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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 14, 1998
REPUBLIC GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 1-7210 75-1155922
(State of other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
811 East 30th Avenue
Hutchinson, Kansas 67502
(Address of principal executive offices)
(316) 727-2700
(Registrant's Telephone No.)
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ITEM 5. OTHER EVENTS
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Registrant is voluntarily filing as exhibits hereto the following
agreements to which it is a party:
1. Credit Agreement (with related forms of Note, Pledge Agreement,
Security Agreement, Mortgage, and Subsidiary Guarantee attached
as Exhibits thereto) dated as of July 15, 1998, among the
Registrant, Morgan Guaranty Trust Company of New York, as
Syndication Agent, and NationsBank, N.A., as Administrative
Agent, and the Banks and LC Issuing Banks, as defined therein.
2. Indenture dated as of July 15, 1998, between the Company and UMB
Bank, N.A. as Trustee relating to the Company's 9 1/2% Senior
Subordinated Notes due 2008.
3. Paperboard Supply Agreement, dated May 14, 1998, between the
Registrant, Republic Paperboard Company and James Hardie Gypsum,
Inc.
4. Amended and Restated Agreement for Engineering, Procurement and
Construction dated as of June 26, 1998 between Republic
Paperboard Company and Fluor Daniel, Inc. relating to the
Registrant's Lawton Mill.
5. Amended and Restated Parent Company Guarantee effective as of
June 26, 1998 from the Registrant to Fluor Daniel, Inc. relating
to the Lawton Mill.
Portions of Agreements 3 and 4 above were omitted pursuant to a Request for
Confidential Treatment separately filed with the office of the Secretary of the
Commission. The omitted material was submitted with the Request for Confidential
Treatment.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(c) Exhibits
99(a) Credit Agreement (with related forms of Note, Pledge Agreement,
Security Agreement, Mortgage, and Subsidiary Guarantee attached
as Exhibits thereto) dated as of July 15, 1998, among the
Registrant, Morgan Guaranty Trust Company of New York, as
Syndication Agent, and NationsBank, N.A., as Administrative
Agent, and the Banks and LC Issuing Banks, as defined therein.
99(b) Indenture dated as of July 15, 1998, between the Company and
UMB Bank, N.A. as Trustee relating to the Company's 9 1/2%
Senior Subordinated Notes due 2008.
99(c) Paperboard Supply Agreement, dated May 14, 1998, between the
Registrant, Republic Paperboard Company and James Hardie
Gypsum, Inc. Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment separately
filed with the Office of the Secretary of the Commission. The
omitted material was submitted with the Request for
Confidential Treatment.
99(d) Amended and Restated Agreement for Engineering, Procurement and
Construction dated as of June 26, 1998 between Republic
Paperboard Company and Fluor Daniel, Inc. relating to the
Registrant's Lawton Mill. Portions of this Exhibit have been
omitted pursuant to a request for confidential treatment
separately filed with the Office of the Secretary of the
Commission. The omitted material was submitted with the Request
for Confidential Treatment.
99(e) Amended and Restated Parent Company Guarantee effective as of
June 26, 1998 from the Registrant to Fluor Daniel, Inc.
relating to the Lawton Mill.
Page 3
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
REPUBLIC GROUP INCORPORATED
Dated: September 10, 1998 By: /s/ DOYLE R. RAMSEY
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Printed Name: Doyle R. Ramsey
Title: Executive Vice President
and Chief Financial Officer
Page 4
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EXHIBIT INDEX
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Item
Number Description
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99(a) Credit Agreement (with related forms of Note, Pledge
Agreement, Security Agreement, Mortgage, and Subsidiary
Guarantee attached as Exhibits thereto) dated as of July 15,
1998, among the Registrant, Morgan Guaranty Trust Company of
New York, as Syndication Agent, and NationsBank, N.A., as
Administrative Agent, and the Banks and LC Issuing Banks, as
defined therein.
99(b) Indenture dated as of July 15, 1998, between the Company and
UMB Bank, N.A. as Trustee relating to the Company's 9 1/2%
Senior Subordinated Notes due 2008.
99(c) Paperboard Supply Agreement, dated May 14, 1998, between the
Registrant, Republic Paperboard Company and James Hardie
Gypsum, Inc. Portions of this Exhibit have been omitted
pursuant to a request for confidential treatment separately
filed with the Office of the Secretary of the Commission.
The omitted material was submitted with the Request for
Confidential Treatment.
99(d) Amended and Restated Agreement for Engineering, Procurement
and Construction dated as of June 26, 1998 between Republic
Paperboard Company and Fluor Daniel, Inc. relating to the
Registrant's Lawton Mill. Portions of this Exhibit have been
omitted pursuant to a request for confidential treatment
separately filed with the Office of the Secretary of the
Commission. The omitted material was submitted with the Request
for Confidential Treatment.
99(e) Amended and Restated Parent Company Guarantee effective as
of June 26, 1998 from the Registrant to Fluor Daniel, Inc.
relating to the Lawton Mill.
Page 5
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EXHIBIT 99(a)
$85,000,000
CREDIT AGREEMENT
dated as of
July 15, 1998
among
REPUBLIC GROUP INCORPORATED
THE BANKS PARTY HERETO
THE LC ISSUING BANKS REFERRED TO HEREIN
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
AS SYNDICATION AGENT
and
NATIONSBANK, N.A.,
AS ADMINISTRATIVE AGENT
__________________________________________
J.P. MORGAN SECURITIES INC.,
Arranger
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TABLE OF CONTENTS
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ARTICLE 1
Definitions
Section 1.01. Definitions............................................. 1
Section 1.02. Accounting Terms and Determinations..................... 21
Section 1.03. Classes and Types of Loans and Borrowings............... 21
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend..................................... 21
Section 2.02. Notice of Borrowing..................................... 22
Section 2.03. Notice to Banks; Funding of Loans....................... 23
Section 2.04. Maturity of Loans; Contingent Prepayments............... 24
Section 2.05. Interest Rates.......................................... 25
Section 2.06. Method of Electing Interest Rates....................... 27
Section 2.07. Fees.................................................... 29
Section 2.08. Termination or Reduction of Revolving Credit
Commitments....................................................... 29
Section 2.09. Optional Prepayments.................................... 30
Section 2.10. General Provisions as to Payments....................... 31
Section 2.11. Funding Losses.......................................... 31
Section 2.12. Computation of Interest and Fees........................ 32
Section 2.13. Maximum Interest Rate................................... 32
Section 2.14. Notes................................................... 33
Section 2.15. Letters of Credit....................................... 33
Section 2.16. Registry................................................ 39
ARTICLE 3
Conditions
Section 3.01. Closing Date............................................ 40
Section 3.02. Borrowings and Issuances of Letters of Credit........... 42
Section 3.03. Construction Borrowings and Construction Letters of
Credit............................................................ 43
ARTICLE 4
Representations and Warranties
Section 4.01. Corporate Existence and Power........................... 44
Section 4.02. Corporate and Governmental Authorization; No
Contravention..................................................... 44
Section 4.03. Binding Effect; Liens Enforceable....................... 45
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Section 4.04. Financial Information.................................. 45
Section 4.05. Litigation............................................. 45
Section 4.06. Compliance with ERISA.................................. 46
Section 4.07. Environmental Matters.................................. 46
Section 4.08. Taxes.................................................. 47
Section 4.09. Subsidiaries........................................... 48
Section 4.10. No Regulatory Restrictions on Borrowing................ 48
Section 4.11. Full Disclosure........................................ 48
Section 4.12. Year 2000.............................................. 48
ARTICLE 5
Covenants
Section 5.01. Information............................................ 49
Section 5.02. Payment of Obligations................................. 53
Section 5.03. Maintenance of Property; Insurance..................... 53
Section 5.04. Conduct of Business and Maintenance of Existence....... 54
Section 5.05. Compliance with Laws................................... 54
Section 5.06. Inspection of Property, Books and Records.............. 54
Section 5.07. Consolidations, Mergers and Sales of Assets............ 55
Section 5.08. Use of Proceeds........................................ 56
Section 5.09. Negative Pledge........................................ 56
Section 5.10. Limitation on Debt..................................... 57
Section 5.11. Debt to EBITDA......................................... 57
Section 5.12. Interest Coverage Ratio................................ 58
Section 5.13. Minimum EBITDA......................................... 58
Section 5.14. Minimum Consolidated Net Worth......................... 58
Section 5.15. Limitation on Capital Expenditures..................... 59
Section 5.16. Lease Payments......................................... 59
Section 5.17. Restricted Payments; Voluntary Prepayments............. 59
Section 5.18. Investments and Acquisitions........................... 60
Section 5.19. Transactions with Affiliates........................... 60
Section 5.20. Environmental Matters.................................. 60
Section 5.21. Limitation on Restrictions Affecting the Borrower and
Subsidiaries..................................................... 61
Section 5.22. Fiscal Year............................................ 61
Section 5.23. Material Contracts..................................... 61
Section 5.24. Title Insurance; Surveys............................... 61
Section 5.25. Landlord and Warehouseman Waivers...................... 62
Section 5.26. Further Assurances..................................... 63
Section 5.27. Amendments to Subordinated Notes....................... 64
Section 5.28. Matters Relating to Project............................ 64
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Section 5.29. Proceeds of Subordinated Notes............................. 66
ARTICLE 6
Defaults
Section 6.01. Events of Default.......................................... 67
Section 6.02. Notice of Default.......................................... 70
Section 6.03. Cash Collateral............................................ 70
ARTICLE 7
The Agents
Section 7.01. Appointment and Authorization.............................. 70
Section 7.02. Administrative Agent and Affiliates........................ 71
Section 7.03. Action by Administrative Agent............................. 71
Section 7.04. Consultation with Experts.................................. 71
Section 7.05. Liability of Administrative Agent.......................... 71
Section 7.06. Indemnification............................................ 72
Section 7.07. Credit Decision............................................ 72
Section 7.08. Successor Administrative Agent............................. 72
Section 7.09. Agents' Fees............................................... 73
Section 7.10. Syndication Agent.......................................... 73
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate
or Unfair............................................................ 73
Section 8.02. Illegality................................................. 73
Section 8.03. Increased Cost and Reduced Return.......................... 74
Section 8.04. Taxes...................................................... 76
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar
Loans................................................................ 77
Section 8.06. Substitution of Banks...................................... 78
ARTICLE 9
Miscellaneous
Section 9.01. Notices.................................................... 78
Section 9.02. No Waivers................................................. 79
Section 9.03. Expenses; Indemnification.................................. 79
Section 9.04. Set-Offs................................................... 80
Section 9.05. Amendments and Waivers..................................... 81
Section 9.06. Successors; Participations and Assignments................. 81
Section 9.07. No Reliance on Margin Stock................................ 83
Section 9.08. Governing Law; Submission to Jurisdiction.................. 83
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Section 9.09. Counterparts; Integration; Effectiveness................... 84
Section 9.10. WAIVER OF JURY TRIAL....................................... 84
Section 9.11. Confidentiality............................................ 84
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COMMITMENT SCHEDULE
PRICING SCHEDULE
SCHEDULE 3.01 -- Closing Date Collateral Documents
SCHEDULE 4.05 -- Pending Litigation
SCHEDULE 4.07 -- Environmental Liabilities
SCHEDULE 5.03 -- Part I - Physical Damage Insurance
Part II - Public Liability Insurance
SCHEDULE 5.09 -- Existing Liens
SCHEDULE 5.10 -- Existing Debt
SCHEDULE 5.21 -- Existing Restrictions
EXHIBIT A -- Note
EXHIBIT B -- Mortgage
EXHIBIT C -- Pledge Agreement
EXHIBIT D -- Security Agreement
EXHIBIT E -- Subsidiary Guarantee
EXHIBIT F-1 -- Opinion of Locke Purnell Rain Harrell (A Professional
Corporation), counsel for the Obligors
EXHIBIT F-2 -- Opinion of Crowe & Dunlevy, Oklahoma counsel for the
Obligors
EXHIBIT G -- Opinion of Davis Polk & Wardwell, special counsel for
the Agents
EXHIBIT H -- Assignment and Assumption Agreement
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AGREEMENT dated as of July 15, 1998 among REPUBLIC GROUP INCORPORATED, the
BANKS party hereto, the LC ISSUING BANKS referred to herein, MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Syndication Agent, and NATIONSBANK, N.A., as
Administrative Agent.
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"ADJUSTED CAPITAL EXPENDITURES" means, for any fiscal period, Consolidated
Capital Expenditures for such period, adjusted to exclude the portion thereof
allocable to the Project.
"ADJUSTED LONDON INTERBANK OFFERED RATE" has the meaning set forth in
Section 205(b).
"ADMINISTRATIVE AGENT" means NationsBank, N.A., in its capacity as
administrative agent for the Banks under the Loan Documents, and its successors
in such capacity.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent,
completed by such Bank and returned to the Administrative Agent (with a copy to
the Borrower).
"AFFILIATE" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "CONTROLLING PERSON") or (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person. As used herein, the term
"CONTROL" means possession, directly or indirectly, of the power to vote 10% or
more of any class of voting securities of a Person or to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGENT" means the Administrative Agent or the Syndication Agent, and
"AGENTS" means both the Administrative Agent and the Syndication Agent.
"AGGREGATE LC EXPOSURE" means, at any time, the sum, without duplication,
of (i) the aggregate amount that is (or may thereafter become)
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available for drawing under all Letters of Credit outstanding at such time plus
----
(ii) the aggregate unpaid amount of all LC Reimbursement Obligations at such
time minus (iii) the aggregate amount of cash collateral deposited by the
-----
Borrower pursuant to Section 204 and held by the Administrative Agent in the
General Collateral Account at such time.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Base Rate Loans and its participations in Letters of Credit, its
Domestic Lending Office and (ii) in the case of its Euro-Dollar Loans, its Euro-
Dollar Lending Office.
"APPLICABLE MARGIN" means, with respect to Loans of any Type at any time,
the applicable percentage rate per annum set forth in the Pricing Schedule with
respect to Loans of such Type which is applicable at such time in accordance
with the Pricing Schedule; provided that (i) the Applicable Margin on any date
with respect to any Loan shall be the sum of the percentage so determined in
accordance with the Pricing Schedule plus 2.00%, if on such date a Default (but
not an Event of Default) exists under Section 6.01 with respect to such Loan and
(ii) the Applicable Margin on any date with respect to all Loans shall be the
sum of the percentage so determined in accordance with the Pricing Schedule plus
2.00%, if on such date an Event of Default exists and the Administrative Agent
shall have notified the Borrower upon instruction by any Bank that this clause
(ii) is applicable.
"ARCHITECT/ENGINEER" means Marathon Engineers/Architects/Planners, LLC.
"ARCHITECT CONTRACT" means the Contract entered into effective July 7, 1998
by and between Republic Paperboard acting through Owner's Agent Fluor Daniel,
Inc. and Marathon Engineers/Architects/Planners.
"ASSET SALE" means any sale, lease or other disposition (including any such
transaction effected by way of merger or consolidation) by the Borrower or any
of its Subsidiaries of any asset, but excluding (i) dispositions of inventory
and obsolete equipment in the ordinary course of business, (ii) dispositions of
Temporary Cash Investments and cash payments otherwise permitted under this
Agreement, (iii) dispositions to the Borrower or any of its Subsidiaries and
(iv) trade-ins of equipment in the ordinary course of business.
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"AVAILABLE CASH FLOW" means, for any fiscal period, the sum of (i)
Consolidated Net Income for such period plus (ii) to the extent deducted in
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determining Consolidated Net Income for such period, depreciation, amortization
and other similar noncash charges plus (iii) any increase (or minus any
decrease) during such period in deferred tax liabilities of the Borrower and its
Consolidated Subsidiaries, taken as a whole.
"BANK" means (i) each Person listed on the Commitment Schedule, (ii) each
Assignee which becomes a Bank pursuant to Section 9.06(c) and (iii) their
respective successors.
"BANK PARTIES" means the Banks, the LC Issuing Banks and the Agents.
"BASE RATE" means, for any day, a rate per annum equal to the higher of (i)
the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds
Rate for such day.
"BASE RATE LOAN" means a Loan which bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.06(a) or Article 8.
"BORROWER" means Republic Group Incorporated, a Delaware corporation, and
its successors.
"BORROWER SECURITY AGREEMENt" means the Security Agreement to which the
Borrower is a party.
"BORROWING" has the meaning set forth in Section 1.03.
"BUSINESS ACQUISITION" means any acquisition, whether in a single
transaction or series of related transactions, by the Borrower or any one or
more Subsidiaries, or any combination thereof, of (i) all or substantially all
of the assets, or a going concern business or division, of any Person, whether
through purchase of assets or securities, by merger or otherwise, (ii) control
of securities of an existing corporation or other Person having ordinary voting
power (apart from rights accruing under special circumstances) to elect a
majority of the board of directors of such corporation or other Person or (iii)
control of a greater than 50% ownership interest in any existing partnership,
joint venture or other Person.
"CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, all
obligations of such Person as lessee which are capitalized in accordance with
GAAP.
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"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and any rules or regulations promulgated
thereunder.
"CLASS" has the meaning set forth in Section 1.03.
"CLOSING DATE" means the date on which all of the conditions set forth in
Section 301 shall have been satisfied (or waived in accordance with Section
905).
"COLLATERAL" means the collateral subject to the Liens of the Collateral
Documents.
"COLLATERAL ASSETS" means all right, title and interest of the Borrower and
its Subsidiaries in and to (i) the Project, (ii) all other personal property of
whatsoever kind or nature and (iii) on and after the date on which the aggregate
outstanding principal amount of the Loans first exceeds $50,000,000, any and all
real property interests owned in fee which the Required Banks so designate by
notice to the Borrower through the Administrative Agent.
"COLLATERAL DOCUMENTS" means the Pledge Agreements, the Security
Agreements, the Mortgage and any additional security agreements, pledge
agreements or mortgages required to be delivered pursuant to the Loan Documents
and any instruments of assignment or other instruments or agreements executed
pursuant to the foregoing.
"COMMITMENT FEE RATE" has the meaning set forth on the Pricing Schedule.
"COMMITMENT SCHEDULE" means the Schedule attached hereto and identified as
such.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the additions to
property, plant and equipment and other capital expenditures of the Borrower and
its Consolidated Subsidiaries for such period, as the same are or would be set
forth in a consolidated statement of cash flows of the Borrower and its
Consolidated Subsidiaries for such period, excluding (i) capitalized interest
charges and (ii) expenditures for the restoration or replacement of fixed assets
which are subject to a casualty loss, to the extent financed by the proceeds of
insurance, or which are subject to condemnation, to the extent financed by any
condemnation award received therefor, but including in any event all investments
and acquisitions of assets pursuant to Section 5.18 during such period.
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"CONSOLIDATED CASH" means at any date the cash and Temporary Cash
Investments of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"CONSOLIDATED CURRENT ASSETS" means at any date the current assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"CONSOLIDATED DEBT" means, at any date, the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"CONSOLIDATED CURRENT LIABILITIES" means at any date (i) the consolidated
current liabilities of the Borrower and its Consolidated Subsidiaries plus (ii)
the current liabilities of any Person (other than the Borrower or a Consolidated
Subsidiary) which are Guaranteed by the Borrower or a Consolidated Subsidiary,
all determined as of such date.
"CONSOLIDATED EBIT" means, for any fiscal period, Consolidated Net Income
for such period plus, to the extent deducted in determining Consolidated Net
Income for such period, the aggregate amount of (i) Consolidated Interest
Charges and (ii) provision for income taxes.
"CONSOLIDATED EBITDA" means, for any fiscal period, Consolidated EBIT for
such period plus, to the extent deducted in determining Consolidated Net Income
for such period, the aggregate amount of depreciation, amortization and other
similar non-cash charges.
"CONSOLIDATED INTEREST CHARGES" means, for any fiscal period, the aggregate
amount of interest charges, whether expensed or capitalized, incurred or accrued
during such period, net of interest income received during such period, all on a
consolidated basis for the Borrower and its Consolidated Subsidiaries.
"CONSOLIDATED NET DEBT" means, at any date, Consolidated Debt minus the
amount of cash and Temporary Cash Investments held in the General Collateral
Account at such date.
"CONSOLIDATED NET INCOME" means, for any fiscal period, the net income
(calculated (a) before preferred and common stock dividends and (b) exclusive of
the effect of any extraordinary or other material non-recurring gain (but not
loss) outside the ordinary course of business) of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis for such period.
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"CONSOLIDATED NET WORKING INVESTMENT" means at any date the difference of
Consolidated Current Assets (exclusive of Consolidated Cash) minus Consolidated
Current Liabilities (exclusive of Debt).
"CONSOLIDATED NET WORTH" means at any date the sum of the consolidated
common stockholders' equity of the Borrower and its Consolidated Subsidiaries
determined as of such date.
"CONSOLIDATED SUBSIDIARY" means, at any date with respect to any Person,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in the consolidated financial statements of such Person as
of such date.
"CONSTRUCTION BORROWING" means a Borrowing, the proceeds of which are to be
used in connection with the construction of the Project.
"CONSTRUCTION LETTER OF CREDIT" means a Letter of Credit issued in
connection with the construction of the Project.
"CONSTRUCTION MANAGER" means Fluor Daniel, Inc.
"CONTINUING DIRECTOR" means, at any date, an individual (i) who is a member
of the board of directors of the Borrower on the Closing Date or (ii) who has
been nominated to be a member of such board of directors by a majority of the
other Continuing Directors then in office.
"CONVERSION DATE" means the earlier of (i) the date of Project Start-Up and
(ii) the second anniversary of the Closing Date.
"CREDIT EXPOSURE" means, with respect to any Bank at any time, the sum of
(i) such Bank's Revolving Credit Commitment, if still in existence, or such
Bank's Outstanding Revolving Credit Amount, if its Revolving Credit Commitment
is no longer in existence plus (ii) the outstanding principal amount of such
Bank's Term Loans (if any).
"DEBT" of any Person means, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services, (iv) all
Capital Lease Obligations of such Person, (v) all obligations of such Person to
purchase securities which arise out of or in connection with the sale of the
same or substantially similar securities, (vi) all obligations of such Person,
fixed or contingent, to reimburse any other Person for amounts drawn under a
letter of
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credit or similar instrument, (vii) any preferred stock of any Subsidiary of
such Person held by any other Person except a wholly-owned Subsidiary of such
first Person and any Redeemable Stock of such Person, (viii) all Debt secured by
a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person and (ix) all Debt of others Guaranteed by such Person;
provided that neither trade accounts payable arising in the ordinary course of
business nor obligations in respect of insurance policies or performance or
surety bonds which are not themselves Guarantees of Debt (nor drafts,
acceptances or similar instruments evidencing the same nor obligations in
respect of letters of credit supporting the payment of the same) shall
constitute Debt. It is understood that Derivatives Obligations do not constitute
"Debt" of the Borrower.
"DEBT INCURRENCE" means the incurrence of any Debt by the Borrower or any
of its Subsidiaries, other than Debt permitted by clauses (a) through (f) of
Section 5.10.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DEFICIENCY AMOUNT" has the meaning set forth in Section 5.28(f).
"DERIVATIVES OBLIGATIONS" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DIRECT CONSTRUCTION COSTS" has the meaning set forth in Section 5.08.
"DIRECT COSTS SCHEDULE" has the meaning set forth in Section 5.08.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office
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as such Bank may hereafter designate as its Domestic Lending Office by notice to
the Borrower and the Administrative Agent.
"DUKE-OKLAHOMA PLANT" means the Borrower's gypsum wallboard plant located
in Duke, Oklahoma.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law,
treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, agreement or governmental restriction or requirement,
whether now or hereafter in effect, relating to human health and safety, the
environment or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities of or relating to
the Borrower and any Subsidiary (including any entity which is, in whole or in
part, a predecessor of the Borrower or any Subsidiary), whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which
arise under or relate to matters covered by Environmental Laws (including
without limitation any matter disclosed or required to be disclosed in Schedule
4.07 hereto).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Administrative Agent.
"EURO-DOLLAR LOAN" means a Loan which bears interest at a Euro-Dollar Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election.
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"EURO-DOLLAR RATE" means a rate of interest determined pursuant to Section
2.05(b) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR RESERVE PERCENTAGE" means, for any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
"EVENTS OF DEFAULT" has the meaning set forth in Section 6.01.
"EVERGREEN LETTER OF CREDIT" means a Letter of Credit that is automatically
extended unless the relevant LC Issuing Bank gives notice to the beneficiary
thereof stating that such Letter of Credit will not be extended.
"EXCESS CASH FLOW" means, for any fiscal period of the Borrower, the excess
(if any) of "A" over "B", where:
"A" means the sum of (i) Available Cash Flow for such fiscal
period, and (ii) any decrease in Consolidated Net Working Investment
between the beginning and the end of such fiscal period; and
"B" means the sum of (i) Adjusted Capital Expenditures for such
fiscal period, (ii) any increase in Consolidated Net Working
Investment between the beginning and the end of such fiscal period,
(iii) scheduled amortization of long-term Debt of the Borrower and its
Consolidated Subsidiaries during such fiscal period (adjusted to
eliminate the effect of any credit to such scheduled amortization by
reason of (A) optional prepayments in a prior period, (B) prepayments
on account of Excess Cash Flow for a prior period and (C) other
mandatory prepayments in any period, prior or current) and (iv)
optional prepayments of the Term Loans during such fiscal period.
"EXCESS CASH FLOW PAYMENT DATE" has the meaning set forth in Section
2.04(c)(ii), 2.04(c)(iii).
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"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to NationsBank, N.A. on such day on such
transactions as determined by the Administrative Agent.
"FISCAL QUARTER" means a fiscal quarter of the Borrower.
"FISCAL YEAR" means a fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred in by
the Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks.
"GENERAL COLLATERAL ACCOUNT" has the meaning set forth in the Borrower
Security Agreement.
"GENERAL CONSTRUCTION CONTRACT" means the Agreement for Engineering,
Procurement and Construction dated June 26, 1998 between Republic Paperboard and
the Construction Manager.
"GROUP OF LOANS" means at any time a group of Loans of any Class consisting
of (i) all Loans of such Class which are Base Rate Loans at such time or (ii)
all Loans of such Class which are Euro-Dollar Loans having the same Interest
Period at such time, provided that, if a Loan of any particular Bank is
converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall
be included in the same Group or Groups of Loans from time to time as it would
have been in if it had not been so converted or made.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
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Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the holder of such
Debt or other obligation of the payment thereof or to protect such holder
against loss in respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HAZARDOUS SUBSTANCES" means any pollutant, contaminant, waste or chemical
or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substance, waste or material, or any substance, waste or material having any
constituent elements displaying any of the foregoing characteristics, including,
without limitation, petroleum, its derivatives, by-products and other
hydrocarbons, and any substance, waste or material regulated under Environmental
Laws.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INSPECTING ENGINEER" means the Architect/Engineer or such other architect
or licensed civil engineer appointed by the Administrative Agent upon the
request of the Required Banks.
"INTEREST COVERAGE RATIO" means, at the last day of any Fiscal Quarter, the
ratio of (i) Consolidated EBITDA for the period of four consecutive Fiscal
Quarters ended on such day to (ii) Consolidated Interest Charges for such
period.
"INTEREST PERIOD" means, with respect to each Euro-Dollar Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in such notice; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clauses (c) and (d) below, end on the last Euro-Dollar
Business Day of a calendar month;
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(c) no Interest Period for any Revolving Credit Loan shall extend
beyond the Revolving Credit Termination Date; and
(d) no Interest Period applicable to any Term Loan shall extend beyond
any date upon which is due any scheduled principal payment in respect of
the Term Loans unless the aggregate principal amount of Term Loans
represented by Base Rate Loans and Euro-Dollar Loans having Interest
Periods which end on or prior to such date equals or exceeds the amount of
such principal payment. (For purposes of determinations under this clause
(d) prior to the Conversion Date, all outstanding Loans shall be deemed
Term Loans.)
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of share
purchase, capital contribution, loan, Guarantee, time deposit or otherwise (but
not including any demand deposit).
"LC EXPOSURE" means, with respect to any Bank at any time, an amount equal
to its Revolving Commitment Percentage of the Aggregate LC Exposure at such
time.
"LC FEE RATE" means a rate per annum determined in accordance with the
Pricing Schedule.
"LC INDEMNITEES" has the meaning set forth in Section 2.15(k).
"LC ISSUING BANKS" means NationsBank, N.A. (and any other Bank which, at
the Borrower's request, shall have agreed to issue Letters of Credit hereunder
and confirmed such agreement in a notice to the Administrative Agent), each in
its capacity as an LC Issuing Bank under the letter of credit facility described
in Section 2.15.
"LC OFFICE" means, with respect to any LC Issuing Bank, the office at which
it books any Letter of Credit issued by it.
"LC PAYMENT DATE" has the meaning set forth in Section 2.15(g).
"LC REIMBURSEMENT DUE DATE" has the meaning set forth in Section 2.15(h).
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"LC REIMBURSEMENT OBLIGATIONS" means, at any time, all obligations of the
Borrower to reimburse the LC Issuing Banks for amounts paid by the LC Issuing
Banks in respect of drawings under the Letters of Credit, including any portion
of any such obligations to which a Bank has become subrogated pursuant to
Section 215(i).
"LETTER OF CREDIT" means a letter of credit issued hereunder by an LC
Issuing Bank.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has substantially the same practical effect as a
security interest, in respect of such asset. For purposes hereof, the Borrower
or any Subsidiary shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"LOAN" means a Base Rate Loan or a Euro-Dollar Loan and "LOANS" means any
combination of the foregoing, as the context may require; provided that, if any
such Loan or Loans (or portions thereof) are combined or subdivided pursuant to
a Notice of Interest Rate Election, the term "LOAN" shall refer to the combined
principal amount resulting from such combination or to each of the separate
principal amounts resulting from such subdivision, as the case may be.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary Guarantee
and the Collateral Documents.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.05(b).
"MAJOR CASUALTY PROCEEDS" means (i) the aggregate insurance proceeds
received in connection with one or more related events by the Borrower or any of
its Subsidiaries under any Property Insurance Policy or (ii) any award or other
compensation with respect to any condemnation of property (or any transfer or
disposition of property in lieu of condemnation) received by the Borrower or any
of its Subsidiaries.
"MAJOR SUBCONTRACTORS" means a subcontractor or materialman employed
pursuant to a Major Subcontract.
"MAJOR SUBCONTRACTS" means any contract or contracts entered into with any
single subcontractor or materialman employed by the Construction Manager or
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the Borrower in connection with the construction of the Project and providing
for aggregate payments to such subcontractor or materialman equal to or in
excess of $1,000,000.
"MATERIAL ADVERSE EFFECT" means a material adverse effect (i) on the
condition (financial or otherwise), business, results of operations, properties,
liabilities or prospects of the Borrower and its Subsidiaries, considered as a
whole, or (ii) on the rights and obligations of the Banks hereunder.
"MATERIAL DEBT" means Debt (other than the Loans and LC Reimbursement
Obligations) of the Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, in an aggregate principal or face
amount exceeding $3,500,000.
"MATERIAL FINANCIAL OBLIGATIONS" means a principal or face amount of Debt
(other than the Loans and LC Reimbursement Obligations) and/or payment or
collateralization obligations in respect of Derivatives Obligations of the
Borrower and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate $3,500,000.
"MATERIAL PLAN" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $3,500,000.
"MATERIAL SUBSIDIARY" means any Subsidiary having consolidated assets
exceeding $3,500,000.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means a Mortgage between Republic Paperboard and the
Administrative Agent covering the Real Property, substantially in the form of
Exhibit B, as amended from time to time.
"MULTIEMPLOYER PLAN" means, at any time, an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"NET CASH PROCEEDS" means, with respect to any Reduction Event, an amount
equal to the cash proceeds received by the Borrower or any of its Subsidiaries
from or in respect of such Reduction Event (including any cash proceeds received
as interest or similar income or other proceeds of any noncash
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proceeds of any Asset Sale, as and when received), less (a) in each case, any
fees, costs and expenses reasonably incurred by such Person in respect of such
Reduction Event and (b) if such Reduction Event is an Asset Sale, (i) Debt
secured by a Lien on any asset sold in such Asset Sale and satisfied by the
proceeds of such Asset Sale and (ii) any taxes actually paid or to be payable by
such Person (as estimated by a senior financial or accounting officer of the
Borrower, giving effect to the overall tax position of the Borrower) in respect
of such Asset Sale.
"NET WORKING INVESTMENT" means, at any date, (i) the consolidated current
assets (excluding cash and cash equivalents) of the Borrower and its
Consolidated Subsidiaries minus (ii) consolidated current liabilities (excluding
Debt) of the Borrower and its Consolidated Subsidiaries, all determined as of
such date.
"NOTES" means promissory notes of the Borrower, substantially in the form
of Exhibit A hereto, evidencing the Borrower's obligation to repay the Loans,
and "NOTE" means any one of such promissory notes issued hereunder.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.02.
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.06.
"OBLIGOR" means the Borrower and each Subsidiary Guarantor.
"OTHER FINANCING PROCEEDS" means an amount equal to (i) the proceeds from
the offering of the Subordinated Notes that have been deposited in the General
Collateral Account under the Security Agreement, less (ii) $10,000,000.
"OTHER PROJECT COSTS" has the meaning set forth in Section 5.08.
"OTHER SUBCONTRACTS" means any contracts other than Major Subcontracts
entered into by the Construction Manager or the Borrower with subcontractors or
materialmen in connection with the construction of the Project.
"OUTSTANDING REVOLVING CREDIT AMOUNT" means, with respect to any Bank at
any time, the sum of (i) the aggregate outstanding principal amount of its
Revolving Credit Loans and (ii) its LC Exposure, all determined at such time
after giving effect to any prior assignments by or to such Bank pursuant to
Section 9.06(c).
"PARENT" means, with respect to any Bank, any Person controlling such Bank.
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"PARTICIPANT" has the meaning set forth in Section 9.06.(b)
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERSON" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means, at any time, an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PLANS AND SPECIFICATIONS" has the meaning set forth in Section 5.28.
"PLEDGE AGREEMENTS" means each Pledge Agreement dated as of the Closing
Date between an Obligor and the Administrative Agent, substantially in the form
of Exhibit C, as amended from time to time.
"PRELIMINARY SURVEY" means the boundary survey of Hightower & Associates
delivered to the Administrative Agent prior to the Closing Date.
"PRICING SCHEDULE" means the Pricing Schedule attached hereto and
identified as such.
"PRIME RATE" means, at any time, the prime interest rate announced or
published by NationsBank, N.A. from time to time as its reference rate for the
determination of interest rates for loans of varying maturities in United States
dollars to United States residents of varying degrees of creditworthiness and
being quoted at such time by NationsBank, N.A. as its "PRIME RATE;" it being
understood that such rate may not be the lowest rate of interest charged by
NationsBank, N.A.
"PRODUCTION STABILIZATION" means the production of 9,000 tons of paperboard
per month for two consecutive calendar months.
"PROJECT" means the Real Property, together with any buildings and other
improvements constructed on such Land pursuant to and in accordance with the
Plans and Specifications delivered to the Administrative Agent.
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"PROJECT START-UP" means the date on which a final certificate of occupancy
shall have been issued for the Project and Production Stabilization has been
achieved.
"PROPERTY INSURANCE POLICY" means any insurance policy maintained by the
Borrower or any of its Subsidiaries covering losses with respect to tangible
real or personal property or improvements or losses from business interruption.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30 and
December 31.
"REAL PROPERTY" means the land located in Lawton, Oklahoma and more
particularly described in Exhibit A to the Mortgage.
"REDEEMABLE STOCK" means any equity securities which are subject to
redemption otherwise than at the sole option of the issuer thereof.
"REDUCTION EVENT" means (i) any Asset Sale, (ii) any Debt Incurrence and
(iii) any receipt of Major Casualty Proceeds; provided that neither an Asset
Sale nor receipt of Major Casualty Proceeds in any Fiscal Year shall constitute
a Reduction Event unless, and then only to the extent that, the aggregate Net
Cash Proceeds from Asset Sales and Major Casualty Proceeds received during such
Fiscal Year exceeds $500,000; and provided further that no Asset Sale or receipt
of Major Casualty Proceeds shall constitute a Reduction Event if and to the
extent that the Net Cash Proceeds thereof are applied within 120 days of the
consummation of such sale to the purchase by the Borrower or a Subsidiary of
substitute assets, so long as that the Borrower shall have delivered to the
Administrative Agent a certificate (a "REPLACEMENT SALES CERTIFICATE") of the
chief financial officer or the treasurer of the Borrower, certifying as to (x)
the amount of such Net Cash Proceeds and (y) the fact that the Borrower or a
Subsidiary shall invest such Net Cash Proceeds in substitute assets within 120
days after the date of consummation of such sale. The description of any
transaction as falling within the above definition does not affect any
limitation on such transaction imposed by Article 5 of this Agreement.
"REFERENCE BANKS" means the principal London offices of Morgan Guaranty
Trust Company of New York and NationsBank, N.A.
"REGISTER" has the meaning set forth in Section 2.16.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
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"REPUBLIC PAPERBOARD" means Republic Paperboard Company, a Kansas
corporation and wholly-owned subsidiary of the Borrower.
"REQUIRED BANKS" means, at any time, Banks having more than 50% in
aggregate amount of the Credit Exposures at such time.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on any
shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock other than mandatorily redeemable preferred stock)
or (ii) any payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Borrower's capital stock or (b) any option,
warrant or other right to acquire shares of the Borrower's capital stock (but
not including payments of principal, premium (if any) or interest made pursuant
to the terms of convertible debt securities prior to conversion).
"REVOLVING COMMITMENT PERCENTAGE" means, with respect to any Bank at any
time, the percentage which the amount of its Revolving Credit Commitment at such
time represents of the aggregate amount of all the Revolving Credit Commitments
at such time. At any time after the Revolving Credit Commitments shall have
terminated, the term "Revolving Commitment Percentage" shall refer to a Bank's
Revolving Credit Commitment Percentage immediately before such termination,
adjusted to reflect any subsequent assignments pursuant to Section 9.06(c).
"REVOLVING CREDIT COMMITMENT" means,
(i) with respect to each Bank listed on the signature pages hereof,
the amount set forth opposite the name of such Bank in the Commitment
Schedule, and
(ii) with respect to each Assignee which becomes a Bank pursuant to
Section 9.06(c), the amount of the Revolving Credit Commitment thereby
assumed by it,
in each case as such amount may be reduced from time to time pursuant to Section
208 or increased or reduced by reason of an assignment to or by such Bank in
accordance with Section 9.06(c).
"REVOLVING CREDIT LOAN" means a loan made by a Bank pursuant to Section
2.01(a).
"REVOLVING CREDIT PERIOD" means the period from and including the Closing
Date to but not including the Revolving Credit Termination Date.
