the Banks to make Loans to the Borrower and
Other Creditors to enter into Interest Rate Protection Agreements or Other
Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: (i) to the Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Notes issued by, and the Loans made
to, the Borrower under the Credit Agreement and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Bank Creditors under the Credit Agreement (including,
without limitation, indemni ties, Fees and interest thereon) and the other
Credit Documents to which the Borrower is a party, whether now existing or
hereafter incurred under, arising out of or in connection with the Credit
Agreement or any such other Credit Document and the due performance and
compliance with the terms of the Credit Documents by the Borrower (all such
principal, interest, liabilities and obligations under this clause (i), except
to the extent consisting of obligations or liabilities with respect to Interest
Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); and (ii) to each Other
Creditor the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities owing by the Borrower under any Interest Rate
Protection Agreements or Other Hedging Agreements, whether now in existence or
hereafter arising, and the due performance and compliance by the Borrower with
all terms, conditions and agreements contained therein (all such obligations and
liabilities being herein collectively called the "Other Obligations", and
together with the Credit Document Obligations are herein collectively called the
"Guaranteed Obligations"), provided that the maximum amount payable by each
Guarantor hereunder shall at no time exceed the Maximum Amount (as hereinafter
defined) of such Guarantor. As used herein, "Maximum Amount" of any Guarantor
means an amount equal to 95% of the amount by which the present fair saleable
value of such Guarantor's assets exceeds the amount reasonably expected to come
due in respect of all liabilities (including, without limitation, contingent
liabilities), other than liabilities (contingent or otherwise) of such Guarantor
hereunder and under, or given in
-2-
<PAGE>
respect of, the Senior Subordinated Notes determined on the Initial Borrowing
Date or on the day any demand is made under this Guaranty, whichever date
results in a higher Maximum Amount. Subject to the proviso in the second
preceding sentence, each Guarantor understands, agrees and confirms that the
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against each Guarantor without pro ceeding against any other
Guarantor, the Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. All payments by each Guarantor under this Guaranty shall be made
on the same basis as payments by the Borrower under Sections 4.03 and 4.04 of
the Credit Agree ment.
2. Additionally, each Guarantor, jointly and severally, unconditionally
and irrevocably, guarantees the payment of any and all Guaranteed Obligations of
the Borrower to the Creditors whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 9.05 of the Credit Agreement, and unconditionally and irrevocably,
jointly and severally, promises to pay such Guaranteed Obligations to the
Creditors, or order, on demand, in lawful money of the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Borrower whether executed by such Guarantor, any other Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations of the Borrower, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower or (e) any payment made to any Creditor on the Guaranteed Obligations
which any Creditor repays the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding. This is a
guaranty of payment and not of collection.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any other
guarantor or the Borrower and whether or not any other Guarantor, any other
guarantor of the Borrower or the Borrower be joined in any such action or
actions. Each Guarantor waives, to the fullest extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Borrower or other circumstance which
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operates to toll any statute of limitations as to the Borrower shall operate to
toll the statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives (to the fullest extent permitted by
applicable law) notice of acceptance of this Guaranty and notice of any
liability to which it may apply, and waives promptness, diligence, presentment,
demand of payment, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Agent or any other Creditor
against, and any other notice to, any party liable thereon (including such
Guarantor or any other guarantor or the Borrower).
6. Any Creditor may (except as shall be required by applicable statute
and cannot be waived) at any time and from time to time without the consent of,
or notice to, any Guarantor, without incurring responsibility to such Guarantor,
without impairing or releasing the obligations of such Guarantor hereunder, upon
or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty herein
made shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to creditors of the
Borrower;
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of
what liabilities of the Borrower remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging
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Agreements, the Credit Documents or any of the instruments or agreements
referred to therein, or otherwise amend, modify or supplement any of the
Interest Rate Protection Agreements or Other Hedging Agreements, the Credit
Documents or any of such other instruments or agreements; and/or
(g) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Borrower to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations or of any security therefor shall affect, impair or
be a defense to this Guaranty, and this Guaranty shall be primary, absolute and
unconditional notwithstanding the occurrence of any event or the existence of
any other circumstances which might constitute a legal or equitable discharge of
a surety or guarantor except payment in full of the Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Creditor to inquire into the
capacity or powers of the Borrower or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the Agent,
after an Event of Default has occurred and is continuing, so requests, shall be
collected, enforced and received by such Guarantor as trustee for the Creditors
and be paid over to the Creditors on account of the indebtedness of the Borrower
to the Creditors, but without affecting or impairing in any manner the liability
of such Guarantor under the other provisions of this Guaranty. Prior to the
transfer by any Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with the Creditors
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that it will not exercise any right of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have
been irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be required by
applicable statute or law and cannot be waived) to require the Creditors to:
(i) proceed against the Borrower, any other Guarantor, any other guarantor of
the Borrower or any other party; (ii) proceed against or exhaust any security
held from the Borrower, any other Guarantor, any other guarantor of the Borrower
or any other party; or (iii) pursue any other remedy in the Creditors' power
whatsoever. Each Guarantor waives any (to the fullest extent permitted by
applicable law) defense based on or arising out of any defense of the Borrower,
any other Guarantor, any other guarantor of the Borrower or any other party
other than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor of the Borrower or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Agent, the Collateral
Agent or the other Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such
election by the Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
(c) Each Guarantor understands, is aware and hereby acknowledges that to
the extent the Guaranteed Obligations are secured by real property located in
the State of California, such Guarantor shall be liable for the full amount of
its liability hereunder notwithstanding foreclosure on such real property by
trustee sale or any other reason impairing such Guarantor's or any Creditor's
right to proceed against any Credit Party.
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<PAGE>
Each Guarantor hereby waives, to the fullest extent permitted by law, all rights
and benefits under Section 2809 of the California Civil Code purporting to
reduce a guarantor's obligation in proportion to the principal obligation. Each
Guarantor hereby waives all rights and benefits under Section 580a of the
California Code of Civil Procedure purporting to limit the amount of any
deficiency judgment which might be recoverable following the occurrence of a
trustee's sale under a deed of trust and all rights and benefits under Section
580b of the California Code of Civil Procedure stating that no deficiency may be
recovered on a real property purchase money obligation. Each Guarantor further
understands, is aware and hereby acknowledges that if the Creditors elect to
nonjudicially foreclose on any real property security located in the State of
California any right of subrogation of such Guarantor against the Creditors may
be impaired or extinguished and that as a result of such impairment or
extinguishment of subrogation rights, such Guarantor may have a defense to a
deficiency judgment arising out of the operation of (i) Section 580d of the
California Code of Civil Procedure which states that no deficiency may be
recovered on a note secured by a deed of trust on real property in case such
real property is sold under the power of sale contained in such deed of trust,
and (ii) related principles of estoppel. To the fullest extent permitted by
law, each Guarantor waives all rights and benefits and any defense arising out
of the operation of Section 580d of the California Code of Civil Procedure and
related principles of estoppel, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against any Credit Party or any other party or any security. In
addition, each Guarantor hereby waives, to the fullest extent permitted by
applicable law, without limiting the generality of the foregoing or any other
provision hereof, all rights and benefits which might otherwise be available to
such Guarantor under Section 726 of the California Code of Civil Procedure and
all rights and benefits which might otherwise be available to such Guarantor
under California Civil Code Sections 2809, 2810, 2815, 2819, 2821, 2839, 2845,
2848, 2849, 2850, 2899 and 3433.