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"REVOLVING CREDIT TERMINATION DATE" means the fourth anniversary of the
Conversion Date (or, if such date is not a Euro-Dollar Business Day, the next
preceding Euro-Dollar Business Day).
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Inc.
"SCHEDULE OF OTHER PROJECT COSTS" has the meaning set forth in Section
5.08.
"SCHEDULED AMORTIZATION DATE" means the date corresponding to the
Conversion Date in (or if there is no corresponding date, the last day of) the
third calendar month following the calendar month in which the Conversion Date
falls and each third succeeding calendar month thereafter to and including the
fourth anniversary of the Conversion Date.
"SEC" means the Securities and Exchange Commission.
"SECURITY AGREEMENTS" means each Security Agreement dated as of the Closing
Date between an Obligor and the Administrative Agent, substantially in the form
of Exhibit D, as amended from time to time.
"SUBORDINATED NOTES" means aggregate principal amount of at least
$100,000,000 of the Borrower's Senior Subordinated Notes due 2008, to be issued
on the terms and conditions specified in the related Preliminary Offering
Memorandum dated June 26, 1998, copies of which have been delivered to the Banks
by the Administrative Agent or Syndication Agent, or otherwise on terms
satisfactory to the Required Banks.
"SUBSIDIARY" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"SUBSIDIARY GUARANTEE" means the Subsidiary Guarantee dated as of the
Closing Date from the Subsidiary Guarantors in favor of the Administrative
Agent, substantially in the form of Exhibit E, as amended from time to time.
"SUBSIDIARY GUARANTORS" means Republic Gypsum Company, Hollis & Eastern
Railroad Company, Republic Paperboard Company of West Virginia and Republic
Paperboard Company, and any other Person that becomes a party to the
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Subsidiary Guarantee pursuant to Section 5.26(d), and "Subsidiary Guarantor"
means any one of them.
"SYNDICATION AGENT" means Morgan Guaranty Trust Company of New York, in its
capacity as syndication agent in respect of this Agreement.
"TERM LOAN" means a Revolving Credit Loan converted to a Term Loan pursuant
to Section 2.01(b).
"TERM LOAN CONVERSION LIMIT" means an amount equal to $50,000,000, less the
aggregate amount of reductions of the Commitments pursuant to Section 2.08 prior
to the Conversion Date.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct obligations
of the United States or any agency thereof or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Services and P-1 by Moody's Investors Service, Inc.,
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized or licensed under the laws of the United States or any State thereof
and has capital, surplus and undivided profits aggregating at least
$1,000,000,000 or (iv) repurchase agreements with respect to securities
described in clause (i) above entered into with an office of a bank or trust
company meeting the criteria specified in clause (iii) above, provided in each
case that such Investment matures within one year after it is acquired by the
Borrower or a Subsidiary, provided further that debt securities (x) the interest
rate on which is reset no less frequently than every 45 days (a "reset"), (y)
which are subject to an unconditional put option at the discretion of the holder
at the time of each reset (a "reset date") and (z) which meet the ratings
criteria specified in clause (ii) above, shall be deemed commercial paper with a
maturity corresponding to the next reset date.
"TYPE" has the meaning set forth in Section 1.03.
"TOTAL REVOLVING OUTSTANDING AMOUNT" means, at any time, the sum of (i) the
aggregate outstanding principal amount of the Revolving Credit Loans and (ii)
the Aggregate LC Exposure.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent
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valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the ERISA Group to the PBGC or any other
Person under Title IV of ERISA.
"UNITED STATES" means the United States of America.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP;
provided that, if the Borrower notifies the Administrative Agent that the
Borrower wishes to amend any provision hereof to eliminate the effect of any
change in GAAP (or if the Administrative Agent notifies the Borrower that the
Required Banks wish to amend any provision hereof for such purpose), then such
provision shall be applied on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Borrower and the
Required Banks.
Section 1.03. Classes and Types of Loans and Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more Banks to be made to
the Borrower pursuant to Article 2 on the same date, all of which Loans are of
the same Class and Type (subject to Article 8) and, in the case of Euro-Dollar
Loans, have the same initial Interest Period. Loans hereunder are distinguished
by "Class" and by "Type". The "Class" of a Loan refers to the determination
whether such Loan is a Term Loan or Revolving Credit Loan, each of which
constitutes a Class. The "Type" of a Loan refers to the determination whether
such Loan is a Euro-Dollar Loan or a Base Rate Loan, each of which constitutes a
"Type". Identification of a Loan (or a Borrowing or Group) by both Class and
Type (e.g., a "Euro-Dollar Term Loan") indicates that such Loan is both a Term
Loan and a Euro-Dollar Loan (or that such Borrowing or Group is comprised of
such Loans).
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend. (a) Revolving Credit Facility.
During the Revolving Credit Period, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Credit Loans to the
Borrower from time to time in aggregate amounts at any time outstanding such
that its Outstanding Revolving Credit Amount at no time exceeds the amount of
its
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Revolving Credit Commitment. Each Borrowing shall be in the aggregate
principal amount of $2,000,000 or any larger multiple of $500,000; provided that
any Borrowing may be in the aggregate amount of the unused Revolving Credit
Commitments. Each Borrowing shall be made from the several Banks ratably in
proportion to their respective Revolving Credit Commitments. Within the limits
specified in this Agreement, the Borrower may borrow under this Section 2.01(a),
prepay Revolving Credit Loans to the extent permitted by Section 2.09 and
reborrow at any time during the Revolving Credit Period pursuant to this Section
2.01(a).
(b) Term Loans. On the Conversion Date, an aggregate outstanding
principal amount of Revolving Credit Loans equal to the lesser of (i) the then
aggregate outstanding principal amount of Revolving Credit Loans and (ii) the
Term Loan Conversion Limit, shall be converted to Term Loans automatically and
without further action by any party to this Agreement. If less than all
outstanding Revolving Credit Loans at such time are to be converted, such
conversion shall be applied to such Group or Groups of Loans as the Borrower may
designate (or, failing such designation, as determined by the Administrative
Agent), and within any such Group shall be applied ratably to the Loans of the
several Banks. To the extent the then aggregate outstanding principal amount of
the Revolving Credit Loans exceeds the Term Loan Conversion Limit, any Group of
Revolving Credit Loans not designated for conversion in accordance with the
preceding sentence shall remain outstanding as Revolving Credit Loans.
Conversion of Loans pursuant to this subsection (b) shall not constitute either
a prepayment or a borrowing, and shall not affect the rate of interest
applicable to outstanding Loans.
Section 2.02. Notice of Borrowing.
(a) The Borrower shall give the Administrative Agent notice (a "NOTICE OF
BORROWING") not later than 11:00 A.M. (Kansas City time) on (x) the date of each
Base Rate Borrowing and (y) the third Euro-Dollar Business Day before each Euro-
Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the initial Type of Loans comprising such Borrowing; and
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(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Each Notice of Borrowing shall also specify whether the Borrowing will
be a Construction Borrowing.
Section 2.03. Notice to Banks; Funding of Loans. (a) Promptly after
receiving a Notice of Borrowing, the Administrative Agent shall notify each Bank
of the contents thereof and of such Bank's share of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 1:00 P.M. (Kansas City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in Kansas City,
to the Administrative Agent at its address specified in or pursuant to Section
9.01. Unless the Administrative Agent determines that any applicable condition
specified in Article 3 has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address. The failure of any Bank to make
available such funds shall not relieve any other Bank of its obligations
hereunder.
(c) Unless the Administrative Agent shall have received notice from a Bank
before the date of any Borrowing that such Bank will not make available to the
Administrative Agent such Bank's share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available to the
Administrative Agent on the date of such Borrowing in accordance with Section
2.03(b) and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such share available to the
Administrative Agent, such Bank and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Administrative Agent,
at (i) if such amount is repaid by the Borrower, a rate per annum equal to the
higher of the Federal Funds Rate and the interest rate applicable to such
Borrowing pursuant to Section 2.05 and (ii if such amount is repaid by such
Bank, the Federal Funds Rate. If such Bank shall repay to the Administrative
Agent such corresponding amount, the Borrower shall not be required to repay
such amount to the Administrative Agent and the amount so repaid by such Bank
shall constitute such Bank's Loan included in such Borrowing for purposes of
this Agreement.
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Section 2.04. Maturity of Loans; Contingent Prepayments. (a) On each
Scheduled Amortization Date set forth below, the Borrower shall repay Term Loans
in an aggregate principal amount equal to the product of (i) the percentage set
forth below opposite such date times (ii) the aggregate principal amount of
Revolving Credit Loans converted to Term Loans pursuant to Section 2.01(b):
- --------------------------------------------------------------------------------
SCHEDULED AMORTIZATION DATE AMORTIZATION PERCENTAGE
- --------------------------------------------------------------------------------
Nos. 1-4 2.50%
- --------------------------------------------------------------------------------
Nos. 5-8 5.00%
- --------------------------------------------------------------------------------
Nos. 9-12 7.50%
- --------------------------------------------------------------------------------
Nos. 13-16 10.00%
- --------------------------------------------------------------------------------
(b) Each Revolving Credit Loan shall mature, and the principal amount
thereof shall be due and payable, together with accrued interest thereon, on the
Revolving Credit Termination Date.
(c) (i) If a Reduction Event shall occur prior to the Conversion Date, an
amount equal to the Net Cash Proceeds of such Reduction Event shall be applied
to prepay the Revolving Credit Loans, until such amount has been fully applied.
If a Reduction Event shall occur on or after the Conversion Date, an amount
equal to the Net Cash Proceeds of such Reduction Event shall be applied, first,
to prepay the Term Loans until the Term Loans shall have been prepaid in full
and, second, to prepay the Revolving Credit Loans, until such amount has been
fully applied. Each such prepayment shall be made within ten Euro-Dollar
Business Days receipt by the Borrower or any of its Subsidiaries, as the case
may be, of such Net Cash Proceeds, provided that if the Net Cash Proceeds in
respect of any Reduction Event are less than $1,000,000, such prepayment shall
be effective upon receipt of proceeds such that, together with all other such
amounts not previously applied, the Net Cash Proceeds are equal to at least
$1,000,000.
(ii) Within five Euro-Dollar Business Days following the date on which the
Borrower has delivered the certificate required to be delivered by it pursuant
to Section 5.01(e) for any Fiscal Year commencing on or after the Conversion
Date (such date, an "EXCESS CASH FLOW PAYMENT DATE"), an amount equal to 50% of
Excess Cash Flow for such Fiscal Year then ended shall be applied to prepay the
Term Loans until the Term Loans shall have been prepaid in full and, second, to
prepay the Revolving Credit Loans, until such amount has been fully applied.
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(iii) The Borrower shall give the Administrative Agent at least five Euro-
Dollar Business Days' notice of each prepayment required to be made pursuant to
this subsection (c). The Administrative Agent shall promptly notify each Bank of
each such notice of prepayment received by it.
(d) (i) Each prepayment of Loans of any Class shall be applied ratably
to the respective Loans of the such Class of all Banks.
(ii) The amount of any prepayments of Term Loans pursuant to
Section 2.09 or subsection (c) shall be applied to reduce the amount of
subsequent scheduled repayments of the Term Loans required pursuant to
subsection (a) pro rata by amount (or, if the Borrower so elects by notice
to the Administrative Agent not later than the date of such prepayment, in
inverse order of maturity).
(iii) Each payment of principal of the Loans of any Class shall
be made together with interest accrued and unpaid on the amount repaid to
the date of payment.
(iv) Each payment of the Loans of any Class shall be applied
to such Group or Groups of Loans of such Class as the Borrower may
designate (or, failing such designation, as determined by the
Administrative Agent).
(e) If on any date the Revolving Credit Commitments are reduced pursuant
to Section 2.08(b)(ii), 2.08(b)(iii) or 2.08(b)(iv), then, on such date, the
Borrower shall cash collateralize the Aggregate LC Exposure (by depositing an
amount in the General Collateral Account) or the Borrower shall provide for the
replacement or cancellation of any outstanding Letters of Credit, or both, to
such extent (if any) as may be necessary in order that the Total Revolving
Outstanding Amount does not exceed the aggregate Revolving Credit Commitments as
so reduced.
Section 2.05. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the sum of the
Applicable Margin for such day plus the Base Rate for such day. Such interest
shall be payable quarterly in arrears on each Quarterly Payment Date. Any
overdue principal of or interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of the Applicable Margin plus the Base Rate for such day.
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(b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Applicable Margin for such day plus the
Adjusted London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "ADJUSTED LONDON INTERBANK OFFERED RATE" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period means
(a) the offered rate for dollar deposits, for a period approximately equal to
such Interest Period and, if the amount is so quoted, in an amount approximately
equal to the average principal amount of the applicable Loans, quoted on the
second Euro-Dollar Business Day prior to the first day of such Interest Period,
as such rate appears on the display designated as page "3750" on the Telerate
service (or such other page as may replace page "3750" on the Telerate service
or such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for Dollar deposits) ("Telerate Page
3750") as of 11:00 A.M. (London time) on such date, (b) if, as of 11:00 A.M.
(London time) on any such date such rate does not appear on the Telerate Page
3750, the arithmetic mean (rounded upward, if necessary, to the nearest 1/16th
of 1%), of the offered rates for dollar deposits, for a period approximately
equal to such Interest Period quoted on the second Euro-Dollar Business Day
prior to the first day of such Interest Period, as such rates appear on the
display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or
such other page as may replace the "LIBO" page on that service for the purpose
of displaying London interbank offered rates of major banks) ("Reuters Screen
LIBO Page") as of 11:00 A.M. (London time) on such date, or (c) if neither of
the above rates is available (and in the case of clause (b), if on any such date
at least two such rates do not appear on the Reuters Screen LIBO Page), the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Reference Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
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<PAGE>
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of the Applicable Margin for such day plus
the Adjusted London Interbank Offered Rate applicable to such Loan on the day
before such payment was due and (ii the sum of the Applicable Margin for such
day plus a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
three months as the Administrative Agent may select) deposits in dollars in an
amount approximately equal to the portion of such overdue payment due to each of
the Reference Banks are offered to such Reference Bank in the London interbank
market for the applicable period determined as provided above by (y) 1.00 minus
the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause
8.01(a) or 8.01(b) shall exist, at a rate per annum equal to the sum of the
Applicable Margin plus the Base Rate for such day).
(d) The Administrative Agent shall determine each interest rate applicable
to the Loans hereunder. The Administrative Agent shall promptly notify the
Borrower and the Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(e) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation
furnished by the remaining Reference Bank or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
Section 2.06. Method of Electing Interest Rates. (a) The Loans included in
each Borrowing shall bear interest initially at the type of rate specified by
the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each Group of Term Loans or Revolving Credit Loans (subject to subsection (d)
and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
and
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<PAGE>
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Base Rate Loans as of any Domestic Business Day or
elect to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, subject to Section 2.11 if any such conversion is
effective on any day other than the last day of an Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "NOTICE OF INTEREST
RATE ELECTION") to the Administrative Agent not later than 11:00 A.M. (Kansas
City time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such Notice applies, and the remaining portion to which it does not
apply, are each at least $2,000,000 (unless such portion is comprised of Base
Rate Loans). If no such notice is timely received before the end of an Interest
Period for any Group of Euro-Dollar Loans, the Borrower shall be deemed to have
elected that such Group of Loans be converted to Base Rate Loans at the end of
such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the
new Type of Loans and, if the Loans resulting from such conversion are to
be Euro-Dollar Loans, the duration of the next succeeding Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall notify
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<PAGE>
each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any Loans to,
or continue any Loans for an additional Interest Period as Euro-Dollar Loans if
(i) the aggregate principal amount of any Group of Euro-Dollar Loans created or
continued as a result of such election would be less than $2,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower delivers to the
Administrative Agent the relevant Notice of Interest Rate Election.
(e) If any Euro-Dollar Loan is converted to a Base Rate Loan, the Borrower
shall pay, on the date of such conversion, the interest accrued to such date on
the principal amount being converted.
Section 2.07. Fees. (a) The Borrower shall pay to the Administrative
Agent, for the account of the Banks in proportion to their Revolving Commitment
Percentages, a commitment fee calculated for each day at the Commitment Fee Rate
for such day (determined in accordance with the Pricing Schedule) on the amount
by which the aggregate amount of the Revolving Credit Commitments exceeds the
Total Revolving Outstanding Amount on such day. Such commitment fee shall
accrue from and including the Closing Date to but excluding the date on which
the Revolving Credit Commitments terminate in their entirety.
(b) The Borrower shall pay to the Administrative Agent, for the account of
the Banks ratably in proportion to their Revolving Commitment Percentages, a
letter of credit fee calculated for each day at the LC Fee Rate for such day on
the aggregate amount available for drawing (whether or not conditions for
drawing have been satisfied) under all Letters of Credit outstanding at the
close of business on such day. The Borrower shall pay to each LC Issuing Bank
fronting fees and other usual and customary charges in the amounts and at the
times agreed between the Borrower and such LC Issuing Bank.
(c) Fees accrued for the account of the Banks under this Section shall be
payable quarterly in arrears on each Quarterly Payment Date and on the day on
which the Revolving Credit Commitments terminate in their entirety (and, if
later, on the day on which the Revolving Credit Exposures are reduced to zero).
Section 2.08. Termination or Reduction of Revolving Credit Commitments.
(a) Optional. The Borrower may, upon at least three Domestic Business Days'
notice to the Administrative Agent, (i) terminate the Revolving Credit
Commitments at any time, if the Total Revolving Outstanding Amount is zero at
such time (after giving effect to any mandatory or optional prepayments to be
made at such time) or (ii) ratably reduce from time to time by an aggregate
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<PAGE>
amount of $2,000,000 or a multiple of $1,000,000, the aggregate amount of the
Revolving Credit Commitments in excess of the Total Revolving Outstanding
Amount.
(b) Mandatory. (i) Unless previously terminated, the Revolving Credit
Commitments shall terminate in their entirety on the Revolving Credit
Termination Date.
(ii) On each Excess Cash Flow Payment Date, the Revolving Credit
Commitments shall be permanently reduced by an amount equal to the sum of
(A) the amount of Excess Cash Flow used to repay the Revolving Credit Loans
in accordance with Section 2.04(c)(ii), 2.04(c)(iii) and (B) the excess, if
any of 50% of the related Excess Cash Flow over the aggregate outstanding
principal amount of the Loans on such Excess Cash Flow Payment Date.
(iii) If a Reduction Event shall occur, the Revolving Credit
Commitments shall be permanently reduced by an amount equal to the sum of
(A) the amount of Net Cash Proceeds of such Reduction Event used to repay
the Revolving Credit Loans in accordance with Section 2.04(c)(i) and (B)
the excess, if any, of the amount of such Net Cash Proceeds over the then
aggregate outstanding principal amount of the Loans. Such reduction shall
be effective as of the date the related prepayment of Loans is made (or is
or would be required to be made) pursuant to Section 2.04(c).
(iv) Unless previously reduced to the same or a lesser amount, the
Revolving Credit Commitments shall be ratably reduced to the aggregate
amount of $35,000,000 on the Conversion Date, automatically and without
further action by any party to this Agreement.
Section 2.09. Optional Prepayments. (a) Subject in the case of Euro-Dollar
Loans to Section 211, the Borrower may (i) upon at least one Domestic Business
Day's notice to the Administrative Agent, prepay any Group of Base Rate Loans of
any Class or (ii upon at least three Euro-Dollar Business Days' notice to the
Administrative Agent, prepay any Group of Euro-Dollar Loans of any Class, in
each case in whole at any time, or from time to time in part in amounts
aggregating $1,000,000 or any larger multiple thereof, by paying the principal
amount to be prepaid together with interest accrued thereon to the date of
prepayment; provided that the Borrower may prepay the aggregate outstanding
principal amount of all Revolving Credit Loans, regardless of the principal
amount thereof. Each such optional prepayment shall be applied to prepay ratably
the Loans of the several Banks included in such Group of Loans.
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(b) Promptly after receiving a notice of prepayment pursuant to this
Section, the Administrative Agent shall notify each Bank of the contents thereof
and of such Bank's ratable share (if any) of such prepayment, and such notice
shall not thereafter be revocable by the Borrower.
Section 2.10. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and LC
Reimbursement Obligations and each payment of fees hereunder (other than fees
payable directly to the LC Issuing Banks) not later than 1:00 P.M. (Kansas City
time) on the date when due, in Federal or other funds immediately available in
Kansas City, to the Administrative Agent at its address specified in or pursuant
to Section 9.01. The Administrative Agent will promptly distribute to each Bank
its ratable share of each such payment received by the Administrative Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Base Rate Loans or LC Reimbursement Obligations or any payment of fees shall
be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If
the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Borrower notifies the Administrative Agent before the date
on which any payment is due to the Banks hereunder that the Borrower will not
make such payment in full, the Administrative Agent may assume that the Borrower
has made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance on such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Administrative Agent forthwith on demand
such amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Administrative Agent, at the Federal Funds Rate.
Section 2.11. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a Base Rate Loan (whether such payment or conversion is pursuant to
Article 2, 6 or 8 or otherwise) on any day other than the last day of an
Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.05(c), or if the Borrower fails to borrow, prepay,
convert or continue any
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Euro-Dollar Loan after notice has been given to any Bank in accordance with
Section 2.03(a), 2.04(c), 2.06(c) or 2.09(b), the Borrower shall reimburse each
Bank within 15 days after demand for any resulting loss or expense incurred by
it (or by a Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after such payment or
conversion or failure to borrow, prepay, convert or continue; provided that such
Bank shall have delivered to the Borrower a certificate as to the amount of such
loss or expense (showing in reasonable detail the calculation thereof), which
certificate shall be conclusive in the absence of manifest error.
Section 2.12. Computation of Interest and Fees. All interest and fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Section 2.13. Maximum Interest Rate. (a) Nothing contained in this
Agreement or the Notes shall require the Borrower to pay interest for the
account of any Bank at a rate exceeding the maximum rate permitted without
penalty by applicable law to be charged by such Bank.
(b) Notwithstanding the foregoing, if any interest in excess of the
maximum amount allowed by applicable usury laws is contracted for, charged,
taken, reserved, or received for the account of any Bank at any time in
connection with this Agreement or its Note under any circumstances whatsoever,
then any such excess interest shall be canceled automatically and shall not be
collectible or collected, and if paid shall be credited to the unpaid principal
balance of such Bank's Note or refunded to the Borrower at the option of such
Bank. It is further agreed that all calculations of interest contracted for,
charged, taken, reserved, or received for the account of any Bank in connection
with this Agreement or its Note, for the purpose of determining whether the rate
of interest contracted for, charged, taken, reserved, or received exceeds the
maximum rate of interest allowed under all applicable usury laws, shall be made,
to the extent permitted by applicable usury laws, by amortizing, prorating,
spreading, and allocating in equal parts over the full term of this Agreement
and the Notes (including without limitation all prior and future renewals and
extensions), all interest at any time contracted for, charged, taken, reserved,
or received for the account of such Bank in connection with this Agreement and
its Note.
(c) If the amount of interest payable for the account of any Bank in
respect of any interest computation period is reduced pursuant to clause (b) of
this section and the amount of interest payable for its account in respect of
any subsequent interest computation period, computed pursuant to Section 2.05,
would be less than the maximum amount permitted without penalty by applicable
law to
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<PAGE>
be charged by such Bank, then the amount of interest payable for its account in
respect of such subsequent interest computation period shall be automatically
increased to such maximum permissible amount; provided that at no time shall the
aggregate amount by which interest paid for the account of any Bank has been
increased pursuant to this clause (c) exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to clause
(b) of this Section.
(d) In the event that maturity of the Loans is accelerated for any reason,
or in the event of any required or permitted prepayment of the Loans in full,
then such consideration that constitutes interest payable for the account of any
Bank shall never include more than the maximum amount allowed without penalty by
applicable law to be charged by such Bank, and excess interest, if any, payable
for the account of such Bank pursuant to its Notes, this Agreement or otherwise
shall be canceled automatically as of the date of such acceleration and
prepayment and, if theretofore paid, shall be credited on the Loans of such Bank
(or if such Loans would thereby be paid in full, refunded by such Bank to the
Borrower).
Section 2.14. Notes. (a) The Borrower's obligation to repay the Loans of
each Bank shall be evidenced by a single Note payable to the order of such Bank
for the account of its Applicable Lending Office.
(b) Each Bank may, by notice to the Borrower and the Administrative Agent,
request that the Borrower's obligation to repay such Bank's Loans of a
particular Type or Class be evidenced by a separate Note. Each such Note shall
be in substantially the form of Exhibit A hereto with appropriate modifications
to reflect the fact that it relates solely to Loans of the relevant Type or
Class. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Promptly after it receives each Bank's Note pursuant to Section 3.01,
the Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and Type of each Loan made by it and the date and amount
of each payment of principal made by the Borrower with respect thereto, and may,
if such Bank so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that a Bank's failure to make (or any error in making) any
such recordation or endorsement shall not affect the Borrower's obligations
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
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Section 2.15. Letters of Credit. (a) Issuance. Each LC Issuing Bank
agrees, on the terms and conditions set forth in this Agreement, to issue
letters of credit hereunder at the request of the Borrower from time to time
prior to the date that is 30 days before the Revolving Credit Termination Date;
provided that, immediately after each such letter of credit is issued and
participations therein are sold to the Banks as provided in this subsection:
(i) the Aggregate LC Exposure shall not exceed $5,000,000;
(ii) in the case of each Bank, its Outstanding Revolving Credit
Amount shall not exceed its Revolving Credit Commitment; and
(iii) the Total Revolving Outstanding Amount shall not exceed the
aggregate Revolving Credit Commitments as in effect at the date of
issuance.
Whenever an LC Issuing Bank issues a Letter of Credit hereunder, such LC Issuing
Bank shall be deemed, without further action by any party hereto, to have sold
to each Bank, and each Bank shall be deemed, without further action by any party
hereto, to have purchased from such LC Issuing Bank, a participation (on the
terms specified in this Section) in such Letter of Credit equal to such Bank's
Revolving Commitment Percentage thereof.
(b) Notice of Proposed Issuance. With respect to each Letter of Credit,
the Borrower shall give the relevant LC Issuing Bank and the Administrative
Agent at least five Domestic Business Days' prior notice (i) specifying the date
such Letter of Credit is to be issued and (ii) describing the proposed terms of
such Letter of Credit and the nature of the transactions to be supported
thereby, including whether such Letter of Credit is a Construction Letter of
Credit. Promptly after it receives such notice, the Administrative Agent shall
notify each Bank of the contents thereof.
(c) Conditions to Issuance. No LC Issuing Bank shall issue any Letter of
Credit unless:
(i) such Letter of Credit shall be satisfactory in form and
substance to such LC Issuing Bank,
(ii) the Borrower shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit as such LC
Issuing Bank shall have reasonably requested,
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(iii) such LC Issuing Bank shall have confirmed with the
Administrative Agent on the date of such issuance that the limitations
specified in Section 2.15(a) will not be exceeded immediately after such
Letter of Credit is issued and
(iv) such LC Issuing Bank shall not have been notified in writing by
the Borrower or the Administrative Agent expressly to the effect that any
condition specified in clause 3.02(c), 3.02(d) or 3.02(e) is not satisfied
at the time such Letter of Credit is to be issued or, if such Letter of
Credit is a Construction Letter of Credit, that any condition in Section
3.03 is not satisfied at the time such Construction Letter of Credit is to
be issued.
(d) Notice of Actual Issuance. Promptly after it issues any Letter of
Credit, the relevant LC Issuing Bank shall notify the Administrative Agent of
the date, face amount, beneficiary or beneficiaries and expiry date of such
Letter of Credit. Promptly after it receives such notice, the Administrative
Agent shall notify each Bank of the contents thereof and the amount of such
Bank's participation in such Letter of Credit. Promptly after it issues any
Letter of Credit, the relevant LC Issuing Bank shall send a copy of such Letter
of Credit to the Administrative Agent.
(e) Expiry Dates. No Letter of Credit shall have an expiry date later
than the fifth Domestic Business Day before the Revolving Credit Termination
Date. Subject to the preceding sentence, each Letter of Credit shall expire on
or before the first anniversary of the date of its issuance; provided that the
expiry date of any Letter of Credit may be extended from time to time (i) at the
Borrower's request or (ii) in the case of an Evergreen Letter of Credit,
automatically, in each case so long as such extension is for a period not
exceeding one year and is granted (or the last day on which notice can be given
to prevent such extension occurs) no earlier than three months before the then
existing expiry date thereof.
(f) Notice of Proposed Extensions of Expiry Dates. The relevant LC
Issuing Bank shall give the Administrative Agent at least three Domestic
Business Days' notice before such LC Issuing Bank extends (or allows an
automatic extension of) the expiry date of any Letter of Credit issued by it.
Such notice shall identify such Letter of Credit, the date on which it is to be
extended (or the last day on which notice can be given to prevent such
extension) and the date to which it is to be extended. Promptly after it
receives such notice, the Administrative Agent shall notify each Bank of the
contents thereof. No LC Issuing Bank shall extend (or allow the extension of)
the expiry date of any Letter of Credit if:
(i) such extension does not comply with Section 2.15(e) or
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(ii) such LC Issuing Bank shall have been notified by the Borrower
or the Administrative Agent expressly to the effect that any condition
specified in clause 3.02(c), 3.02(d) or 3.02(e) is not satisfied at the
time of such proposed extension.
If any Letter of Credit is not extended after notice of a proposed extension
thereof has been given to the Banks, the relevant LC Issuing Bank shall promptly
notify the Administrative Agent of such failure to extend. Promptly after it
receives such notice, the Administrative Agent shall notify each Bank thereof.
(g) Drawings. If an LC Issuing Bank receives a demand for payment under
any Letter of Credit issued by it and determines that such demand should be
honored, such LC Issuing Bank shall (i) promptly notify the Borrower and the
Administrative Agent as to the amount to be paid by such LC Issuing Bank as a
result of such demand and the date of such payment (an "LC PAYMENT DATE") and
(ii) make such payment in accordance with the terms of such Letter of Credit.
(h) Reimbursement by the Borrower. (i) If any amount is drawn under any
Letter of Credit, the Borrower irrevocably and unconditionally agrees to
reimburse the relevant LC Issuing Bank for such amount, together with any and
all reasonable charges and expenses which such LC Issuing Bank may pay or incur
relative to such drawing. Such reimbursement shall be due and payable on the
relevant LC Payment Date or the date on which such LC Issuing Bank notifies the
Borrower of such drawing, whichever is later; provided that, if such notice is
given after 11:00 A.M. (Kansas City time) on the later of such dates, such
reimbursement shall be due and payable on the next following Domestic Business
Day (the date on which it is due and payable being an "LC REIMBURSEMENT DUE
DATE").
(ii) In addition, the Borrower agrees to pay, on the applicable LC
Reimbursement Due Date, interest on each amount drawn under a Letter of
Credit, for each day from and including the date such amount is drawn to
but excluding such LC Reimbursement Due Date, at the Base Rate for such
day. The Borrower also agrees to pay, on demand, interest on any overdue
amount (including any overdue interest) payable under this Section 2.15(h),
for each day from and including the day such amount becomes due to but
excluding the day such amount is paid in full, at a rate per annum equal to
the sum of the Applicable Margin plus the Base Rate for such day.
(iii) Each payment by the Borrower pursuant to this Section 2.15(h)
shall be made to the relevant LC Issuing Bank in Federal or other funds
immediately available to it at its address specified in or pursuant to
Section 9.01.
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(i) Payments by Banks. (i) If the Borrower fails to pay any LC
Reimbursement Obligation in full when due, the relevant LC Issuing Bank may
notify the Administrative Agent of the unreimbursed amount and request that the
Banks reimburse such LC Issuing Bank for their respective Revolving Commitment
Percentages thereof. Promptly after it receives any such notice, the
Administrative Agent shall notify each Bank of the unreimbursed amount and such
Bank's Revolving Commitment Percentage thereof. Upon receiving such notice from
the Administrative Agent, each Bank shall make available to such LC Issuing
Bank, at its address specified in or pursuant to Section 9.01, an amount equal
to such Bank's Revolving Commitment Percentage of such unreimbursed amount, in
Federal or other funds immediately available to such LC Issuing Bank, by 2:00
P.M. (Kansas City time) (A) on the day such Bank receives such notice if it is
received at or before 12:00 Noon (Kansas City time) on such day or (B) on the
next Domestic Business Day if such notice is received after 12:00 Noon (Kansas
City time) on the date of receipt, in each case together with interest on such
amount for each day from and including the relevant LC Payment Date to but
excluding the day such payment is due from such Bank at the Federal Funds Rate
for such day. Upon payment in full thereof, such Bank shall be subrogated to the
rights of such LC Issuing Bank against the Borrower to the extent of such Bank's
Revolving Commitment Percentage of the related LC Reimbursement Obligation
(including interest accrued thereon).
(ii) If any Bank fails to pay when due any amount to be paid by it
pursuant to clause (i) of this subsection, interest shall accrue on such
Bank's obligation to make such payment, for each day from and including the
date such payment became due to but excluding the date such Bank makes such
payment, at a rate per annum equal to (x) for each day from the day such
payment is due to the third succeeding Domestic Business Day, inclusive,
the Federal Funds Rate for such day and (y) for each day thereafter the sum
of 2% plus the Base Rate for such day.
(iii) If the Borrower shall reimburse any LC Issuing Bank for any
drawing with respect to which any Bank shall have made funds available to
such LC Issuing Bank in accordance with clause (i) of this subsection, such
LC Issuing Bank shall promptly upon receipt of such reimbursement
distribute to such Bank its Revolving Commitment Percentage thereof,
including interest, to the extent received by such LC Issuing Bank.
(j) Exculpatory Provisions. The obligations of the Borrower and the Banks
under this Section 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 Bank may have or have had against any LC Issuing Bank,
any Bank, any beneficiary of any Letter of Credit or any other Person. The
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Borrower assumes all risks of the acts or omissions of any beneficiary of any
Letter of Credit with respect to the use of such Letter of Credit by such
beneficiary. None of the LC Issuing Banks, the Banks, the Administrative Agent
and their respective officers, directors, employees and agents shall be
responsible for, and the obligations of each Bank to make payments to each LC
Issuing Bank and of the Borrower to reimburse each LC Issuing Bank for drawings
pursuant to this Section shall not be excused or affected by, among other
things, unless resulting solely from the gross negligence or willful misconduct
of such LC Issuing Bank as finally determined by a court of competent
jurisdiction, (i) the use which may be made of any Letter of Credit or any acts
or omissions of any beneficiary or transferee in connection therewith; (ii) the
validity, sufficiency or genuineness of documents presented under any Letter of
Credit or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by any LC Issuing Bank against presentation of documents to it
which do not comply with the terms of the relevant Letter of Credit or (iv) any
dispute between or among the Borrower, any beneficiary of any Letter of Credit
or any other Person or any claims or defenses whatsoever of the Borrower or any
other Person against any beneficiary of any Letter of Credit. No LC Issuing Bank
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. Any action taken or omitted by any LC
Issuing Bank in connection with any Letter of Credit and the related drafts and
documents, unless such action shall be finally determined by a court of
competent jurisdiction to result from the gross negligence or willful misconduct
of such LC Issuing Bank, shall be binding upon the Borrower and shall not place
any LC Issuing Bank or any Bank under any liability to the Borrower.
Notwithstanding the foregoing, the provisions of this subsection shall not
relieve any LC Issuing Bank from responsibility for its own gross negligence or
willful misconduct.
(k) Indemnification by Borrower. The Borrower agrees to indemnify and
hold harmless each Bank, each LC Issuing Bank and the Administrative Agent
(collectively, the "LC INDEMNITEES") from and against any and all claims,
damages, losses, liabilities, costs or expenses (including, without limitation,
the reasonable fees and disbursements of counsel) which such LC Indemnitee may
reasonably incur (or which may be claimed against such LC Indemnitee by any
Person whatsoever) by reason of or in connection with any execution and delivery
or transfer of or payment or failure to pay under any Letter of Credit or any
actual or proposed use of any Letter of Credit; provided that the Borrower shall
not be required to indemnify any LC Issuing Bank for any such claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (i) its own willful misconduct or gross negligence or (ii) its failure
to pay under any Letter of Credit issued by it after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit. Nothing in this
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subsection is intended to limit the obligations of the Borrower under any other
provision of this Section.
(l) Indemnification by Banks. The Banks shall, ratably in proportion to
their Revolving Commitment Percentages, indemnify each LC Issuing Bank (to the
extent not reimbursed by the Borrower) against any claims, damages, losses,
liabilities, reasonable costs and reasonable expenses (including, without
limitation, reasonable fees and disbursements of counsel) that such LC Issuing
Bank may suffer or incur in connection with this Section or any action taken or
omitted by it under this Section; provided that the Banks shall not be required
to indemnify any LC Issuing Bank for any such claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(i) its own gross negligence or willful misconduct, (ii) its failure to pay
under any Letter of Credit issued by it after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit, (iii) its failure to comply with Section 2.15(e), (iv) its liabilities
under any Letter of Credit issued by it in contravention of clause 2.15(c)(iii)
(to the extent that the limitations referred to therein were in fact exceeded)
or clause 2.15(c)(iv) or (v) its liabilities under any Letter of Credit extended
(or allowed to be automatically extended) by it in contravention of clause
2.15(f)(ii).
(m) Liability for Damages. Nothing in this Section shall preclude the
Borrower or any Bank from asserting against any LC Issuing Bank any claim for
damages suffered by the Borrower or such Bank to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence of such LC
Issuing Bank or (ii) such LC Issuing Bank's failure to pay under any Letter of
Credit issued by it after the presentation to it of a request strictly complying
with the terms and conditions thereof.
(n) Dual Capacities. In its capacity as a Bank, each LC Issuing Bank
shall have the same rights and obligations under this Section as any other Bank.
(o) Information to be Provided to Administrative Agent. Each LC Issuing
Bank shall furnish to the Administrative Agent upon request such information as
the Administrative Agent shall reasonably request in order to calculate (i) the
Aggregate LC Exposure existing from time to time and (ii) the amount of any fee
payable for the account of the Banks under Section 2.07.
Section 2.16. Registry. The Administrative Agent shall maintain a
register (the "Register") on which it will record the Revolving Credit
Commitments of each Bank, each Loan made by such Bank and each repayment of any
Loan made by such Bank. Any such recordation by the Administrative Agent on the
Register shall be conclusive, absent manifest error. With respect to any
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Bank, the assignment or other transfer of the Revolving Credit Commitments of
such Bank and the rights to the principal of, and interest on, any Loan made and
Note issued pursuant to this Agreement shall not be effective until such
assignment or other transfer is recorded on the Register and otherwise complies
with Section 9.06(c). The registration of assignment or other transfer of all or
part of any Revolving Credit Commitments, Loans and Notes for a Bank shall be
recorded by the Administrative Agent on the Register only upon the acceptance by
the Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement referred to in Section 9.06(c). The Register shall be
available at the offices where kept by the Administrative Agent for inspection
by the Borrower and any Bank at any reasonable time upon reasonable prior notice
to the Administrative Agent. Each Bank shall record on its internal records
(including computerized systems) the foregoing information as to its own
Revolving Credit Commitments and Loans. Failure to make any such recordation, or
any error in such recordation, shall not affect the obligations of any Obligor
under the Loan Documents.