(d) Each Guarantor hereby further waives (to the fullest extent permitted
by applicable law): (1) all rights and defenses arising out of an election of
remedies by the Creditors, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a Guaranteed Obligation,
has destroyed such Guarantor's rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the California Code of Civil
Procedure or otherwise; (2) such Guarantor's rights of subrogation and
reimbursement and any other rights and defenses available to such Guarantor by
reason of the California Civil Code Sections 2787 to 2855, inclusive, including,
without limitation, (i) any defenses such Guarantor may have to the Guaranteed
Obligations by reason of an election of remedies by the Creditors and (ii) any
rights or defenses such Guarantor may have by reason of protection afforded to
the principal borrower with respect to the obligation so guaranteed pursuant to
the antideficiency or other laws of the State of California limiting or
discharging the borrower's indebtedness, including, without limitation,
California Code of Civil Procedure Sections 580a, 580b, 580d or 726.
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<PAGE>
11. The Creditors agree that this Guaranty may be enforced only by the
action of the Agent or the Collateral Agent, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least a majority
of the outstanding Other Obligations) and that no other Creditor shall have any
right individually to seek to enforce or to enforce this Guaranty or to realize
upon the security to be granted by the Security Documents, it being understood
and agreed that such rights and remedies may be exercised by the Agent or the
Collateral Agent or the holders of at least a majority of the outstanding Other
Obligations, as the case may be, for the benefit of the Creditors upon the terms
of this Guaranty and the Security Documents. The Creditors further agree that
this Guaranty may not be enforced against any director, officer, employee, or
stockholder of any Guarantor (except to the extent such stockholder is also a
Guarantor hereunder).
12. In order to induce the Banks to make Loans and issue Letters of
Credit pursuant to the Credit Agreement, and in order to induce the Other
Creditors to execute, deliver and perform the Interest Rate Protection
Agreements or Other Hedging Agreements, each Guarantor represents, warrants and
covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation and is in good standing under the laws of the jurisdiction of
its organization, and has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (ii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is
required to be so qualified and where the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and each
other Credit Document to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it
of each such Credit Document. Such Guarantor has duly executed and
delivered this Guaranty and each other Credit Document to which it is a
party and each such Credit Document constitutes the legal, valid and
binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof or thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by
equitable principles (regardless of whether enforcement is sought in equity
or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Credit Document to which it is a party, nor
compliance by it with the terms and provisions hereof or thereof (i) will
contravene any applicable provision of any law, statute, rule or
regulation, or any order, writ,
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<PAGE>
injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of, any of
the terms, covenants, conditions or provisions of, or constitute a default
under, or (other than pursuant to the Security Documents and the Accounts
Receivable Facility Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or
assets of such Guarantor or any of its Subsidiaries pursuant to the terms
of any indenture, mortgage, deed of trust, loan agreement, credit agreement
or other material agreement or other instrument to which such Guarantor or
any of its Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the certificate of incorporation or by-laws of such Guarantor
or any of its Subsi diaries.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Guaranty or any other Credit
Document to which such Guarantor is a party, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other
Credit Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or to the
knowledge of such Guarantor, threatened (i) with respect to such Guarantor
that are likely to have a Material Adverse Effect or (ii) that could
reasonably be expected to have a material adverse effect on the rights or
remedies of the Creditors or on the ability of such Guarantor to perform
its respective obligations to the Creditors hereunder and under the other
Credit Documents to which it is a party.
13. Each Guarantor covenants and agrees that on and after the date hereof
and until the termination of the Total Revolving Loan Commitment and all
Interest Rate Protection Agreements or Other Hedging Agreements and when no Note
or Letter of Credit remains outstanding (other than Letters of Credit, together
with all Fees that have accrued and will accrue thereon through the stated
termination date of such Letters of Credit, which have been supported in a
manner satisfactory to the Letter of Credit Issuer in its sole and absolute
discretion) and all Guaranteed Obligations have been paid in full (other than
indemnities described in Section 12.13 of the Credit Agreement and analogous
provisions in the Security Documents which are not then due and payable), such
Guarantor shall take, or will refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 7 or 8 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.
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14. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of each Creditor in connection with
the enforcement of this Guaranty and any amendment, waiver or consent relating
hereto (including, without limitation, the reasonable fees and disbursements of
counsel (including in-house counsel) employed by any of the Creditors).
15. This Guaranty shall be binding upon each Guarantor and its successors
and assigns and shall inure to the benefit of the Creditors and their successors
and assigns.
16. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and either (x) the Required Banks (or to the
extent required by Section 12.12 of the Credit Agreement, with the written
consent of each Bank) at all times prior to the time on which all Credit
Document Obligations have been paid in full or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time on
which all Credit Document Obligations have been paid in full; provided, that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Creditors (and not all Creditors in a like or
similar manner) shall require the written consent of the Requisite Creditors (as
defined below) of such Class of Creditors (it being understood that the addition
or release of any Guarantor hereunder shall not constitute a change, waiver,
discharge or termination affecting any Guarantor other than the Guarantor so
added or released). For the purpose of this Guaranty the term "Class" shall
mean each class of Creditors, i.e., whether (x) the Bank Creditors as holders of
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Guaranty, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
17. Each Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents and Interest Rate Protection Agreements or Other
Hedging Agreements has been made available to its principal executive officers
and such officers are familiar with the contents thereof.
18. In addition to any rights now or hereafter granted under applicable
law (including, without limitation, Section 151 of the New York Debtor and
Creditor Law) and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (such term to mean
and include any "Event of Default" as defined in the Credit Agreement or any
payment default under any Interest Rate Protection Agreement or Other Hedging
Agreement continuing after any applicable grace period), each Creditor is hereby
authorized at any time or from time to time, without notice to any Guarantor or
to any other Person, any such notice being expressly waived, to set off and
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to appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Creditor to or for the credit or
the account of such Guarantor, against and on account of the obligations and
liabilities of such Guarantor to such Creditor under this Guaranty, irrespective
of whether or not such Creditor shall have made any demand hereunder and
although said obligations, liabilities, deposits or claims, or any of them,
shall be contingent or unmatured. Notwithstanding anything to the contrary
contained in this Section 18, no Creditor shall exercise any such right of set-
off without the prior consent of the Agent or the Required Banks so long as the
Guaranteed Obligations shall be secured by any Real Property located in the
State of California, it being understood and agreed, however, that this sentence
is for the sole benefit of the Creditors and may be amended, modified or waived
in any respect by the Required Banks without the requirement of prior notice to
or consent by any Credit Party and does not constitute a waiver of any rights
against any Credit Party or against any Collateral.
19. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at its address set forth opposite its signature
below and (iii) in the case of any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Guarantor; or in any case at
such other address as any of the Persons listed above may hereafter notify the
others in writing.
20. If claim is ever made upon any Creditor for repayment or recovery of
any amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid payees repays all or part of said amount by
reason of (i) any judg ment, decree or order of any court or administrative body
having jurisdiction over such payee or any of its property or (ii) any
settlement or compromise of any such claim effected by such payee with any such
claimant (including the Borrower), then and in such event each Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
upon such Guarantor, notwithstanding any revocation hereof or other instrument
evidencing any liability of the Borrower, and such Guarantor shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee.
21. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE CREDITORS
AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Guaranty or any other Credit Document to which
such Guarantor is a party may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York, and,
by execution and delivery of this Guaranty, each Guarantor
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hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor
hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such Guarantor, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Guaranty or any other Credit Document
to which such Guarantor is a party brought in any of the aforesaid courts, that
any such court lacks jurisdiction over such Guarantor. Each Guarantor further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each Guarantor at its address
set forth opposite its signature below, such service to become effective 30 days
after such mailing. Each Guarantor hereby irrevocably waives any objection to
such service of process and further irrevocably waives and agrees not to plead
or claim in any action or proceeding commenced hereunder or under any other
Credit Document to which such Guarantor is a party that service of process was
in any way invalid or ineffective. Nothing herein shall affect the right of any
of the Creditors to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against each Guarantor in any
other jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty or any other
credit document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.
22. In the event that all of the capital stock of one or more Guarantors
is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 8.02 of the Credit Agreement (or such sale or other
disposition or liquidation has been approved in writing by the Required Banks
(or all Banks if required by Section 12.12 of the Credit Agreement)) and the
proceeds of such sale, disposition or liquidation are applied in accordance with
the provisions of the Credit Agreement, to the extent applicable, such Guarantor
shall be released from this Guaranty and this Guaranty shall, as to each such
Guarantor or Guarantors, terminate, and have no further force or effect (it
being understood and agreed that the sale of one or more Persons that own,
directly or indirectly, all of the capital stock or partnership interests of any
Guarantor shall be deemed to be a sale of such Guarantor for the purposes of
this Section 22).
23. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Agent.
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<PAGE>
24. EACH GUARANTOR AND EACH OF THE CREDITORS HEREBY IRREVOCABLY
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
25. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense.
26. It is understood and agreed that any Subsidiary of Holdings that
is required to execute a counterpart of this Guaranty after the date hereof
pursuant to Sections 7.13 and/or 8.15 of the Credit Agreement shall
automatically become a Guarantor hereunder by executing a counterpart hereof and
delivering the same to the Agent.
* * *
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Address: AMERICAN OFFICE PRODUCTS,
17304 Preston Road INC.,
Suite 700 as a Guarantor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
-----------------------------------
Title: President
Address: NIAGARA ENVELOPE COMPANY,
17304 Preston Road INC.,
Suite 700 as a Guarantor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
----------------------------------
Title: President
Address: REGENCY THERMOGRAPHERS,
17304 Preston Road INC.,
Suite 700 as a Guarantor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
----------------------------------
Title: President
Address: REGENCY THERMOGRAPHERS OF CALIFORNIA,
17304 Preston Road INC.,
Suite 700 as a Guarantor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
----------------------------------
Title: President
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<PAGE>
Address: WENTED COMPANY,
17304 Preston Road as a Guarantor
Suite 700
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
-----------------------------
Title: President
Address: WENTED COMPANY OF TEXAS,
17304 Preston Road INC.,
Suite 700 as a Guarantor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
-------------------------------
Title: President
Address: WILLIAMHOUSE OF CALIFORNIA,
17304 Preston Road INC.,
Suite 700 as a Guarantor
Dallas, TX 75252-5613
Attention: Gregory M. Benson By /s/ Gregory M. Benson
-----------------------------
Title: President
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent for the Banks
By /s/ Christopher Kinslow
------------------------
Title: Vice President
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AMERICAN PAD & PAPER COMPANY
1996 KEY EMPLOYEES STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the American Pad & Paper Company 1996 Key Employees Stock
Incentive Plan (the "Plan") is to enable American Pad & Paper Company, a
Delaware corporation (the "Company") and its subsidiaries to attract, retain and
motivate their employees by providing for or increasing the proprietary
interests of such employees in the Company.
SECTION 2. PERSONS ELIGIBLE
Any person employed by the Company or any of its subsidiaries including any
director who is so employed (an "Employee"), shall be eligible to be considered
for the grant of Awards (as defined below) under the Plan.
SECTION 3. AWARDS
(a) The Committee (as defined below), on behalf of the Company, is
authorized under the Plan to enter into any type of arrangement with an Employee
that is consistent with the provisions of the Plan and that by its terms
involves the issuance or potential issuance of (i) shares of Common Stock, par
value $.01 per share, of the Company ("Common Stock") or (ii) a Derivative
Security (as such term is defined in Rule 16a-1 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be
amended from time to time) with an exercise or conversion right at a price
related to Common Stock or with a value derived from the value of the shares of
Common Stock. The entering into of any such arrangement is referred to herein as
the grant of an "Award."
(b) Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock,
restricted stock unit, stock options, reload stock options, stock purchase
warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights, limited stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares, and an Award may consist of one or more such security or benefit.
(c) Common Stock may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.
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(d) Subject to the provisions of the Plan, the Committee, in its sole and
absolute discretion, shall determine all of the terms and conditions of each
Award granted under the Plan, which terms and conditions may include without
limitation:
(i) a provision permitting the recipient of such Award, including a
director or officer of the Company, to pay the purchase price of the Common
Stock or other property issuable pursuant to such Award, or such
recipient's tax withholding obligation with respect to such Award, in whole
or in part, by any one or more of the following:
(A) the delivery of previously owned shares of Common Stock or other
property,
(B) a reduction in the amount of Common Stock or other property
otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and conditions of
which shall be determined by the Committee;
(ii) a provision conditioning or accelerating the receipt of benefits
pursuant to such Award, either automatically or in the discretion of the
Committee, upon the occurrence of specified events, including a change of
control of the Company, an acquisition of a specified percentage of the
voting power of the Company, the dissolution or liquidation of the Company,
a sale of substantially all of the property and assets of the Company or an
event of the type described in Section 7 hereof; or
(iii) a provision required in order for such Award to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code (an
"Incentive Stock Option").
(e) Notwithstanding any other provision of the Plan, no one Employee shall
be granted options or other Awards with respect to more than 100,000 shares of
Common Stock in any one calendar year; provided, however, that this limitation
shall not apply if it is not required in order for the compensation attributable
to Awards hereunder to qualify as performance-based compensation described in
Section 162(m) of the Internal Revenue Code ("Performance-Based Compensation").
The limitation set forth in this Section 3(e) shall be subject to adjustment as
provided in Section 7 hereof, but only to the extent such adjustment would not
affect the status of compensation attributable to Awards hereunder as
Performance-Based Compensation.
SECTION 4. STOCK SUBJECT TO PLAN
(a) At any time, the aggregate number of shares of Common Stock issued and
issuable pursuant to all Awards granted under the Plan shall not exceed
1,500,000, subject to adjustment as provided in Section 7 hereof. Shares of
Common Stock issued pursuant to the Plan may be authorized but unissued shares,
treasury shares, reacquired shares or any combination thereof.
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(b) For purposes of Section 4(a) hereof, the aggregate number of shares of
Common Stock issued and issuable pursuant to Awards granted under the Plan shall
at any time be deemed to be equal to the sum of the number of shares of Common
Stock which have been issued pursuant to Awards and which have not been
repurchased by the Company and the number of shares which are or may be issuable
at or after such time pursuant to Awards granted prior to such time.
SECTION 5. DURATION
No Awards shall be granted under the Plan after June __, 2006. Shares of
Common Stock may be issued after June __, 2006 pursuant to Awards granted prior
to such date, however, no shares of Common Stock shall be issued under the Plan
after June __, 2016.