ARTICLE 3
Conditions
Section 3.01. Closing Date. The Closing Date shall occur on the first
date on which all the following conditions have been satisfied (or waived in
accordance with Section 9.05:
(a) receipt by the Administrative Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the
Administrative Agent in form satisfactory to it of telegraphic, telex or
other written confirmation from such party of execution of a counterpart
hereof by such party);
(b) receipt by the Administrative Agent of a duly executed Note for
the account of each Bank dated on or before the Closing Date and complying
with the provisions of Section 2.14;
(c) receipt by the Administrative Agent of duly executed counterparts
of the Subsidiary Guarantee and of each Collateral Document set forth in
Schedule 3.01, together with evidence reasonably satisfactory to it of the
effectiveness of the security contemplated thereby and the perfection of
the Liens created thereunder, and of the policy of title
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insurance, title commitment, and other documents referred to in Section
5.26;
(d) receipt by the Administrative Agent of the opinions of Locke
Purnell Rain Harrell (A Professional Corporation), counsel for the
Obligors, and Crowe & Dunlevy, Oklahoma counsel for the Obligors,
substantially in the forms of Exhibits F-1 and F-2 hereto, dated the
Closing Date and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(e) receipt by the Administrative Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agents, substantially in the form of
Exhibit G hereto, dated the Closing Date and covering such additional
matters relating to the transactions contemplated hereby as the Required
Banks may reasonably request;
(f) receipt by the Administrative Agent of all fees and other amounts
(including, without limitation, legal fees and expenses, title premiums,
survey charges and recording taxes and fees) payable to it in connection
with the Loan Documents;
(g) all necessary anti-trust and other governmental, shareholder and
third party consents and approvals necessary or reasonably desirable in
connection with the Project and the transactions contemplated hereby shall
have been obtained and all applicable waiting periods shall have expired
without any action to affect the Project or the transactions contemplated
hereby;
(h) there shall not be any pending or, to the best of the Borrower's
knowledge, threatened litigation or proceeding against the Borrower or any
of its Subsidiaries or affiliates, or otherwise relating to the Project,
which seeks to enjoin or challenge the Project or the financing
contemplated hereby or which could reasonably be expected in the Banks'
judgment to have a Material Adverse Effect;
(i) receipt by the Administrative Agent of evidence of insurance
maintained by the Borrower and its Subsidiaries reasonably satisfactory to
the Banks;
(j) receipt by the Administrative Agent of evidence reasonably
satisfactory to it that (i) all outstanding Debt and other obligations owed
by the Borrower have been paid in full, all commitments with respect
thereto have been terminated and all Liens securing such obligations and
all
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Guarantees thereof have been released and (ii) all Guarantees given by the
Borrower shall have been released and (iii) on the Closing Date,
immediately after giving effect to the borrowings to be made hereunder, the
Borrower and its Subsidiaries shall have no Debt outstanding other than the
Loans except, in each case, for the Debt set forth in Schedule 5.10; and
(k) receipt by the Administrative Agent of all documents it may
reasonably request relating to the existence of each Obligor, the corporate
authority for and the validity of the Loan Documents, and any other matters
relevant hereto, all in form and substance satisfactory to the
Administrative Agent in its sole good faith discretion.
Promptly after the Closing Date occurs, the Administrative Agent shall
notify the Borrower and the Banks thereof, and such notice shall be conclusive
and binding on all parties hereto.
Section 3.02. Borrowings and Issuances of Letters of Credit. The
obligation of any Bank to make a Loan on the occasion of any Borrowing, and the
obligation of any LC Issuing Bank to issue (or extend or allow an extension of
the expiry date of) any Letter of Credit, is subject to the satisfaction of the
following conditions:
(a) the Closing Date shall have occurred on or before July 31, 1998;
(b) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.02, or receipt by the relevant LC Issuing Bank of a
notice of proposed issuance or extension as required by Section 2.15(b) or
2.15(f), as the case may be;
(c) immediately after such Borrowing or issuance or extension, as the
case may be, the Total Revolving Outstanding Amount does not exceed the
aggregate Revolving Credit Commitments as in effect at the date of such
Borrowing or issuance, as the case may be;
(d) immediately before and after such Borrowing or issuance or
extension of a Letter of Credit, no Default shall have occurred and be
continuing; and
(e) the representations and warranties of the Obligors contained in
the Loan Documents shall be true in all material respects on and as of the
date of such Borrowing or issuance or extension of a Letter of Credit.
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Each Borrowing and each issuance or extension of a Letter of Credit
hereunder shall be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing or issuance or extension of a Letter of Credit as to
the facts specified in the foregoing clauses 3.02(d) and 3.02(e).
Section 3.03. Construction Borrowings and Construction Letters of Credit.
The obligation of any Bank to make a Loan on the occasion of any Construction
Borrowing or of any LC Issuing Bank to issue a Construction Letter of Credit is
subject to the satisfaction of the following additional conditions:
(a) the Borrower shall have invested an amount equal to the Other
Financing Proceeds in the Project in a manner reasonably satisfactory to
the Administrative Agent;
(b) the Administrative Agent shall have received, not more than
forty-five (45) days prior to the Notice of Borrowing for such Construction
Borrowing or prior to the notice of issuance of a Construction Letter of
Credit in accordance with Section 2.15(b), the certificate described in
Section 5.01(l);
(c) the balance of the Loans yet to be advanced by the Bank Parties,
together with any additional amounts deposited by the Borrower with the
Administrative Agent pursuant to Section 5.28 shall at least equal the
actual sum which will be required to complete construction of the Project
in accordance with the Plans and Specifications as most recently estimated
by the Inspecting Engineer in the certificate delivered in accordance with
Section 3.03(b);
(d) the Title Company shall have issued not more than ninety (90)
days prior to the date of the Notice of Borrowing (i) a bring down of title
showing title to the Real Property to be vested in the Borrower and no
exceptions to the title of the Real Property other than Liens permitted
under this Agreement and (ii) a commitment to insure the priority of the
lien of the Mortgage, subject only to exceptions previously approved by the
Administrative Agent in writing, for the full amount of each Loan or Letter
of Credit and all previous Loans made or Letters of Credit issued by the
Bank Parties to the Borrower pursuant to this Agreement;
(e) upon the reasonable request of the Administrative Agent, the
Borrower shall have furnished the Administrative Agent lien waivers
executed by the Construction Manager pursuant to the General Construction
Contract (at such times and in such form required by the General
Construction Contract) certifying that the Construction Manager
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has received payment in full of all monies owed to the Construction
Manager, and lien waivers executed by each Major Subcontractor engaged in
the construction of the Project on behalf of the Construction Manager or
the Borrower certifying that each such Major Subcontractor has received
payment in full of all monies owed to each such Major Subcontractor by the
Construction Manager or the Borrower; and
(f) upon the reasonable request of the Administrative Agent, the
Borrower shall have furnished the Administrative Agent with copies of all
material certificates, authorizations, permits and licenses which are
required to permit the construction and completion of the Project, as
issued by the appropriate governmental authorities.
Each Construction Borrowing and each issuance or extension of a Construction
Letter of Credit hereunder shall be deemed to be a representation and warranty
by the Borrower on the date of such Construction Borrowing or issuance or
extension of a Construction Letter of Credit as to the facts specified in the
foregoing clauses 3.03(a), 3.03(c) and 3.03(d).
All conditions and requirements of this Agreement relating to the obligations of
the Bank Parties to make Loans are for the sole benefit of the Bank Parties, the
Syndication Agent and the Administrative Agent and no other person or party
(including, without limitation, the Construction Manager and subcontractors and
materialmen engaged in the construction of the Project) shall have the right to
rely on the satisfaction of such conditions and requirements by Borrower as a
condition precedent to the Bank Parties' obligations under this Agreement.
ARTICLE 4
Representations and Warranties
The Borrower represents and warrants that:
Section 4.01. Corporate Existence and Power. Each Obligor is a
corporation duly incorporated or a partnership duly formed, as the case may be,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation, as applicable, and has all powers and all material
governmental licenses, consents, authorizations and approvals required to carry
on its business as now conducted.
Section 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Obligor of the
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Loan Documents to which it is a party are within its corporate or partnership
powers, as the case may be, have been duly authorized by all necessary corporate
or partnership action, require no action by or in respect of, or, except for
Uniform Commercial Code filings in connection with the Collateral Documents and
the recordation of the Mortgage, filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
or partnership agreement of any Obligor or, except where a Material Adverse
Effect could not reasonably be expected to result, of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or any
of its Subsidiaries or result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries (other than the Lien created by
the Collateral Documents).
Section 4.03. Binding Effect; Liens Enforceable. (a) Each Loan Document
(other than the Notes) constitutes a valid and binding agreement of the Obligor
party thereto, and each Note, when executed and delivered in accordance with
this Agreement, will constitute a valid and binding obligation of the Borrower,
in each case enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
general principles of equity.
(b) The Collateral Documents create valid security interests in, and first
mortgage Liens on, the Collateral purported to be covered thereby, which
security interests and mortgage Liens are and will remain perfected security
interests and mortgage Liens, prior to all other Liens (other than Liens not
securing Debt which rank senior to such security interests and mortgage Liens by
operation of law). Each of the representations and warranties made by each
Obligor in the Collateral Documents is true and correct in all material
respects.
Section 4.04. Financial Information. (a) The audited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 1997 and
the related consolidated statements of income and cash flows for the Fiscal Year
then ended, reported on by Arthur Andersen LLP, fairly present, in conformity
with GAAP, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such Fiscal Year.
(b) Since June 30, 1997, there has been no material adverse change in the
business, condition (financial or otherwise), operations, properties,
liabilities or prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
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SECTION 4.05. Litigation. Except as disclosed on Schedule 4.05, there is
no action, suit or proceeding pending against, or to the Borrower's knowledge
threatened against or affecting, the Borrower or any Subsidiary before any court
or arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could reasonably be expected
to have a Material Adverse Effect or which in any manner draws into question the
validity or enforceability of any Loan Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 4.12 of
the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could reasonably be expected to result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Internal Revenue Code or (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA.
SECTION 4.07. Environmental Matters. To the best of the Borrower's
knowledge, (a) except (x) as disclosed on Schedule 4.07 or (y) to the extent
that the liabilities of the Borrower and its Subsidiaries, taken as a whole,
relating to the matters referred to in clauses (i) through (vi) below could not
reasonably be expected to exceed in the aggregate $1,000,000:
(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending, or to the Borrower's knowledge, threatened by any governmental or
other entity relating to the Borrower or any Subsidiary and relating to or
arising out of any Environmental Law;
(ii) there are no liabilities of the Borrower or any Subsidiary
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, arising under or relating to any Environmental
Law, and there are no facts, conditions, situations or set of circumstances
which could reasonably be expected to result in or be the basis for any
such liability;
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<PAGE>
(ii) no polychlorinated biphenyls, radioactive material, lead,
lead paint, asbestos-containing material, incinerator, sump, surface
impoundment, lagoon, landfill, septic, wastewater treatment or other
disposal system or underground storage tank (active or inactive) is or has
been present at any property now or previously owned, operated or leased by
the Borrower or any Subsidiary in violation of Environmental Laws or in a
condition which has given, or would reasonably be expected to give, rise to
an Environmental Liability;
(iv) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or released
at, on or under any property now or previously owned, operated or leased by
the Borrower or any Subsidiary in violation of Environmental Laws or in a
manner that has given, or would reasonably be expected to give, rise to an
Environmental Liability;
(v) no property now or previously owned, leased or operated by
the Borrower or any Subsidiary nor, to the knowledge of Borrower, any
property to which the Borrower or any Subsidiary has, directly or
indirectly, transported or arranged for the transportation of any Hazardous
Substances, is listed or, to the Borrower's knowledge, proposed for
listing, on the National Priorities List promulgated pursuant to CERCLA, on
CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign
list of sites requiring investigation or clean-up; and
(vi) the Borrower and its Subsidiaries are in compliance with
all Environmental Laws and have obtained and are in compliance with all
permits, licenses, authorizations, certificates and approvals of
governmental authorities relating to or required by Environmental Laws and
necessary or proper for the business of the Borrower or any Subsidiary as
currently conducted.
(b) There has been no environmental investigation, study, audit,
test, review or other analysis conducted in the last 2 years in the possession
or control of the Borrower or any Subsidiary in relation to the current or prior
business of the Borrower or any Subsidiary or any property or facility now or
previously owned, leased or operated by the Borrower or any Subsidiary, which
has not been delivered to the Administrative Agent at least five days prior to
the date hereof.
(c) For purposes of this Section, the terms "Borrower" and
"Subsidiary" shall include any business or business entity which is, in whole or
in part, a predecessor of the Borrower or any Subsidiary.
47
<PAGE>
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary, except for any taxes not yet due and payable or except to the extent
that any such assessment is being contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes or other governmental charges are, in the
Borrower's opinion, adequate.
SECTION 4.09. Subsidiaries. The Borrower has no Material Subsidiaries
other than the Subsidiary Guarantors. Neither the Borrower nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
SECTION 4.10. No Regulatory Restrictions on Borrowing. No Obligor is (i)
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) otherwise subject to any regulatory scheme which
restricts its ability to incur or guarantee debt.
SECTION 4.11. Full Disclosure. All information heretofore furnished by
the Borrower to the Administrative Agent or any Bank for purposes of or in
connection with the Loan Documents or any transaction contemplated thereby is,
and all such information hereafter furnished by the Borrower to the
Administrative Agent or any Bank will be, true and accurate in all material
respects on the date as of which such information is stated or certified;
provided that, with respect to information consisting of statements, estimates
and projections regarding the future performance of the Borrower and its
Subsidiaries (collectively, the "PROJECTIONS"), no representation, warranty or
covenant is made other than that the Projections have been (and, in the case of
Projections furnished after the date hereof, will be) prepared in good faith
based on assumptions believed to be reasonable at the time of preparation
thereof. The Borrower has disclosed to the Banks in writing any and all facts
which materially and adversely affect, or may affect (to the extent the Borrower
can now reasonably foresee), the business, operations or financial condition of
the Borrower and its Consolidated Subsidiaries, taken as a whole, or the ability
of any Obligor to perform its Obligations under the Loan Documents.
SECTION 4.12. Year 2000. Any reprogramming required to permit the proper
functioning, in and following year 2000, of the Borrower's computer systems and
the testing of all such systems and equipment, as so reprogrammed, will be
completed by July 1, 1999. The cost to the Borrower of such reprogramming and
testing and of the reasonably foreseeable consequences of year
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<PAGE>
2000 to the Borrower (including, without limitation, reprogramming errors and
the failure of others' systems or equipment) will not result in a Default or a
Material Adverse Effect. Except for such of the reprogramming referred to in the
preceding sentence as may be necessary, the computer and management information
systems of the Borrower and its Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Borrower to conduct its business without Material
Adverse Effect.
ARTICLE 5
Covenants
The Borrower agrees that, so long as any Bank has any Credit Exposure
hereunder or any interest or fees accrued hereunder remain unpaid:
SECTION 5.01. Information. The Borrower will deliver to the
Administrative Agent in sufficient quantities for the Banks:
(a) as soon as available and in any event within 96 days after the
end of each Fiscal Year, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income and cash flows for such Fiscal
Year, setting forth, in comparative form the figures for the previous
Fiscal Year, all reported on without material qualification by Arthur
Andersen LLP or other independent public accountants of nationally
recognized standing; provided that as long as the Borrower is subject to
the reporting requirements of the Securities Exchange Act of 1934, as
amended, the provision by the Borrower of its annual report on Form 10-K
which includes consolidated financial statements of the Borrower and its
Consolidated Subsidiaries, as filed with the SEC pursuant to the Securities
Exchange Act of 1934, shall be deemed to satisfy the Borrower's obligation
under this subsection;
(b) as soon as available and in any event within 51 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter, the related consolidated
statement of income for such Fiscal Quarter and the related consolidated
statements of cash flows for the portion of the Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in the case of each such
statement of income and cash flows in comparative form the figures for the
49
<PAGE>
corresponding period in the previous Fiscal Year, all certified (subject to
normal year-end adjustments) as to fairness of presentation and consistency
with GAAP by the Borrower's chief financial officer or chief accounting
officer; provided that as long as the Borrower is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, the
provision by the Borrower of its quarterly report on Form 10-Q which
includes consolidated financial statements of the Borrower and its
Consolidated Subsidiaries, as filed with the SEC pursuant to the Securities
Exchange Act of 1934, shall be deemed to satisfy the Borrower's obligation
under this subsection;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses 5.01(a) and 5.01(b) above, a certificate
of the Borrower's chief financial officer, treasurer or chief accounting
officer (i) setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Sections 5.10 to 5.17, inclusive, on the date of such financial statements
and (ii stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause 5.01(a) above, a statement of the firm of
independent public accountants which reported on such statements in the
form prescribed by generally accepted auditing standards stating whether
anything has come to their attention to cause them to believe that any
Default existed on the date of such statements;
(e) simultaneously with the delivery of each set of financial
statements referred to in clause 5.01(a) above for each Fiscal Year
commencing after the Conversion Date, a certificate of the Borrower's chief
financial officer, treasurer or chief accounting officer setting forth in
reasonable detail the calculation of Excess Cash Flow for such Fiscal Year;
(f) within five Domestic Business Days after any officer of the
Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the Borrower's chief financial officer,
treasurer or chief accounting officer setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(g) promptly after the mailing thereof to the Borrower's
stockholders, copies of all financial statements, reports and proxy
statements so mailed;
50
<PAGE>
(h) promptly after the filing thereof, copies of all registration
statements (other than the exhibits thereto) and periodic reports filed by
the Borrower with the SEC;
(i) if and when any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice
and other information filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the Borrower's chief financial officer or chief
accounting officer setting forth details as to such occurrence and the
action, if any, which the Borrower or applicable member of the ERISA Group
is required or proposes to take;
(j) within thirty (30) days after the completion of the Project, the
originals or copies of all permanent certificates of occupancy and all
other material certificates, licenses, consents and other approvals of the
governmental authorities, and of the appropriate Board of Fire
Underwriters, if any, or other similar body, if any, acting in and for the
locality in which the Real Property is situated which are required for the
use and occupancy of the Project;
(k) from time to time upon the reasonable request of the
Administrative Agent but not more often than once each month any of the
following: (i) the names of all Major Subcontractors with whom the Borrower
or the Construction Manager has contracted or intends to contract
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<PAGE>
for the construction of the Project or the furnishing of labor or materials
in connection therewith, (ii) a list of all unpaid bills for labor and
materials from Major Subcontractors with respect to construction of the
Project, (iii) a schedule of Direct Construction Costs and Other
Construction Costs incurred as of such date and budgets of the Borrower and
revisions thereof showing estimated Direct Construction Costs and Other
Project Costs and other costs and expenses to be incurred in connection
with the completion of construction of the Project, (iv) lien waivers,
receipted bills or other evidences of payment of all Direct Construction
Costs, Other Project Costs and other costs and expenses incurred in
connection with the construction of the Project and any other costs and
expenses relating to the Real Property, and (v) such other information
relating to the Borrower, the Project, the Construction Manager or other
person or party connected with the Borrower, the Secured Obligations, the
construction of the Project or any collateral for the Loans or other source
of repayment of the Secured Obligations;
(l) on or about the date of the delivery of each set of financial
statements referred to in clauses 5.01(a) and 5.01(b) above, a certificate
of the Inspecting Engineer based upon an on-site inspection of the Project
made by the Inspecting Engineer not more than thirty (30) days prior to the
date of such certificate, in which the Inspecting Engineer shall (i)
certify, to the best estimation of the Inspecting Engineer, that (A) the
portion of the Project completed as of the date of such inspection has been
completed substantially in accordance with the Plans and Specifications and
(B) based upon available information at the time of certification, the
Project can be 90% completed by the Conversion Date and in no event later
than six months after the Conversion Date and (ii) state, to the best
estimation of the Inspecting Engineer, (w) the percentage of construction
of the Project completed as of the date of such inspection on the basis of
work in place as part of the Project and the Direct Costs Schedule, (x)
Direct Construction Costs actually incurred for work in place as part of
the Project as of the date of such inspection, (y) the actual sum necessary
to complete construction of the Project in accordance with the Plans and
Specifications and (z) the amount of time from the date of such inspection
which will be required to complete construction of the Project in
accordance with the Plans and Specifications; and
(m) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
52
<PAGE>
Information required to be delivered pursuant to Sections 5.01(a), 5.01(b),
5.01(g) or 5.01(h) above shall be deemed to have been delivered on the date on
which the Borrower provides notice to the Administrative Agent that such
information has been posted on the Borrower's website on the Internet at the
website address listed on the signature pages hereof, at
sec.gov/edaux/searches.htm or at another website identified in such notice and
accessible by the Banks without separate charge; provided that the Borrower
shall deliver paper copies of the information referred to in Sections 5.01(a),
5.01(b), 5.01(g) or 5.01(h) to the Administrative Agent for delivery to any Bank
which requests such delivery.
SECTION 5.02. Payment of Obligations. The Borrower (i) will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities (including,
without limitation, tax liabilities and claims of materialmen, warehousemen and
the like which if unpaid might by law give rise to a Lien, other than inchoate
Liens for obligations not yet due), except where the same are contested in good
faith by appropriate proceedings, and (ii) will maintain, and will cause each
Subsidiary to maintain, in accordance with GAAP, appropriate reserves for the
accrual thereof.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will maintain, and will cause each of its Subsidiaries to
maintain, (i) physical damage insurance on all real and personal property on an
all risks basis, covering the repair and replacement cost of all such property
and consequential loss coverage for business interruption and extra expense,
covering such risks, for amounts not less than those, and with deductible
amounts not greater than those, set forth in Part I of Schedule 5.03, (ii)
public liability insurance (including products/completed operations liability
coverage) covering such risks, for amounts not less than those, and with
deductible amounts not greater than those, set forth in Part II of Schedule
5.03, and (iii) such other insurance coverage in such amounts and with respect
to such risks as the Required Banks may reasonably request. All such insurance
shall be provided by insurers having an A.M. Best policyholders rating of not
less than B+ or such other insurers as the Required Banks may approve in
writing.
(c) On or prior to the Closing Date, the Borrower shall cause the
Administrative Agent to be named as an additional insured and loss payee, as
applicable, on each insurance policy required to be maintained pursuant to this
Section; provided that the Administrative Agent shall not be named loss payee on
insurance maintained in respect of the Real Property prior to the completion of
Project construction. The Borrower will deliver to the Administrative Agent (i)
on
53
<PAGE>
the Closing Date, a certificate from the Borrower's insurance broker dated such
date showing the amount of coverage as of such date, (ii) upon the request of
any Bank through the Administrative Agent from time to time full information as
to the insurance carried, (iii) within five days of receipt of notice from any
insurer, a copy of any notice of cancellation, nonrenewal or material change in
coverage from that existing on the date of this Agreement and (iv) forthwith,
notice of any cancellation or nonrenewal of coverage by the Borrower.
(d) Any proceeds in excess of $1,000,000 from any Property Insurance
Policy which are payable to the insured in respect of any claim, or any
condemnation award or other compensation in respect of a condemnation (or any
transfer or disposition of property in lieu of condemnation) for which the
Borrower or any of its Subsidiaries receives a condemnation award or other
compensation in excess of $1,000,000, shall be paid to the Administrative Agent
to be held, applied or released for application in accordance with Section 5 of
the Borrower Security Agreement and each Property Insurance Policy shall provide
that all insurance proceeds in excess of $1,000,000 per claim which are payable
to the insured shall be adjusted with and payable to the Administrative Agent;
provided that so long as no Event of Default has occurred and is continuing, no
claim shall be adjusted or settled without the consent of the Borrower or the
applicable Subsidiary. The Borrower hereby appoints the Administrative Agent as
its attorney-in-fact to make proof of loss, claim for insurance and adjustments
with insurers, and to execute or endorse all documents, checks or drafts in
connection with payments under Property Insurance Policies.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower and its Subsidiaries will continue to engage in business of the same
general type as now conducted by the Borrower and its Subsidiaries, and will
preserve, renew and keep in full force and effect their respective corporate
existences and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that nothing in this
Section shall prohibit any merger or consolidation expressly permitted by
Section 5.07.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or where the
failure to comply could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record and
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<PAGE>
account in which full and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will permit, and
will cause each Subsidiary to permit, representatives of any Bank at such Bank's
expense to visit and inspect any of their respective properties, to examine and
make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be requested.
SECTION 5.07. Consolidations, Mergers and Sales of Assets. (a) The
Borrower will not, and will not permit any of its Subsidiaries to, consolidate
or merge with or into any other Person; provided that the Borrower or any of its
Subsidiaries may merge with another Person if:
(i) the Borrower or a wholly-owned Consolidated Subsidiary is the
corporation surviving such merger;
(ii) the person (if other than the Borrower) formed by such
consolidation or into which the Borrower is merged (any such person, the
"Successor"), shall be organized and existing under the laws of the United
States, any state thereof or the District of Columbia and shall expressly
assume, in a writing executed and delivered to the Administrative Agent for
delivery to each of the Banks, in form reasonably satisfactory to the
Administrative Agent, the due and punctual payment of the principal of and
interest on the Notes and the performance of the other obligations under
this Agreement and the Notes on the part of the Borrower to be performed or
observed, as fully as if such Successor were originally named as the
Borrower in this Agreement;
(iii) after giving effect to such merger, no Default shall have
occurred and be continuing; and
(iv) the Borrower has delivered to the Administrative Agent a
certificate on behalf of the Borrower signed by a financial officer and an
opinion of counsel (which counsel may be an employee of the Borrower), each
stating that all conditions provided in this Section 5.07 relating to such
transaction have been satisfied.
(b) The Borrower will not, and will not permit any of its Subsidiaries to,
make any Asset Sale unless (i) the consideration therefor is not less than the
fair market value of the related asset (as determined in good faith by the chief
executive officer or the chief financial officer of the Borrower as of the date
of the sale of such asset or of the agreement with respect to the sale of such
asset), (ii) the
55
<PAGE>
consideration therefor consists solely of cash and (iii) after giving effect
thereto, the aggregate fair market value of the assets disposed of in all Asset
Sales during any Fiscal Year ended after the Closing Date would not exceed
$5,000,000.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used by
the Borrower to finance the Project, to refinance amounts outstanding under an
existing NationsBank, N.A. line of credit and for working capital purposes. With
respect to the Project, such proceeds shall be used (i) for direct construction
costs incurred by the Borrower in connection with the construction of the
Project (hereinafter referred to as "DIRECT CONSTRUCTION COSTS"), as itemized in
the schedule of direct costs (referred to as the "DIRECT COSTS SCHEDULE"), as
the same may be revised from time to time after the date hereof, and (ii) for
costs, other than Direct Construction Costs, incurred by the Borrower in
connection with the Loan or the construction of the Project (referred to as
"OTHER PROJECT COSTS"), as itemized in a schedule (referred to as the "SCHEDULE
OF OTHER PROJECT COSTS"), as the same may be revised from time to time after the
date hereof. Neither any proceeds of the Loans nor any Letter of Credit will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning of
Regulation U.
SECTION 5.09. Negative Pledge. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens created under the Collateral Documents;
(b) Permitted Encumbrances (as defined in any Mortgage) on the Real
Property covered thereby;
(c) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Subsidiary and not created in contemplation of such
acquisition;
(d) any Lien on any asset that has been financed with the proceeds of
Debt permitted by Section 5.10(c) and securing such Debt; provided that
such Lien attaches to such asset concurrently with or within 90 days after
the acquisition of such asset; and provided further that the aggregate
principal amount of Debt secured by Liens permitted by this clause (d)
incurred during any Fiscal Year shall not exceed $2,500,000;
(e) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash equivalents
subject to such Liens shall at no time exceed $5,000,000;
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<PAGE>
(f) Liens in existence on the Closing Date and identified in Schedule
5.09;
(g) Liens not permitted by the foregoing clauses arising in the
ordinary course of its business which (i) do not secure Debt or Derivatives
Obligations and (ii) do not secure any single obligation (or class of
obligations having a common cause) in an amount exceeding $5,000,000; and
(h) Liens not permitted by the foregoing clauses securing Debt in an
aggregate principal amount at any time outstanding not to exceed
$2,500,000.
SECTION 5.10. Limitation on Debt. The Borrower will not, and will not
permit any of its Subsidiaries to, incur or at any time be liable with respect
to any Debt except:
(a) Debt under the Loan Documents;
(b) intercompany Debt owing to any Obligor;
(c) Capital Lease Obligations and other Debt the proceeds of which are
applied to finance the cost of acquisition of any asset; provided that such Debt
is incurred concurrently or within 90 days after the acquisition of such asset;
and provided further that the aggregate outstanding principal amount of Debt
permitted by this clause shall not exceed (i) prior to the first anniversary of
the Conversion Date, $10,000,000 and (ii) on and after the first anniversary of
the Conversion Date, 50% of the then applicable cumulative limitation on
Investments and Business Acquisitions specified in Section 5.18;
(d) Debt outstanding on the Closing Date and identified in Schedule 5.10;
(e) the Subordinated Notes;
(f) Debt of the Borrower not permitted by the foregoing clauses in an
aggregate principal amount at any time outstanding not to exceed $5,000,000; and
(g) other unsecured Debt of the Borrower, (i) incurred with the prior
approval of the Required Banks and (ii) the Net Cash Proceeds of which are
applied in accordance with Sections 2.04(c) and 2.08(b).
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SECTION 5.11. Debt to EBITDA. At any date during each period set forth
below, the ratio of (i) Consolidated Net Debt at such date to (ii) Consolidated
EBITDA for the period of four consecutive Fiscal Quarters most recently ended on
or prior to such date will not exceed the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
- -------------------------------------------------------
Period Ratio
- -------------------------------------------------------
<S> <C>
6/30/98 - 9/29/99 4.00:1
- -------------------------------------------------------
9/30/99 - 9/29/2000 4.50:1
- -------------------------------------------------------
9/30/2000 - 9/29/2001 4.00:1
- -------------------------------------------------------
9/30/2001 - 9/29/2002 3.00:1
- -------------------------------------------------------
9/30/2002 and thereafter 2.50:1
- -------------------------------------------------------
</TABLE>
SECTION 5.12. Interest Coverage Ratio. At the end of each Fiscal Quarter
ending during each period set forth below, the Interest Coverage Ratio will not
be less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
- -------------------------------------------------------
Period Ratio
- -------------------------------------------------------
<S> <C>
9/30/98 - 12/31/99 2.00:1
- -------------------------------------------------------
3/31/2000 - 9/30/2000 1.75:1
- -------------------------------------------------------
12/31/2000 - 6/30/2002 2.00:1
- -------------------------------------------------------
9/30/2002 and thereafter 2.50:1
- -------------------------------------------------------
</TABLE>
SECTION 5.13. Minimum EBITDA. At the last day of each Fiscal Quarter
ending during each period set forth below, Consolidated EBITDA for the period of
four consecutive Fiscal Quarters then ended shall not be less than the amount
set forth below opposite such period:
<TABLE>
<CAPTION>
- -------------------------------------------------------
Period Amount
- -------------------------------------------------------
<S> <C>
9/30/98 - 6/30/99 $30,000,000
- -------------------------------------------------------
9/30/99 - 6/30/2000 $35,000,000
- -------------------------------------------------------
9/30/2000 - 6/30/2001 $40,000,000
- -------------------------------------------------------
</TABLE>
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<PAGE>
- -------------------------------------------------------
9/30/2001 and thereafter $45,000,000
- -------------------------------------------------------
SECTION 5.14. Minimum Consolidated Net Worth. Consolidated Net Worth will
at no time be less than an amount equal to the sum of (i) $69,915,200 and (ii)
an amount equal to 50% of the consolidated net income of the Borrower and its
Consolidated Subsidiaries for each Fiscal Quarter ending after March 31, 1998
but before the date of determination, in each case, for which such consolidated
net income is positive (but with no deduction on account of negative
consolidated net income for any Fiscal Quarter) plus (iii) 90% of the amount by
which Consolidated Net Worth is increased after March 31, 1998 as a result of
the issuance and sale of capital stock of the Borrower or the conversion or
exchange of Debt of the Borrower into capital stock of the Borrower.
SECTION 5.15. Limitation on Capital Expenditures. At the end of each
Fiscal Year, Consolidated Capital Expenditures (exclusive of (i) the Project,
(ii) the current expansion of the Duke-Oklahoma Plant, which includes the
purchase of 80 railcars in connection therewith, and (iii) major rebuilds of the
facilities of the Borrower in an aggregate cumulative amount of $10,000,000 at
any date on or prior to the Conversion Date and $30,000,000 thereafter) for such
Fiscal Year shall not exceed $15,000,000; provided that, to the extent
Consolidated Capital Expenditures for any Fiscal Year are less than the amount
set forth above opposite such Fiscal Year, the difference may be carried forward
for the immediately succeeding Fiscal Year (but not to any subsequent Fiscal
Year) and, for this purpose, Consolidated Capital Expenditures in such
immediately succeeding Fiscal Year shall be applied first, to the specified
amount for such Fiscal Year and second, to any such carry-forward amount.
SECTION 5.16. Lease Payments. Neither the Borrower nor any Subsidiary
will incur or assume (whether pursuant to a Guarantee or otherwise) any
liability for rental payments under a lease (excluding capital leases) with a
lease term (as defined in Financial Accounting Standards Board Statement No. 13,
as in effect on the date hereof) of three years or more if, immediately after
giving effect thereto, the aggregate amount of minimum lease payments for which
the Borrower and its Subsidiaries are liable will exceed $750,000 for any Fiscal
Year under all such leases (excluding capital leases).
SECTION 5.17. Restricted Payments; Voluntary Prepayments. Neither the
Borrower nor any Subsidiary will declare or make any Restricted Payment or
voluntary prepayment of any Debt (excluding Loans outstanding under this
Agreement); provided that, so long as immediately before and after giving effect
to any such payment, no Default has occurred and is continuing, the Borrower may
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pay cash dividends and/or redeem stock in aggregate amounts of not more than (i)
$5,300,000 in each Fiscal Year ending on or before the Conversion Date, (ii)
$5,500,000 in each of the first and second Fiscal Years ending after the
Conversion Date, (iii) $6,000,000 in each of the third and fourth Fiscal Years
ending after the Conversion Date and (iv) thereafter, without limitation as to
amount; provided further that on the Closing Date the Borrower may (and shall)
prepay amounts outstanding under the existing NationsBank, N.A. line of credit.
SECTION 5.18. Investments and Acquisitions. Neither the Borrower nor any
Subsidiary will hold, make or acquire any Investment in any Person or make any
Business Acquisition other than:
(a) Investments in Obligors;
(b) Temporary Cash Investments;
(c) other Investments and Business Acquisitions in an aggregate
unrecovered amount at any time not greater than the excess, if any, of (i)
50% of Excess Cash Flow for the period from June 30, 1998 through and
including the Fiscal Quarter most recently ended at or prior to such time
(treated for this purpose as a single accounting period) over (ii) the
aggregate amount of Restricted Payments made during such period (other than
Restricted Payments permitted under Section 5.17 hereof); and
(d) other Investments and Business Acquisitions in aggregate
cumulative amounts not exceeding (i) $15,000,000 on or prior to the
Conversion Date; (ii) $20,000,000, on or prior to the first anniversary of
the Conversion Date; (iii) $25,000,000, on or prior to the second
anniversary of the Conversion Date; (iv) $30,000,000, on or prior to the
third anniversary of the Conversion Date; and (v) $35,000,000 thereafter.
SECTION 5.19. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, (i) pay any funds to
or for the account of any Affiliate, (ii) make any Investment in any Affiliate
(whether by acquisition of stock or indebtedness, by loan, advance, transfer of
property, guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise), (iii) lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to any Affiliate, or (iv)
participate in, or effect, any transaction with any Affiliate, except in each
case on an arms-length basis on terms at least as favorable to the Borrower or
such Subsidiary as could have been obtained from a third party that was not an
Affiliate.
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Section 5.20. Environmental Matters. The Borrower will promptly give to
the Administrative Agent notice in writing of any complaint, order, citation,
notice or other written communication from any Person with respect to, or if the
Borrower becomes aware of, (i) the existence or alleged existence of (x) a
violation of any applicable Environmental Law in connection with any property
now or previously owned, leased or operated by the Borrower or any of its
Subsidiaries or (y) any Environmental Liability, (ii) any discharge, disposal,
dumping, injection, pumping, deposit, spill, leak, emission or release at, on or
under such property or any part thereof in a quantity that is reportable under
any applicable Environmental Law, and (iii) any pending or threatened proceeding
for the termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, in each case which is reasonably likely to result
in the incurrence by the Borrower or any of its Subsidiaries of liabilities or
expenses in excess of $500,000.
Section 5.21. Limitation on Restrictions Affecting the Borrower and
Subsidiaries. Neither the Borrower nor any of its Subsidiaries will enter into,
or suffer to exist, any agreement with any Person (other than (x) the Loan
Documents, (y) agreements with respect to Debt secured by a Lien permitted under
Section 5.09(d) containing restrictions on the ability to transfer or grant
Liens on the asset securing such Debt and (z) restrictions existing as of the
Closing Date and set forth in Schedule 5.21) which (i) prohibits or limits the
ability of any Subsidiary to (a) pay dividends or make other distributions or
pay any Debt owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary or (c) transfer any of its properties or
assets to the Borrower or any Subsidiary or (ii) prohibits or limits the ability
of the Borrower or any Subsidiary to create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired as security for the obligations of the Borrower under the
Loan Documents; provided that the Borrower or any of its Subsidiaries may enter
into contracts containing usual and customary clauses prohibiting the assignment
of such contracts without the consent of the other parties to such contracts.
Section 5.22. Fiscal Year. The Borrower will not change its Fiscal Year
from a fiscal year ending June 30.
Section 5.23. Material Contracts. There shall be no termination of any
material license or contract by a party to such license or contract other than
the Borrower or any of its Subsidiaries for reasons of a breach of such license
or contract by the Borrower or such Subsidiary (or for reasons of a failure of
performance by the Borrower or such Subsidiary, which is not excused by force
majeure), if such terminated license or contract is not replaced by the Borrower
or such Subsidiary.
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Section 5.24. Title Insurance; Surveys. (a) On the Closing Date, the
Borrower will furnish the Administrative Agent with an ALTA extended coverage
lender's policy of title insurance in an aggregate amount of $90,000,000
insuring the Mortgage as a valid, enforceable first Lien on the Borrower's
interest in the Real Property covered thereby, subject only to Permitted
Encumbrances (as defined in such Mortgage). Prior to the Closing Date, the
Borrower shall furnish a title commitment for such policy to the Administrative
Agent, together with legible copies of all documents affecting title, which
shall show all recording information. The policy, including each of the
exceptions to coverage contained therein, shall be subject to the approval of
the Administrative Agent, and shall be issued by Old Republic Title Insurance
Company. Attached to the policy shall be any and all endorsements reasonably
required by the Administrative Agent and available in the relevant jurisdiction,
including, but not limited to (i) an endorsement ensuring that the lien of the
Mortgage is valid against any applicable usury laws or other laws prohibiting
the charging of interest on interest in the relevant jurisdiction, (ii) a
revolving credit endorsement, and (iii) an endorsement deleting the so-called
"doing business" exclusion.
(b) On or before the Closing Date, the Borrower shall deliver to the
Administrative Agent the Preliminary Survey. The Borrower shall deliver to the
Administrative Agent (i) a foundation survey within thirty (30) days after
completion of the foundation of the building and other improvements, (ii) an as-
built survey complying with minimum ALTA standards within thirty (30) days after
the completion of the building and other improvements, and (iii) any additional
surveys reasonably requested or required by the Administrative Agent, the
Inspecting Engineer or the Title Company within fifteen (15) days after request,
it being agreed that any change in the state of facts shown in any such updated
survey shall be subject to approval by the Administrative Agent and the
Inspecting Engineer, such approval not to be unreasonably withheld. Upon the
delivery of the as-built survey as described in clause (ii) above, the Borrower
shall cause to be delivered to the Administrative Agent the following
endorsements to the title policies referred to in subsection (a): (w) a
comprehensive endorsement covering restrictions and other matters, (x) an
endorsement ensuring that the Real Property has access to a dedicated public
street, (y) a survey and "same as" endorsement, and (z) a contiguity
endorsement.
Section 5.25. Landlord and Warehouseman Waivers. The Borrower shall use
its reasonable best efforts to deliver to the Administrative Agent waivers or
subordinations of contractual and statutory landlord's, landlord's mortgagee's
and warehouseman's Liens in form and substance reasonably satisfactory to the
Administrative Agent under each existing lease, warehouse agreement or similar
agreement to which the Borrower or any Subsidiary is a party; provided that the
Borrower will use its reasonable best efforts to include in such agreements such
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waivers or subordinations when the existing lease, warehouse agreement or
similar agreement is amended, renewed or extended and the Borrower will use its
reasonable best efforts to obtain waivers of both contractual and statutory
landlord's, landlord's mortgagee's and warehouseman's Liens in form and
substance reasonably satisfactory to the Administrative Agent in connection with
each new lease, warehouse agreement or similar agreement entered into by the
Borrower or any Subsidiary.
Section 5.26. Further Assurances. (a) The Borrower will, and will cause
each Subsidiary Guarantor to, at the Borrower's sole cost and expense, do,
execute, acknowledge and deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment and transfers as the
Administrative Agent shall from time to time request, which may be necessary in
the reasonable judgment of the Administrative Agent from time to time to assure,
perfect, convey, assign and transfer to the Administrative Agent the property
and rights conveyed or assigned pursuant to the Collateral Documents. Without
limiting the generality of the foregoing, on or after the date on which the
aggregate outstanding principal amount of the Loans first exceeds $50,000,000,
the Borrower will, and will cause each Subsidiary Guarantor to, (i) enter into
any additional Collateral Documents which may be necessary or desirable in order
to grant perfected first priority Liens on and security interests in all of the
Collateral Assets to secure its obligations under the Loan Documents to which it
is a party, and will deliver such certificates, evidences of corporate action or
other documents as the Administrative Agent may reasonably request, all in form
and substance reasonably satisfactory to the Administrative Agent, relating to
the satisfaction of the Borrower's obligations under this Section and (ii) upon
request, with respect to any real properties which become Collateral Assets
after the Closing Date, provide the Administrative Agent with environmental
assessments, title commitments, surveys and other similar documents relating to
such real properties, in each case, in form and substance reasonably
satisfactory to the Administrative Agent. Any title policy delivered pursuant
to this Section shall be in form and substance substantially similar to the
policy delivered for the Project.
(b) To the extent permitted by law, all costs and expenses in connection
with the grant of any security interests under the Collateral Documents,
including without limitation reasonable legal fees, fees and expenses of
environmental consultants and other reasonable costs and expenses in connection
with the granting, perfecting and maintenance of any security interests under
the Collateral Documents or the preparation, execution, delivery, recordation or
filing of documents and any other acts as the Administrative Agent may
reasonably request in connection with the grant of such security interests shall
be paid by the Borrower promptly upon demand.
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(c) The Borrower will not, and will not permit any of its Subsidiaries to,
enter into or become subject to any agreement which would impair their ability
to comply, or which would purport to prohibit them from complying, with the
provisions of this Section.
(d) The Borrower will cause each Person which becomes a U.S. Subsidiary
and a Material Subsidiary after the Closing Date (i) to become a party to the
Subsidiary Guarantee as guarantor by executing a supplement thereof in form and
substance reasonably satisfactory to the Administrative Agent and (ii) to enter
into a Security Agreement and any other agreements as may be necessary or
desirable in order to grant perfected first priority security interests upon all
of its Collateral Assets to secure its obligations under the Subsidiary Guaranty
(except for those assets subject to pre-existing Liens). In addition, the
Borrower will pledge, or cause to be pledged, pursuant to a Pledge Agreement,
all of the capital stock or other equity interests of such Subsidiary owned
directly or indirectly by the Borrower. The Borrower shall cause each such
Subsidiary to take such actions as may be necessary or desirable to effect the
foregoing within 45 days after such Subsidiary is acquired, including without
limitation causing such Subsidiary to (x) execute and deliver to the
Administrative Agent such number of copies as the Administrative Agent may
specify of such supplements and Security Agreement and other documents creating
security interests and (y) deliver such certificates, evidences of corporate
action or other documents as the Administrative Agent may reasonably request,
all in form and substance satisfactory to the Administrative Agent, relating to
the satisfaction of the Borrower's obligations under this Section.
(e) The covenants set forth in this Section do not affect any limitation
imposed by Article 5 of this Agreement on the ability of the Borrower or any of
its Subsidiaries to acquire or form any new Subsidiaries.
Section 5.27. Amendments to Subordinated Notes. The Borrower will not
enter into any amendment or waiver of any terms of the Subordinated Notes
without the prior written consent of the Required Banks.
Section 5.28. Matters Relating to Project. (a) The Borrower has submitted
to the Inspecting Engineer a set of plans and specifications for the Project
prepared by the Architect/Engineer (referred to as the "PLANS AND
SPECIFICATIONS"). The Borrower represents and warrants to the Administrative
Agent that the Plans and Specifications have been submitted to the Construction
Manager, and the Construction Manager has agreed to perform its obligations
under the General Construction Contract in a manner consistent with the
requirements of the Plans and Specifications. The Borrower represents and
warrants to the Administrative Agent that the Borrower has obtained or will
obtain from the appropriate governmental authorities all required approvals
(including,
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without limitation, all environmental approvals) with respect to the Plans and
Specifications, and the Project, and all necessary permits, certificates,
licenses and other approvals required for the construction of the Project that
if not so obtained could be reasonably expected to result in a Material Adverse
Effect. Each material addition or modification to the Plans and Specifications
shall be approved in writing by the Inspecting Engineer and, to the extent
required by law, by the appropriate governmental authorities. The Borrower shall
not commence any work on any stage or phase of the Project unless all required
permits, certificates, licenses and approvals therefor have been issued or
obtained from the appropriate governmental authorities. The Borrower shall
construct and equip the Project in accordance with the Plans and Specifications,
free and clear of all liens, encumbrances and security instruments (other than
the Mortgage and other Permitted Encumbrances (as defined in the Mortgage)). The
Plans and Specifications as approved by the Administrative Agent shall become
the property of the Administrative Agent upon the occurrence and continuance of
an Event of Default and exercise of available remedies under the Loan Documents.
The Project shall be constructed and equipped in compliance in all material
respects with the requirements of the governmental authorities and the
appropriate Board of Fire Underwriters, if any, or other similar body, if any,
acting in and for the locality in which the Real Property is situated.
Compliance with the provisions of this paragraph and any other provisions of
this Agreement relating to the construction and equipping of the Project shall
be determined by the Inspecting Engineer. At all times upon reasonable notice
(other in the event of an emergency), the Administrative Agent, the Inspecting
Engineer, and their respective agents and employees, shall have the right of
entry and free access to the Real Property to inspect the Project.
(b) At the Conversion Date, the Project shall be at least 90% complete (as
reasonably determined by the Inspecting Engineer) and Project Start-Up shall
occur no more than six months after the Conversion Date.
(c) Upon the reasonable request of the Administrative Agent, the Borrower
shall deliver to the Administrative Agent and the Inspecting Engineer a copy of
the Architect Contract, the General Construction Contract and each Major
Subcontract. The Borrower shall not agree to any modification or termination of
any of the Architect Contract, the General Construction Contract or any Major
Subcontract that could reasonably be expected to result in a Material Adverse
Effect without the prior written approval of the Administrative Agent which
approval shall not be unreasonably withheld. The Borrower shall make available
for inspection at all times by the Inspecting Engineer and the Administrative
Agent copies of all Other Subcontracts, and shall furnish to the Inspecting
Engineer and the Administrative Agent, upon request, copies of the same.
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(d) The Borrower shall make available to the Inspecting Engineer, upon
request, the Plans and Specifications and all shop and related drawings used in
connection with the Plans and Specifications and the construction of the Project
at the location where the same are kept. The Borrower shall cause the
Architect, the Construction Manager and all Major Subcontractors to respectively
execute and deliver to the Administrative Agent contemporaneously with the
execution and delivery of their respective contracts letter agreements pursuant
to the provisions of which the Architect, the Construction Manager and such
Major Subcontractors shall agree to perform their respective contracts at no
additional cost or expense for the benefit of the Administrative Agent, its
nominee, or wholly owned subsidiary, if an Event of Default under the Loan
Documents occurs and is continuing or a foreclosure of the Mortgage, which
letter agreements shall be in form and substance reasonably satisfactory to the
Administrative Agent. The Borrower shall observe and perform all of the
material terms, covenants and conditions of the Architect Contract, the General
Construction Contract, the Major Subcontracts and the Other Subcontracts on the
Borrower's part to be observed or performed.
(e) The Inspecting Engineer shall initially be the Architect/Engineer,
provided upon the reasonable request of the Required Banks, the Administrative
Agent shall engage a civil engineer or architect having at least five years'
experience in the construction of manufacturing and/or industrial projects
similar in size and complexity to the Project.
(f) In the event that the Subordinated Notes proceeds on deposit in the
General Collateral Account and the balance of the Loans yet to be advanced by
the Bank Parties is less than the actual sum (as estimated by the Inspecting
Engineer) required to complete the construction of the Project in accordance
with the Plans and Specifications, the Borrower shall, upon the reasonable
request of the Administrative Agent, deposit with the Administrative Agent an
amount equal to such shortfall (the "DEFICIENCY AMOUNT"). The Deficiency Amount
shall be deposited in the General Collateral Account, to pay Direct Construction
Costs and Other Project Costs as construction of the Project progresses. If an
Event of Default shall occur and be continuing, the Administrative Agent, in
addition to all other rights which it may have, shall have the unconditional
right, at its option, to apply, in whole or in part, any amounts deposited by
the Borrower with the Administrative Agent with respect to the Deficiency to the
payment of the Secured Obligations in such order and priority as the
Administrative Agent shall deem appropriate.
Section 5.29. Proceeds of Subordinated Notes. The Borrower will deposit
into the General Collateral Account all net proceeds from the issuance of the
Subordinated Notes on the Closing Date, if such issuance has occurred prior to
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such date, or upon the date of such issuance, if such issuance occurs after the
Closing Date.
ARTICLE 6
Defaults
Section 6.01. Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) any principal of any Loan or
any LC Reimbursement Obligation when due or (ii) any interest or, so long
as the Borrower shall have received notice and a demand for payment of the
same, any fee or other amount payable by it hereunder within five Domestic
Business Days of the due date thereof;
(b) the Borrower shall fail to observe or perform any covenant
contained in Article 5, other than those contained in clauses (a) - (d) and
(g) - (k) of Section 5.01, in Sections 5.02 through 5.06, inclusive, and in
Sections 5.25, 5.26 and clauses (a) and (c) - (f) of Section 5.28;
(c) any Obligor shall fail to observe or perform any covenant or
agreement (other than those covered by clause 6.01(a) or 6.01(b) above)
contained in the Loan Documents or any amendment hereof for 30 days after
the Administrative Agent gives notice thereof to the Borrower at the
request of any Bank;
(d) any representation, warranty, certification or statement made by
any Obligor in any Loan Document or any amendment hereof or in any
certificate, financial statement or other document delivered pursuant to
any Loan Document shall prove to have been incorrect in any material
respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make one or more
payments in respect of Material Financial Obligations when due or within
any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such
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Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer, any Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $2,500,000;
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(j) judgments or orders for the payment of money exceeding $2,500,000
in aggregate amount shall be rendered against the Borrower or any
Subsidiary and such judgments or orders shall continue unsatisfied and
unstayed for a period of 30 days;
(k) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended), other than Phil
Simpson, his spouse, his descendants and their spouses, trusts and estates
of which any of them are primary beneficiaries and any entities of which
any of them are holders of a majority of the equity securities, shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of 40% or more of
the outstanding shares of common stock of the Borrower; or the Continuing
Directors shall fail to constitute a majority of the board of directors of
the Borrower;
(l) (i) any Lien created by any of the Collateral Documents shall at
any time fail to constitute a valid and (to the extent required by the
Collateral Documents) perfected Lien on any material portion of the
Collateral purported to be subject thereto, securing the obligations
purported to be secured thereby, with the priority required by the Loan
Documents, or (ii) any Obligor shall so assert in writing; provided that if
a failure of the sort described in clause 6.01(l)(i) is susceptible of
cure, no Event of Default shall arise under this clause 6.01(l) with
respect thereto unless such failure remains uncured for 30 days after
notice of such failure shall have been given to the Borrower by the
Administrative Agent; or
(m) the issuance of the Subordinated Notes shall not have been
consummated on terms satisfactory to the Required Banks by August 31, 1998;
then, and in every such event, the Administrative Agent may, with the consent
of, and shall, if requested by, Banks:
(i) having more than 50% in aggregate amount of the Commitments, by
notice to the Borrower terminate the Commitments and they shall thereupon
terminate;
(ii) having more than 50% of the Aggregate LC Exposure, by notice to
each LC Issuing Bank instruct such LC Issuing Bank (x) not to extend the
expiry date of any outstanding Letter of Credit and/or (y) in the case of
any Evergreen Letter of Credit, to give notice to the beneficiary thereof
terminating such Letter of Credit as soon as is permitted by the provisions
thereof, whereupon such LC Issuing Bank shall deliver notice to that effect
promptly (or as soon thereafter as is permitted by the
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provisions of the relevant Letter of Credit) to the beneficiary of each
such Letter of Credit and the Borrower; and
(iii) holding Notes evidencing more than 50% in aggregate outstanding
principal amount of the Loans, by notice to the Borrower declare the Loans
(together with accrued interest thereon) to be, and the Loans (together
with accrued interest thereon) shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower;
provided that, if any Event of Default specified in clause 6.01(g) or 6.01(h)
occurs with respect to the Borrower, then without any notice to the Borrower or
any other act by the Administrative Agent or the Banks, the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
Section 6.02. Notice of Default. The Administrative Agent shall give
notice to the Borrower under Section 6.01(c) or 6.01(l) or under clause (ii) of
the definition of Applicable Margin promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
Section 6.03. Cash Collateral. If an Event of Default shall have occurred
and be continuing and Banks having more than 50% of the Aggregate LC Exposure
instruct the Administrative Agent to request cash collateral pursuant to this
Section, the Borrower will, promptly after it receives such request from the
Administrative Agent, deposit in the General Collateral Account an amount in
immediately available funds equal to the then aggregate amount available for
subsequent drawings under all outstanding Letters of Credit, to be held by the
Administrative Agent, under arrangements satisfactory to it, to secure the
payment of all LC Reimbursement Obligations arising from subsequent drawings
under such Letters of Credit; provided that, if any Event of Default specified
in clause 6.01(g) or 6.01(h) occurs with respect to the Borrower, the Borrower
shall pay such amount to the Administrative Agent forthwith without any notice,
demand or other act by the Administrative Agent or the Banks.
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ARTICLE 7
The Agents
Section 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Administrative Agent by the terms hereof or
thereof, together with all such powers as are reasonably incidental thereto.
Section 7.02. Administrative Agent and Affiliates. NationsBank, N.A. shall
have the same rights and powers under the Loan Documents as any other Bank and
may exercise or refrain from exercising the same as though it were not the
Administrative Agent, and NationsBank, N.A. and its affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower as if it were not
the Administrative Agent.
Section 7.03. Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in Article 6.
Section 7.04. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
Section 7.05. Liability of Administrative Agent. None of the
Administrative Agent, its affiliates and their respective directors, officers,
agents and employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required Banks
(or such different number of Banks as any provision hereof expressly requires
for such consent or request) or (ii) in the absence of its own gross negligence
or willful misconduct. None of the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of the Borrower; (iii) the satisfaction of any condition specified
in Article 3, except receipt of items required to be delivered to the
Administrative Agent; (iv) the validity,
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effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection herewith or (v) the existence, validity or
sufficiency of any Collateral. The Administrative Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate, statement
or other writing (which may be a bank wire, telex, facsimile or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
Without limiting the generality of the foregoing, the use of the term "agent" in
this Agreement with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
Section 7.06. Indemnification. The Banks shall, ratably in proportion to
their Credit Exposures, indemnify the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
Section 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance on either Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance on either 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 decisions in taking or
not taking any action under this Agreement.
Section 7.08. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving notice thereof to the Banks and the Borrower. Upon
any such resignation, the Required Banks shall have the right to appoint from
among the Banks a successor Administrative Agent, subject to the prior written
consent of the Borrower, which shall not be unreasonably withheld. If no
successor Administrative Agent shall have been so appointed by the Required
Banks with the consent of the Borrower, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives notice
of resignation, then the retiring Administrative Agent may, on behalf of the
Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized or licensed under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $100,000,000.
Upon the
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acceptance of its appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent resigns as Administrative Agent hereunder, the provisions
of this Article shall inure to its benefit as to actions taken or omitted to be
taken by it while it was Administrative Agent.
Section 7.09. Agents' Fees. The Borrower shall pay to each Agent for its
own account fees in the amounts and at the times previously agreed upon by the
Borrower and such Agent.
Section 7.10. Syndication Agent. No provision of any Loan Document shall
impose on the Syndication Agent, in such capacity, any duty or obligation
whatsoever.
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If
on or before the first day of any Interest Period for any Euro-Dollar Loans of
any Class:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars in the applicable amounts are not being offered to the
Reference Banks in the London interbank market for such Interest Period, or
(b) Banks having at least 50% in aggregate amount of the Revolving
Credit Commitments advise the Administrative Agent that the Adjusted London
Interbank Offered Rate, as determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Banks of funding their Euro-
Dollar Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make Euro-Dollar Loans or to continue or
convert outstanding Loans as or into Euro-Dollar Loans, as the case may be,
shall be suspended and (ii)
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each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable thereto. Unless the
Borrower notifies the Administrative Agent at least two Domestic Business Days
before the date of any affected Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing.
Section 8.02. Illegality. If, on or after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, 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 Bank (or
its Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into Euro-
Dollar Loans or continue outstanding Loans as Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Administrative Agent pursuant to
this Section, such Bank shall designate a different Euro-Dollar Lending Office
if such designation will avoid the need for giving such notice and will not, in
the judgment of such Bank in the good faith exercise of its discretion, be
otherwise disadvantageous to such Bank. If such notice is given, each Euro-
Dollar Loan of such Bank then outstanding shall be converted to a Base Rate Loan
either (i) on the last day of the then current Interest Period applicable to
such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund
such Loan as a Euro-Dollar Loan to such day or (ii) immediately if such Bank
shall determine that it may not lawfully continue to maintain and fund such Loan
as a Euro-Dollar Loan to such day. Interest and principal on any such Base Rate
Loan shall be payable on the same dates as, and on a pro rata basis with, the
interest and principal payable on the related Euro-Dollar Loans of the other
Banks.
Section 8.03. Increased Cost and Reduced Return. (a) If on or after the
date hereof (or, with respect to any Bank not a party hereto on the date hereof,
on or after the date on which such Bank becomes a party hereto), the adoption of
any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, 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 Bank (or
its
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Applicable Lending Office) or any LC Issuing Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency, shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding, with respect to any
Euro-Dollar Loan any such requirement included in the Euro-Dollar Reserve
Percentage), special deposit, insurance assessment or similar requirement
against assets of, deposits with or for the account of, or credit (including
letters of credit and participations therein) extended by, any Bank (or its
Applicable Lending Office) or any LC Issuing Bank or shall impose on any Bank
(or its Applicable Lending Office) or any LC Issuing Bank or the London
interbank market any other condition affecting its Euro-Dollar Loans, its Notes
or its obligation to make Euro-Dollar Loans or its obligations hereunder in
respect of Letters of Credit and the result of any of the foregoing is to
increase the cost to such Bank (or its Applicable Lending Office) or such LC
Issuing Bank of making or maintaining any Euro-Dollar Loan or issuing or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Bank (or its Applicable Lending Office) or such
LC Issuing Bank under this Agreement or under its Note with respect thereto, by
an amount deemed by such Bank or LC Issuing Bank in the good faith exercise of
its discretion to be material, then, within 15 days after demand by such Bank
(with a copy to the Administrative Agent), the Borrower shall pay to such Bank
or LC Issuing Bank such additional amount or amounts as will compensate such
Bank or LC Issuing Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof (or,
with respect to any Bank not a party hereto on the date hereof, on or after the
date on which such Bank becomes a party hereto), the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change in any such
law, rule or regulation, 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 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 capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank in the good faith exercise of
its discretion to be material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Administrative Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
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(c) Each Bank and LC Issuing Bank will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank or LC Issuing Bank to compensation
pursuant to this Section and will designate a different Applicable Lending
Office or LC Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of such Bank or LC
Issuing Bank, be otherwise disadvantageous to it. A certificate of any Bank or
LC Issuing Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder and showing in
reasonable detail the calculation thereof shall be conclusive in the absence of
manifest error. In determining such amount, such Bank or LC Issuing Bank may use
any reasonable averaging and attribution methods.
Section 8.04. Taxes. (a) For the purposes of this Section, the following
terms have the following meanings:
"TAXES" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment by the Borrower
pursuant to this Agreement or under any Note, and all liabilities with respect
thereto, excluding (i) in the case of each Bank Party, taxes imposed on its net
income, and franchise or similar taxes imposed on it, by a jurisdiction under
the laws of which it is organized or in which its principal executive office is
located or in which its Applicable Lending Office or LC Office is located and
(ii) in the case of each Bank, any United States withholding tax imposed on such
payment, but not excluding any portion of such tax that exceeds the United
States withholding tax which would have been imposed on such a payment to such
Bank under the laws and treaties in effect when such Bank first becomes a party
to this Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any Note.
(b) All payments by the Borrower to or for the account of any Bank Party
hereunder or under any Note shall be made without deduction for any Taxes or
Other Taxes; provided that, if the Borrower shall be required by law to deduct
any Taxes or Other Taxes from any such payment, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such Bank
Party receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
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Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
promptly furnish to the Administrative Agent, at its address specified in or
pursuant to Section 9.01, the original or a certified copy of a receipt
evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank Party for the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed or asserted (whether or not correctly) by any jurisdiction on
amounts payable under this Section) paid by such Bank Party and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be paid within 15 days after such Bank Party
makes demand therefor.
(d) Each Bank Party organized under the laws of a jurisdiction outside the
United States, before it signs and delivers this Agreement in the case of each
Bank Party listed on the signature pages hereof and before it becomes a Bank
Party in the case of each other Bank Party, and from time to time thereafter if
requested in writing by the Borrower (but only so long as such Bank Party
remains lawfully able to do so), shall provide each of the Borrower and the
Administrative Agent with Internal Revenue Service Form 1001 or 4224, as
appropriate, or any additional or successor forms prescribed by the Internal
Revenue Service, certifying that such Bank Party is entitled to benefits under
an income tax treaty to which the United States is a party which exempts such
Bank Party from United States withholding tax or reduces the rate of withholding
tax on payments of interest for the account of such Bank Party or certifying
that the income receivable by it pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States.
(e) For any period with respect to which a Bank Party has failed to
provide the Borrower or the Administrative Agent with the appropriate form
referred to in Section 8.04(d) (unless such failure is due to a change in
treaty, law or regulation occurring after the date on which such form originally
was required to be provided), such Bank Party shall not be entitled to
indemnification under Section 8.04(b) or 8.04(c) with respect to Taxes imposed
by the United States; provided that if a Bank Party, that is otherwise exempt
from or subject to a reduced rate of withholding tax, becomes subject to Taxes
because of its failure to deliver a form required hereunder, the Borrower shall
take such steps as such Bank Party shall reasonably request to assist such Bank
Party to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section as a result of a change in law or
treaty occurring after such Bank first became a party to this Agreement, then
such Bank
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will, at the Borrower's request, change the jurisdiction of its Applicable
Lending Office if, in the judgment of such Bank, such change (i) will eliminate
or reduce any such additional payment which may thereafter accrue and (ii) is
not otherwise disadvantageous to such Bank.
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans.
If (i) the obligation of any Bank to make, or to continue or convert outstanding
Loans as or to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or 8.04 with respect
to its Euro-Dollar Loans, and in any such case the Borrower shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this Section shall
apply to such Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for compensation no
longer exist, all Loans which would otherwise be made by such Bank as (or
continued as or converted to) Euro-Dollar Loans shall instead be Base Rate Loans
on which interest and principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks. If such Bank notifies the Borrower
that the circumstances giving rise to such suspension or demand for compensation
no longer exist, the principal amount of each such Base Rate Loan shall be
converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other Banks.
Section 8.06. Substitution of Banks. If (i) the obligation of any Bank to
make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any
Bank has demanded compensation under Section 8.03 or 8.04 (any such Bank, an
"Affected Bank"), the Borrower shall have the right, with the assistance of the
Administrative Agent, to seek a mutually satisfactory substitute bank or banks
(which may be one or more of the Banks) to purchase the Note and assume the
Revolving Credit Commitment of such Affected Bank and, upon finding such
substitute bank or banks, such Affected Bank shall sell to it its Notes and
assign its Revolving Credit Commitment, at a purchase price equal to the
aggregate outstanding principal amount of such Affected Bank's Loans plus
accrued and unpaid interest thereon.
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ARTICLE 9
Miscellaneous
Section 9.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
or similar writing) and shall be given to such party: (a) in the case of the
Borrower, any LC Issuing Bank listed on the signature pages hereof or the
Administrative Agent, at its address, facsimile number or telex number set forth
on the signature pages hereof, (b) in the case of any Bank, at its address,
facsimile number or telex number set forth in its Administrative Questionnaire
or (c) in the case of any party, at such other address, facsimile number or
telex number as such party may hereafter specify for the purpose by notice to
the Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when transmitted to the
telex number referred to in this Section and the appropriate answerback is
received, (ii) if given by facsimile, when transmitted to the facsimile number
referred to in this Section and confirmation of receipt is received, (iii) if
given by mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iv) if given by any
other means, when delivered at the address referred to in this Section; provided
that notices to the Administrative Agent or any LC Issuing Bank under Article 2
or Article 8 shall not be effective until received.
Section 9.02. No Waivers. No failure or delay by any Bank Party exercising
any right, power or privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Agents, including reasonable fees
and disbursements of Davis Polk & Wardwell, special counsel for the Agents, in
connection with the preparation and administration of the Loan Documents, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs and is continuing, all
reasonable out-of-pocket expenses incurred by each Bank Party, including
(without duplication) the fees and disbursements of outside counsel to the Banks
and the allocated cost of inside counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.
(b) The Borrower agrees to indemnify each Bank Party, their respective
affiliates and the respective directors, officers, agents and employees of the
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foregoing (each an "INDEMNITEE") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any kind
(including without limitation reasonable expenses of investigation by engineers,
environmental consultants and similar technical personnel), including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with (x) any investigative,
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
any Loan Document or any actual or proposed use of any Letter of Credit or any
proceeds of Loans hereunder or (y) arising out of, in respect of or in
connection with any and all Environmental Liabilities; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a court
of competent jurisdiction. Without limiting the generality of the foregoing, the
Borrower hereby waives all rights for contribution or any other rights of
recovery with respect to liabilities, losses, damages, costs and expenses
arising under or related to Environmental Laws that it might have by statute or
otherwise against any Bank.
Section 9.04. Set-Offs. (a) If (i) an Event of Default has occurred and is
continuing and (ii) Banks holding more than 50% in aggregate unpaid principal
amount of the Loans have requested the Administrative Agent to declare the Loans
to be immediately due and payable pursuant to Section 6.01, or the Loans have
become immediately due and payable without notice as provided in Section 6.01,
then each Bank is hereby authorized by the Borrower at any time and from time to
time, to the extent permitted by applicable law, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to set off and apply
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Bank to or for the
account of the Borrower against any obligations of the Borrower to such Bank now
or hereafter existing under this Agreement, regardless of whether any such
deposit or other obligation is then due and payable or is in the same currency
or is booked or otherwise payable at the same office as the obligation against
which it is set off and regardless of whether such Bank shall have made any
demand for payment under this Agreement. Each Bank agrees promptly to notify the
Borrower after any such set-off and application made by such Bank; provided that
any failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Banks under this subsection are in addition to
any other rights and remedies which the Banks may have.
(b) Each Bank agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest then due with respect to the Loans and
participations in LC Reimbursement Obligations held by it which is greater than
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the proportion received by any other Bank in respect of the aggregate amount of
principal and interest then due with respect to the Loans and participations in
LC Reimbursement Obligations held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Loans
and participations in LC Reimbursement Obligations held by the other Banks, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Loans and participations
in LC Reimbursement Obligations held by the Banks shall be shared by the Banks
pro rata; provided that nothing in this Section shall impair the right of any
Bank to exercise any right of set-off or counterclaim it may have and to apply
the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness in respect of the Loans and LC
Reimbursement Obligations. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Loan or LC Reimbursement Obligation, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
Section 9.05. Amendments and Waivers. (a) Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of either Agent or any LC Issuing Bank are affected thereby, by
such Agent or such LC Issuing Bank, as relevant); provided that no such
amendment or waiver shall:
(i) unless signed by all the Banks of the relevant Class, (A)
reduce the principal of or rate of interest on any Term Loan or (B)
postpone the date fixed for any payment of principal of or interest on any
Term Loan,
(ii) unless signed by all the Banks, (A) increase or decrease the
Revolving Credit Commitment of any Bank (except for a ratable decrease in
the Revolving Commitments of all the Banks), (B) reduce the principal of or
rate of interest on any Revolving Credit Loan or (C) postpone the date
fixed for any payment of any LC Reimbursement Obligation or any principal
of or interest on any Revolving Credit Loan or any overdue LC Reimbursement
Obligation or any fees payable with respect to Letters of Credit or the
Revolving Credit Commitments or for the termination of any Revolving Credit
Commitment, or
(iii) unless signed by all the Banks, (i) change the percentage of
the Revolving Credit Commitments or of the aggregate unpaid principal
amount of the Loans of any Class, (ii) the number of Banks, which shall be
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required for the Banks or any of them to take any action under this Section
or any other provision of this Agreement, (iii) release all or
substantially all of the Subsidiary Guarantors from the Subsidiary
Guarantee or (iv) effect or permit the release of all or substantially all
of the Collateral.
(b) Any provision of the Collateral Documents or the Subsidiary Guarantee
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by each Obligor party thereto and the Administrative Agent with
the consent of the Required Banks; provided that no such amendment or waiver
shall, unless signed by all the Banks, effect or permit a release of all or
substantially all of the Collateral or release all or substantially all of the
Subsidiary Guarantors from the Subsidiary Guarantee.
Section 9.06. Successors; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all the Bank Parties.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Revolving
Credit Commitment or any or all of its Loans and participations in Letters of
Credit. If a Bank grants any such participating interest to a Participant,
whether or not upon notice to the Borrower and the Administrative Agent, such
Bank shall remain responsible for the performance of its obligations hereunder,
and the Borrower, the LC Issuing Banks and the Administrative Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower and the LC Issuing Banks hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such participation agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of this Agreement described in clause (i), (ii) or (iii) of Section 9.05(a)
without the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by Section
9.06(c) or 9.06(d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection.
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part of all, of (i)
its
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Revolving Credit Commitment and its Revolving Credit Loans or (ii) its Term
Loans, and such Assignee shall assume such rights and obligations, pursuant to
an Assignment and Assumption Agreement substantially in the form of Exhibit H
hereto signed by such Assignee and such transferor Bank, with (and subject to)
the subscribed consent of the Borrower (which shall not be unreasonably
withheld), the Administrative Agent and, solely with respect to any assignments
of the Revolving Credit Commitments, the LC Issuing Banks; provided that (i)
after giving effect to any proposed assignment, the Credit Exposure of the
transferor Bank shall be equal to $0 or at least $1,000,000 and the Credit
Exposure of the proposed Assignee shall be at least equal to $5,000,000 and (ii)
if a proposed Assignee is an affiliate of a transferor Bank or was a Bank
immediately before such assignment, no such consent of the Borrower, the
Administrative Agent or, where applicable, the LC Issuing Banks, shall be
required. When such instrument has been signed and delivered by the parties
thereto and recorded as provided in Section 2.16 and such Assignee has paid to
such transferor Bank the purchase price agreed between them, such Assignee shall
be a Bank party to this Agreement and shall have all the rights and obligations
of a Bank with a Revolving Credit Commitment and/or Loans and LC Reimbursement
Obligations as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection, the transferor Bank,
the Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to the Assignee. In connection with any
such assignment, the transferor Bank shall pay to the Administrative Agent an
administrative fee for processing such assignment in the amount of $3,500. If
the Assignee is not incorporated under the laws of the United States or a State
thereof, it shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of United States
federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Note to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
83
<PAGE>
Section 9.07. No Reliance on Margin Stock. Each of the Banks represents to
each Agent and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
Section 9.08. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
Section 9.09. Counterparts; Integration; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.11. Confidentiality. Each Bank agrees to hold all non-public
information obtained pursuant to the requirements of the Loan Documents in
accordance with its customary procedure for handling confidential information of
this nature and in accordance with safe and sound banking practices; provided
that nothing herein shall prevent any Bank from disclosing such information (i)
to any affiliate of such Bank or to any other Bank or to the Agent, (ii) upon
the order of any court or administrative agency, provided that if permitted,
such Bank shall, as soon as reasonably practical in advance of such disclosure,
advise the Borrower of such disclosure, (iii) upon the request or demand of any
financial institution regulatory agency or authority having jurisdiction over
such Bank, (iv) which had been publicly disclosed other than as a result of a
disclosure by the Agent or any Bank prohibited by this Agreement or (to the
knowledge of such Bank) by a third party in violation of a confidentiality
agreement with the Borrower, (v) in
84
<PAGE>
connection with any litigation to which the Agent, any Bank or its subsidiaries
or Parent may be a party, (vi) to the extent necessary in connection with the
exercise of any remedy hereunder, (vii) to such Bank's or Agent's legal counsel
and independent auditors and (viii) subject to provisions substantially similar
to those contained in this Section, to any actual or proposed Participant or
Assignee.
85
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
REPUBLIC GROUP INCORPORATED
By: /s/ Doyle R. Ramsey
---------------------------------------------------
Title: Vice President - Finance
Address: 811 East 30th Street
Hutchinson, KS 67503
Facsimile: 316-727-2727
Web site: www.republic-group.com
NATIONSBANK, N.A.
By: /s/ Robert K. McCall
---------------------------------------------------
Title: Senior Vice President
BANK OF AMERICA TEXAS, N.A.
By: /s/ Donald P. Hellman
---------------------------------------------------
Title: Vice President
COMERICA BANK - TEXAS
By: /s/ David Terry
---------------------------------------------------
Title: Vice President
86
<PAGE>
COMMERCE BANK, N.A.
By: /s/ Jeffery R. Gray
---------------------------------------------------
Title: Vice President
COMPASS BANK
By: /s/ Jerry Hopkins
---------------------------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Scott Santa Cruz
---------------------------------------------------
Title: Vice President
MERCANTILE BANK
By: /s/ Sara E. Lancaster
---------------------------------------------------
Title: Assistant Vice President
UMB BANK N.A.
By: /s/ Terry A. Dierks
---------------------------------------------------
Title: Senior Vice President
87
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Stephen J. Hannan
---------------------------------------------------
Title: Vice President
PLAINS NATIONAL BANK
By: /s/ Darrell W. Adams
---------------------------------------------------
Title: Senior Vice President
88
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Syndication Agent
By: /s/ Stephen J. Hannan
---------------------------------------------------
Title: Vice President
Address: 60 Wall Street
New York, NY 10260
NATIONSBANK, N.A.,
as Administrative Agent
By: /s/ Robert K. McCall
---------------------------------------------------
Title: Senior Vice President
Address: 14 West 10th Street
Kansas City, MO
64105
Facsimile: (816) 979-7561
89
<PAGE>
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
BANK COMMITMENT
- ----------------------------------------- ----------------------
<S> <C>
NationsBank, N.A. $ 9,375,000
Bank of America Texas, N.A. $ 9,375,000
Comerica Bank - Texas $ 9,375,000
Commerce Bank, N.A. $ 9,375,000
Compass Bank $ 9,375,000
First Union National Bank $ 9,375,000
Mercantile Bank $ 9,375,000
UMB Bank, N.A. $ 9,375,000
Morgan Guaranty Trust Company of New York $ 5,000,000
Plains National Bank $ 5,000,000
-----------
Total $85,000,000
</TABLE>
90
<PAGE>
PRICING SCHEDULE
"BASE RATE MARGIN" means on any date the rate per annum set forth below in
the column corresponding to the Pricing Level that applies on such day:
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- ---------------- ------- -------- --------- -------- -------
Base Rate Margin ----- ----- 0.25% 0.50% 0.75%
"COMMITMENT FEE RATE" means on any date the rate per annum set forth below
in the column corresponding to the Pricing Level that applies on such day:
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- ------------------- ------- -------- --------- -------- -------
Commitment Fee Rate 0.30% 0.35% 0.375% 0.375% 0.40%
"EURO-DOLLAR MARGIN" means on any date the rate per annum set forth below
in the column corresponding to the Pricing Level that applies on such day:
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- ------------------ ------- -------- --------- -------- -------
Euro-Dollar Margin 0.75% 1.00% 1.25% 1.50% 1.75%
"LC FEE RATE" means on any date the rate per annum set forth below in the
column corresponding to the Pricing Level that applies on such day:
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- --------------- ------- -------- --------- -------- -------
LC Fee Rate 0.75% 1.00% 1.25% 1.50% 1.75%
1
<PAGE>
For purposes of this Schedule, the following terms have the following
meanings:
"APPLICABLE LEVERAGE RATIO" means, at any date, the ratio of (i)
Consolidated Debt at the last day (the "Measurement Date") of the Fiscal Quarter
most recently ended on or prior to such date with respect to which the Borrower
has delivered the financial statements required to be delivered by it pursuant
to Section 5.01(a) or 5.01(b), as the case may be, to (ii) Consolidated EBITDA
for the period of four consecutive Fiscal Quarters ended on the Measurement
Date; provided that for each day from and including the date on which the
Borrower is required to deliver the financial statements described in Section
5.01(a) or 5.01(b), as the case may be, for its most recently ended Fiscal
Quarter to but excluding the date on which such financial statements are so
delivered, the Applicable Leverage Ratio shall be deemed to exceed 2.75:1.