SECTION 6. ADMINISTRATION
(a) The Plan shall be administered by a committee (the "Committee") of the
Board of Directors of the Company (the "Board") consisting of two or more
directors, each of whom is a "disinterested person" (as such term is defined in
Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to
time); provided that to the extent permitted at any time under Rule 16b-3 or any
successor rule and under Section 162(m) of the Internal Revenue Code or any
successor statutory provision, and any implementing regulations, without
adversely affecting the ability of the Plan to comply with the conditions for
exemption from Section 16 of the Exchange Act provided by Rule 16b-3 and the
exemption from the limitations on the deductibility of certain executive
compensation provided by Section 162(m), the Committee may delegate the
administration of the Plan in whole or in part, on such terms and conditions, to
such other person or persons as it may determine in its discretion, which
persons may be officers or employees of the Company or third parties (each such
person, an "Authorized Delegate").
(b) Subject to the provisions of the Plan, the Committee (or its
Authorized Delegate) shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of the Plan,
including the following:
(i) adopt, amend and rescind rules and regulations relating to the
Plan;
(ii) determine which persons meet the requirements of Section 2
hereof for eligibility under the Plan and to which of such eligible
persons, if any, Awards shall be granted hereunder;
(iii) determine whether, and the extent to which adjustments are
required pursuant to Section 7 hereof;
(iv) interpret and construe the Plan and the terms and conditions of
any Award granted hereunder; and
(v) correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent
the Committee deems necessary or desirable to carry it into effect.
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(c) Any decision of the Committee (or any Authorized Delegate) in the
interpretation and administration of the Plan shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned. The Committee may act only by a majority of its members in office,
except that the members thereof may authorize any one or more of their members
or any Authorized Delegate to execute and deliver documents or to take any other
ministerial action on behalf of the Committee with respect to Awards made or to
be made to Plan participants. No member of the Committee or Authorized Delegate
shall be liable for anything done or omitted to be done by such member or
Authorized Delegate, by any other member of the Committee or by any other
Authorized Delegate in connection with the performance of duties under the Plan,
except for his or her own willful misconduct or as expressly provided by
statute. Determinations to be made by the Committee under the Plan may be made
by Authorized Delegates.
SECTION 7. ADJUSTMENTS
If the outstanding securities of the class then subject to the Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the
Committee shall make appropriate and proportionate adjustments in (a) the number
and type of shares or other securities or cash or other property that may be
acquired pursuant to Awards theretofore granted under the Plan, (b) the maximum
number and type of shares or other securities that may be issued pursuant to
Awards thereafter granted under the Plan and (c) to the extent permitted under
Section 3(e) hereof, the maximum number of shares of Common Stock with respect
to which Awards may be granted to any Employee during any calendar year;
provided, however, that no adjustment shall be made to the number of shares of
Common Stock that may be acquired pursuant to outstanding Incentive Stock
Options or the maximum number of shares of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan to the extent such
adjustment would result in such options being treated as other than Incentive
Stock Options; provided further that no such adjustment shall be made to the
extent the Committee determines that such adjustment would result in the
disallowance of a federal income tax deduction for compensation attributable to
Awards hereunder by causing such compensation to be other than Performance-Based
Compensation.
SECTION 8. AMENDMENT AND TERMINATION
The Board may amend or terminate the Plan at any time and in any manner;
provided however, that no such amendment or termination shall deprive the
recipient of an Award previously granted under the Plan of any of his or her
rights thereunder, without the consent of such recipient and provided further
that no amendment shall become effective without stockholder approval if such
stockholder approval is required by law, rule or regulation.
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SECTION 9. EFFECTIVENESS
The Plan shall be submitted to the stockholders of the Company, for their
approval and adoption in accordance with applicable law and Rule 16b-3 under the
Exchange Act and Section 162(m) under the Internal Revenue Code. The Plan shall
not be effective and no Award shall be made hereunder unless and until the Plan
has been so approved and adopted.
SECTION 10. MISCELLANEOUS PROVISIONS
(a) Neither the Plan nor any action taken hereunder shall be construed as
giving any Employee or other person any right to continue to be employed by the
Company or any of its subsidiaries.
(b) Except as may be approved by the Committee where such approval shall
not adversely affect compliance of the Plan with Rule 16b-3 under the Exchange
Act, an Employee's rights and interest under the Plan may not be assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of an Employee's death)
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner.
(c) It is the intent of the Company that the Plan comply in all respects
with Rule 16b-3 under the Exchange Act and Section 162(m) of the Internal
Revenue Code, that any ambiguities or inconsistencies in construction of the
Plan be interpreted to give effect to such intention and that if any provision
of the Plan is found not to be in compliance with Rule 16b-3 or Section 162(m),
such provision shall be deemed null and void to the extent required to permit
the Plan to comply with Rule 16b-3 or Section 162(m), as the case may be.
(d) The Company shall have the right to deduct from any payment made under
the Plan any federal, state, local or foreign income or other taxes required by
law to be withheld with respect to such payment. It shall be a condition to the
obligation of the Company to issue shares of Common Stock, other securities or
property or any combination thereof, upon exercise, settlement or payment of any
Award under the Plan, that the recipient of an Award (or any beneficiary or
person entitled to act) pay to the Company, upon its demand, such amount as may
be required by the Company for the purpose of satisfying any liability to
withhold such taxes.
(e) By accepting any Award or other benefit under the Plan, each recipient
of an Award and each person claiming under or through him or her shall be
conclusively deemed to have indicated his or her acceptance and ratification of,
and consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.
(f) The validity, construction, interpretation, administration and effect
of the Plan, and of its rules and regulations, and rights relating to the Plan
and to Awards granted under the Plan, shall be governed by the substantive laws,
but not the choice of law rules, of the State of Delaware.
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AMERICAN PAD & PAPER COMPANY
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
I. PURPOSE.
The purpose of American Pad & Paper Company Non-Employee Director Stock
Option Plan (the "Plan") is to promote the interests of American Pad & Paper
Company, a Delaware corporation (the "Company") by providing an inducement to
obtain and retain the services of qualified persons as members of the Company's
Board of Directors (the "Board") and to align more closely the interests of such
persons with the interests of the Company's stockholders by providing a
significant portion of the compensation provided to such persons in the form of
equity securities of the Company. The definitions for certain capitalized terms
used herein are set forth in Section V of this Plan.
II. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have
full power to construe and interpret the Plan and Options granted hereunder, to
establish and amend rules for its administration and to correct any defect or
omission and to reconcile any inconsistency in the Plan or in any Option granted
hereunder to the extent the Committee deems desirable to carry the Plan or any
Option granted hereunder into effect. Any decisions of the Committee in the
administration of the Plan shall be final and conclusive. The Committee may
authorize any one or more of its members, the secretary of the Committee or any
officer of the Company to execute and deliver documents on behalf of the
Committee. Each member of the Committee, and, to the extent provided by the
Committee, any other person to whom duties or powers shall be delegated in
connection with the Plan, shall incur no liability with respect to any action
taken or omitted to be take in connection with the Plan and shall be fully
protected in relying in good faith upon the advice of counsel, to the fullest
extent permitted under applicable law.
III. ELIGIBILITY.
Each Non-Employee Director shall be eligible to participate in the Plan.
IV. LIMITATION ON AGGREGATE SHARES.
A. Maximum Number of Shares. The aggregate maximum number of Shares that
may be issued upon exercise of Options granted pursuant to the Plan shall be
350,000 shares. Such maximum number of Shares is subject to adjustment under the
provisions of Section IV.B. The Shares issued upon exercise of Options may be
authorized but unissued Shares or Shares previously issued which have been
reacquired by the Company. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
Shares subject to such Option but not purchased thereunder shall be available
for future Options to be granted under the Plan.