"LEVEL I PRICING" applies on or after the Conversion Date at any date if at
such date the Applicable Leverage Ratio is less than or equal to 1.0:1.
"LEVEL II PRICING" applies on or after the Conversion Date at any date if
at such date (i) the Applicable Leverage Ratio is less than or equal to 1.5:1
and (ii) Level I Pricing does not apply.
"LEVEL III PRICING" applies on or after the Conversion Date at any date if
at such date (i) the Applicable Leverage Ratio is less than or equal to 2.0:1
and (ii) neither Level I Pricing nor Level II Pricing applies.
"LEVEL IV PRICING" applies at any date if at such date (i) the Applicable
Leverage Ratio is less than or equal to 2.5:1 and (ii) none of Level I Pricing,
Level II Pricing and Level III Pricing applies.
"LEVEL V PRICING" applies on any day if no other Pricing Level applies on
such day.
"PRICING LEVEL" refers to the determination of which of Level I, Level II,
Level III, Level IV or Level V Pricing applies on any day.
2
<PAGE>
SCHEDULE 3.01
CLOSING DATE COLLATERAL DOCUMENTS
Pledge Agreement between Republic Group Incorporated and
NationsBank, N.A., as Administrative Agent
Pledge Agreement between Republic Paperboard Company and
NationsBank, N.A., as Administrative Agent
Pledge Agreement between Republic Gypsum Company and
NationsBank, N.A., as Administrative Agent
Security Agreement between Republic Group Incorporated and
NationsBank, N.A., as Administrative Agent
Security Agreement between Republic Paperboard Company and
NationsBank, N.A., as Administrative Agent
Security Agreement between Republic Paperboard of West Virginia and
NationsBank, N.A., as Administrative Agent
Security Agreement between Republic Gypsum Co. and
NationsBank, N.A., as Administrative Agent
Security Agreement between Hollis & Eastern and
NationsBank, N.A., as Administrative Agent
Mortgage between Republic Paperboard Company and
NationsBank, N.A., as Agent
Uniform Commercial Code Financing Statements as follows:
Hollis & Eastern Railroad Company- Oklahoma Central Filing
Secretary of State of Kansas
LaPorte Minerals Corporation- Secretary of State of Kansas
Resource Control, Inc.- Secretary of State of Kansas
Republic Gypsum Company- Secretary of State of Alabama
Secretary of State of Kansas
<PAGE>
Secretary of State of Ohio
Hamilton County, Ohio
Oklahoma Central Filing
Republic Group Incorporated- Secretary of State of Kansas
Republic Recycling Company- Secretary of State of Kansas
Republic Paperboard Company- Secretary of State of Kansas
Secretary of State of Colorado
Secretary of State of Missouri
Jackson, Missouri
Oklahoma Central Filing
Republic Paperboard Company of Secretary of State of Kansas
West Virginia- Secretary of State of West Virginia
2
<PAGE>
SCHEDULE 4.05
PENDING LITIGATION
Reference is made to the complaint filed in October 1997 by the West
Virginia Division of Environmental Protection against Republic Paperboard
Company of West Virginia, a subsidiary of the Borrower, as described in
"Business -- Environmental Regulation" and "Business -- Legal Proceedings" in
that certain Offering Memorandum of the Borrower dated July 10, 1998 relating to
the Subordinated Notes (the "Offering Memorandum"), which description is
incorporated herein by reference.
3
<PAGE>
SCHEDULE 4.07
ENVIRONMENTAL LIABILITIES
Reference is made to (a) the complaint filed in October 1997 by the West
Virginia Division of Environmental Protection against Republic Paperboard
Company of West Virginia, a subsidiary of the Borrower, as described in
"Business -- Environmental Regulation" and "Business -- Legal Proceedings" in
the Offering Memorandum, and (b) the discovery of subsurface petroleum
hydrocarbons on or near the recycled paperboard mill in Commerce City, Colorado
operated by a subsidiary of the Borrower, as described in "Business --
Environmental Regulation" in the Offering Memorandum, which descriptions are
incorporated herein by reference.
<PAGE>
SCHEDULE 5.03
PART I - PHYSICAL DAMAGE INSURANCE
See Attached Certificate.
PART II - PUBLIC LIABILITY INSURANCE
See Attached Certificate.
<PAGE>
SCHEDULE 5.09
EXISTING LIENS
1. Republic Recycling Company
--------------------------
a. Lease Filing No. 962003521 in Colorado between Republic Recycling Company
and Finzer Leasing, Inc.; interest in Ricoh copier. Filed January 12,
1996.
b. Lease Filing No. 962096018 in Colorado between Republic Recycling Company
and Finzer Leasing, Inc.; interest in Ricoh facsimile. Filed December 24,
1996.
c. Lease Filing No. 2460840 in Missouri between Republic Recycling Company,
as Lessee and Midcontinent Leasing Services, Inc., and assigned to Bank of
Blue Valley; interest in Sharpe copier and cabinet. Filed October 6, 1994.
2. Republic Paperboard Company
---------------------------
a. Filing No. 2157979 in Kansas between Republic Paperboard Company and
Materials Handling Equipment Company, and assigned to Hyster Credit
Company; interest in Hyster lift truck. Filed July 21, 1995.
b. Lease Filing No. 2217273 in Kansas between Republic Paperboard Company, as
Lessee and Intermountain Lift Trucks, Inc., as Lessor, and assigned to
Yale Financial Services, Inc.; interest in New Yale forklift. Field
February 9, 1996.
c. Lease Filing No. 2237193 in Kansas between Republic Paperboard Company, as
Lessee and Intermountain Lift Trucks, Inc., as Lessor, and assigned to
Yale Financial Services, Inc.; interest in New Cascade rotater. Filed
April 15, 1996.
3. Resource Control, Inc.
----------------------
a. Filing No. 1378285 in Kansas between Resource Control, Inc. and Kansas
State Bank; interest in 1979 International truck and aluminum sorter.
Filed October 31, 1988 and continued under File No. 1914861 filed May 28,
1993 (Financing Statement lapsed).
<PAGE>
b. Filing No. 1991890 in Kansas between Resource Control, Inc. and Kansas
State Bank; interest in specific equipment. Filed February 9, 1994.
c. Filing No. 2062295 in Kansas between Resource Control, Inc. and Kansas
State Bank; interest in specific equipment. Filed September 21, 1994.
d. Filing No. 2077353 in Kansas between Resource Control, Inc. and Kansas
State Bank; interest in specific equipment. Filed November 8, 1994.
4. Republic Gypsum Company
-----------------------
a. Filing No. 0032172 in Oklahoma between Republic Gypsum Company and Van
Keppel Liftruck, and assigned to Hyster Credit Company; interest in two
(2) Hyster fork trucks. Filed June 23, 1998.
2
<PAGE>
SCHEDULE 5.10
EXISTING DEBT
None.
<PAGE>
SCHEDULE 5.21
EXISTING RESTRICTIONS
That certain Indenture dated as of July 15, 1998 between the Borrower and UMB
Bank, N.A., as Trustee, relating to the Subordinated Notes.
<PAGE>
EXHIBIT A
NOTE
New York, New York
July , 1998
For value received, Republic Group Incorporated, a Delaware corporation
(the "BORROWER"), promises to pay to the order of ____________________ (the
"BANK"), for the account of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below on the maturity date provided for in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of each such Loan on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of NationsBank, N.A., 14 West 10th Street, Kansas City, MO,
64105.
All Loans made by the Bank, the respective types thereof and all repayments
of the principal thereof shall be recorded by the Bank and, if the Bank so
elects in connection with any transfer or enforcement hereof, appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding may be endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make (or any error in making) any such
recordation or endorsement shall not affect the Borrower's obligations hereunder
or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as
of July 15, 1998 among Republic Group Incorporated, the Banks party thereto, the
LC Issuing Banks referred to therein, Morgan Guaranty Trust Company of New York,
as Syndication Agent, and NationsBank, N.A., as Administrative Agent (as the
same may be amended from time to time, the "CREDIT AGREEMENT"). Terms defined in
the Credit Agreement are used herein with the same meanings. Reference is made
to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
REPUBLIC GROUP INCORPORATED
By:_________________________________
Name:
Title:
2
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------
AMOUNT OF
AMOUNT OF TYPE OF PRINCIPAL
DATE LOAN LOAN REPAID NOTATION MADE BY
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
3
<PAGE>
EXHIBIT B
================================================================================
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
dated as of July 15, 1998
from
REPUBLIC PAPERBOARD COMPANY
a Kansas corporation,
the Mortgagor,
to
NATIONSBANK, N.A.,
a national banking association,
as Agent,
the Mortgagee
Property:
Lawton, Oklahoma
County of Comanche
================================================================================
This Instrument Contains After-acquired Property Provisions and Secures
Obligations Containing Provisions for Changes in Interest Rates. This Instrument
Also Secures Future Advances.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE, ASSIGNMENT OF LEASES AND
- ---------------------------------------------------------------------------
RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT. A POWER OF SALE MAY ALLOW
- -----------------------------------------------------------------------------
THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT
- -------------------------------------------------------------------------------
IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE,
- --------------------------------------------------------------------------
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT.
- ---------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS/1/
<TABLE>
<S> <C>
Preamble............................................................ 1
Recitals............................................................ 1
Granting Clauses.................................................... 1
Granting Clause I. Real Estate............................. 2
Granting Clause II. Improvements............................ 2
Personal Property and Equipment......... 3
Granting Clause III. Appurtenant Rights...................... 3
Granting Clause IV. Agreements.............................. 4
Granting Clause V. Leases.................................. 4
Granting Clause VI. Rents, Issues and Profits............... 4
Granting Clause VII. Permits................................. 5
Granting Clause VIII. Deposits................................ 5
Granting Clause IX. Proceeds and Awards..................... 5
Granting Clause X. Further Property........................ 5
ARTICLE 1
Definitions and Interpretation
Section 1.01. Definitions................................. 6
Section 1.02. Interpretation.............................. 11
ARTICLE 2
Representations, Warranties and Covenants
Section 2.01. Title to Mortgaged Property................. 12
Section 2.02. Impositions................................. 13
Section 2.03. Legal and Insurance Requirements............ 13
Section 2.04. Status and Care of the Property............. 14
Section 2.05. Liens....................................... 15
Section 2.06. Transfer.................................... 15
Section 2.07. Permitted Contests.......................... 16
ARTICLE 3
Insurance, Casualty and Condemnation
Section 3.01. Insurance................................... 16
Section 3.02. Casualty.................................... 17
</TABLE>
___________________
/1/ The Table of Contents is not part of this Mortgage.
i
<PAGE>
<TABLE>
<S> <C>
Section 3.03. Condemnation................................. 17
Section 3.04. Insurance Proceeds and Awards................ 18
ARTICLE 4
Expenses and Indemnification
Section 4.01. Expenses..................................... 18
Section 4.02. Indemnification.............................. 18
Section 4.03. Obligation to Reimburse...................... 19
Section 4.04. Increased Costs.............................. 19
ARTICLE 5
Defaults, Remedies and Rights
Section 5.01. Events of Default............................ 19
Section 5.02. Remedies..................................... 19
Section 5.03. Waivers by the Mortgagor..................... 23
Section 5.04. Jurisdiction and Process..................... 24
Section 5.05. Sales........................................ 24
Section 5.06. Proceeds..................................... 27
Section 5.07. Assignment of Leases......................... 27
Section 5.08. Dealing with the Mortgaged Property.......... 29
Section 5.09. Information and Right of Entry............... 29
Section 5.10. Right to Perform Secured Obligations......... 30
Section 5.11. Right to Make Claims......................... 30
ARTICLE 6
Security Agreement
Section 6.01. Security Agreement........................... 31
Section 6.02. Fixture Filing............................... 32
ARTICLE 7
Miscellaneous
Section 7.01. Mortgagee as Agent........................... 33
Section 7.02. Release of Mortgaged Property................ 33
Section 7.03. Notices...................................... 34
Section 7.04. Modification and Waiver...................... 34
Section 7.05. Severability................................. 34
Section 7.06. Binding Effect............................... 34
Section 7.07. Governing Law................................ 35
Section 7.08. Revolving Loans.............................. 35
Section 7.09. Subrogation.................................. 35
Section 7.10. Trust Fund................................... 36
Exhibit A Description of the Land
Exhibit B Permitted Encumbrances
</TABLE>
ii
<PAGE>
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING
STATEMENT
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING
STATEMENT (this "MORTGAGE") dated as of July 15, 1998 from REPUBLIC PAPERBOARD
COMPANY, a Kansas corporation, having an address at 811 East 30th Street,
Hutchinson, Kansas 67503 (the "MORTGAGOR"), to NATIONSBANK, N.A., a national
banking association, not in its individual capacity but in its limited capacity
as Agent (defined below), having an address at Corporate Center, 100 N. Tryon
Street, 7th Floor, NC10070701, Charlotte, North Carolina 28255 (the
"MORTGAGEE").
WITNESSETH:/2/
RECITALS
WHEREAS:
A. The Mortgagor is the owner of the Land described in Exhibit A and the
Improvements located thereon.
B. Reference is hereby made to that certain Credit Agreement (as amended
and in effect from time to time, the "CREDIT AGREEMENT") dated as of July 15,
1998 among Republic Group Incorporated (the "BORROWER"), the Banks referred to
therein, the LC Issuing Banks referred to therein, Morgan Guaranty Trust Company
of New York, as Syndication Agent, and NationsBank, N.A., as Administrative
Agent (the "AGENT"). Pursuant to the Credit Agreement, the Banks have extended,
or may from time to time extend, Loans (including the Term Loans and the
Revolving Credit Loans) and the LC Issuing Banks have issued, or may from time
to time issue, Letters of Credit, and the Borrower has or may hereafter execute
and deliver certain notes (herein collectively called the "NOTES") evidencing
the Borrower's obligations to repay the Loans, and have agreed in Section 2.14
of the Credit Agreement to pay the LC Reimbursement Obligations.
______________________
/2/ Capitalized terms are defined in, or are referenced in, Section 1.01.
<PAGE>
C. Reference is hereby made to that certain Subsidiary Guarantee dated as
of the date hereof (as amended and in effect from time to time, the ("Guaranty")
from the Subsidiary Guarantors (including Mortgagor) to the Agent.
D. The maximum principal indebtedness that may be secured by this Mortgage
is $85,000,000. The scheduled maturity date of the latest to mature of the
Secured Obligations (as defined herein) is July 15, 2006.
Granting Clauses
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, for the purpose of securing the due and punctual payment,
performance and observance of the Secured Obligations, and intending to be bound
hereby, the Mortgagor (a) does hereby MORTGAGE, GRANT, BARGAIN, SELL, CONVEY,
ASSIGN, TRANSFER and WARRANT WITH POWER OF SALE to the Mortgagee and its
successors as Agent for the benefit of Secured Parties, with power of sale and
right of entry as hereinafter provided, all of the property and rights described
in the following Granting Clauses (all of which property and rights are
collectively called the "MORTGAGED PROPERTY"), to the extent not covered by the
Uniform Commercial Code (hereinafter sometimes called the "MORTGAGED PROPERTY"),
and (b) does hereby GRANT and WARRANT to the Mortgagee and its successors as
Agent for the benefit of the Secured Parties, a continuing first security
interest in and to the Mortgaged Property to the extent covered by the Uniform
Commercial Code (hereinafter sometimes called the "COLLATERAL"), to wit:
Granting Clause I.
Land. All estate, right, title and interest of the Mortgagor in, to, under
or derived from those certain lots, pieces, tracts or parcels of land located in
the County of Comanche, State of Oklahoma, more particularly described in
Exhibit A (the "LAND").
Granting Clause II.
Improvements. All estate, right, title and interest of the Mortgagor in,
to, under or derived from all buildings, structures and other improvements of
every kind and description now or hereafter located on the Land, including all
parking areas, roads, driveways, walks, fences, walls, berms, recreation
facilities, drainage facilities, lighting facilities and other site
improvements, all water, sanitary and storm sewer, drainage, electricity, steam,
gas, telephone and other utility equipment and facilities, all plumbing,
lighting, heating, ventilating,
2
<PAGE>
air-conditioning, refrigerating, incinerating, compacting, fire protection and
sprinkler, surveillance and security, vacuum cleaning, public address and
communications equipment and systems, all kitchen and laundry appliances, all
walls, partitions, floor coverings, screens, awnings, elevators, escalators,
motors, machinery, pipes, fittings and other items of equipment and personal
property of every kind and description now or hereafter located on the Land or
attached to the improvements which by the nature of their location thereon or
attachment thereto are real property or fixtures under Applicable Laws; and
including all materials intended for the construction, reconstruction, repair,
replacement, alteration, addition or improvement of or to such buildings,
equipment, fixtures, structures and improvements, all of which materials shall
be deemed to be part of the Mortgaged Property immediately upon delivery thereof
on the Land and to be part of the improvements immediately upon their
incorporation therein (the foregoing being collectively the "IMPROVEMENTS").
Personal Property and Equipment. All estate, right, title and interest of
the Mortgagor in, to, under or derived from all articles of personal property
and equipment of every kind and description now or hereafter located on or used
or useful in connection with the use or operation of the Property (as defined
below) which are not real property under Applicable Laws; including all
partitions, screens, awnings, shades, blinds, curtains, draperies, carpets,
rugs, all plumbing, lighting, heating, ventilating, air-conditioning,
refrigerating, incinerating, compacting, fire protection and sprinkler,
surveillance and security, vacuum cleaning, public address and communications
equipment and systems, all chattels, furnishings, furniture, pictures,
paintings, statues, works of art, decorations, accessories, apparatus,
materials, supplies, implements, tools, china, glassware, silverware, pots,
pans, utensils, linens, stoves, refrigerators, freezers and other devices,
appliances and equipment; and including all types of property included within
the term "equipment" as defined in the Uniform Commercial Code (except vehicles,
boats or airplanes) now or hereafter located on the Property and now or
hereafter used or useful in connection with the use or operation of the
Property, all of which shall be deemed to be part of the Mortgaged Property
immediately upon the location thereof on the Land (the foregoing being
collectively the "EQUIPMENT"; the Land, the Improvements, the Equipment and the
Appurtenant Rights (as defined below) being collectively the "PROPERTY").
Granting Clause III
Appurtenant Rights. All estate, right, title and interest of the Mortgagor
in, to, under or derived from all tenements, hereditaments and appurtenances now
or hereafter relating to the Property; the streets, roads, sidewalks and alleys
abutting the Land; all strips and gores within or adjoining the Land; all land
in the bed of any body of water adjacent to the Land; all land adjoining the
Land created by
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artificial means or by accretion; all air space and rights to use said air space
above the Land; all development or similar rights appurtenant to the Land; all
rights of ingress and egress now or hereafter appertaining to the Property; all
easements and rights of way now or hereafter appertaining to the Property; and
all royalties and other rights appertaining to the use and enjoyment of the
Property, including alley, party walls, drainage, crop, timber, agriculture,
horticulture, oil, gas and other mineral, riparian and other water rights (the
foregoing being collectively the "APPURTENANT RIGHTS").
Granting Clause IV.
Agreements. All estate, right, title and interest of the Mortgagor in, to,
under and derived from all insurance policies (including all unearned premiums
and dividends thereunder), title insurance policies, guarantees and warranties
relating to the Property and all supply and service contracts for water,
sanitary and storm sewer, drainage, electricity, steam, gas, telephone and other
utilities relating to the Property and all other contracts and agreements
affecting or relating to the use, enjoyment or occupancy of the Property (the
foregoing being collectively the "AGREEMENTS").
Granting Clause V.
Leases. All estate, right, title and interest of the Mortgagor in, to,
under and derived from all Leases now or hereafter in effect, whether or not of
record, for the use or occupancy of all or any part of the Property, together
with all amendments, supplements, consolidations, replacements, extensions,
renewals and other modifications of any thereof; and together with all
guarantees of any of the obligations of the tenants under any of the Leases; and
together with all Security Deposits given by any tenants under any of the
Leases.
Granting Clause VI.
Rents, Issues and Profits. All estate, right, title and interest of the
Mortgagor in, to, under or derived from all rents, royalties, issues, profits,
receipts, revenue, income and other benefits now or hereafter, including during
any period of redemption, accruing with respect to the Property; all rents and
other sums now or hereafter, including during any period of redemption, payable
pursuant to the Leases; all other sums now or hereafter, including during any
period of redemption, payable with respect to the use, occupancy, operation or
control of the Property; and all other claims, rights and remedies now or
hereafter, including during any period of redemption, belonging to or accruing
with respect to the Property, including fixed, additional and percentage rents,
occupancy charges, security deposits, parking, maintenance, common area, tax,
insurance,
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utility and service charges and contributions (whether collected under the
Leases or otherwise), proceeds of sale of electricity, gas, heating, air
conditioning and other utilities and services (whether collected under the
Leases or otherwise), oil, gas and mineral royalties and deficiency rents and
liquidated damages following default or cancellation (the foregoing rents and
other sums described in this Granting Clause being collectively the "RENTS"),
all of which the Mortgagor hereby irrevocably directs be paid to the Mortgagee,
subject to Section 507, to be held, applied and disbursed as provided in this
Mortgage.
Granting Clause VII
Permits. To the extent permitted by Applicable Laws, all estate, right,
title and interest of the Mortgagor in, to, under or derived from all licenses,
authorizations, certificates, variances, concessions, grants, franchises,
consents, approvals and other permits now or hereafter appertaining to the
Property (the foregoing being collectively the "PERMITS").
Granting Clause VII
Deposits. All estate, right, title and interest of the Mortgagor in, to,
under or derived from all amounts deposited with the Mortgagee hereunder,
including all insurance proceeds and awards, and including all notes,
certificates of deposit, securities and other investments relating thereto and
all interest, dividends and other income thereon, proceeds thereof and rights
relating thereto (the foregoing being collectively the "DEPOSITS").
Granting Clause IX.
Proceeds and Awards. All estate, right, title and interest of the Mortgagor
in, to, under or derived from all proceeds of any sale, transfer, financing,
refinancing or conversion into cash or liquidated claims, whether voluntary or
involuntary, of any of the Mortgaged Property, including all insurance proceeds,
all awards, all title insurance proceeds under any title insurance policy now or
hereafter held by the Mortgagor, and all rights, dividends and other claims of
any kind whatsoever (including damage, secured, unsecured, priority and
bankruptcy claims) now or hereafter relating to any of the Mortgaged Property,
all of which the Mortgagor hereby irrevocably directs be paid to the Mortgagee
to the extent provided hereunder and subject to Section 304, to be held, applied
and disbursed as provided in this Mortgage.
Granting Clause X.
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Further Property. All greater estate, right, title and interest of the
Mortgagor in, to, under or derived from the Mortgaged Property hereafter
acquired by the Mortgagor, and all right, title and interest of the Mortgagor
in, to, under or derived from all extensions, improvements, betterments,
renewals, substitutions and replacements of, and additions and appurtenances to,
any of the Mortgaged Property hereafter acquired by or released to the Mortgagor
or constructed or located on, or attached to, the Property, in each case,
immediately upon such acquisition, release, construction, location or
attachment, without any further conveyance, mortgage, assignment or other act by
the Mortgagor; and all estate, right, title and interest of the Mortgagor in,
to, under or derived from any other property and rights which are, by the
provisions of the Loan Documents, required to be subjected to the Lien hereof;
and all right, title and interest of the Mortgagor in, to, under or derived from
all other property and rights which are by any instrument or otherwise subjected
to the Lien hereof by the Mortgagor or by anyone acting on its behalf.
TO HAVE AND TO HOLD the Mortgaged Property, together with all estate,
right, title and interest of the Mortgagor and anyone claiming by, through or
under the Mortgagor in, to, under or derived from the Mortgaged Property and all
rights and appurtenances relating thereto, to the Mortgagee and its successors
as Agent forever, subject to Permitted Encumbrances.
THE MORTGAGOR ADDITIONALLY COVENANTS AND AGREES WITH THE MORTGAGEE AS
FOLLOWS:
ARTICLE 1
Definitions and Interpretation
Section 1.01. Definitions. (a) Capitalized terms used in this Mortgage,
but not otherwise defined herein, are defined in, or are defined by reference
in, the Credit Agreement and have the same meanings herein as therein.
(b) In addition, in this Mortgage, unless otherwise specified, the
following terms have the following meanings:
"AGREEMENTS" is defined in Granting Clause.
"APPLICABLE LAWS" means all applicable laws, codes, statutes, rules,
ordinances, regulations, certificates, orders, interpretations, licenses
and permits of any governmental authority, agency, board, commission or
court having jurisdiction.
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"APPURTENANT RIGHTS" is defined in Granting Clause.
"AWARDS" means at any time, all awards or payments paid or payable with
respect to any Condemnation or any agreement with any condemning authority
which has been made in settlement of any proceeding relating to a
Condemnation.
"BANKRUPTCY CODE" means the Bankruptcy Code of 1978, as amended.
"CASUALTY" means any damage to, or destruction of, the Property by reason
of fire or any other cause or event.
"COLLATERAL" is defined in the Granting Clauses.
"CONDEMNATION" means any condemnation or other taking or temporary or
permanent requisition of the Property, any interest therein or right
appurtenant thereto, or any change of grade affecting the Property as the
result of the exercise of any right of condemnation or eminent domain. A
Transfer in lieu or anticipation of Condemnation shall be deemed to be a
Condemnation.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEPOSITS" is defined in Granting Clause.
"EQUIPMENT" is defined in Granting Clause.
"IMPOSITIONS" means all taxes (including real estate taxes and sales and
use taxes), assessments (including all assessments for public improvements
or benefits, whether or not commenced or completed prior to the date
hereof), water, sewer or other rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges, in each case whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereon), which at any time may be assessed, levied,
confirmed or imposed on or in respect of, or be a Lien upon, (i) the
Property, any other Mortgaged Property or any interest therein, (ii) any
occupancy, use or possession of, or activity conducted on, the Property,
(iii) the Rents from the Property or the use or occupancy thereof, or (iv)
this Mortgage, excepting however, the Oklahoma Real Estate Mortgage Tax.
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"IMPROVEMENTS" is defined in Granting Clause.
"INSURANCE PROCEEDS" means, at any time, all insurance proceeds or
payments to which the Mortgagor may be or become entitled by reason of any
Casualty under the insurance policies maintained by the Mortgagor pursuant
to the Credit Agreement, plus all insurance proceeds and payments to which
the Mortgagor may be or become entitled by reason of any Casualty under any
other insurance policies or coverages maintained by the Mortgagor with
respect to the Property.
"INSURANCE REQUIREMENTS" means all provisions of the insurance policies
and coverages required to be maintained pursuant to the Credit Agreement
with respect to the Property, all requirements of the issuer of any of such
insurance policies and all orders, rules, regulations and any other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to the Property, any adjoining
vaults, sidewalks, parking areas or driveways or any use or condition
thereof.
"INTEREST RATE" means for any day, the lesser of (i) a per annum amount
equal to the sum of the Applicable Margin plus the rate otherwise
applicable to Base Rate Loans on each day, or (ii) the maximum rate
permitted under Applicable Law.
"LAND" is defined in Granting Clause.
"LEASE" means any lease, tenancy, subtenancy, license, franchise,
concession or other occupancy agreement relating to the Property, together
with any guarantee of the obligations of the landlord or the tenant
thereunder, or any occupancy or right to possession under Section 365 of
the Bankruptcy Code in the event of the rejection of any Lease by the
landlord or its trustee pursuant to said Section; "LANDLORD" means the
landlord, sublandlord, lessor, sublessor, franchisor or other grantor of a
right of occupancy under a Lease and any guarantor of its obligations
thereunder; and "TENANT" means the tenant, subtenant, lessee, sublessee,
licensee, franchisee, concessionaire or other occupant under a Lease and
any guarantor of its obligations thereunder.
"LEGAL REQUIREMENTS" means all provisions of the Leases, the Agreements
and Liens applicable to the Property and binding upon the Mortgagor, all
provisions of the Permits and all provisions of all Applicable Laws, now or
hereafter applicable to the Property, any
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adjoining vaults, sidewalks, streets or rights of way or any use or
condition thereof.
"LOSS" means a Casualty or Condemnation.
"MORTGAGE" is defined in the Preamble.
"MORTGAGED PROPERTY" is defined in the Granting Clauses.
"MORTGAGEE" is defined in the Preamble.
"MORTGAGOR" is defined in the Preamble.
"NATIONAL FLOOD INSURANCE PROGRAM" means the National Flood Insurance Act
of 1968 and the Flood Disaster Protection Act of 1973 (42 U.S.C. Sections
4001, et seq.).
"NATIONAL FLOOD INSURANCE REGULATIONS" means the regulations with respect
to flood insurance promulgated by the Comptroller of the Currency (12 CFR
Ch. I, Part 22, Sections 22.0 - 22.5), the Federal Reserve Board (12 CFR
Ch. II, Part 208, Section 208.8(e)) and the Federal Home Loan Bank Board
(12 CFR Ch. V, Part 523, Section 523.29).
"PERMITS" is defined in Granting Clause.
"PERMITTED ENCUMBRANCES" means the Liens and other matters described in
Exhibit B.
"PERMITTED LIENS" means those liens permitted under Section 5.09 of the
Credit Agreement.
"PROCEEDS" is defined in the Security Agreement.
"PROPERTY" is defined in Granting Clause.
"RECEIVER" is defined in Section 5.02(a)(iv).
"RENTS" is defined in Granting Clause.
"RESTORATION" means the restoration, repair, replacement or rebuilding of
the Property after a Casualty or Condemnation and "RESTORE" means to
restore, repair, replace or rebuild the Property after a Casualty or
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Condemnation, in each case as nearly as possible to its value and condition
immediately prior to such Casualty or Condemnation.
"SECURED OBLIGATIONS" means the obligations secured under this Mortgage
including (i) all principal of and interest (including, without limitation,
any interest that accrues after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of
the Mortgagor, whether or not allowed or allowable as a claim in any such
proceeding) on any loan to the Mortgagor under, or any note issued by the
Mortgagor pursuant to, the Credit Agreement, (ii) all reimbursement
obligations with respect to any Letter of Credit issued on behalf of the
Mortgagor pursuant to the Credit Agreement and all interest thereon
(including, without limitation, any interest which accrues after or would
accrue but for the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Mortgagor,
whether or not allowed or allowable as a claim in any such proceeding),
(iii) all amounts payable by the Mortgagor in respect of its Guaranteed
Obligations (as defined in the Subsidiary Guarantee to which the Mortgagor
is a party), (iv) all Bank Derivative Obligations payable by the Mortgagor,
(v) all other amounts payable by the Mortgagor hereunder or under the
Credit Agreement (including without limitation any LC Reimbursement
Obligations) or under any other Loan Documents and (vi) any amendments,
restatements, renewals, extensions or modifications of any of the
foregoing; provided that the Secured Obligations described in clause (iii)
above and any amendment, restatement, renewal, extension or modification
thereof described in clause (vi) above shall be subordinate and junior in
rank to the other Secured Obligations for purposes of this Mortgage and the
Liens created hereby.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURITY DEPOSIT" means any payment, note, or other security or deposit
made or given by or on behalf of a tenant under any Lease as security for
the performance of its obligations thereunder.
"TRANSFER" means, when used as a noun, any sale, conveyance, assignment,
delegation of management or other transfer and, when used as a verb, to
sell, convey, assign, delegate the management of or otherwise transfer, in
each case (i) whether voluntary or involuntary, (ii) whether direct or
indirect and (iii) including any agreement providing for a Transfer or
granting any right or option providing for a Transfer.
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"UNAVOIDABLE DELAYS" means delays due to causes beyond the reasonable
control of the Mortgagor, including acts of God, fire, flood, earthquake,
explosion or other Casualty, inability to procure or shortage of labor,
equipment, facilities, sources of energy (including electricity, steam, gas
or gasoline), materials or supplies, failure of transportation, strikes,
lockouts, action of labor unions, Condemnation, contests, inability to
obtain Permits and other causes beyond the reasonable control of the
Mortgagor, provided that lack of funds shall not be deemed to be a cause
beyond the reasonable control of the Mortgagor.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in effect
from time to time in the State of Oklahoma.
Section 1.02. Interpretation. In this Mortgage, unless otherwise
specified, (i) singular words include the plural and plural words include the
singular; (ii) words which include a number of constituent parts, things or
elements, including the terms Improvement, Equipment, Land, Property, Secured
Obligations and Mortgaged Property, shall be construed as referring separately
to each constituent part, thing or element thereof, as well as to all of such
constituent parts, things or elements as a whole; (iii) words importing any
gender include the other gender; (iv) references to any Person include such
Person's successors and assigns and in the case of an individual, the word
"SUCCESSORS" includes such Person's heirs, devisees, legatees, executors,
administrators and personal representatives; (v) references to any statute or
other law include all applicable rules, regulations and orders adopted or made
thereunder and all statutes or other laws amending, consolidating or replacing
the statute or law referred to; (vi) the words "CONSENT", "APPROVE" and "AGREE",
and derivations thereof or words of similar import, mean the prior written
consent, approval or agreement of the Person in question; (vii) the words
"INCLUDE" and "INCLUDING", and words of similar import, shall be deemed to be
followed by the words "WITHOUT LIMITATION"; (viii) the words "HERETO", "HEREIN",
"HEREOF" and "HEREUNDER", and words of similar import, refer to this Mortgage in
its entirety; (ix) references to Articles, Sections, Schedules, Exhibits,
subsections, paragraphs and clauses are, unless otherwise specified, to the
Articles, Sections, Schedules, Exhibits, subsections, paragraphs and clauses of
this Mortgage; (x) the Schedules and Exhibits to this Mortgage are incorporated
herein by reference; (xi) the titles and headings of Articles, Sections,
Schedules, Exhibits, subsections, paragraphs and clauses are inserted as a
matter of convenience and shall not affect the construction of this Mortgage;
(xii) all obligations of the Mortgagor hereunder shall be satisfied by the
Mortgagor or other third party at the Mortgagor's sole cost and expense; (xiii)
all rights and powers granted to the Mortgagee hereunder shall be deemed to be
coupled with an interest and be irrevocable; and (xiv) references to this
Mortgage, the Credit Agreement, Security Agreement, Notes,
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Security Documents and Loan Documents include all amendments, supplements,
consolidations, replacements, restatements, extensions, renewals and other
modifications thereof, in whole or in part.
ARTICLE 2
Representations, Warranties and Covenants
Section 2.01. Title to Mortgaged Property. (a) The Mortgagor represents
and warrants that (i) the Mortgagor is the owner of good and marketable title to
the fee simple interest in the Land and Improvements, free and clear of all
Liens other than the Permitted Encumbrances; (ii) the Mortgagor is the owner of
or has a valid leasehold interest in the Equipment and all other items
constituting the Mortgaged Property, in each case free and clear of all Liens
other than the Permitted Liens; (iii) the Permitted Encumbrances do not
materially interfere with the enjoyment, use or operation of the Property or
materially, adversely affect the value thereof; (iv) the current use of the
Property complies in all material respects with all Applicable Laws; (v) this
Mortgage constitutes a valid, binding and enforceable first Lien on the
Mortgaged Property, subject only to the Permitted Encumbrances; and (vi) the
Mortgagor has good and lawful right to mortgage the Mortgaged Property to the
Mortgagee without the consent of any Person other than those Persons whose
consents have been obtained.
(b) The Mortgagor shall (i) cause the representations and warranties in
Section 2.01(a) be true in each and every material respect at all times prior to
the termination of this Mortgage subject to the other terms and conditions of
the Credit Agreement and this Mortgage; and (ii) forever preserve, protect,
warrant and defend (A) the estate, right, title and interest of the Mortgagor in
and to the Mortgaged Property, (B) the validity, enforceability and priority of
the Lien of this Mortgage on the Mortgaged Property, and (C) the right, title
and interest of the Mortgagee and any purchaser at any sale of the Mortgaged
Property hereunder or relating hereto, in each case against all other Liens and
claims whatsoever, subject only to the Permitted Liens.
(c) Upon reasonable request by the Mortgagee, the Mortgagor shall (i)
promptly correct any defect or error which may be discovered in this Mortgage or
any financing statement or other document relating hereto; and (ii) promptly
execute, acknowledge, deliver, record and re-record, register and re-register,
and file and re-file this Mortgage and any financing statements or other
documents which the Mortgagee may reasonably require from time to time (all in
form and substance reasonably satisfactory to the Mortgagee) which may be
necessary in the reasonable judgment of the Mortgagee (A) to effectuate,
complete, perfect, continue or preserve the Lien of this Mortgage as a first
Lien on the Mortgaged
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Property, whether now owned or hereafter acquired, subject only to the Permitted
Liens, or (B) to effectuate, complete, perfect, continue or preserve any right,
power or privilege granted or intended to be granted to the Mortgagee hereunder.
(d) Upon the recording of this Mortgage in the appropriate county
recording offices, the Lien of this Mortgage and the security interest in the
Mortgaged Property constituting real property and fixtures granted hereby shall
be a perfected first Lien on and security interest in such Mortgaged Property
prior to all Liens on and security interests in such Property other than the
Permitted Encumbrances. Upon the filing of Uniform Commercial Code financing
statements in the appropriate Uniform Commercial Code filing offices and county
recording offices and the timely continuation thereof, the Lien on and security
interest in the personal property described in such financing statements shall
be a perfected first Lien on and security interest in such personal property
prior to all Liens on and security interest in such personal property other than
Permitted Liens.
(e) Nothing herein shall be construed to subordinate the Lien of this
Mortgage to any Permitted Lien to which the Lien of this Mortgage is not
otherwise subordinate.
Section 2.02. Impositions. The Mortgagor shall (i) duly and punctually
pay all Impositions prior to the delinquency date thereof other than Impositions
which are being contested pursuant to Section 2.07; (ii) duly and punctually
file all returns and other statements required to be filed with respect to any
Imposition; (iii) promptly notify the Mortgagee of the receipt by the Mortgagor
of any notice of default in the payment of any Imposition or in the filing of
any return or other statement relating to any Imposition and simultaneously
furnish to the Mortgagee a copy of such notice of default; and (iv) not make any
deduction from or claim any credit on any Secured Obligation by reason of any
Imposition and, to the extent permitted under Applicable Law, hereby irrevocably
waives any right to do so.
Section 2.03. Legal and Insurance Requirements. (a) The Mortgagor
represents and warrants that, other than Legal Requirements and Insurance
Requirements which are being contested pursuant to Section 2.07, (i) as of the
date hereof, the Property and the use and operation thereof comply, in all
material respects, with all Legal Requirements and Insurance Requirements; (ii)
there is no material default under any Legal Requirement or Insurance
Requirement; and (iii) the execution, delivery and performance of this Mortgage
do not require any consent under, and will not contravene any provision of or
constitute a material default under, any Legal Requirement or Insurance
Requirement.
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(b) The Mortgagor shall (i) duly and punctually comply with all Legal
Requirements and Insurance Requirements, other than Legal Requirements and
Insurance Requirements which are being contested pursuant to Section 2.07; (ii)
procure, maintain and duly and punctually comply with all Permits required for
any construction, reconstruction, repair, alteration, addition, improvement,
maintenance, use and operation of the Property, where the failure to do so could
reasonably be expected to result in a Material Adverse Effect; (iii) promptly
notify the Mortgagee of the receipt by the Mortgagor of any notice of default
under any Legal Requirement, Insurance Requirement or Permit or any threatened
or actual termination of any Permit or insurance policy with respect to the
Property and furnish to the Mortgagee a copy of such notice of default or
termination; and (iv) promptly after obtaining knowledge thereof notify the
Mortgagee of any condition which, with or without the giving of notice or the
passage of time or both, would constitute a material default under any Legal
Requirement, Insurance Requirement or Permit or a termination of any Permit or
any insurance policy required to be maintained under the Credit Agreement with
respect to the Property and the action being taken to remedy such condition.
Section 2.04. Status and Care of the Property. (a) The Mortgagor
represents and warrants that (i) the Property is, or upon completion of
construction will be, served by all necessary water, sanitary and storm sewer,
drainage, electric, steam, gas, telephone and other utilities and utility
facilities, which utility facilities have capacities which are sufficient to
serve the current use and occupancy of the Property; (ii) the Property has legal
access to all streets, roads or alleys adjacent to the Property (including, as
appropriate, access over properly granted, perpetual, private right-of-way or
easement agreements) sufficient to serve the current use and operation of the
Property; and (iii) the Improvements are not located in an area designated as
"flood prone" (as defined under the National Flood Insurance Regulations) or, to
the extent the Improvements or any portion thereof are located in an area
designated as "flood prone", the Mortgagor maintains in full force and effect
flood insurance under the National Flood Insurance Program to the extent and in
the amounts required by Applicable Law.
(b) The Mortgagor (i) shall not cause or permit the Property to be
misused, wasted, disfigured or damaged, or to deteriorate (except, in the case
of deterioration, for reasonable wear and tear); (ii) shall use and operate the
Property, or cause the same to be used and operated, for substantially the same
uses and purposes, as they are used and operated upon completion of the
construction of the Project and the achievement of Production Stabilization;
(iii) shall operate and maintain the Property, or cause the same to be operated
and maintained, in good order, repair and condition except (subject to the
provisions of this Section) for reasonable wear and tear; (iv) subject to the
provisions of
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Section 3.04, shall promptly make, or cause to be made, all Restorations,
whether interior or exterior, structural or nonstructural, foreseen or
unforeseen, necessary or appropriate to keep the Property in good order, repair
and condition, all of which Restorations shall be equal in quality to or better
than the Property as of the date hereof; (v) shall do or use reasonable best
efforts to cause others to do all shoring of the Property or any properties
adjacent thereto, including the foundations and walls of either thereof, and to
take all other actions necessary or appropriate for the preservation and safety
thereof by reason of or in connection with any excavation or other construction
operation on the Property or any properties adjacent thereto, whether or not the
Mortgagor or any adjacent-property owner shall be required by any Legal
Requirement to take such action or be liable for failure to do so; (vi) shall
not initiate or affirmatively support any change in the applicable zoning that
would adversely affect the Property or the Mortgagor's use, operation or
ownership thereof, seek any variance (or any change in any variance) under the
zoning that would adversely affect the Property, execute or file any subdivision
or other plat or map adversely affecting the Property or consent to any of the
foregoing; and (vii) shall, promptly after receiving notice or obtaining
knowledge of any proposed or threatened change in the zoning affecting the
Property which would result in the current use of the Property being a non-
conforming use, notify the Mortgagee thereof and diligently contest the same by
any action or proceeding deemed appropriate by the Mortgagor or reasonably
requested by the Mortgagee.
Section 2.05. Liens. (a)The Mortgagor shall not create or permit to be
created or to remain, and shall immediately discharge or cause to be discharged,
any Lien on the Mortgaged Property or any interest therein, except (i) Permitted
Liens, in each case (A) whether voluntarily or involuntarily created, (B)
whether directly or indirectly a Lien thereon, and (C) whether or not
subordinate hereto, and (ii) Liens that are being contested in accordance with
Section 2.07.
(b) The provisions of this Section 2.05 shall apply to each and every Lien
on the Mortgaged Property or any interest therein, regardless of whether or not
the Mortgagee has previously consented to or waived its right to consent to any
other Lien thereon.
Section 2.06. Transfer. (a) The Mortgagor shall not Transfer, or suffer
any Transfer of, the Mortgaged Property or any part thereof or interest therein,
except as provided in Section 5.07 of the Credit Agreement.
(b) The provisions of this Section shall apply to each and every Transfer
of the Mortgaged Property or any interest therein, regardless of whether or not
the Mortgagee has previously consented to or waived its right to consent to any
other Transfer thereof.
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Section 2.07. Permitted Contests. After prior notice to the Mortgagee, the
Mortgagor may contest, by appropriate proceedings conducted in good faith and
with due diligence, any Legal Requirement, any Insurance Requirement, any
Imposition or Lien therefor on the Mortgaged Property or any interest therein or
any Lien of any laborer, mechanic, materialman, supplier or vendor on the
Mortgaged Property or any interest therein, provided that (i) no Event of
Default has occurred and is continuing; (ii) no Mortgaged Property or interest
therein is in danger of being sold, forfeited or lost, nor is the priority of
the Lien of the Mortgagee at risk, as a result of such contest or proceeding;
(iii) in the case of any Legal Requirement, the Mortgagee and the other Secured
Parties are not in danger of any criminal or material civil penalty or any other
liability for failure to comply therewith and no Mortgaged Property or interest
therein is subject to the imposition of any Lien as a result of such failure
(other than any Lien that is also being properly contested in accordance with
this Section 2.07); (iv) in the case of any Insurance Requirement, no Insurance
Policy or coverage is in danger of being forfeited or lost as a result of such
contest or proceeding unless replaced; and (v) in the case of (A) any Lien of a
laborer, mechanic, materialman, supplier or vendor, or (B) any Imposition or
Lien therefor, such proceedings suspend the foreclosure of such Lien or any
other collection thereof from the Mortgaged Property; and provided further that
the Mortgagor establishes any reserve or other appropriate provision required
with respect to such contest under generally accepted accounting principles
consistently applied. Upon request, the Mortgagor shall promptly deliver to the
Mortgagee (x) a certificate of the Mortgagor describing in detail reasonably
satisfactory to the Mortgagee the contests pending as of the date thereof and
evidencing that the Mortgagor has complied with the provisions of this Section
2.07 with respect thereto and (y) such other information and documents with
respect to the contests conducted pursuant to this Section 2.07 as the Mortgagee
shall reasonably request.
ARTICLE 3
Insurance, Casualty and Condemnation
Section 3.01. Insurance. (a) The Mortgagor shall maintain in full force
and effect insurance policies with respect to the Property as required by
Section 5.03(b) of the Credit Agreement.
(b) If the Mortgagor fails to maintain such insurance policies or, upon
request, fails to promptly deliver evidence thereof to the Mortgagee, the
Mortgagee shall have the right, but not the obligation, to obtain such insurance
policies and pay the premiums therefor. If the Mortgagee obtains such insurance
policies or pays the premiums therefor, upon demand, the Mortgagor shall
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reimburse the Mortgagee for its expenses in connection therewith, together with
interest thereon, pursuant to Section 4.03.
Section 3.02. Casualty. (a) The Mortgagor represents and warrants that, as
of the date hereof, there is no Casualty affecting the Property as of the date
hereof.
(b) In the event of any Casualty, the Mortgagor shall (i) promptly give
notice thereof to the Mortgagee, describing in detail reasonably satisfactory to
the Mortgagee the nature and extent thereof, the work required to Restore the
Property and the Mortgagor's best estimate of the cost of such Restoration
itemized in detail reasonably satisfactory to the Mortgagee; (ii) immediately
take such action as may be reasonably necessary or appropriate to preserve the
undamaged portion of the Property and to protect against personal injury or
property damages; (iii) promptly make proof of loss under the applicable
insurance policies and diligently pursue to conclusion its claim for the
Insurance Proceeds payable thereunder and any suit, action or other proceeding
necessary or appropriate to obtain payment of such Insurance Proceeds, in each
case subject to the provisions of Section 5.11; and (iv) subject to Unavoidable
Delays, promptly commence and diligently pursue to completion the Restoration of
the Property.
Section 3.03. Condemnation. (a) The Mortgagor represents and warrants
that, as of the date hereof, (i) Mortgagor has no knowledge of, and has received
no notice of, any Condemnation affecting the Property, (ii) there are no
negotiations or proceedings which might result in such a Condemnation, and (iii)
to the knowledge of the Mortgagor, no Condemnation is proposed or threatened.
(b) In the event of any Condemnation or the commencement of any
negotiation or proceeding which might result in a Condemnation, or in the event
of any proposed or threatened Condemnation, the Mortgagor shall (i) promptly
after receiving notice or obtaining knowledge thereof (A) give notice thereof to
the Mortgagee, describing in detail reasonably satisfactory to the Mortgagee the
nature and extent of such Condemnation, negotiation or proceeding, the action
which the Mortgagor intends to take with respect thereto, the work required to
Restore the Property and the Mortgagor's best estimate of the cost of such
Restoration; (B) do all things deemed necessary or appropriate by the Mortgagor
in its reasonable judgment or reasonably requested by the Mortgagee to preserve
the Mortgagor's interest in the Property, and (C) make claim for the Awards
payable with respect thereto and diligently pursue to conclusion such claims for
such Awards and any suit, action or other proceedings necessary or appropriate
to obtain payment thereof, in each case subject to the provisions of Section
5.11; and (ii) subject to Unavoidable Delays, promptly commence and diligently
pursue to completion the Restoration of the Property.
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Section 3.04. Insurance Proceeds and Awards. In the event of a Loss in
respect of which Insurance Proceeds or Awards in excess of $1,000,000 have been
received or if an Event of Default shall have occurred, the Mortgagor (a) shall
pay such proceeds to the Mortgagee to be held, applied or released for
application in accordance with Section 5.03 of the Credit Agreement and Section
5 of the Security Agreement, and (b) shall have no right to settle, and shall
not settle, any claim or proceeding relating to such Loss or such Proceeds
without the consent of the Mortgagee, which consent shall not be unreasonably
withheld. If such Insurance Proceeds or Awards are not in an amount in excess
of $1,000,000 or if no Event of Default shall have occurred, the Mortgagor shall
not have to obtain the consent of the Mortgagee to settle any claim for such
Insurance Proceeds or Awards.
ARTICLE 4
Expenses and Indemnification
Section 4.01. Expenses. Upon demand, the Mortgagor shall reimburse the
Mortgagee and the other Secured Parties, to the extent not otherwise reimbursed
pursuant to the Credit Agreement, for all reasonable fees and expenses payable
by the Mortgagor pursuant to the Credit Agreement and any other out-of-pocket
expenses (including reasonable attorneys' fees and expenses and a reasonable
allocation of the compensation, costs and expenses of the Mortgagee's in-house
counsel, based upon time spent) paid or incurred by the Mortgagee or the other
Secured Parties in connection with (i) the exercise or enforcement of any right
or remedy under or with respect to this Mortgage, (ii) the execution, delivery,
administration or performance of this Mortgage or (iii) otherwise incurred by
Mortgagee as permitted under this Mortgage or any other Loan Document, together
with interest thereon at the Interest Rate from the date paid by such Secured
Party through the date repaid to such Secured Party. All funds advanced in the
reasonable exercise of the Mortgagee's or any other Secured Party's reasonable
judgment that the same are needed to protect the Mortgaged Property, the Lien of
this Mortgage or the security of the Secured Parties are to be deemed obligatory
advances hereunder. The obligations of the Mortgagor under this Section 4.01
shall survive the release of this Mortgage.
Section 4.02. Indemnification. The Mortgagor shall indemnify and defend
each Indemnitee, to the extent not otherwise indemnified and defended pursuant
to Section 9.03 of the Credit Agreement, from and against all liabilities,
losses, damages, costs and expenses of any kind (including reasonable attorneys'
fees and expenses and a reasonable allocation of the compensation, costs and
expenses of the Mortgagee's in-house counsel, based upon time spent), or any
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settlement costs, which may be incurred by such Indemnitee in connection with
the exercise or enforcement of any right or remedy under this Mortgage, except
to the extent caused by the willful misconduct or gross negligence of such
Indemnitee. Any amount payable to the Mortgagee under this Section 4.02 will be
deemed a demand obligation and will bear interest pursuant to Section 4.03. The
obligations of the Mortgagor under this Section 4.02 shall survive the release
of this Mortgage.
Section 4.03. Obligation to Reimburse. If, pursuant to the terms of this
Mortgage, the Mortgagee shall make any payment on behalf of the Mortgagor, the
amount so paid shall be reimbursable by the Mortgagor immediately upon such
payment together with interest accrued thereon at the Interest Rate to the date
of reimbursement. The obligation of the Mortgagor to reimburse the Mortgagee for
such payment, as well as interest accrued thereon, shall be part of the Secured
Obligations and shall be secured by this Mortgage.
Section 4.04. Increased Costs. In the event of the enactment after the
date hereof of any Applicable Law deducting from the value of the Property for
the purpose of taxation any Lien thereon or changing in any way the Applicable
Law for the taxation of mortgages, deeds of trust or other Liens or obligations
secured thereby, or the manner of collection of such taxes, so as to adversely
affect this Mortgage, the Secured Obligations, the Mortgagee or any other
Secured Party, upon demand by the Mortgagee, to the extent permitted under
Applicable Law, the Mortgagor shall pay or reimburse such Secured Party for all
taxes, assessments or other charges which such Secured Party is obligated to pay
as a result thereof.
ARTICLE 5
Defaults, Remedies and Rights
Section 5.01. Events of Default. (a) Any Event of Default under the Credit
Agreement shall constitute an Event of Default hereunder.
(b) All notice and cure periods provided under this Mortgage, the Credit
Agreement or any other Loan Document shall, subject to mandatory provisions of
Applicable Law, run concurrently with any notice or cure periods provided under
Applicable Law.
Section 5.02. Remedies. (a) If an Event of Default has occurred and is
continuing, the Mortgagee shall have the right and power immediately to exercise
any of the following remedies and rights on behalf of the Secured Parties,
subject
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to Applicable Laws, whether or not the maturity of the Secured
Obligations has been accelerated, to wit:
(i) to institute a proceeding or proceedings or continue a
proceeding or proceedings begun, by advertisement, judicial process or
otherwise as provided under Applicable Law, for collection of the Secured
Obligations and the complete or partial foreclosure of this Mortgage, or
the complete or partial sale of the Mortgaged Property under the power of
sale hereunder or under any Applicable Law, and the Mortgagor agrees to pay
all unpaid Secured Obligations directly to the Mortgagee as Agent; or
(ii) to sell the Mortgaged Property and all estate, right, title,
interest, claim and demand of the Mortgagor therein, and all rights of
redemption thereof, at one or more sales, as an entirety or in parcels,
with such elements of real or personal property, at such time and place and
upon such terms as the Mortgagee may deem expedient or as may be required
under Applicable Law, and in the event of a sale hereunder or under any
applicable provision of law of less than all of the Mortgaged Property,
this Mortgage shall continue as a Lien on the remaining Mortgaged Property;
or
(iii) to institute a suit, action or proceeding for the specific
performance of any of the provisions of the Loan Documents; or
(iv) to apply for the appointment of a receiver, trustee, liquidator,
conservator or other custodian (a "RECEIVER") of the Mortgaged Property, to
be appointed as a matter of right and without regard to, or the necessity
to disprove, the adequacy of the security for the Secured Obligations or
the solvency of either Mortgagor or any other Person, and the Mortgagor
hereby irrevocably waives such necessity and consents to such appointment,
and to be vested with the fullest powers permitted under Applicable Law,
including to the extent permitted under Applicable Law those under Section
5.02(a)(v); or
(v) by the Person exercising the rights under this clause, to enter
upon the Property, and exclude the Mortgagor and its managers, employees,
contractors, agents and other representatives therefrom, without liability
for trespass, damages or otherwise, and take possession of all other
Mortgaged Property, and all books, records and accounts relating thereto,
and the Mortgagor shall surrender possession of the Property, the other
Mortgaged Property and such books, records and accounts to the Person
exercising the rights under this clause on demand after the occurrence of
any Event of Default; and having and holding the same, the
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Person exercising the rights under this clause may use, operate, manage,
preserve, control and otherwise deal therewith and conduct the business
thereof, either personally or by its managers, employees, contractors,
agents or other representatives, without interference from the Mortgagor or
its managers, employees, contractors, agents and other representatives;
and, upon each such entry and from time to time thereafter, at the expense
of the Mortgagor and the Mortgaged Property, without interference by the
Mortgagor or its managers, employees, contractors, agents and other
representatives, the Person exercising the rights under this clause may, as
such Person deems expedient, (A) insure or reinsure the Property, (B) make
all necessary or proper repairs, renewals, replacements, alterations,
additions, betterments and improvements to the Property and (C) in such
Person's own name or, at the option of such Person, in the Mortgagor's
name, exercise all rights, powers and privileges of the Mortgagor with
respect to the Mortgaged Property, including the right to enter into Leases
with respect to the Property, including Leases extending beyond the time of
possession by the Person exercising the rights under this clause; and the
Person exercising the rights under this clause shall not be liable to
account for any action taken hereunder, other than for Rents actually
received by such Person, and shall not be liable for any loss sustained by
the Mortgagor resulting from any failure to let the Property or from any
other act or omission of such Person, except to the extent such loss is
caused by such Person's own willful misconduct or gross negligence; or
(vi) with or without the entry upon the Property, in the name of the
Mortgagee or a Receiver (whichever is the Person exercising the rights
under this clause) or, at such Person's option, in the name of the
Mortgagor, to collect, receive, sue for and recover all Rents and proceeds
of or derived from the Mortgaged Property, and after deducting therefrom
all costs, expenses and liabilities of every character incurred by the
Person exercising the rights under this clause in collecting the same and
in using, operating, managing, preserving and controlling the Mortgaged
Property and otherwise in exercising the rights under Section 5.02(a)(v) or
any other rights hereunder, including all amounts necessary to pay the
Impositions, insurance premiums and the other costs, expenses and
liabilities relating to the Property, as well as compensation for the
services of such Person and its managers, employees, contractors, agents or
other representatives, to apply the remainder as provided in Section 5.06;
or
(vii) to take any action with respect to any Mortgaged Property
permitted under the Uniform Commercial Code; or
(viii) to exercise any statutory power of sale; or
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(ix) to take any other action, or to pursue any other remedy or
right, as the Mortgagee may have under Applicable Law, and the Mortgagor
does hereby grant the same to the Mortgagee.
(b) (i) Subject to Applicable Laws, no remedy or right hereunder or
under any other Loan Document shall be exclusive of any other remedy or
right, but each remedy or right hereunder or under any other Loan Document
shall be in addition to, and not in limitation of, any other remedy or
right hereunder, under any other Loan Document or now or hereafter existing
at law or in equity under Applicable Law.
(ii) Subject to Applicable Laws, every remedy or right hereunder,
under any other Loan Document or under Applicable Law may be exercised
concurrently or independently and whenever and as often as deemed
appropriate by the Mortgagee.
(c) To the fullest extent permitted by Applicable Laws, (i) No
failure to exercise or delay in exercising any remedy or right hereunder,
under any other Loan Document or under Applicable Law shall be construed as
a waiver of any Default or other occurrence hereunder or under any other
Loan Document.
(ii) No waiver of, failure to exercise or delay in exercising, any
remedy or right hereunder, under any other Loan Document or under
Applicable Law upon any Default or other occurrence hereunder or under any
other Loan Document shall be construed as a waiver of, or otherwise limit
the exercise of, such remedy or right upon any other or subsequent Default
or other occurrence hereunder or under any other Loan Document.
(iii) No single or partial exercise of any remedy or right hereunder,
under any other Loan Document or under Applicable Law upon any Default or
other occurrence hereunder or under any other Loan Document shall preclude,
or otherwise limit, the exercise of any other remedy or right hereunder,
under any other Loan Document or under Applicable Law upon such Default or
occurrence or upon any other or subsequent Default or other occurrence
hereunder or under any other Loan Document.
(iv) The acceptance by any Secured Party of any payment of an amount
less than the amount of the Secured Obligation in question shall be deemed
to be an acceptance on account only and shall not be construed as
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a waiver of any Default hereunder or under any other Loan Document with
respect thereto.
(v) The acceptance by any Secured Party of any payment of, or on
account of, any Secured Obligation shall not be deemed to be a waiver of
any Default or other occurrence hereunder or under any other Loan Document
with respect to any other Secured Obligation.
(d) In the event that the Mortgagee has proceeded to enforce any remedy or
right hereunder or with respect hereto by foreclosure, sale, entry or otherwise,
it may compromise, discontinue or abandon such proceeding for any reason without
notice to the Mortgagor or any other Person; and, in the event that any such
proceeding shall be discontinued or abandoned for any reason, the Mortgagor and
the Mortgagee shall retain and be restored to their former positions and rights
hereunder with respect to the Mortgaged Property, subject to the Lien hereof.
(e) To the fullest extent permitted by Applicable Laws, for the purpose of
carrying out any provisions hereunder authorizing the Mortgagee or any other
Person to perform any action on behalf of the Mortgagor, the Mortgagor hereby
irrevocably appoints the Mortgagee or a Receiver appointed pursuant to Section
5.02(a)(iv) or such other Person (as the case may be as the Person appointed
under this subsection), as the attorney-in-fact of the Mortgagor (with a power
to substitute any other Person in its place as such attorney-in-fact) to act in
the name of the Mortgagor or, at the option of the Person appointed to act under
this subsection, in such Person's own name, to take the action authorized under
the provisions hereof, and to execute, acknowledge and deliver any document in
connection therewith or to take any other action incidental thereto, as the
Person appointed to act under this Section 5.02(e) shall deem appropriate in its
discretion; and the Mortgagor hereby irrevocably authorizes and directs any
other Person to act upon the foregoing appointment and a certificate of the
Person appointed to act under this Section 5.02(e) that such Person is
authorized to act under this Section 5.02(e).
Section 5.03. Waivers by the Mortgagor. To the extent permitted under
Applicable Law, the Mortgagor shall not assert, and hereby irrevocably waives,
any right or defense the Mortgagor may have under any statute or rule of law or
equity now or hereafter in effect relating to (i) valuation, homestead
exemption, extension, moratorium, stay, statute of limitations, redemption,
marshaling of the Mortgaged Property or the other assets of the Mortgagor, sale
of the Mortgaged Property in any order or notice of deficiency or intention to
accelerate any Secured Obligation; (ii) impairment of any right of subrogation
or reimbursement; (iii) any requirement that at any time any action must be
taken against any other Person, any portion of the Mortgaged Property or any
other asset of the Mortgagor
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or any other Person; (iv) any provision barring or limiting the right of the
Mortgagee to sell any Mortgaged Property after any other sale of any other
Mortgaged Property or any other action against the Mortgagor or any other
Person; (v) any provision barring or limiting the recovery by the Mortgagee or
the other Secured Parties of a deficiency after any sale of the Mortgaged
Property; (vi) any other provision of Applicable Law (including any provision
relating to decedents' estates) which might defeat, limit or adversely affect
any right or remedy of the Mortgagee or any other Secured Party under or with
respect to this Mortgage or the other Loan Documents; or (vii) the right of the
Mortgagee as Agent to foreclose this Mortgage in its own name on behalf of all
Secured Parties by judicial action as the real party in interest without the
necessity of joining any other Secured Party. If the Mortgagee elects to
foreclose this Mortgage by judicial proceedings, appraisement of the Property is
waived, at the option of the Mortgagee, such option to be exercised at or prior
to the time judgment is rendered in any judicial foreclosure thereof.
Section 5.04. Jurisdiction and Process. (a) To the extent permitted under
Applicable Law, in any suit, action or proceeding arising out of or relating to
this Mortgage, the Mortgagor (i) irrevocably consents to the nonexclusive
jurisdiction of any State or Federal court sitting in the State in which such
Mortgaged Property is located and irrevocably waives any defense or objection
which it may now or hereafter have to the jurisdiction of such court over, the
venue of such court for or the convenience of such court as the forum for any
such suit, action or proceeding; and (ii) irrevocably consents to the service of
(A) any process in any such suit, action or proceeding, or (B) any notice
relating to any sale, or the exercise of any other remedy by the Mortgagee
hereunder by sending a copy of such process or notice by prepaid overnight
courier or United States registered or certified mail, postage prepaid, return
receipt requested to the Mortgagor at its address specified in or pursuant to
Section 7.03, such service to be effective when received at the address
specified or when delivery at such address is refused.
(b) Nothing in this Section shall affect the right of the Mortgagee or any
other Secured Party to bring any suit, action or proceeding arising out of or
relating to this Mortgage or any other Loan Document in any court having
jurisdiction under the provisions of any other Loan Document or Applicable Law
or to serve any process, notice of sale or other notice in any manner permitted
by any other Loan Document or Applicable Law.
Section 5.05. Sales. Except as otherwise provided herein, to the extent
permitted under Applicable Law, at the election of the Mortgagee, the following
provisions shall apply to any sale of the Mortgaged Property hereunder, whether
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made pursuant to the power of sale hereunder or under any Applicable Law, any
judicial proceeding or any judgment or decree of foreclosure or sale or
otherwise:
(a) The Mortgagee or the court officer (as the case may be as the Person
conducting any sale) may conduct any number of sales from time to time. The
power of sale hereunder or under any Applicable Law shall not be exhausted by
any sale as to any part or parcel of the Mortgaged Property which is not sold,
unless and until the Secured Obligations shall have been paid in full, and shall
not be exhausted or impaired by any sale which is not completed or is defective.
Any sale may be as a whole or in part or parcels and the Mortgagor hereby waives
its right to direct the order in which the Mortgaged Property or any part or
parcel thereof is sold.
(b) Any sale may be postponed or adjourned by public announcement at the
time and place appointed for such sale or for such postponed or adjourned sale
without further notice.
(c) After each sale, the Person conducting such sale shall execute and
deliver to the purchaser or purchasers at such sale a good and sufficient
instrument or instruments granting, conveying, assigning and transferring but
without warranty all right, title and interest of the Mortgagor in and to the
Mortgaged Property sold and shall receive the proceeds of such sale and apply
the same as provided in Section 5.06. The Mortgagor hereby irrevocably appoints
the Person conducting such sale as the attorney-in-fact of the Mortgagor (with
full power to substitute any other Person in its place as such attorney-in-
fact), to act in the name of the Mortgagor or, at the option of the Person
conducting such sale, in such Person's own name, to make without warranty by
such Person any conveyance, assignment, Transfer or delivery of the Mortgaged
Property sold, and to execute, acknowledge and deliver any instrument of
conveyance, assignment, Transfer or delivery or other document in connection
therewith or to take any other action incidental thereto, as the Person
conducting such sale shall deem appropriate in its discretion; and the Mortgagor
hereby irrevocably authorizes and directs any other Person to act upon the
foregoing appointment and a certificate of the Person conducting such sale that
such Person is authorized to act hereunder. Nevertheless, upon the request of
such attorney-in-fact the Mortgagor shall promptly execute, acknowledge and
deliver any documentation which such attorney-in-fact may require for the
purpose of ratifying, confirming or effectuating the powers granted hereby or
any such conveyance, assignment, Transfer or delivery by such attorney-in-fact.
(d) Any statement of fact or other recital made in any instrument referred
to in Section 5.05(c) given by the Person conducting any sale as to the
nonpayment of any Secured Obligation, the occurrence of any Event of Default,
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the amount of the Secured Obligations due and payable, the request to the
Mortgagee to sell, the notice of the time, place and terms of sale and of the
Mortgaged Property to be sold having been duly given, or any other act or thing
having been duly done or not done by the Mortgagor, the Mortgagee or any other
Person, shall be taken as conclusive and binding against all other Persons as
evidence of the truth of the facts so stated or recited. The Person conducting
any sale may appoint or delegate any other Person as agent to perform any act
necessary or incident to such sale, including the posting of notices and the
conduct of such sale, but in the name and on behalf of the Person conducting
such sale.
(e) The receipt of the Person conducting any sale for the purchase money
paid at any such sale shall be sufficient discharge therefor to any purchaser of
any Mortgaged Property sold, and no such purchaser, or its representatives,
grantees or assigns, after paying such purchase price and receiving such
receipt, shall be bound to see to the application of such purchase price or any
part thereof upon or for any trust or purpose of this Mortgage or the Loan
Documents or, in any manner whatsoever, be answerable for any loss,
misapplication or nonapplication of any such purchase money or be bound to
inquire as to the authorization, necessity, expediency or regularity of such
sale.
(f) Any sale shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of the
Mortgagor in and to the Mortgaged Property sold, and (to the extent permitted
under Applicable Law) shall be a perpetual bar both at law and in equity against
the Mortgagor and any and all Persons claiming such Mortgaged Property or any
interest therein by, through or under the Mortgagor.
(g) At any sale, the Mortgagee or any Secured Party may bid for and
acquire the Mortgaged Property sold and, in lieu of paying cash therefor, may
make settlement for the purchase price by causing the Secured Parties to credit
against the Secured Obligations, including the expenses of the sale and the cost
of any enforcement proceeding hereunder, the amount of the bid made therefor to
the extent necessary to satisfy such bid.
(h) In the event that the Mortgagor or any Person claiming by, through or
under the Mortgagor shall transfer or fail to surrender possession of the
Mortgaged Property after the exercise of any of the remedies provided for herein
or any sale thereof, then the Mortgagor or such Person shall be deemed a tenant
at sufferance of the purchaser at such sale, subject to eviction by means of
forcible entry and unlawful detainer proceedings, or subject to any other right
or remedy available hereunder or under Applicable Law.
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(i) Upon any sale, it shall not be necessary for the Person conducting
such sale to have any Mortgaged Property being sold present or constructively in
its possession.
(j) To the extent permitted under Applicable Law, in the event that a
foreclosure hereunder shall be commenced by the Mortgagee, the Mortgagee may at
any time before the sale abandon the sale, and may institute suit for the
collection of the Secured Obligations or reinstitute suit for the foreclosure of
this Mortgage, or in the event that the Mortgagee should institute suit for
collection of the Secured Obligations or the foreclosure of this Mortgage, the
Mortgagee may at any time before the entry of final judgment in said suit
dismiss the same and sell the Mortgaged Property in accordance with the
provisions of this Mortgage.
Section 5.06. Proceeds. Except as otherwise provided herein, in the
Credit Agreement or the other Security Documents or required under Applicable
Law, the proceeds of any sale of, or other realization upon, the Mortgaged
Property hereunder, whether made pursuant to the power of sale hereunder, any
judicial proceeding or any judgment or decree of foreclosure or sale or
otherwise shall be applied and paid as follows:
(a) First: to the payment of all expenses of such sale or other
realization, including reasonable compensation for the Person conducting such
sale (which may include the Mortgagee and the relevant court officer), the cost
of title searches and reasonable attorneys' fees and expenses incurred by such
Person (including a reasonable allocation of the compensation, costs and
expenses of in-house counsel, based on time spent), together with interest on
any such expenses paid by such Person at the Interest Rate from the date paid by
such Person through the date repaid to such Person; and
(b) Second: to the Mortgagee for deposit in the Insurance Account (as
defined in the Security Agreement) of the Mortgagor to be held, applied and
disbursed in the same order of priorities as set forth in Section 9 of the
Security Agreement.
Section 5.07. Assignment of Leases. (a) To the fullest extent permitted by
Applicable Laws, the assignments of the Leases and the Rents under Granting
Clauses and are and shall be present, absolute and irrevocable assignments by
the Mortgagor to the Mortgagee and, subject to the license to the Mortgagor
under Section 5.07(b), the Mortgagee or a Receiver appointed pursuant to
Section 5.02(a)(iv) (or other Person exercising the rights under this Section
5.07) shall have the absolute, immediate and continuing right, subject to
mandatory provisions of Applicable Law, to collect and receive all Rents now or
hereafter, including during any period of redemption, accruing with respect to
the Property.
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At the request of the Mortgagee or such Receiver, the Mortgagor shall promptly
execute, acknowledge, deliver, record, register and file any additional general
assignment of the Leases or specific assignment of any Lease which the Mortgagee
or such Receiver may require from time to time (all in form and substance
satisfactory to the Mortgagee or such Receiver) to effectuate, complete,
perfect, continue or preserve the assignments of the Leases and the Rents under
Granting Clauses and . Neither the acceptance hereof nor the exercise of the
rights and remedies hereunder nor any other action on the part of the Mortgagee
or any Person exercising the rights of the Mortgagee hereunder shall be
construed to be an assumption by the Mortgagee or any such Person of, or to
otherwise make the Mortgagee or such Person liable or responsible for, any of
the obligations of the Mortgagor under or with respect to the Leases or for any
Rent, Security Deposit or other amount delivered to the Mortgagor, provided that
the Mortgagee or any such Person exercising the rights of the Mortgagee
hereunder shall be accountable as provided in Section 5.07(c) for any Rents,
Security Deposits or other amounts actually received by the Mortgagee or such
Person, as the case may be. Neither the acceptance hereof nor the exercise of
the rights and remedies hereunder nor any other action on the part of the
Mortgagee or any Person exercising the rights of the Mortgagee hereunder shall
be construed to obligate the Mortgagee or any such Person to take any action
under or with respect to the Leases or with respect to the Property, to incur
any expense or perform or discharge any duty or obligation under or with respect
to the Leases or with respect to the Property, to appear in or defend any action
or proceeding relating to the Leases or the Property, to constitute the
Mortgagee as a mortgagee in possession (unless the assignee hereunder actually
enters and takes possession of the Property), or to be liable in any way for any
injury or damage to person or property sustained by any Person in or about the
Property other than to the extent caused by the willful misconduct or gross
negligence of the Mortgagee or any Person exercising the rights of the Mortgagee
hereunder.
(b) As long as no Event of Default has occurred and is continuing, the
Mortgagor shall have the right under a license granted hereby, subject to
Section 5.07(c), to collect the Rents upon the due date thereof.
(c) If an Event of Default has occurred and is continuing, the Mortgagee
or a Receiver appointed pursuant to Section 5.02(a)(iv) (as the case may be as
the Person exercising the rights under this Section 5.07(c)) shall have the
right to terminate the license granted under Section 5.07(b) by notice to the
Mortgagor and exercise the rights and remedies provided under Section 5.07(a),
under Sections 5.02(a)(v) and 5.02(a)(vi) or under Applicable Law. If an Event
of Default has occurred and is continuing, upon written demand by the Person
exercising the rights under this Section, any tenants of the Mortgagor shall
promptly pay to such Person all Security Deposits under the Leases and all Rents
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allocable to any period after the making of such demand. Subject to Sections
5.02(a)(v) and 5.02(a)(vi) and any Applicable Law, any Rents received hereunder
by the Person exercising the rights under this Section shall be promptly paid to
the Mortgagee, and any Rents received hereunder by the Mortgagee shall be
applied and disbursed as provided in Section 5.06, provided that, subject to
Sections 5.02(a)(v) and 5.02(a)(vi) and any provision of Applicable Law, any
Security Deposits actually received by the Mortgagee shall be held, applied and
disbursed as provided in the applicable Leases.
(d) Nothing herein shall be construed to be an assumption by the Person
exercising the rights under this Section, or to otherwise make such Person
liable for the performance, of any of the obligations of the Mortgagor under the
Leases, provided that such Person shall be accountable as provided in Section
5.07(c) for any Rents or Security Deposits actually received by such Person.
Section 5.08. Dealing with the Mortgaged Property. The Mortgagee shall
have the right to release any portion of the Mortgaged Property from the Lien of
this Mortgage for such consideration as the Mortgagee may require, or without
consideration, without, as to the remainder of the Mortgaged Property, in any
way impairing or affecting the Lien or priority of this Mortgage, or improving
the position of any subordinate lienholder with respect thereto, except to the
extent that the Secured Obligations shall have been reduced by any actual
monetary consideration received for such release and applied to the Secured
Obligations, and may accept by assignment, pledge or otherwise any other
property in place thereof as the Mortgagee may require without being accountable
therefor to any other lienholder.
Section 5.09. Information and Right of Entry. (a) Upon the reasonable
request by the Mortgagee, the Mortgagor shall deliver to the Mortgagee promptly
after such request or, if requested by the Mortgagee, on a continuing or
periodic basis any information, certificates and documents with respect to the
matters referred to in this Mortgage as the Mortgagee shall reasonably request,
including, with respect to Section 2.02, copies of receipts evidencing payment
of material Impositions.