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B. Adjustment. The maximum number of Shares referred to in Section IV.A
of the Plan, the number of Options granted pursuant to Section VI of the Plan
and the option price and the number of Shares which may be purchased under any
outstanding Option granted under Section VI of the Plan shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
Shares as the result of (i) the declaration and payment of a dividend payable in
Common Stock, or the division of the Common Stock outstanding at the date hereof
(or the date of the grant of any such outstanding Option, as applicable) into a
greater number of Shares without the receipt of consideration therefor by the
Company, or any other increase in the number of such Shares of the Company
outstanding at the date hereof (or the date of the grant of any such outstanding
Option, as applicable) which is effective without the receipt of consideration
therefor by the Company (exclusive of any Shares granted by the Company to
employees of the Company or any of its Subsidiaries without receipt of separate
consideration by the Company), or (ii) the consolidation of the Shares
outstanding at the date hereof (or the date of the grant of any such outstanding
Option, as applicable) into a smaller number of Shares without the payment of
consideration thereof by the Company, or any other decrease in the number of
such Shares outstanding at the date hereof (or the date of the grant of any such
outstanding Option, as applicable) effected without the payment of consideration
by the Company; provided, however, that the total option price for all Shares
which may be purchased upon the exercise of any Option granted pursuant to the
Plan (computed by multiplying the number of Shares originally purchasable
thereunder, reduced by the number of such Shares which have theretofore been
purchased thereunder, by the original option price per share before any of the
adjustments herein provided for) shall not be changed.
In the event of a change in the Common Stock as presently constituted which
is limited to a change of the Company's authorized shares with a par value into
the same number of shares with a different par value or without par value, the
shares resulting from any such change will be deemed to be the Common Stock
within the meaning of this Plan and no adjustment will be required pursuant to
this Section IV.B.
The foregoing adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided in this Section IV.B, a Non-Employee Director shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class.
V. DEFINITIONS.
The following terms shall have the meanings set forth below when used
herein:
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board, any successor
committee of the Board performing similar functions or, in the absence of such a
committee, the Board.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
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"Disability" means a mental or physical condition which, in the opinion of
the Committee, renders a Non-Employee Director unable or incompetent to carry
out his or her duties as a member of the Board and which is expected to be
permanent or for an indefinite duration.
"Effective Date" shall mean the date upon which the following conditions
are satisfied: (i) this Plan is adopted by the stockholders of the Company and
(ii) the Company's Registration Statement on Form S-1 relating to the initial
public offering of its Common Stock is declared effective by the Securities and
Exchange Commission.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of any Share means, as of any applicable date, the mean
between the high and low prices of the Shares as reported on the New York Stock
Exchange-Composite Tape, or if no such reported sale of the Shares shall have
occurred on such date, on the next succeeding date on which there was such a
reported sale.
"Initial Election Date" means, for each Non-Employee Director, the later to
occur of (i) the date the Plan is approved and adopted by the Company's
stockholders pursuant to Section XIII of the Plan, and (ii) the date of such
member's initial election or appointment to the Board.
"Non-Employee Director" means each member of the Board who is not an
officer or employee of the Company or any of its Subsidiaries.
"Option" means an option to purchase shares of Common Stock.
"Shares" means shares of Common Stock.
"Subsidiary" means any partnership, corporation, association, limited
liability company, joint stock company, trust, joint venture, unincorporated
organization or other business entity of which (i) if a corporation, a majority
of the total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
the Company or one or more of the other Subsidiaries of the Company or a
combination thereof, or (ii) if a partnership, association, limited liability
company, joint stock company, trust, joint venture, unincorporated organization
or other business entity, a majority of the partnership or other similar equity
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by the Company or one or more Subsidiaries of the Company or a
combination thereof. For purposes hereof, the Company or a Subsidiary shall be
deemed to have a majority ownership interest in a partnership, association,
limited liability company, joint stock company, trust, joint venture,
unincorporated organization or other business entity if the Company or such
Subsidiary shall be allocated a majority of partnership, association, limited
liability company, joint stock company, trust, joint venture, unincorporated
organization or other business entity gains or losses or shall be or control the
managing director, the trustee, the manager or the general partner of such
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partnership, association, limited liability company, joint stock company, trust,
joint venture, unincorporated organization or other business entity.
VI. FORMULA STOCK OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS.
A. Annual Grant of Options. Each Non-Employee Director serving on the
Board of Directors on the Effective Date shall automatically be granted Options
to purchase 2,000 Shares beginning on the fourth anniversary of the Effective
Date and continuing on each subsequent anniversary thereof. Each Non-Employee
Director that was elected or appointed to the Board after the Effective Date
shall automatically be granted Options to purchase 2,000 Shares beginning on the
fourth anniversary of such Non-Employee Director's election or appointment to
the Board and continuing on each subsequent anniversary thereof.
B. Grant for Newly Appointed Directors. All Non-Employee Directors
serving on the Board on the Effective Date shall automatically be granted, as of
such date, Options to purchase 25,000 Shares. Any Non-Employee Director that is
initially elected or appointed to the Board after the Effective Date shall
automatically be granted, on the date he or she joins the Board, Options to
purchase 25,000 Shares.
C. Option Exercise Price. The exercise price per Share for each Option
shall be 100% of the Fair Market Value of a Share on the date of grant, subject
to Section IV.B.
D. Term of Options. Each Option shall be exercisable for ten years after
the date of grant, subject to Section VI.F.
E. Conditions and Limitations on Exercise.
(i) Vesting. Each Option granted pursuant to Section VI.A shall vest
in three equal installments on the first, second and third anniversaries of
the date of grant. Each Option granted pursuant to Section VI.B shall vest
in three installments, with 50% of the Shares vesting on the first
anniversary of the date of grant and 25% of the Shares vesting on each of
the second and third anniversaries of the date of grant. Upon the
termination of a Non-Employee Director's tenure for any reason (including
termination due to death or Disability), other than such Non-Employee
Director's voluntary registration from the Board, the unvested portions of
any outstanding Options held by such Non-Employee Director shall become
fully vested.
(ii) Exercise. Each Option shall be exercisable in one or more
installments and shall not be exercisable for less than 100 Shares, unless
the exercise represents the entire remaining exercisable balance of a grant
or grants. Each Option shall be exercised by delivery to the Company of
written notice of intent to purchase a specific number of Shares subject to
the Option. The option price of any Shares as to which an Option shall be
exercised shall be paid in full at the time of the exercise. Payment may,
at the election
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of the Non-Employee Director, be made in any one or any combination of the
following forms:
(a) check or wire transfer of funds in such form as may be
satisfactory to the Committee;
(b) delivery of Shares valued at their Fair Market Value on the
date of exercise or, if the date of exercise is not a business day,
the next succeeding business day;
(c) through simultaneous sale through a broker of unrestricted
Shares acquired on exercise, as permitted under Regulation T of the
Federal Reserve Board; or
(d) by authorizing the Company in his or her written notice of
exercise to withhold from issuance a number of Shares issuable upon
exercise of such Option which, when multiplied by the Fair Market
Value of the Common Stock on the date of exercise (or, if the date of
exercise is not a business day, the next succeeding business day), is
equal to the aggregate exercise price payable with respect to the
Option so exercised.
In the event a Non-Employee Director elects to pay the exercise price
payable with respect to an Option pursuant to clause (b) above, (i) only a whole
number of Share(s) (and not fractional Shares) may be tendered in payment, (ii)
such Non-Employee Director must present evidence acceptable to the Company that
he or she has owned any such Shares tendered in payment of the exercise price
(and that such Shares tendered have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise, and (iii) the
certificate(s) for all such Shares tendered in payment of the exercise price
must be accompanied by duly executed instruments of transfer in a form
acceptable to the Company. When payment of the Option exercise price is made by
the tender of Shares, the difference, if any, between the aggregate exercise
price payable with respect to the Option being exercised and the Fair Market
Value of the Share(s) tendered in payment (plus any applicable taxes) shall be
paid by check or wire transfer of funds. No Non-Employee Director may tender
Shares having a Fair Market Value exceeding the aggregate exercise price payable
with respect to the Option being exercised.
In the event a Non-Employee Director elects to pay the exercise price
payable with respect to an Option pursuant to clause (d) above, (i) only a whole
number of Share(s) (and not fractional Shares) may be withheld in payment and
(ii) such Non-Employee Director must present evidence acceptable to the Company
that he or she has owned a number of Shares at least equal to the number of
Shares to be withheld in payment of the exercise price (and that such owned
Shares have not been subject to any substantial risk of forfeiture) for at least
six months prior to the date of exercise. When payment of the Option exercise
price is made by the withholding of Shares, the difference, if any, between the
aggregate exercise price payable with respect to the Option being exercised and
the Fair Market Value of the Share(s) withheld in payment (plus any applicable
taxes) shall be paid by check or wire transfer of funds. No Non-Employee
Director may authorize the withholding of Shares having a Fair Market Value
exceeding the aggregate
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exercise price payable with respect to the Option being exercised. Any withheld
Shares shall no longer be issuable under such Option.
F. Additional Provisions.
(i) Expiration of Options Upon Termination of Directorship. Upon the
termination of a Non-Employee Director's tenure for any reason (including
termination due to death or Disability), each outstanding vested and
previously unexercised Option (after giving effect to any vesting of the
Option upon such termination pursuant to Section VI. E hereof) shall expire
two years after the date of such termination. In no event shall the
provisions of this Section VI.F operate to extend the original expiration
date of any Option.
(ii) Sale of the Company. In the event of a merger of the Company
with or into another corporation constituting a change of control of the
Company, a sale of all or substantially all of the Company's assets or a
sale of a majority of the Company's outstanding voting securities (a "Sale
of the Company"), the Options may be assumed by the successor corporation
or a parent of such successor corporation or substantially equivalent
options may be substituted by the successor corporation or a parent of such
successor corporation, and if the successor corporation does not assume the
Options or substitute options, then all outstanding and unvested Options
shall become immediately exercisable and all outstanding Options shall
terminate if not exercised as of the date of the Sale of the Company (or
other prescribed period of time). The Company shall provide at least 30
days prior written notice of the Sale of the Company to the holders of all
outstanding Options, which notice shall state whether (a) the Options will
be assumed by the successor corporation or substantially equivalent options
will be substituted by the successor corporation, or (b) the Options are
thereafter vested and exercisable and will terminate if not exercised as of
the date of the Sale of the Company (or other prescribed period of time).
(iii) Liquidation or Dissolution. In the event of the liquidation or
dissolution of the Company, Options shall terminate immediately prior to
the liquidation or dissolution.
G. Non-Qualified Stock Options. All Options granted under the Plan shall
be non-qualified options not entitled to special tax treatment under Code
Section 422, as may be amended from time to time.
VII. MISCELLANEOUS PROVISIONS.
A. Rights of Non-Employee Directors. No Non-Employee Director shall be
entitled under the Plan to voting rights, dividends or other rights of a
stockholder prior to the issuance of the Common Stock. Neither the Plan nor any
action taken hereunder shall be construed as giving any Non-Employee Director
any right to be retained in the service of the Company.
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B. Limitations on Transfer and Exercise. All Options granted under the
Plan shall not be transferable by the Non-Employee Director, other than by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined by (S)1 et seq, of the Code, Title I of ERISA or the
rules and regulations thereunder, and shall be exercisable during the Non-
Employee Director's lifetime only by such Non-Employee Director or by such Non-
Employee Director's guardian or other legal representative.
C. Compliance with Laws. No shares of Common Stock shall be issued
hereunder unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable federal, state, local and foreign
securities, securities exchange and other applicable laws and requirements. Each
Option granted pursuant to Section VI shall be subject to the requirement that
if at any time the Committee shall determine, in its discretion, that the
listing, registration or qualification of the Shares subject to the Option upon
any securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
such Option or the issuance or purchase of Shares thereunder, no Option may be
exercised or paid in shares of Common Stock, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee. The
holder of such Option will supply the Company with such certificates,
representations and information as the Company shall request and shall otherwise
cooperate with the Company in obtaining such listing, registration,
qualification, consent or approval. The Committee may at any time impose any
limitations upon the exercise of an Option or the sale of the Common Stock
issued upon exercise of an Option that, in the Committee's discretion, are
necessary or desirable in order to comply with Section 16(b) of the Exchange Act
and the rules and regulations thereunder. The Committee may at any time impose
additional limitations, or may amend or delete the existing limitations, upon
the exercise of Options by the tender or withholding of Shares in accordance
with Section VI.E (including an amendment or deletion of the related ownership
period for Shares specified in such Section), if such additional, amended or
deleted limitations are necessary, desirable or no longer required (as the case
may be) to remain in compliance with applicable accounting pronouncements
relating to the treatment of the plan as a fixed plan for accounting purposes.
D. Payment of Withholding Tax. Whenever Shares are to be issued upon
exercise of Options issued pursuant to Section VI of the Plan, the Company shall
be entitled to require as a condition of delivery (i) that the participant remit
an amount sufficient to satisfy all federal, state and local withholding tax
requirements related thereto, (ii) the withholding of Shares due to the
participant under the Plan with a Fair Market Value equal to such amount, or
(iii) any combination of the foregoing.
E. Expenses. The expenses of the Plan shall be borne by the Company and
its Subsidiaries.
F. Deemed Acceptance, Ratification and Consent. By accepting any shares
of Common Stock hereunder or other benefit under the Plan, each Non-Employee
Director and each person claiming under or through him or her shall be
conclusively deemed to have indicated his
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<PAGE>
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.
G. Securities Act Registration. The Company shall use its best efforts to
cause to be filed under the Securities Act of 1933, as amended, a registration
statement covering the Shares issuable upon exercise of Options granted under
the Plan.
H. Governing Law. The provisions of the Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
I. Headings; Construction. Headings are given to the sections of the Plan
solely as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of the Plan or any provisions hereof. The use of the singular
shall also include within its meaning the plural, where appropriate, and vice
versa.
VIII. AMENDMENT.
The Plan may be amended at any time and from time to time by resolution of
the Board as the Board shall deem advisable; provided, however, that no
amendment shall become effective without stockholder approval if such
stockholder approval is required by law, rule or regulation; and provided
further, that to the extent required by Rule 16b-3 under Section 16 of the
Exchange Act, Plan provisions shall not be amended more than once every six
months, except that the foregoing shall not preclude any amendment to comport
with changes in the Code, ERISA or the rules thereunder. No amendment of the
Plan shall materially and adversely affect any right of any participant with
respect to any Options theretofore granted under the Plan without such
participant's written consent, except for any modifications required to maintain
compliance with any federal or state statute or regulation.