(b) The Mortgagee and the representatives of the Mortgagee shall have the
right, (i) without prior notice if an Event of Default has occurred and is
continuing, or (ii) after reasonable notice and at the Mortgagee's expense if no
Event of Default has occurred and is continuing, to enter upon the Property at
all reasonable times, as often as the Mortgagee may reasonably require, to
inspect the Mortgaged Property or, subject to the provisions hereof, to exercise
any right, power or remedy of the Mortgagee hereunder, provided that no such
entry on the Property (including any entry for the purpose of performing
obligations under
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Section 5.10 or any other purpose) shall be construed to be possession of the
Property by the Mortgagee or to constitute the Mortgagee as a mortgagee in
possession (unless the Mortgagee exercises its right to take possession of the
Property under Section 5.02(a)(v)) or to be a cure of any Default or waiver of
any Default or Secured Obligation subject to reimbursement under Section 5.06,
and provided, further, that if no Event of Default has occurred and is
continuing, the Mortgagor may place reasonable limits on such access.
Section 5.10. Right to Perform Secured Obligations. If the Mortgagor fails
to pay or perform any obligation of the Mortgagor hereunder or any obligation of
the Mortgagor relating to the Mortgaged Property under any of the other Loan
Documents and is not contesting such obligation pursuant to Section 2.07, then
the Mortgagee and the representatives of the Mortgagee shall have the right, (i)
if an Event of Default has occurred and is continuing, without notice, or (ii)
if no Event of Default has occurred and is continuing, to pay or perform such
obligation after reasonable notice (during which time the Mortgagor shall have
the right and ability to cure such failure), provided that no such payment or
performance by the Mortgagee shall be construed to be a cure of any Default or
waiver of any Default or Secured Obligation.
Section 5.11. Right to Make Claims. (a) In the event that the Mortgagor
hereafter has (i) any material claim or right to make any material claim
relating to the Mortgaged Property or the proceeds thereof against any Person,
including any claim for Insurance Proceeds, any claim for Awards or any claim
against the tenant under any Lease (excluding any claim for Rents covered by
Section 5.07(b), but including any claim for damages in the event of the
termination of such Lease), or (ii) any right to bring any suit, action or other
proceeding (including any arbitration proceeding) to enforce any other material
right, power or remedy relating to the Mortgaged Property, then (A) the
Mortgagor shall promptly give notice thereof to the Mortgagee, describing in
detail reasonably satisfactory to the Mortgagee the claim or right in question
and the action which the Mortgagor intends to take with respect thereto; (B) the
Mortgagor shall promptly do all things deemed necessary or appropriate by the
Mortgagor in its reasonable judgment or reasonably requested by the Mortgagee to
preserve and enforce such claim or right and shall promptly commence and
diligently prosecute to conclusion any suit, action or other proceeding
necessary or appropriate to do so; (C) the Mortgagor shall have no right to
waive, compromise or settle, and shall not waive, compromise or settle, such
claim, right or proceeding without the consent of the Mortgagee (which consent
shall not be unreasonably withheld if no Event of Default has occurred and is
continuing); (D) if the Mortgagor fails to commence promptly or to pursue
diligently to completion any such claim, right or proceeding, or if an Event of
Default has occurred and is continuing, (1) the Mortgagee shall have the right
to enforce any such claim or right, to commence or
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take over any such proceeding, to prosecute any such proceeding to conclusion
and to settle any such claim, right or proceeding, in each case (x) without
notice if an Event of Default has occurred and is continuing, and (y) after
reasonable written notice to the Mortgagor if no Event of Default has occurred
and is continuing; (2) the Mortgagor hereby irrevocably appoints the Mortgagee
as the attorney-in-fact of the Mortgagor (with full power to substitute any
other Person in its place as such attorney-in-fact), to act in the name of the
Mortgagor or, at the option of the Mortgagee, in the Mortgagee's own name, to
take any action described in Section 5.11(a)(ii)(D)(1), and to execute,
acknowledge and deliver and document in connection therewith or take any other
action incidental thereto as the Mortgagee shall deem appropriate in its
discretion; and (3) the Mortgagor hereby irrevocably authorizes and directs any
Person to act upon the foregoing appointment and a certificate of the Mortgagee
that the Mortgagee is entitled to act under Section 5.11(a)(ii)(D); and (E) if
an Event of Default has occurred and is continuing, the proceeds of such claim
or right shall be paid to the Mortgagee, to be held, applied and disbursed as
provided in Section 5(C) of the Security Agreement.
(b) Under this Section, a material claim or right shall be (i) any claim
or right involving, individually or together with any related claims or rights,
any Mortgaged Property or amount in controversy having a value or amounting to
$100,000 or more; or (ii) if an Event of Default has occurred and is continuing,
any claim or right involving any Mortgaged Property or amount in controversy.
ARTICLE 6
Security Agreement
Section 6.01. Security Agreement. To the extent of the Collateral or to
the extent that the Mortgaged Property includes items of personal property which
are or are to become fixtures under Applicable Law, this Mortgage shall also be
construed as a security agreement under the Uniform Commercial Code; and, if an
Event of Default has occurred and is continuing, the Mortgagee shall be entitled
with respect to such Collateral and personal property to all remedies hereunder
and under the Security Agreement, all remedies available under the Uniform
Commercial Code with respect to fixtures and all other remedies available under
Applicable Law. To the extent that the Collateral includes Equipment and other
items of personal property which are not fixtures under Applicable Law, this
Mortgage shall also be construed as a security agreement under the Uniform
Commercial Code; and if an Event of Default has occurred and is continuing, the
Mortgagee shall be entitled with respect to such Collateral to all remedies
hereunder and under the Security Agreement, all remedies available under the
Uniform Commercial Code and all other remedies available under Applicable
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Law. Without limiting the foregoing, any Collateral may, at the Mortgagee's
option, during the continuance of an Event of Default (i) be sold hereunder
together with any sale of the Property or otherwise, (ii) be sold pursuant to
the Uniform Commercial Code, or (iii) be dealt with by the Mortgagee in any
other manner permitted under Applicable Law. The Mortgagee may require the
Mortgagor to assemble the Collateral and make it available to the Mortgagee at a
place to be designated by the Mortgagee during the continuance of an Event of
Default. If an Event of Default has occurred and is continuing, the Mortgagee
shall be the attorney-in-fact of the Mortgagor with respect to any and all
matters pertaining to the Collateral with full power and authority to give
instructions with respect to the collection and remittance of payments, to
endorse checks, to enforce the rights and remedies of the Mortgagor and to
execute on behalf of the Mortgagor and in the Mortgagor's name any instruction,
agreement or other writing required therefor. The Mortgagee may, at its option,
appoint any other Person as the agent of the Mortgagee for the purpose of
disposition of the Collateral in accordance with the Uniform Commercial Code.
Notwithstanding the foregoing, to the extent that the Mortgaged Property
includes personal property covered by the Security Agreement or any other
Security Document, the provisions of the Security Agreement or such other
Security Document shall govern with respect to such personal property.
Section 6.02. Fixture Filing. To the extent that the Mortgaged Property
includes items of personal property which are or are to become fixtures under
Applicable Law, and to the extent permitted under Applicable Law, the filing of
this Mortgage in the real estate records of the county in which such Mortgaged
Property is located shall also operate from the time of filing as a fixture
filing with respect to such Mortgaged Property, and the following information is
applicable for the purpose of such fixture filing, to wit:
(a) Name and Address of the debtor:
The Mortgagor:
Republic Paperboard Company
811 East 30th Street
Hutchinson, Kansas 67503
(b) Name and Address of the secured party:
The Mortgagee:
NationsBank, N.A., as Administrative Agent
Corporate Center
100 N. Tryon Street, 7th Floor
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NC10070701
Charlotte, North Carolina 28255
(c) This instrument covers goods or items of personal property which are
or are to become fixtures upon the Property.
(d) The name of the record owner of the Property on which such fixtures
are or are to be located is Republic Paperboard Company.
ARTICLE 7
Miscellaneous
Section 7.01. Mortgagee as Agent. The Mortgagor acknowledges that pursuant
to Section 7.01 of the Credit Agreement, each Bank has appointed the Agent to
take such action on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms of the Loan Documents. The
provisions of Article 7 of the Credit Agreement are incorporated by reference
herein as if fully restated herein.
Section 7.02. Release of Mortgaged Property. (a) The Lien of this
Mortgage shall cease, terminate and thereafter be of no further force or effect
in the event the Mortgagor shall have satisfied all of the Secured Obligations
and shall have performed and observed all of the covenants, obligations and
conditions to be performed by the Mortgagor pursuant to the Loan Documents and
the obligations of all Bank Parties to extend further credit under any Loan
Document shall have expired or terminated.
(b) Upon any termination of the lien and security interests pursuant to
Section 7.02(a) or upon an asset sale complying with Section 5.07 of the Credit
Agreement, the Mortgagee will, at the expense of the Mortgagor, execute and
deliver to the Mortgagor such documents as it shall reasonably request to
evidence the termination of the security interests or the release of the
Mortgaged Property or the release of a portion of the Mortgaged Property, as the
case may be. Any release of this Mortgage shall also be deemed to be a
termination of any separately filed financing statements relating to the
Mortgaged Property and a release of any other assignments relating to the
Mortgaged Property to the same extent as the release of this Mortgage. The
Mortgagee may conclusively rely on any certificate delivered to it by the
Mortgagor stating that the execution of such documents and release of the
Mortgaged Property is in accordance with and permitted by the terms of this
Mortgage.
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Section 7.03. Notices. All notices, requests and other communications
required or permitted to be given under this Mortgage shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given to the Mortgagor or the Mortgagee as specified in Section 9.01 of
the Credit Agreement. Except as otherwise provided herein, each notice, request
or other communication shall be effective as determined by Section 9.01 of the
Credit Agreement.
Section 7.04. Modification and Waiver. No provision of this Mortgage
shall be modified, waived or terminated, and no consent to any departure by the
Mortgagor from any provision of this Mortgage shall be effective, unless the
same shall be by an instrument in writing, signed by the party against whom such
modification, waiver, termination or consent is to be enforced and, in the case
of such a writing, signed by the Mortgagee. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 7.05. Severability. All rights, powers and remedies provided in
this Mortgage may be exercised only to the extent that the exercise thereof does
not violate Applicable Law, and all the provisions of this Mortgage are intended
to be subject to all mandatory provisions of Applicable Law and to be limited to
the extent necessary so that they will not render this Mortgage illegal,
invalid, unenforceable or not entitled to be recorded, registered or filed under
Applicable Law. If any provision of this Mortgage or the application thereof to
any Person or circumstance shall, to any extent, be illegal, invalid or
unenforceable, or cause this Mortgage not to be entitled to be recorded,
registered or filed, the remaining provisions of this Mortgage or the
application of such provision to other Persons or circumstances shall not be
affected thereby, and each provision of this Mortgage shall be valid and be
enforced to the fullest extent permitted under Applicable Law.
Section 7.06. Binding Effect. (a) The provisions of this Mortgage shall
be binding upon and inure to the benefit of each of the parties hereto, the
respective successors and assigns of the Mortgagor and the Mortgagee in its
capacity as the Agent, and shall inure to the benefit of the Secured Parties and
their respective successors and assigns; and all references herein to the
"MORTGAGOR", the "MORTGAGEE" and the "SECURED PARTIES" shall include the
respective successors and assigns of such parties.
(b) To the fullest extent permitted under Applicable Law, the provisions
of this Mortgage binding upon the Mortgagor shall be deemed to be covenants
which run with the land.
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(c) Nothing in this Section shall be construed to permit the Mortgagor to
Transfer or grant a Lien upon the Mortgaged Property contrary to the provisions
of the Credit Agreement.
Section 7.07. Governing Law. This Mortgage shall be governed by and
construed in accordance with the laws of the State of Oklahoma. Whenever
possible each provision of this Mortgage shall be interpreted in such manner as
to be effective and valid under Applicable Law, but if any provision of this
Mortgage shall be prohibited by or invalid under Applicable Law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Mortgage.
Section 7.08. Revolving Loans. The Secured Obligations secured by this
Mortgage include Revolving Credit Loans and LC Reimbursement Obligations which
are revolving in nature, which may be advanced, paid, and readvanced from time
to time after the date hereof. The aggregate maximum principal amount of Total
Revolving Outstanding Amount which may be outstanding at any one time is
$85,000,000. The aggregate maximum principal amount of Secured Obligations
which may be outstanding at any one time is $85,000,000. The interest of the
Mortgagee hereunder will remain in full force and effect notwithstanding a zero
balance of the Total Revolving Outstanding Amount and the Lien of this Mortgage
will not be extinguished until all Secured Obligations have been paid and
performed and the obligation of all Bank Parties to extend further credit under
the Loan Documents shall have expired or terminated.
Section 7.09. Subrogation. To the extent that the Mortgagee pays pursuant
to the terms of this Mortgage any sum due under any provision of law or any
instrument or documents creating any Lien prior or superior to the Lien of this
Mortgage, the Mortgagee shall have and be entitled to a Lien on the Mortgaged
Property equal in priority to that discharged, and the Mortgagee shall be
subrogated to, and receive and enjoy all rights and Liens possessed, held or
enjoyed by, the holder of such Lien, which shall remain in existence for the
benefit of the Mortgagee to secure the amount expended by the Mortgagee on
account of or in connection with such Lien. The Mortgagee shall be subrogated,
notwithstanding their release of record, to mortgages trust deeds, superior
titles, vendor's liens, liens, charges, encumbrances, rights and equities on the
Property to the extent that any obligation under any thereof is paid or
discharged with proceeds of disbursements or advances under any instrument
evidencing the Secured Obligations.
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Section 7.10. Trust Fund. With respect to any Construction Borrowing, the
Borrower shall receive the Loans and shall hold the right to receive such Loans
as a trust fund to be applied first for the purpose of the cost of the
Improvements and the Borrower shall apply the same first to the payment of the
cost of the Improvements before using any part of the total of the same for any
other purpose.
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IN WITNESS WHEREOF, the undersigned has executed and delivered this
Mortgage as of the date first set forth above.
MORTGAGOR:
Republic Paperboard Company,
a Kansas corporation
By: _________________________
Name:
Title:
37
<PAGE>
State of )
)
County of )
This instrument was acknowledged before me on July __, 1998 by
___________________ as _________ of Republic Paperboard Company, a Kansas
corporation.
___________________________
Notarial Officer
(Seal, if any)
__________________________
Title (and Rank)
My commission expires:
__________________________.
Drafted by and when
recorded, return to:
Susan D. Kennedy, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
38
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
Liens and other matters shown in the title insurance commitment issued by Old
Republic National Title Insurance Company, No. 9851376, dated May 14, 1998, and
updated on July 16, 1998.
<PAGE>
EXHIBIT C
PLEDGE AGREEMENT
AGREEMENT dated as of July 15, 1998 between REPUBLIC PAPERBOARD COMPANY
(with its successors, the "DEBTOR") and NATIONSBANK, N.A., as Administrative
Agent (the "AGENT").
W I T N E S S E T H :
WHEREAS the Republic Group Incorporated, certain banks (the "BANKS"),
certain LC Issuing Banks (the "LC ISSUING BANKS"), Morgan Guaranty Trust Company
of New York, as Syndication Agent, and NationsBank, N.A., as Administrative
Agent for such banks are parties to a Credit Agreement of even date herewith (as
the same may be amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS in order to induce the Banks, the LC Issuing Banks, the Syndication
Agent and the Agent to enter into the Credit Agreement, the Debtor is willing to
grant a continuing security interest in and to the Collateral (as hereafter
defined) to secure the Secured Obligations (as herein defined);
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
respective meanings:
"BANK DERIVATIVES OBLIGATIONS" means any Derivatives Obligations owed by
the Borrower to any Bank (or any of its affiliates) as contemplated by Section
5.09 of the Credit Agreement.
"COLLATERAL" has the meaning assigned to such term in Section 3(a).
"ISSUERS" means Republic Paperboard Company of West Virginia, a West
Virginia corporation, Republic Recycling Company, a Kansas corporation, and
Resource Control, Inc., a Kansas corporation.
<PAGE>
"PLEDGED STOCK" means (i) the Subsidiary Shares and (ii) any other capital
stock required to be pledged to the Agent pursuant to Section 3(b).
"SECURED OBLIGATIONS" means all principal of and interesting (including,
without limitation, any interest which accrues after or would accrue but for the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower, whether or not allowed or
allowable as a claim in any such proceeding) on any loan under, or any note
issued pursuant to, the Credit Agreement, (ii) all reimbursement obligations
with respect to any Letter of Credit issued pursuant to the Credit Agreement and
all interest thereon (including, without limitation, any interest which accrues
after or would accrue but for the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Borrower,
whether or not allowed or allowable as a claim in any such proceeding), (iii)
all Bank Derivatives Obligations, (iv) all other amounts payable by any Obligor
under the Loan Documents and (v) any amendments, restatements,
renewals,extensions or modifications of any of the foregoing.
"SECURITY INTERESTS" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
"SUBSIDIARY SHARES" means (i) 1000 shares of common stock, par value $0.01
per share, of Republic Paperboard Company of West Virginia, (ii) 100 shares of
common stock, no par value, of Republic Recycling Company and (iii) 65 shares of
common stock, par value $100.00 per share, of Resource Control, Inc.
Unless otherwise defined herein, or unless the context otherwise requires,
all terms used herein which are defined in the New York Uniform Commercial Code
as in effect on the date hereof shall have the meanings therein stated.
Section 2. Representations and Warranties. The Debtor represents and
warrants as follows:
(a) Title to Pledged Stock. The Debtor owns all of the Pledged Stock,
free and clear of any Liens other than the Security Interests. The Pledged
Stock includes all of the issued and outstanding capital stock of the
Issuers. The Issuers are all of the direct Subsidiaries of the Debtor. All
of the Pledged Stock has been duly authorized and validly issued, and is
fully paid and non-assessable, and is subject to no options to purchase or
similar rights of any Person. The Debtor is not and will not become a party
to or otherwise bound by any agreement, other than this Agreement, or the
Indenture dated as of July 15, 1998 governing the Subordinated
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Notes, which restricts in any manner the rights of any present or future
holder of any of the Pledged Stock with respect thereto.
(b) Validity, Perfection and Priority of Security Interests. Upon the
delivery of the certificates representing the Pledged Stock to the Agent in
accordance with Section 4 hereof, the Agent will have valid and perfected
security interests in the Collateral subject to no prior Lien. No
registration, recordation or filing with any governmental body, agency or
official is required in connection with the execution or delivery of this
Agreement or necessary for the validity or enforceability hereof or for the
perfection or enforcement of the Security Interests. Neither the Debtor nor
any of its Subsidiaries has performed or will perform any acts which might
prevent the Agent from enforcing any of the terms and conditions of this
Agreement or which would limit the Agent in any such enforcement.
(c) UCC Filing Locations. The chief executive office of the Debtor is
located at its address set forth on the signature pages of the Credit
Agreement. Under the Uniform Commercial Code as in effect in the State in
which such office is located, no local filing is required to perfect a
security interest in collateral consisting of general intangibles.
Section 3. The Security Interests. In order to secure the full and
punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all the obligations of the Debtor
hereunder:
(a) The Debtor hereby assigns and pledges to and with the Agent for
the benefit of the Banks and grants to the Agent for the benefit of the
Banks security interests in the Pledged Stock, and all of its rights and
privileges with respect to the Pledged Stock, and all income and profits
thereon, and all interest, dividends and other payments and distributions
with respect thereto, and all proceeds of the foregoing (the "COLLATERAL").
Contemporaneously with the execution and delivery hereof, the Debtor is
delivering the certificates representing the Subsidiary Shares in pledge
hereunder.
(b) In the event that the Issuer at any time issues any additional or
substitute shares of capital stock of any class, the Debtor will
immediately pledge and deposit with the Agent certificates representing all
such shares as additional security for the Secured Obligations. All such
shares constitute Pledged Stock and are subject to all provisions of this
Agreement.
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<PAGE>
(c) The Security Interests are granted as security only and shall not
subject the Agent or any Bank to, or transfer or in any way affect or
modify, any obligation or liability of the Debtor or any of its
Subsidiaries with respect to any of the Collateral or any transaction in
connection therewith.
Section 4. Delivery of Pledged Stock. All certificates representing
Pledged Stock delivered to the Agent by the Debtor pursuant hereto shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, with signatures appropriately
guaranteed, and accompanied by any required transfer tax stamps, all in form and
substance satisfactory to the Agent.
Section 5. Further Assurances. (a) The Debtor agrees that it will, at its
expense and in such manner and form as the Agent may require, execute, deliver,
file and record any financing statement, specific assignment or other paper and
take any other action that may be necessary, or that the Agent may reasonably
request, in order to create, preserve, perfect or validate any Security Interest
or to enable the Agent to exercise and enforce its rights hereunder with respect
to any of the Collateral. To the extent permitted by applicable law, the Debtor
hereby authorizes the Agent to execute and file, in the name of the Debtor or
otherwise, Uniform Commercial Code financing statements (which may be carbon,
photographic, photostatic or other reproductions of this Agreement or of a
financing statement relating to this Agreement) which the Agent in its sole
discretion may deem necessary or appropriate to further perfect the Security
Interests.
(b) The Debtor agrees that it will not change (i) its name, identity or
corporate structure in any manner or (ii the location of its chief executive
office unless it shall have given the Agent not less than 30 days' prior notice
thereof.
Section 6. Record Ownership of Pledged Stock. The Agent may at any time
or from time to time after an Event of Default has occurred and is continuing,
in its sole discretion, cause any or all of the Pledged Stock to be transferred
of record into the name of the Agent or its nominee. The Debtor will promptly
give to the Agent copies of any notices or other communications received by it
with respect to Pledged Stock registered in the name of the Debtor and the Agent
will promptly give to the Debtor copies of any notices and communications
received by the Agent with respect to Pledged Stock registered in the name of
the Agent or its nominee.
Section 7. Right to Receive Distributions on Collateral. The Agent shall
have the right to receive and, upon the occurrence and during the continuance of
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<PAGE>
any Event of Default, have the right to retain as Collateral hereunder all
dividends, interest and other payments and distributions made upon or with
respect to the Collateral and the Debtor shall take all such action as the Agent
may deem necessary or appropriate to give effect to such right. All such
dividends, interest and other payments and distributions which are received by
the Debtor shall be received in trust for the benefit of the Agent and the Banks
and, if the Agent so directs during the continuance of an Event of Default,
shall be segregated from other funds of the Debtor and shall, forthwith upon
demand by the Agent during the continuance of an Event of Default, be paid over
to the Agent as Collateral in the same form as received (with any necessary
endorsement). After all Events of Default have been cured, the Agent's right to
retain dividends, interest and other payments and distributions under this
Section 7 shall cease and the Agent shall pay over to the Debtor any such
Collateral retained by it during the continuance of any Event of Default.
Section 8. Right to Vote Pledged Stock. Unless an Event of Default shall
have occurred and be continuing and the Debtor has received notice that its
rights hereunder have been terminated, the Debtor shall have the right, from
time to time, to vote and to give consents, ratifications and waivers with
respect to the Pledged Stock, and the Agent shall, upon receiving a written
request from the Debtor accompanied by a certificate signed by its principal
financial officer stating that no Event of Default has occurred and is
continuing, deliver to the Debtor or as specified in such request such proxies,
powers of attorney, consents, ratifications and waivers in respect of any of the
Pledged Stock which is registered in the name of the Agent or its nominee as
shall be specified in such request and be in form and substance satisfactory to
the Agent.
If an Event of Default shall have occurred and be continuing, the Agent
shall have the right to the extent permitted by law and the Debtor shall take
all such action as may be necessary or appropriate to give effect to such right,
to vote and to give consents, ratifications and waivers, and take any other
action with respect to any or all of the Pledged Stock with the same force and
effect as if the Agent were the absolute and sole owner thereof.
Section 9. General Authority. The Debtor hereby irrevocably appoints the
Agent its true and lawful attorney, with full power of substitution, in the name
of the Debtor, the Agent, the Banks or otherwise, for the sole use and benefit
of the Agent and Banks, but at the expense of the Debtor, to the extent
permitted by law to exercise, at any time and from time to time while an Event
of Default has occurred and is continuing, all or any of the following powers
with respect to all or any of the Collateral:
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<PAGE>
(a) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof,
(b) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(c) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the Agent
were the absolute owner thereof, and
(d) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Debtor not less than ten days' prior
notice of the time and place of any sale or other intended disposition of any of
the Collateral except any Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market. The
Agent and the Debtor agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the Uniform Commercial
Code.
Section 10. Remedies upon Event of Default. If any Event of Default shall
have occurred and be continuing, the Agent may exercise on behalf of the Banks
all the rights of a secured party under the Uniform Commercial Code (whether or
not in effect in the jurisdiction where such rights are exercised) and, in
addition, the Agent may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law, (i) apply
the cash, if any, then held by it as Collateral as specified in Section 13 and
(ii) if there shall be no such cash or if such cash shall be insufficient to pay
all the Secured Obligations in full, sell the Collateral or any part thereof at
public or private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery, and at such price or prices as the
Agent may deem satisfactory. Any Bank may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The Agent
is authorized, in connection with any such sale, if it deems it advisable so to
do, (A) to restrict the prospective bidders on or purchasers of any of the
Pledged Stock to a limited number of sophisticated investors who will represent
and agree that they are purchasing for their own account for investment and not
with a view to the distribution or sale of any of such Pledged Stock, (B) to
cause to be placed on certificates for any or all of the Pledged Stock or on any
other securities pledged hereunder a legend to the effect that such security has
not been registered under the Securities Act of 1933 and may not be disposed of
in violation of the
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<PAGE>
provision of said Act, and (C) to impose such other limitations or conditions in
connection with any such sale as the Agent deems necessary or advisable in order
to comply with said Act or any other law. The Debtor will execute and deliver
such documents and take such other action as the Agent deems necessary or
advisable in order that any such sale may be made in compliance with law. Upon
any such sale the Agent shall have the right to deliver, assign and transfer to
the purchaser thereof the Collateral so sold. Each purchaser at any such sale
shall hold the Collateral so sold absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Debtor which
may be waived, and the Debtor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted. The notice (if any) of
such sale required by Section 9 shall (1) in the case of a public sale, state
the time and place fixed for such sale, (2) in the case of a sale at a broker's
board or on a securities exchange, state the board or exchange at which such
sale is to be made and the day on which the Collateral, or the portion thereof
so being sold, will first be offered for sale at such board or exchange, and (3)
in the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix in the
notice of such sale. At any such sale the Collateral may be sold in one lot as
an entirety or in separate parcels, as the Agent may determine. The Agent shall
not be obligated to make any such sale pursuant to any such notice. The Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In the case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the purchaser thereof,
but the Agent shall not incur any liability in the case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in the case of any
such failure, such Collateral may again be sold upon like notice. The Agent,
instead of exercising the power of sale herein conferred upon it, may proceed by
a suit or suits at law or in equity to foreclose the Security Interests and sell
the Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
Section 11. Expenses. The Debtor agrees that it will forthwith upon
demand pay to the Agent:
(a) the amount of any taxes which the Agent may have been required to
pay by reason of the Security Interests or to free any of the Collateral
from any Lien thereon, and
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(b) the amount of any and all reasonable out-of-pocket expenses,
including the fees and disbursements of counsel and of any other experts,
which the Agent may incur in connection with (i) the administration or
enforcement of this Agreement, including such expenses as are incurred to
preserve the value of the Collateral and the validity, perfection, rank and
value of any Security Interest, (ii the collection, sale or other
disposition of any of the Collateral, (ii the exercise by the Agent of any
of the rights conferred upon it hereunder or (iv any Default or Event of
Default.
Any such amount not paid on demand shall bear interest for each day until
paid at the rate per annum equal to the sum of the Applicable Margin on such day
plus the Base Rate for such day and shall be an additional Secured Obligation
hereunder.
Section 12. Limitation on Duty of Agent in Respect of Collateral. Beyond
the exercise of reasonable care in the custody thereof, the Agent shall have no
duty as to any Collateral in its possession or control or in the possession or
control of any agent or bailee or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any agent or bailee selected by the Agent in good faith.
Section 13. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held shall be
applied by the Agent in the following order of priorities:
FIRST, to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the Agent, and
all expenses, liabilities and advances incurred or made by the Agent in
connection therewith, and any other unreimbursed expenses for which the
Agent or any Bank is to be reimbursed pursuant to Section 9.03 of the
Credit Agreement or Section 11 hereof and unpaid fees owing to the Agent
under the Credit Agreement;
SECOND, to the ratable payment of unpaid principal of, any
reimbursement obligations constituting, the Secured Obligations;
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<PAGE>
THIRD, to the ratable payment of accrued but unpaid interest on the
Secured Obligations in accordance with the provisions of the Credit
Agreement;
FOURTH, to the ratable payment of all other Secured Obligations, until
all Secured Obligations shall have been paid in full; and
FINALLY, to payment to the Debtor or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a
ratable basis, in any combination thereof.
Section 14. Concerning the Agent. The provisions of Article 7 of the
Credit Agreement shall inure to the benefit of the Agent in respect of this
Agreement and shall be binding upon the parties to the Credit Agreement in such
respect. In furtherance and not in derogation of the rights, privileges and
immunities of the Agent therein set forth:
(a) The Agent is authorized to take all such action as is provided to
be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including, without limitation, the timing and methods of realization upon
the Collateral) the Agent shall act or refrain from acting in accordance
with written instructions from the Required Banks or, in the absence of
such instructions, in accordance with its discretion.
(b) The Agent shall not be responsible for the existence, genuineness
or value of any of the Collateral or for the validity, perfection, priority
or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission
to act on its part hereunder. The Agent shall have no duty to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement by the Debtor.
Section 15. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Agent may appoint
another bank or trust company or one or more other persons, either to act as co-
agent or co-agents, jointly with the Agent, or to act as separate agent or
agents on behalf of the Banks with such power and authority as may be necessary
for the effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Agent, include
provisions for
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the protection of such co-agent or separate agent similar to the provisions of
Section 14).
Section 16. Termination of Security Interests; Release of Collateral. Upon
the repayment in full of all Secured Obligations, the termination of the
Commitments under the Credit Agreement and the cancellation or termination of
all Letters of Credit, the Security Interests shall terminate and all rights to
the Collateral shall revert to the Debtor. At any time and from time to time
prior to such termination of the Security Interests, the Agent may release any
of the Collateral with the prior written consent of the Required Banks; provided
that any release of all or substantially all of the Collateral (for purposes of
this proviso, as defined in the Credit Agreement) shall require the prior
written consent of all the Banks. In addition, so long as no Event of Default
shall have occurred and be continuing, upon the consummation of any Asset Sale
as permitted under Section 5.07 of the Credit Agreement with respect to all (but
not less than all) of the Borrower's direct and indirect Investment in any
Subsidiary, the Security Interests in the Collateral subject to such Asset Sale
(but not in any Proceeds arising from such Asset Sale) shall cease immediately
without any further action on the part of the Agent or any Bank. The Agent
shall be fully protected in relying on a certificate of the Borrower certifying
that any Asset Sale is permitted by the terms of the Credit Agreement and that
no Event of Default has occurred and is continuing. Upon any termination of the
Security Interests or release of Collateral in accordance with this Section, the
Agent will, at the expense of the Debtor, execute and deliver to the Debtor such
documents as the Debtor shall reasonably request to evidence the termination of
the Security Interests or the release of such Collateral, as the case may be.
Section 17. Notices. All notices hereunder shall be given in accordance
with Section 9.01 of the Credit Agreement.
Section 18. Waivers, Non-Exclusive Remedies. No failure on the part of
the Agent to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise by the Agent of any right under the
Credit Agreement or this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The rights in this Agreement and
the Credit Agreement are cumulative and are not exclusive of any other remedies
provided by law.
Section 19. Successors and Assigns. This Agreement is for the benefit of
the Agent and the Banks and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such
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indebtedness. This Agreement shall be binding on the Debtor and its successors
and assigns.
Section 20. Changes in Writing. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Debtor and the Agent with the consent of the Required
Banks.
Section 21. New York Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York, except as otherwise
required by mandatory provisions of law and except to the extent that remedies
provided by the laws of any jurisdiction other than New York are governed by the
laws of such jurisdiction.
Section 22. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Banks in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
REPUBLIC PAPERBOARD COMPANY
By:______________________________
Name:
Title:
NATIONSBANK, N.A., as Administrative
Agent
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT D
SECURITY AGREEMENT
AGREEMENT dated as of July 15, 1998 between REPUBLIC GROUP INCORPORATED, a
Delaware corporation (together with its successors, the "DEBTOR"), and
NATIONSBANK, N.A., as Administrative Agent (the "AGENT").
W I T N E S S E T H :
WHEREAS the Debtor, certain banks (the "BANKS"), certain LC Issuing Banks
(the "LC ISSUING BANKS"), Morgan Guaranty Trust Company of New York, as
Syndication Agent (the "SYNDICATION AGENT"), and the Agent are parties to a
Credit Agreement of even date herewith (as the same may be amended from time to
time, the "CREDIT AGREEMENT"); and
WHEREAS in order to induce the Banks, the LC Issuing Banks, the Syndication
Agent and the Agent to enter into the Credit Agreement, the Debtor has agreed to
grant a continuing security interest in and to the Collateral (as hereafter
defined) to secure the Secured Obligations (as herein defined);
NOW THEREFORE in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
respective meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Debtor, and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to the Debtor arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including any such obligation which might be characterized as an account,
contract right or general intangible under the Uniform Commercial Code in effect
in any jurisdiction) and all of the Debtor's rights in, to and under all
purchase orders for goods, services or other property, and all of the Debtor's
rights to any goods, services or other property represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to the
<PAGE>
Debtor under all contracts for the sale, lease or exchange of goods or other
property and/or the performance of services by it (whether or not yet earned by
performance on the part of the Debtor), in each case whether now in existence or
hereafter arising or acquired including, without limitation, the right to
receive the proceeds of said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with respect to any of
the foregoing.
"BANK DERIVATIVE OBLIGATIONS" means any Derivative Obligations owed by the
Debtor to any Bank (or any of its affiliates) as contemplated by the Credit
Agreement.
"COLLATERAL" has the meaning set forth in Section 3.
"COLLATERAL ACCOUNTS" means the General Collateral Account and the
Insurance Account.
"COMMODITY ACCOUNT" means an account maintained by a commodity intermediary
in which a commodity contract is carried for a commodity customer.
"COMMODITY CONTRACT" means a commodity futures contract, an option on a
commodity futures contract, a commodity option, or other contract that, in each
case, is:
(i) traded on or subject to the rules of a board of trade that has been
designated as a contract market for such a contract pursuant to the federal
commodities laws; or
(ii) traded on a foreign commodity board of trade, exchange, or market, and
is carried on the books of a commodity intermediary for a commodity customer.
"DOCUMENTS" means all "documents" (as defined in the UCC) or other receipts
covering, evidencing or representing goods, now owned or hereafter acquired by
the Debtor.
"EQUIPMENT" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Debtor, including without limitation all motor
vehicles, trucks, trailers, railcars and barges.
"GENERAL COLLATERAL ACCOUNT" has the meaning set forth in Section 5(A).
----
"GENERAL INTANGIBLES" means all "general intangibles" (as defined in the
UCC) now owned or hereafter acquired by the Debtor, including (i) all
obligations
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or indebtedness owing to the Debtor (other than Accounts) from whatever source
arising, (ii) all Patents, Patent Licenses, Trademarks, Trademark Licenses and
any rights or interests of the Debtor in any of the foregoing (including without
limitation any rights therein by way of collateral assignment or collateral
security), rights in intellectual property, goodwill, trade names, service
marks, trade secrets, copyrights, permits and licenses, (iii) all rights or
claims in respect of refunds for taxes paid, and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of any member
of the ERISA Group.
"INSTRUMENTS" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC), including those evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including (but not limited to)
promissory notes, drafts, bills of exchange and trade acceptances, now owned or
hereafter acquired by the Debtor.
"INSURANCE ACCOUNT" has the meaning set forth in Section 5(C).
----
"INSURANCE PROCEEDS" has the meaning set forth in Section 5(C).
----
"INVESTMENT PROPERTY" means (i) a Security, whether certificated or
uncertificated, (ii) a Security Entitlement, (iii) a Securities Account, (iv) a
Commodities Contract, or (v) a Commodities Account.
"INVENTORY" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by the Debtor, wherever located, and shall also mean and
include all raw materials and other materials and supplies, work-in-process and
finished goods and any products made or processed therefrom and all substances,
if any, commingled therewith or added thereto.
"LIQUID INVESTMENTS" has the meaning set forth in Section 5(F).
"PATENTS" means all the following: (i) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States or
any other country or any political subdivision thereof, including those
described in the Perfection Certificates, and (ii) all reissues, continuations,
continuations-in-part or extensions thereof.
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"PATENT LICENSE" means any written agreement now or hereafter in existence
granting to the Debtor any right to practice any invention on which a Patent is
in existence.
"PERFECTION CERTIFICATE" means a certificate substantially in the form of
Exhibit A, completed and supplemented with the schedules and attachments
contemplated thereby to the satisfaction of the Agent, and duly executed by the
chief executive officer and the chief legal officer of the Debtor.
"PERMITTED LIENS" means the Security Interests and the Liens on the
Collateral permitted to be created, to be assumed or to exist pursuant to
Section 5.09 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon,
collateral, including all claims of the Debtor against third parties for loss
of, damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance in respect of, any collateral,
and any condemnation or requisition payments with respect to any collateral, in
each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means all principal of and interest (including,
without limitation, any interest which accrues after or would accrue but for the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Debtor, whether or not allowed or allowable
as a claim in any such proceeding) on any loan under, or any note issued
pursuant to, the Credit Agreement, (ii) all reimbursement obligations with
respect to any Letter of Credit issued pursuant to the Credit Agreement and all
interest thereon (including, without limitation, any interest which accrues
after or would accrue but for the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Debtor,
whether or not allowed or allowable as a claim in any such proceeding), (iii)
all Bank Derivative Obligations, (iv) all other amounts payable by any Obligor
under the Loan Documents and (v) any amendments, restatements, renewals,
extensions or modifications of any of the foregoing.
"SECURED PARTIES" means the Agent, the Banks and the LC Issuing Banks.
"SECURITIES ACCOUNT" means an account to which a Financial Asset is or may
be credited in accordance with an agreement under which the person maintaining
the account undertakes to treat the person for whom the account is maintained as
entitled to exercise the rights that comprise the Financial Asset.
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<PAGE>
"SECURITY" means:
(i) a security;
(ii) an obligation of a person or a share, participation, or other
interest in a person or in property or an enterprise of a person, which is, or
is of a type, dealt in or traded on financial markets, or which is recognized in
any area in which it is issued or dealt in as a medium for investment; or
(iii) any property that is held by a securities intermediary for
another person in a Securities Account if the securities intermediary has
expressly agreed with the other person that the property is to be treated as a
financial asset under Article 8 of the UCC.
As context requires, the term means either the interest itself or the means
by which a person's claim to it is evidenced, including a certificated or
uncertificated Security, a Security certificate, or a Security Entitlement.