IX. TERMINATION.
The Plan shall terminate upon the earlier of the following dates or events
to occur :
(i) upon the adoption of a resolution of the Board terminating the
Plan; and
(ii) ten years from the date the Plan is initially approved and
adopted by the stockholders of the Company in accordance with Article X.
Except as specifically provided herein, no termination of the Plan shall
materially and adversely affect any of the rights or obligations of any person
without his or her consent with respect to any Options theretofore granted under
the Plan.
X. STOCKHOLDER APPROVAL AND ADOPTION.
The Plan is dated June 22, 1996, which is the date upon which the Board
adopted the Plan. The Plan shall be submitted to the stockholders of the Company
for their approval. The
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<PAGE>
stockholders shall be deemed to have approved and adopted the Plan only if it is
approved and adopted by vote taken in the manner required by the laws of the
State of Delaware.
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<PAGE>
AMERICAN PAD & PAPER COMPANY
MANAGEMENT STOCK PURCHASE PLAN
SECTION I
PURPOSE
1.1 Purpose. The purpose of the American Pad & Paper Company Management Stock
Purchase Plan (the "Plan") is to enable and encourage selected management
employees to acquire an ownership interest in the Company through the
purchase of the Company's Common Shares, thereby permitting such
participants to share in the growth in value of the Company.
1.2 Effectiveness of the Plan. The Plan will be effective upon the consummation
of the Initial Public Offering. The Plan will remain in effect until such
time as it is amended or terminated by the Board of Directors of the
Company in accordance with the terms of Section IX hereof.
SECTION II
DEFINITIONS
Unless the context indicates otherwise, the following terms have the meanings
set forth below.
2.1 "Board" means the Board of Directors of American Pad & Paper Company.
2.2 "Committee" means the Compensation Committee of the Board or such other
committee designated by the Board to administer the Plan. The Committee
must be comprised of two or more directors, each of whom is a
"disinterested person" (as such term is defined in Rule 166-3 under the
Exchange Act, as such Rule may be amended from time to time).
2.3 "Common Shares" means the shares of Common Stock, par value $.01 per share,
of the Company, or any other class of capital shares which the Company may
authorize and
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<PAGE>
issue from time to time, and as may be made subject to this Plan in the
sole discretion of the Board.
2.4 "Company" means collectively American Pad & Paper Company, any successor
entity in a merger or consolidation, and any Subsidiary, which elects to
participate in the Plan with the approval of the Board.
2.5 "Discount to Market" means a percentage discount to the Fair Market Value
of the Plan Shares for purposes of calculating the Purchase Price
pursuant to Section 5.5 hereof which the Committee may authorize in its
sole discretion from time to time. Unless otherwise determined in writing
by the Committee, the Discount To Market under the Plan shall be 25%.
2.6 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.7 "Fair Market Value" as of a certain date means the fair market value of
the Common Shares as determined by the Committee in its sole discretion.
2.8 "Initial Public Offering" means the initial public offering of the shares
of Common Stock of the Company registered under the Securities Act of
1933.
2.9 "Participant" means the management employees of the Company and its
subsidiaries as designated by the Committee who elect to participate in
the Plan in accordance with the provisions of the Plan.
2.10 "Plan Period" shall have the meaning set forth in Section 5.1.
2.11 "Plan Shares" shall have the meaning set forth in Section 4.1.
2.12 "Purchase Date" shall have the meaning set forth in Section 5.5.
2.13 "Purchase Price" shall have the meaning set forth in Section 5.5.
2.14 "Subsidiary" means any corporation, partnership, association or other
business entity which (i) if a corporation, a majority of the total
voting power of shares of stock entitled to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by the Company or (ii) if a
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest is owned or controlled,
directly or indirectly, by the Company.
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<PAGE>
SECTION III
ADMINISTRATION OF THE PLAN
3.1 Authority of the Committee. The Plan shall be administered by the
Committee. The Committee is authorized by the Board to administer and
control the operation of the Plan including, but not limited to, the power
to (a) determine eligibility for participation in the Plan, (b) subject to
Section V hereof, prescribe the terms and conditions under which Plan
Shares may be purchased under the Plan, and (c) interpret the Plan and
adopt rules for the administration and application of the Plan.
The Committee, in its sole discretion and on such terms and conditions as
it may provide, may delegate its duties in order to facilitate the purchase
and transfer of Plan Shares and to provide for the day-to-day
administration of the Plan. The Committee shall control the general
administration of the Plan with all powers necessary to enable it to carry
out its duties in that respect.
3.2 Decisions Binding. All determinations and decisions made by the Committee
shall be final, conclusive, and binding on all persons, and shall be given
the maximum deference permitted by law.
SECTION IV
NUMBER OF SHARES UNDER THE PLAN
4.1 Shares Subject to Plan. The Company shall reserve 250,000 Common Shares
(the "Plan Shares") for issuance to and purchase by eligible management
employees under this Plan, subject to adjustment pursuant to Section 4.2
hereof. Plan Shares may be Common Shares now or hereafter authorized yet
unissued or Common Shares already authorized, issued and owned or purchased
by the Company. If and to the extent that any right to purchase Plan Shares
shall not be exercised by any Participant for any reason or if such
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<PAGE>
right to purchase shall terminate as provided herein, Plan Shares that have
not been allocated to such Participant under the Plan shall again become
available for allocation to Participants as provided herein.
4.2 Change in Capitalization. In the event of a change in the capitalization of
the Company due to a share split, share dividend, recapitalization, merger,
consolidation, combination, or similar event or as in its sole discretion
may deem appropriate, the aggregate number of Plan Shares and the terms of
any existing offering shall be adjusted by the Board to reflect such
change.
SECTION V
PARTICIPATION AND PLAN OPERATION
5.1 Plan Period. The Plan shall operate on a calendar year basis, with each
Plan Period beginning on the first day of January of each year and ending
on the 31st day of December of such year.
5.2 Eligible Participants. Management employees of the Company and its
Subsidiaries as designated by the Committee prior to the beginning of each
Plan Period shall be eligible to participate in the Plan. In determining
the management employees eligible to participate in the Plan, the Committee
shall consider only those management employees recommended by the Company's
principal executive officer.
5.3 Election to Participate in the Plan. Each year, each Participant may elect
to receive an award of Common Shares under the Plan during the subsequent
calendar year by completing a Stock Subscription Agreement (the
"Subscription Agreement"). The Subscription Agreement shall provide that
the Participant elects to receive Common Shares in lieu of a specified
portion of any annual incentive bonus. Such portion may be expressed as
either (a) a specified percentage of the Participant's actual bonus amount,
up
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Page 4
<PAGE>
to 25% of the Participant's actual bonus amount; (b) the lesser of a
specified percentage or a specified dollar amount of the Participant's
actual bonus amount; or (c) a specified dollar amount, up to 25% of the
Participant's targeted maximum bonus. Any dollar amount specified must be
at least $1,000; any percentage specified must be at least 5% and not more
than 25%. Amounts specified pursuant to methods (a) and (b) are entirely
contingent on the amount of bonus actually awarded. Where the Participant
specifies a fixed dollar amount pursuant to method (c) however, the
Subscription Agreement shall provide that, if the targeted maximum bonus
exceeds the actual bonus amount awarded, the dollar amount specified by the
Participant shall automatically be proportionately reduced. Subscription
Agreements must be received by the Company no later than June 30 of the
fiscal year for which such bonus amount will be determined. A Participant
who is subject to the short-swing profit rules of Section 16 of the
Exchange Act may not revise his or her Subscription Agreement. A
Participant who is not subject to the short-swing profit rules of Section
16 of the Exchange Act may revise his or her Subscription Agreement with
respect to the amount of elected Common Shares no later than September 30
of the fiscal year for which such bonus amount will be determined.
5.4 Award of Common Shares. Once each year, on the date that annual incentive
bonuses are paid or would otherwise be paid, the Company shall award Common
Shares to each Participant as follows: Each Participant shall be issued a
whole number of Common Shares determined by dividing the amount (expressed
in dollars) that is determined under his or her Subscription Agreement by
the Purchase Price of each Common Share awarded on such date. No fractional
Common Share will be issued and the amount equivalent in value to the
fractional Common Share will be paid out to the participant currently in
cash.
5.5 Purchase Price. Unless otherwise specified in writing by the Committee, the
purchase price for each Plan Share to be purchased under the Plan (the
"Purchase Price") shall be equal to the Fair Market Value of the Common
Shares less the Discount To Market as of the date the award of the Common
Shares (the "Purchase Date").
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<PAGE>
5.6 Fair Market Value. Unless otherwise specified in writing by the Committee,
the Fair Market Value of the Common Shares on the Purchase Date shall be
equal to the average of the closing sale prices of the Common Shares on the
New York Stock Exchange (or such other securities exchange or quotation
system as is then the principal trading market for such Common Shares) for
the five business days immediately preceding the Purchase Date.
5.7 Termination of Employment. A Participant shall cease to be eligible to
participate in the Plan immediately upon the termination of employment for
any reason with the Company or any of its Subsidiaries.
SECTION VI
RIGHTS NOT TRANSFERABLE
The rights and interests of any Participant in the Plan, including any right to
purchase Plan Shares, shall not be transferable other than by will or the
applicable laws of descent and distribution and any such right to purchase shall
be exercisable only during the lifetime of such Participant, and then only by
such Participant.
SECTION VII
LIMITATIONS ON SHARE OWNERSHIP
Notwithstanding any provision herein to the contrary, no Participant shall have
a right to purchase Plan Shares if such Participant would, immediately after
electing to purchase such shares, own Common Shares possessing 10% or more of
the total combined voting power or value of all classes of capital shares of the
Company or of any of its Subsidiaries. For purposes of the foregoing,
Participants shall be considered to own any Common Shares which they have a
right to purchase under the Plan or any other share option agreement with the
Company or its Subsidiary.
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<PAGE>
SECTION VIII
MISCELLANEOUS PROVISIONS
8.1 Continued Employment. Nothing in the Plan shall be construed to give any
employee the right to be retained in the employ of the Company or a
Subsidiary or to affect the right of the Company or any Subsidiary or a
Participant to terminate such employment at any time with or without cause.
8.2 Rights as Stockholder. A Participant shall have no rights as a stockholder
with respect to any Plan Shares which he or she may have a right to
purchase under the Plan until the date such shares are registered in the
name of such Participant or in the name of a Nominee on behalf of such
Participant.
8.3 Rights to Purchase Shares. Each right to purchase Plan Shares under the
Plan shall be subject to the requirement that if at any time the Committee
shall determine that the listing, registration or qualification of such
right to purchase or the Plan Shares subject thereto upon any securities
exchange or under any state or federal law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, such right to purchase or the issue of Plan
Shares pursuant thereto, then, anything in the Plan to the contrary
notwithstanding, no such right to purchase may be exercised in whole or in
part, and no Plan Shares shall be issued, unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained free from any conditions not reasonably acceptable to the
Committee. The Committee is authorized upon the advice of counsel to make
such amendments to the Plan as may be necessary or desirable to facilitate
obtaining an effective registration statement with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, covering
Plan Shares issued pursuant hereto.
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<PAGE>
8.4 Withholding Taxes. Each Participant agrees, by entering the Plan, that the
Company shall have the right to deduct any such taxes, in its sole
discretion, from any amount payable to the Participant under the Plan or
from any payment of any kind otherwise due to the Participant. Participants
who wish to avoid the withholding of Common Shares otherwise issuable to
them under the Plan should arrange with the Company to pay the amount of
taxes required to be withheld in advance of the settlement date.
8.5 No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring Common Shares under the Plan to represent to
and agree with the Company in writing that such person is acquiring the
shares without a view to distribution thereof. No Common Shares shall be
issued until all applicable securities law and other legal and stock
exchange requirements have been satisfied. The Committee may require the
placing of such stop-orders and restrictive legends on certificates for
Common Shares as it deems appropriate. The Company shall use its best
efforts to cause to be filed under the Securities Act of 1933, as amended,
a registration statement covering the Common Shares issuable under this
Plan.
8.6 Governing Law. The terms of the Plan shall be governed, construed,
administered and regulated in accordance with the laws of the State of
Delaware. In the event any provision of this Plan shall be determined to be
illegal or invalid for any reason, the other provisions shall continue in
full force and effect as if such illegal or invalid provision had never
been included herein.
8.7 Notices; Delivery of Stock Certificates. Any notice required or permitted
to be given by the Company or the Committee pursuant to the Plan shall be
deemed given when personally delivered or deposited in the United Sates
mail, registered or certified, postage prepaid, addressed to the
Participant at the last address shown for the Participant on the records of
the Company. Delivery of stock certificates to persons entitled to receive
them under the Plan shall be deemed effected for all purposes when the
Company or a share
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<PAGE>
transfer agent of the Company shall have deposited such certificates in the
United States mail, addressed to such person at his/her last known address
on file with the Company.
SECTION IX
AMENDMENT OR TERMINATION OF THE PLAN
9.1 Amendment. The Board may, at any time and from time to time, amend, modify
or suspend the Plan, but no such amendment, modification or suspension
without the approval of the stockholders shall:
(a) increase the maximum number (determined as provided in the Plan) of
Plan Shares, other than as provided in Section 4.2 hereof; or
(b) permit the issuance of any Plan Shares at a Purchase Price less than
that provided in the Plan as approved by the stockholders.
9.2 Termination. This Plan shall terminate upon the adoption of a resolution of
the Board terminating the Plan.
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Page 9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 3,141 3,141
<SECURITIES> 0 0
<RECEIVABLES> 39,736 39,736
<ALLOWANCES> (1,909) (1,909)
<INVENTORY> 111,654 111,654
<CURRENT-ASSETS> 176,921 176,921
<PP&E> 141,195 141,195
<DEPRECIATION> (8,717) (8,717)
<TOTAL-ASSETS> 513,676 513,676
<CURRENT-LIABILITIES> 97,147 97,147
<BONDS> 200,000 200,000
<COMMON> 9 9
0 0
113,887 113,887
<OTHER-SE> (180,796) (180,796)
<TOTAL-LIABILITY-AND-EQUITY> 513,676 513,676
<SALES> 114,099 234,207
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<CGS> 89,168 185,748
<TOTAL-COSTS> 100,893 208,498
<OTHER-EXPENSES> (500) (770)
<LOSS-PROVISION> 88 364
<INTEREST-EXPENSE> (12,491) (25,033)
<INCOME-PRETAX> 1,215 1,446
<INCOME-TAX> 524 625
<INCOME-CONTINUING> 691 821
<DISCONTINUED> 0 0
<EXTRAORDINARY> (1,300) (1,300)
<CHANGES> 0 0
<NET-INCOME> (609) (479)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