"SECURITY ENTITLEMENT" means an obligation of an issuer or a share,
participation, or other interest in an issuer or in property or an enterprise of
an issuer:
(i) which is represented by a Security certificate in bearer or
registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer;
(ii) which is one of a class or series or by its terms is divisible into a
class or series of shares, participations, interests, or obligations; and
(iii) which:
(A) is, or is of a type, dealt in or traded on securities exchanges or
securities markets; or
(B) is a medium for investment and by its terms expressly provides that
it is a security governed by Article 8 of the UCC.
"SECURITY INTERESTS" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
"TRADEMARKS" means all of the following: (i) all trademarks, trade names,
corporate names, company names, business names, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
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<PAGE>
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or
any political subdivision thereof, including those described in the Perfection
Certificates, and (ii) all extensions or renewals thereof.
"TRADEMARK LICENSE" means any written agreement now or hereafter in
existence granting to the Debtor any right to use any Trademark.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or non-
perfection.
Section 2. Representations and Warranties. The Debtor represents and
warrants as follows:
(A) The Debtor has good and marketable title to all of the
Collateral, free and clear of any Liens other than the Permitted Liens. The
Debtor has taken all actions necessary under the UCC to perfect its
interest in any Accounts purchased or otherwise acquired by it, as against
its assignors and creditors of its assignors.
(B) The Debtor has not performed any acts which might prevent the
Agent from enforcing any of the terms of this Agreement or which would
limit the Agent in any such enforcement. Other than financing statements or
other similar or equivalent documents or instruments with respect to the
Security Interests and Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering
all or any part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be effective to
perfect a Lien on such Collateral. Except as contemplated by Section 5.25
of the Credit Agreement, no Collateral is in the possession of any Person
(other than the Debtor) asserting any claim thereto or security interest
therein, except that the Agent or its designee may have possession of
Collateral as contemplated hereby.
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(C) The information set forth in the Perfection Certificate delivered
to the Agent prior to the Closing Date is correct and complete in all
material respects. Not later than 30 days following the Closing Date, the
Debtor shall furnish to the Agent file search reports from each UCC filing
office set forth in Schedule 6 to the Perfection Certificate confirming the
filing information set forth in such Schedule.
(D) The Security Interests constitute valid security interests under
the UCC securing the Secured Obligations. When UCC financing statements in
the form specified in Exhibit A shall have been filed in the offices
specified in the Perfection Certificate, the Security Interests shall
constitute perfected security interests in the Collateral (except Inventory
in transit) to the extent that a security interest therein may be perfected
by filing pursuant to the UCC, prior to all other Liens and rights of
others therein except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance with the
requirements of the Credit Agreement.
(F) To the best of the Debtor's knowledge, all Inventory has or will
have been produced in compliance with the applicable material requirements
of the Fair Labor Standards Act, as amended.
Section 3. The Security Interests. (A) In order to secure the full and
punctual payment and performance of the Secured Obligations in accordance with
the terms thereof, the Debtor hereby grants to the Agent for the ratable benefit
of the Secured Parties a continuing security interest in and to all of the
following property of the Debtor, whether now owned or existing or hereafter
acquired or arising and regardless of where located (all being collectively
referred to as the "COLLATERAL"):
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents;
(v) Instruments;
(vi) Equipment;
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(vii) The Collateral Accounts, all cash deposited therein from time
to time, the Liquid Investments made pursuant to Section 5(F) and other
monies and property of any kind of the Debtor in the possession or under
the control of the Agent;
(viii) All books and records (including customer lists, credit files,
computer programs, printouts and other computer materials and records) of
the Debtor pertaining to any of the Collateral;
(ix) All Proceeds of all or any of the Collateral described in
Clauses 3(A)(i) through 3(A)(viii) hereof; and
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(x) Investment Property.
(B) The Security Interests are granted as security only and shall not
subject any Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of the Debtor with respect to any of the Collateral or
any transaction in connection therewith.
Section 4. Further Assurances; Covenants. (A) The Debtor will not change
(i) its name, identity or corporate structure in any manner, (ii) the location
of its chief executive office or chief place of business or (iii) the locations
where it keeps or holds any Collateral or any records relating thereto from the
applicable location described in the Perfection Certificate, unless, not more
than six months nor less than 30 days prior to the date on which the Debtor
proposes to take any such action contemplated by Section 4(A), the Debtor shall
----
have given notice to the Agent of such proposed action, and, at the Debtor's
cost and expense, caused to be delivered to the Secured Parties with such
notice, an opinion of counsel, satisfactory to the Agent, in form and substance
satisfactory to the Agent, to the effect that all financing statements and
amendments or supplements thereto, continuation statements and other documents
required to be recorded or filed in order to perfect and protect the Security
Interests for a period (and after giving effect to the proposed action that is
the subject of such notice), specified in such opinion against all creditors of
and purchasers from the Debtor have been filed in each filing office necessary
for such purpose and that all filing fees and taxes, if any, payable in
connection with such filings have been paid in full. The Debtor shall not in
any event change the location of any Collateral if such change would cause the
Security Interests in such Collateral to lapse or cease to be perfected.
(B) The Debtor will, from time to time, at its expense, execute, deliver,
file and record any statement, assignment, instrument, document, agreement or
other paper and take any other action (including any filings of financing or
continuation statements under the UCC) that from time to time may be necessary
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or desirable or that the Agent may reasonably request, in order to create,
preserve, perfect, confirm or validate the Security Interests or to enable the
Secured Parties to obtain the full benefits of this Agreement, or to enable the
Agent to exercise and enforce any of its rights, powers and remedies hereunder
with respect to any of the Collateral. To the extent permitted by applicable
law, the Debtor hereby authorizes the Agent, and appoints the Agent as its true
and lawful attorney (with full power of substitution, in the name of the Debtor,
the Secured Parties or otherwise, for the sole use and benefit of the Secured
Parties), to execute and file financing statements or continuation statements
without the Debtor's signature appearing thereon. The Debtor agrees that a
carbon, photographic, photostatic or other reproduction of this Agreement or of
a financing statement is sufficient as a financing statement. The Debtor shall
pay the costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(C) If any Collateral is at any time in the possession or control of any
warehouseman, bailee or any of the Debtor's agents or processors, the Debtor
shall notify such warehouseman, bailee, agent or processor of the Security
Interests created hereby and to hold all such Collateral for the Agent's account
subject to the Agent's instructions.
(D) The Debtor shall keep full and accurate books and records relating to
the Collateral, and stamp or otherwise mark such books and records in such
manner as the Required Banks may reasonably require in order to reflect the
Security Interests.
(E) The Debtor will immediately deliver and pledge each Instrument to the
Agent, appropriately endorsed to the Agent, provided that so long as no Event of
Default shall have occurred and be continuing, the Debtor may retain for
collection in the ordinary course any Instruments (other than checks and drafts
constituting payments in respect of Accounts, as to which the provisions of
Section 5(B) shall apply) received by it in the ordinary course of business and
----
the Agent shall, promptly upon request of the Debtor, make appropriate
arrangements for making any other Instrument pledged by the Debtor available to
it for purposes of presentation, collection or renewal (any such arrangement to
be effected, to the extent deemed appropriate to the Agent, against trust
receipt or like document).
(F) The Debtor shall use its best efforts to cause to be collected from
its account debtors, as and when due, subject to such grace period as is
consistent with prudent customer relations, any and all amounts owing under or
on account of each Account (including Accounts which are delinquent, such
Accounts to be collected in accordance with lawful collection procedures) and
shall apply
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forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account. Subject to the rights of the Secured
Parties hereunder if an Event of Default shall have occurred and be continuing,
the Debtor may allow in the ordinary course of business as adjustments to
amounts owing under its Accounts (i) an extension or renewal of the time or
times of payment, or settlement for less than the total unpaid balance, which
the Debtor finds appropriate in accordance with business judgment and (ii a
refund or credit due as a result of returned or damaged merchandise, all in
accordance with the Debtor's ordinary course of business consistent with its
historical collection practices. The costs and expenses (including attorney's
fees) of collection, whether incurred by the Debtor or the Agent, shall be borne
by the Debtor.
(G) Upon the occurrence and during the continuance of any Event of
Default, the Debtor will upon the request of the Agent promptly notify (and the
Debtor hereby authorizes the Agent so to notify) each account debtor in respect
of any Account or Instrument that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Agent or its designee.
(H) The Debtor shall, if requested by the Agent, cause the Agent to be
named as lienholder on any certificates of title, applications for title or
similar evidence of ownership of Equipment now owned or hereafter acquired.
(I) Without the prior written consent of the Required Banks, the Debtor
will not sell, lease, exchange, assign or otherwise dispose of, or grant any
option with respect to, any Collateral except, subject to the rights of the
Secured Parties hereunder if an Event of Default shall have occurred and be
continuing, upon the consummation of any Asset Sale (including for the purposes
of this Agreement any trade-in of equipment in the ordinary course of business)
as permitted under Section 5.07 of the Credit Agreement whereupon, the Security
Interests created hereby in such item (but not in any Proceeds arising from such
Asset Sale) shall cease immediately without any further action on the part of
any Secured Party.
(J) The Debtor will, promptly upon request, provide to the Agent all
information and evidence it may reasonably request concerning the Collateral to
enable the Agent to enforce the provisions of this Agreement.
(K) From time to time upon reasonable request by the Agent, the Debtor
shall, at its cost and expense, cause to be delivered to the Secured Parties an
opinion of counsel satisfactory to the Agent as to such matters relating to the
transactions contemplated hereby as the Required Banks may reasonably request.
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Section 5. Collateral Accounts. (A) There is hereby established with the
Agent a cash collateral account (the "GENERAL COLLATERAL ACCOUNT") in the name
and under the control of the Agent into which there shall be deposited from time
to time the cash proceeds of the Collateral required to be delivered to the
Agent pursuant to Section 5(B) or any other provision of this Agreement. Any
----
income received by the Agent with respect to the balance from time to time
standing to the credit of the General Collateral Account, including any interest
or capital gains on Liquid Investments, shall remain, or be deposited, in the
General Collateral Account. All right, title and interest in and to the cash
amounts on deposit from time to time in the General Collateral Account together
with any Liquid Investments from time to time made pursuant to subsection 5(F)
hereof shall constitute part of the Collateral hereunder but shall not
constitute payment of the Secured Obligations until applied thereto as
hereinafter provided.
(B) During the continuance of an Event of Default, the Debtor shall upon
the request of the Agent instruct all account debtors and other Persons
obligated in respect of all Accounts to make all payments in respect of the
Accounts either (i) directly to the Agent (by instructing that such payments be
remitted to a post office box which shall be in the name and under the control
of the Agent) or (ii to one or more other banks in any state (other than
Louisiana) in the United States (by instructing that such payments be remitted
to a post office box which shall be in the name and under the control of such
bank) under a Lockbox Letter substantially in the form of Exhibit B hereto duly
executed by the Debtor and such bank or under other arrangements, in form and
substance satisfactory to the Agent, pursuant to which the Debtor shall have
irrevocably instructed such other bank (and such other bank shall have agreed)
to remit all proceeds of such payments directly to the Agent for deposit into
the General Collateral Account or as the Agent may otherwise instruct such bank.
All such payments made to the Agent shall be deposited in the General Collateral
Account. In addition to the foregoing, the Debtor agrees that if the proceeds
of any Collateral hereunder (including the payments made in respect of Accounts)
shall be received by it, the Debtor shall as promptly as possible deposit such
proceeds into the General Collateral Account. Until so deposited, all such
proceeds shall be held in trust by the Debtor for and as the property of the
Agent and the Banks and shall not be commingled with any other funds or property
of the Debtor.
(C) Promptly upon and at all times after the receipt of any cash proceeds
of insurance policies, awards of condemnation or other compensation required to
be paid to the Agent pursuant to Section 5.03 of the Credit Agreement (the
"INSURANCE PROCEEDS"), the Debtor shall establish and shall thereafter maintain
an additional cash collateral account (the "INSURANCE ACCOUNT") at the offices
of the Agent or such other bank as the Debtor and the Agent may agree (the
"INSURANCE ACCOUNT BANK"), in the name and under the control of the Agent.
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Forthwith upon such establishment, the Debtor shall notify the Agent of the
location, account name and account number of such account. The Debtor hereby
agrees to cause any Insurance Proceeds received from time to time after the
establishment of the Insurance Account to be deposited therein as set forth in
this paragraph. Any income received with respect to the balance from time to
time standing to the credit of the Insurance Account, including any interest or
capital gains on Liquid Investments, shall remain, or be deposited, in the
Insurance Account, subject to the rights of the Debtor to receive any amounts on
deposit in such Insurance Account in accordance with Section 5(D). All right,
title and interest in and to the cash amounts on deposit from time to time in
the Insurance Account together with any Liquid Investments from time to time
made pursuant to Section 5(F) hereof shall vest in the Agent, shall constitute
----
part of the Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied thereto as hereinafter provided, subject to the rights
of the Debtor to receive any such amounts in accordance with Section 5(D).
Subject to the rights of the Debtor to receive any amounts on deposit in the
Insurance Account in accordance with Section 5(D), the Agent shall apply to
repayment of the Term Loans and the Revolving Credit Loans those amounts on
deposit in the Insurance Account which are required to be applied to the
repayment of the Term Loans and the Revolving Credit Loans in accordance with
Section 2.04(c)(i) of the Credit Agreement.
(D) The balance from time to time standing to the credit of the Insurance
Account (to the extent not applied pursuant to the last sentence of Section 5)
shall be subject to withdrawal only upon the instructions of the Agent.
(E) Amounts on deposit in the Collateral Accounts shall be invested and
re-invested from time to time in such Liquid Investments as the Debtor shall
determine, which Liquid Investments shall be held in the name and be under the
control of the Agent; provided that, if an Event of Default has occurred and is
continuing, the Agent shall, if instructed by the Required Banks, cause such
Liquid Investments to be liquidated and apply or cause to be applied the
proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 9. For this purpose, "LIQUID INVESTMENTS" means Temporary
Cash Investments; provided that (i) each Liquid Investment shall mature within
30 days after it is acquired by the Agent and (ii) in order to provide the
Agent, for the benefit of the Secured Parties, with a perfected security
interest therein, each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if non-
negotiable then issued in the name of the Agent, which (together with any
appropriate instruments of transfer) are delivered to, and held by, the
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Agent or an agent thereof (which shall not be the Debtor or any of its
Affiliates) in the State of New York; or
(ii) in book-entry form and issued by the United States and subject
to pledge under applicable state law and Treasury regulations and as to
which (in the opinion of counsel to the Agent) appropriate measures shall
have been taken for perfection of the Security Interests.
(F) Amounts on deposit in the General Collateral Account may be drawn by
the Debtor upon its submission to the Agent of an officer's certificate (i)
stating that (x) such withdrawal shall be used for Project construction purposes
and (y) immediately before and after such withdrawal, no Default shall have
occurred and be continuing and (ii) attaching thereto the request for payment
submitted by the Construction Manager to the Debtor (or Republic Paperboard) in
accordance with the General Construction Contract. Interest and other
investment income may be drawn from the General Collateral Account by the Debtor
upon its submission to the Agent of an officer's certificate stating that
immediately before and after such withdrawal, no Default shall have occurred and
be continuing.
Section 6. General Authority. The Debtor hereby irrevocably appoints the
Agent its true and lawful attorney, with full power of substitution, in the name
of the Debtor, the Secured Parties or otherwise, for the sole use and benefit of
the Secured Parties, but at the Debtor's expense, to the extent permitted by law
to exercise, at any time and from time to time while an Event of Default has
occurred and is continuing, all or any of the following powers with respect to
all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance for
any and all monies due or to become due thereon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the Agent
were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Debtor not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline
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speedily in value or is of a type customarily sold on a recognized market. The
Debtor agrees that such notice constitutes "reasonable notification" within the
meaning of Section 9-504(3) of the UCC.
Section 7. Remedies upon Event of Default. (A) If any Event of Default
has occurred and is continuing, the Agent may exercise on behalf of the Secured
Parties all rights of a secured party under the UCC (whether or not in effect in
the jurisdiction where such rights are exercised) and, in addition, the Agent
may, without being required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, (i) withdraw all cash and Liquid
Investments in the Collateral Accounts and apply such cash and Liquid
Investments and other cash, if any, then held by it as Collateral as specified
in Section 9 and (ii) if there shall be no such cash or Liquid Investments or if
-
such cash and Liquid Investments shall be insufficient to pay all the Secured
Obligations in full, sell the Collateral or any part thereof at public or
private sale, for cash, upon credit or for future delivery, and at such price or
prices as the Agent may deem satisfactory. The Agent or any other Secured Party
may be the purchaser of any or all of the Collateral so sold at any public sale
(or, if the Collateral is of a type customarily sold in a recognized market or
is of a type which is the subject of widely distributed standard price
quotations, at any private sale). The Debtor will execute and deliver such
documents and take such other action as the Agent deems necessary or advisable
in order that any such sale may be made in compliance with law. Upon any such
sale the Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Debtor which
may be waived, and the Debtor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted. The notice (if any)
of such sale required by Section 6 shall (1) in case of a public sale, state the
-
time and place fixed for such sale, and (2) in the case of a private sale, state
the day after which such sale may be consummated. Any such public sale shall be
held at such time or times within ordinary business hours and at such place or
places as the Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Agent may determine. The Agent shall not be obligated to make any such sale
pursuant to any such notice. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Agent until the selling
price is paid by the purchaser thereof, but the Agent shall not incur any
liability in case of the
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failure of such purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon like notice.
The Agent, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
(B) For the purpose of enforcing any and all rights and remedies under
this Agreement the Agent may, upon the occurrence and during the continuance of
an Event of Default, (i) require the Debtor to, and the Debtor agrees that it
will, at its expense and upon the request of the Agent, forthwith assemble all
or any part of the Collateral as directed by the Agent and make it available at
a place designated by the Agent which is, in its opinion, reasonably convenient
to the Agent and the Debtor, whether at the premises of the Debtor or otherwise,
(ii) to the extent permitted by applicable law, enter, with or without process
of law and without breach of the peace, any premise where any of the Collateral
is or may be located, and without charge or liability to it seize and remove
such Collateral from such premises, (iii) have access to and use the Debtor's
books and records relating to the Collateral and (iv prior to the disposition of
the Collateral, store or transfer it without charge in or by means of any
storage or transportation facility owned or leased by the Debtor, process,
repair or recondition it or otherwise prepare it for disposition in any manner
and to the extent the Agent deems appropriate and, in connection with such
preparation and disposition, use without charge any trademark, trade name,
copyright, patent or technical process used by the Debtor. Upon the occurrence
and during the continuance of an Event of Default, the Agent may also render any
or all of the Collateral unusable at the Debtor's premises and may dispose of
such Collateral on such premises without liability for rent or costs.
(C) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Agent may license, or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive
basis, any Patents or Trademarks included in the Collateral throughout
the world for such term or terms, on such conditions and in such
manner as the Agent shall in its sole discretion determine;
(ii) the Agent may (without assuming any obligations or liability
thereunder), at any time and from time to time, enforce (and shall
have the exclusive right to enforce) against any licensor, licensee or
sublicensee all rights and remedies of the Debtor in, to and under any
Patent Licenses or Trademark Licenses and take or
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refrain from taking any action under any thereof, and the Debtor
hereby releases the Agent and each of the other Secured Parties from,
and agrees to hold the Agent and each of the other Secured Parties
free and harmless from and against any claims arising out of, any
lawful action so taken or omitted to be taken with respect thereto,
except any such claim to the extent that it arises solely as the
result of the gross negligence or willful misconduct of any Secured
Party; and
(iii) upon request by the Agent, the Debtor will execute and
deliver to the Agent a further power of attorney, in form and
substance satisfactory to the Agent, for the implementation of any
lease, assignment, license, sublicense, grant of option, sale or other
disposition of a Patent, Trademark, Patent License or Trademark
License. In the event of any such disposition pursuant to this
Section, the Debtor shall supply its know-how and expertise relating
to the manufacture and sale of the products bearing Trademarks or the
products or services made or rendered in connection with Patents, and
its customer lists and other records relating to such Patents or
Trademarks and to the distribution of said products, to the Agent.
Section 8. Limitation on Duty of Agent in Respect of Collateral. Beyond
the exercise of reasonable care in the custody thereof, the Agent shall have no
duty as to any Collateral in its possession or control or in the possession or
control of any agent or bailee or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto. The
Agent shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Agent in good faith.
Section 9. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held in the
Collateral Accounts shall be applied by the Agent in the following order of
priorities:
first, to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the Agent, and
all expenses, liabilities and advances incurred or made by the Agent in
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connection therewith, and any other unreimbursed expenses for which the
Agent or any other Secured Party is to be reimbursed pursuant to Section
9.03 of the Credit Agreement or Section 12 hereof and unpaid fees owing to
--
the Agent under the Loan Documents;
second, to the ratable payment of unpaid principal of, and/or any
reimbursement obligations constituting, the Secured Obligations;
third, to the ratable payment of accrued but unpaid interest on the
Secured Obligations in accordance with the provisions of the Credit
Agreement;
fourth, to the ratable payment of all other Secured Obligations, until
all Secured Obligations shall have been paid in full; and
finally, to payment to the Debtor or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a
ratable basis, in any combination thereof.
Section 10. Concerning the Agent. The provisions of Article 7 of the
Credit Agreement shall inure to the benefit of the Agent in respect of this
Agreement and shall be binding upon the parties to the Credit Agreement in such
respect. In furtherance and not in derogation of the rights, privileges and
immunities of the Agent therein set forth:
(A) The Agent is authorized to take all such action as is provided to
be taken by it as Agent hereunder and all other action reasonably
incidental thereto. As to any matters not expressly provided for herein
(including the timing and methods of realization upon the Collateral) the
Agent shall act or refrain from acting in accordance with written
instructions from the Required Banks or, in the absence of such
instructions, in accordance with its discretion.
(B) The Agent shall not be responsible for the existence, genuineness
or value of any of the Collateral or for the validity, perfection, priority
or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission
to act on its part hereunder. The Agent shall have no duty to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement by the Debtor.
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Section 11. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Agent may appoint
another bank or trust company or one or more other persons, either to act as co-
agent or co-agents, jointly with the Agent, or to act as separate agent or
agents on behalf of the Secured Parties with such power and authority as may be
necessary for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment (which may, in the discretion of the
Agent, include provisions for the protection of such co-agent or separate agent
similar to the provisions of Section 10).
--
Section 12. Expenses. In the event that the Debtor fails to comply with
the provisions of the Credit Agreement or this Agreement, such that the value of
any Collateral or the validity, perfection, rank or value of any Security
Interest is thereby diminished or potentially diminished or put at risk, the
Agent if requested by the Required Banks may, but shall not be required to,
effect such compliance on behalf of the Debtor, and the Debtor shall reimburse
the Agent for the costs thereof on demand. All insurance expenses and all
expenses of protecting, storing, warehousing, appraising, insuring, handling,
maintaining, and shipping the Collateral, any and all excise, property, sales,
and use taxes imposed by any state, federal, or local authority on any of the
Collateral, or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may be requested by the Required Banks from
time to time, upon the occurrence and during the continuance of an Event of
Default, or in respect of the sale or other disposition thereof shall be borne
and paid by the Debtor; and if the Debtor fails to promptly pay any portion
thereof when due, the Agent or any other Secured Party may, at its option, but
shall not be required to, pay the same and charge the Debtor's account therefor,
and the Debtor agrees to reimburse the Agent or such other Secured Party
therefor on demand. All sums so paid or incurred by the Agent or any other
Secured Party for any of the foregoing and any and all other sums for which the
Debtor may become liable hereunder and all costs and expenses (including
attorneys' fees, legal expenses and court costs (including the reasonable
allocation of the compensation, costs and expenses of in-house counsel, based
upon time spent)) reasonably incurred by the Agent or any other Secured Party in
enforcing or protecting the Security Interests or any of their rights or
remedies under this Agreement, shall, together with interest thereon until paid
at an annual rate equal to the sum of the Applicable Margin plus the Base Rate,
in each case for each day until paid, be additional Secured Obligations
hereunder.
Section 13. Termination of Security Interests; Release of Collateral. Upon
the repayment in full of all Secured Obligations, the termination of the
Commitments under the Credit Agreement and the cancellation or termination of
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all Letters of Credit, the Security Interests shall terminate and all rights to
the Collateral shall revert to the Debtor. At any time and from time to time
prior to such termination of the Security Interests, the Agent may release any
of the Collateral with the prior written consent of the Required Banks; provided
that any release of all or substantially all of the Collateral (for purposes of
this proviso, as defined in the Credit Agreement) shall require the prior
written consent of all the Banks. In addition, so long as no Event of Default
shall have occurred and be continuing, upon the consummation of any Asset Sale
(including for purposes of this Agreement any trade-in of equipment in the
ordinary course of business) as permitted under Section 5.07 of the Credit
Agreement, the Security Interests in the Collateral subject to such Asset Sale
(but not in any Proceeds arising from such Asset Sale) shall cease immediately
without any further action on the part of the Agent or any Bank. The Agent
shall be fully protected in relying on a certificate of the Debtor certifying
that any Asset Sale is permitted by the terms of the Credit Agreement and that
no Event of Default has occurred and is continuing. Upon any termination of the
Security Interests or release of Collateral in accordance with this Section, the
Agent will, at the expense of the Debtor, execute and deliver to the Debtor such
documents as the Debtor shall reasonably request to evidence the termination of
the Security Interests or the release of such Collateral, as the case may be.
Section 14. Notices. All notices, communications and distributions
hereunder shall be given in accordance with Section 9.01 of the Credit
Agreement.
Section 15. Waivers, Non-Exclusive Remedies. No failure on the part of
the Agent to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise by the Agent or any Secured Party of
any right under the Credit Agreement, any of the other Loan Documents or this
Agreement preclude any other or further exercise thereof or the exercise of any
other right. The rights in this Agreement, the Credit Agreement and the other
Loan Documents are cumulative and are not exclusive of any other remedies
provided by law.
Section 16. Successors and Assigns. This Agreement is for the benefit of
the Agent and the Secured Parties and their successors and assigns, and in the
event of an assignment of all or any of the Secured Obligations, the rights
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Agreement shall be binding on the
Debtor and its successors and assigns.
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Section 17. Changes in Writing. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Debtor and the Agent with the consent of the Required
Banks.
Section 18. New York Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
PRINCIPLES OR CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION.
Section 19. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
other Secured Parties in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
Section 20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
REPUBLIC GROUP INCORPORATED
By:________________________
Name:
Title:
NATIONSBANK, N.A., as Agent
By:________________________
Name:
Title:
<PAGE>
EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, the Chief Executive Officer of Hollis & Eastern Railroad
Company, an Oklahoma corporation (the "DEBTOR"), hereby certifies with reference
to the Security Agreement dated as of July 15, 1998 between the Debtor and
NationsBank, N.A., as Administrative Agent (the "Agent") (terms defined therein
being used herein as therein defined), to the Agent and each Bank as follows:
1. Names. (a) The exact corporate name of the Debtor as it appears in
its certificate of incorporation is as follows:
(b) Set forth below is each other corporate name the Debtor has had since
its organization, together with the date of the relevant change:
(c) Except as set forth in Schedule 1, the Debtor has not changed its
identity or corporate structure in any way within the past five years.
(d) The following is a list of all other names (including trade names or
similar appellations) used by the Debtor or any of its divisions or other
business units at any time during the past five years:
2. Current Locations. (a) The chief executive office of the Debtor is
located at the following address:
MAILING ADDRESS COUNTY STATE
-------------------------- ---------------- ----------------
1
<PAGE>
(b) The following are all the locations where the Debtor maintains any
books or records relating to any Accounts:
MAILING ADDRESS COUNTY STATE
-------------------------- ---------------- ----------------
(c) The following are all the places of business of the Debtor not
identified above:
MAILING ADDRESS COUNTY STATE
-------------------------- ---------------- ----------------
(d) The following are all the locations where the Debtor maintains any
Inventory not identified above:
MAILING ADDRESS COUNTY STATE
-------------------------- ---------------- ----------------
(e) The following are the names and addresses of all Persons other than
the Debtor which have possession of any of the Debtor's Inventory:
MAILING ADDRESS COUNTY STATE
-------------------------- ---------------- ----------------
2
<PAGE>
3. Prior Locations. (a) Set forth below is the information required by
paragraphs 2(a), 2(b) and 2(c) hereof with respect to each location or place of
business maintained by the Debtor at any time during the past five years:
MAILING ADDRESS COUNTY STATE
-------------------------- ---------------- ----------------
(b) Set forth below is the information required by paragraphs 2(D) and
2(E) hereof with respect to each location or bailee where or with whom Inventory
has been lodged at any time during the past four months:
4. Unusual Transactions. All Accounts have been originated by the Debtor
and all Inventory and Equipment has been acquired by the Debtor in the ordinary
course of its business.
5. UCC Filings. A duly signed financing statement on Form UCC-1 in
substantially the form of Schedule 5(A) hereto has been delivered to the Agent
for filing in the Uniform Commercial Code filing office in each jurisdiction
identified in paragraph 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth filing information with respect to the filings described in
paragraph 5 above.
7. Filing Fees. All filing fees and taxes payable in connection with the
filings described in paragraph 5 above will be promptly paid.
3
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands this ____ day of
________, 1998.
________________________
Title:
4
<PAGE>
SCHEDULE 5(A)
DESCRIPTION OF COLLATERAL
All accounts, chattel paper, securities, instruments, contract rights,
general intangibles, goods, inventory, equipment, documents and investment
property, now owned or hereafter acquired, wherever located, and all proceeds
thereof, as such collateral is further described in Exhibit A attached herewith
and incorporated herein.
1
<PAGE>
SCHEDULE 6
SCHEDULE OF FILINGS
DEBTOR FILING OFFICER FILE NUMBER DATE OF FILING/1/
- ------------- --------------------- ------------------ ---------------------
______________________
/1/ Indicate lapse date, if other than fifth anniversary.
<PAGE>
EXHIBIT E
SUBSIDIARY GUARANTEE
GUARANTEE dated as of July 15, 1998 by each of the Persons parties hereto
(each, with its successors, a "SUBSIDIARY GUARANTOR" and collectively, with
their respective successors, the "SUBSIDIARY GUARANTORS") in favor of
NationsBank, N.A., as Administrative Agent (with its successors, the "AGENT").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Republic Group Incorporated, a Delaware corporation (with its
successors, the "BORROWER"), certain banks (the "BANKS"), certain LC Issuing
Banks (the "LC ISSUING BANKS"), Morgan Guaranty Trust Company of New York, as
Syndication Agent, and the Agent are parties to a Credit Agreement dated as of
July 15, 1998 (as the same may be amended from time to time, the "CREDIT
AGREEMENT"); and
WHEREAS, the Borrower has, or may, after the date hereof, become liable in
respect of Derivative Obligations (as defined in the Credit Agreement) to any
Bank (or any of its affiliates) as contemplated by Section 5.09 of the Credit
Agreement ("BANK DERIVATIVES OBLIGATIONS"); and
WHEREAS, the Borrower owns, directly or indirectly, substantially all of
the capital stock or other equity interests of each Subsidiary Guarantor; and
WHEREAS, it is a condition to the effectiveness of the Credit Agreement
that each Subsidiary Guarantor enter into a Subsidiary Guarantee substantially
in the form hereof; and
WHEREAS, in consideration of the financial and other support that the
Borrower has provided, and such financial and other support as the Borrower may
in the future provide, to the Subsidiary Guarantors, the Subsidiary Guarantors
are willing to guarantee the Guaranteed Obligations (as herein defined);
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
<PAGE>
for therein, except that the term "Loan Documents" shall include any document
with respect to any Bank Derivatives Obligations. The following additional term,
as used herein, has the following meaning:
"GUARANTEED OBLIGATIONS" means all principal of and interest (including,
without limitation, any interest which accrues after or would accrue but for the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower, whether or not allowed or
allowable as a claim in any such proceeding) on any loan under, or any note
issued pursuant to, the Credit Agreement, (ii) all reimbursement obligations
with respect to any Letter of Credit issued pursuant to the Credit Agreement and
all interest thereon (including, without limitation, any interest which accrues
after or would accrue but for the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Borrower,
whether or not allowed or allowable as a claim in any such proceeding), (iii)
any Bank Derivatives Obligations, (iv) all other amounts payable by any Obligor
under the Loan Documents and (v) any amendments, restatements, renewals,
extensions or modifications of any of the foregoing.
SECTION 2. The Guarantee. Each of the Subsidiary Guarantors, jointly and
severally, hereby unconditionally guarantees the full and punctual payment
(whether at stated maturity, upon acceleration or otherwise) of the Guaranteed
Obligations. Upon failure by the Borrower to pay punctually any Guaranteed
Obligation, each Subsidiary Guarantor agrees jointly and severally that it shall
forthwith on demand pay the amount not so paid at the place and in the manner
specified in the Credit Agreement or the other relevant Loan Document, as the
case may be.
SECTION 3. Guarantee Unconditional. The obligations of each Subsidiary
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower, any other Obligor or any
other Person under any Loan Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note or any other Loan Document or any Letter of Credit;
(iii) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Borrower, any other
Obligor or any other Person under any Loan Document;
2
<PAGE>
(iv) any change in the corporate existence, structure or ownership of
the Borrower, any other Obligor or any other Person or any of their respective
Subsidiaries, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Borrower, any other Obligor or any other Person or any
of their assets or any resulting release or discharge of any obligation of the
Borrower, any other Obligor or any other Person contained in any Loan Document;
(v) the existence of any claim, set-off or other rights which such
Subsidiary Guarantor may have at any time against the Borrower, any other
Obligor, the Agent, any Bank, any LC Issuing Bank or any other Person, whether
in connection herewith or any unrelated transactions; provided that nothing
herein shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower, any other Obligor or any other Person for any reason of the Credit
Agreement, any Note or any other Loan Document or any Letter of Credit, or any
provision of applicable law or regulation purporting to prohibit the payment by
the Borrower, any other Obligor or any other Person of the principal of or
interest on any Note or any other amount payable by the Borrower under any Loan
Document; or
(vii) any other act or omission to act or delay of any kind by the
Borrower, any other Obligor, the Agent, any Bank, and LC Issuing Bank or any
other party to any Loan Document, or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to obligations of any Subsidiary Guarantor hereunder.
SECTION 4. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances; Release of Subsidiary Guarantors. (a) Each Subsidiary
Guarantor's obligations hereunder shall remain in full force and effect until
the repayment in full of all Guaranteed Obligations, the termination of the
Revolving Credit Commitments under the Credit Agreement and the expiration or
cancellation of all Letters of Credit. If at any time any payment of Guaranteed
Obligations payable by the Borrower is rescinded or must be otherwise restored
or returned upon the insolvency or receivership of the Borrower or otherwise,
each Subsidiary Guarantor's obligations hereunder with respect thereto shall be
reinstated as though such payment had been due but not made at such time.
(b) At any time and from time to time prior to the termination of each
Subsidiary Guarantor's obligations hereunder in accordance with subsection (a),
the Agent may release any Subsidiary Guarantor from its obligations hereunder
3
<PAGE>
with the prior written consent of the Required Banks; provided that any release
of all or substantially all of the Subsidiary Guarantors shall require the
consent of all of the Banks.
(c) So long as no Event of Default shall have occurred and be continuing,
upon the consummation of any Asset Sale as permitted under Section 5.07 of the
Credit Agreement with respect to all (but not less than all) of the Borrower's
direct and indirect Investment in any Subsidiary Guarantor, the obligations of
such Subsidiary Guarantor shall terminate immediately without any further action
on the part of the Agent or any Bank. The Agent shall be fully protected in
relying on a certificate of the Borrower certifying that any Asset Sale is
permitted by the terms of the Credit Agreement and that no Event of Default has
occurred and is continuing. Upon any termination of the obligations of any
Subsidiary Guarantee hereunder in accordance with this Section, the Agent will,
at the expense of the Debtor, execute and deliver to the Debtor such documents
as the Debtor shall reasonably request to evidence such termination.
SECTION 5. Waiver by the Subsidiary Guarantors. Each Subsidiary
Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and
any notice not provided for herein, as well as any requirement that at any time
any action be taken by any corporation or person against the Borrower, any other
Subsidiary Guarantor or any other Person.
SECTION 6. Subrogation. Upon making any payment with respect to the
Borrower hereunder, each Subsidiary Guarantor shall be subrogated to the rights
of the payee against the Borrower with respect to such payment; provided that
such Subsidiary Guarantor shall not enforce any payment by way of subrogation,
or by reason of contribution against any other guarantor of the Borrower's
obligations guaranteed hereunder (including without limitation any other
Subsidiary Guarantor), until the repayment in full of all Guaranteed
Obligations, the termination of the Revolving Credit Commitments under the
Credit Agreement and the expiration or cancellation of all Letters of Credit.
SECTION 7. Stay of Acceleration. If acceleration of the time for
payment of any Guaranteed Obligations payable by the Borrower is stayed by
reason of the insolvency or receivership of the Borrower or otherwise, all such
Guaranteed Obligations otherwise subject to acceleration under the terms of any
Loan Document shall nonetheless be payable by each of the Subsidiary Guarantors
hereunder forthwith on demand by the Agent made at the request of the Required
Banks.
4
<PAGE>
SECTION 8. Representations and Warranties. Each Subsidiary Guarantor
represents and warrants as follows:
(a) Existence and Power. Such Subsidiary Guarantor is a corporation duly
-------------------
incorporated or a partnership duly formed, as the case may be, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
formation, as applicable, and has all powers and all material governmental
licenses, consents, authorizations and approvals required to carry on its
business as now conducted.
(b) Corporate or Partnership and Governmental Authorization; No
-----------------------------------------------------------
Contravention. The execution, delivery and performance by such Subsidiary
- -------------
Guarantor of the Loan Documents to which it is a party are within its corporate
or partnership powers, as the case may be, have been duly authorized by all
necessary corporate or partnership action, require no action by or in respect
of, or, except for Uniform Commercial Code filings in connection with the
Collateral Documents and the recordation of the Mortgage, filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws or partnership agreement of such
Subsidiary Guarantor or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower or any of its Subsidiaries or result
in the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries (other than the Lien created by the Collateral Documents).
(c) Binding Effect; Liens Enforceable. (i) Each Loan Document to which
---------------------------------
such Subsidiary Guarantor is a party constitutes a valid and binding agreement
of such Subsidiary Guarantor, in each case enforceable against such guarantor in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity.
(ii) Each Collateral Document to which such Subsidiary Guarantor is a
party creates valid security interests in, and first mortgage Liens on (if
applicable), the Collateral purported to be covered thereby, which security
interests and mortgage Liens (if applicable) are and will remain perfected
security interests and mortgage Liens, prior to all other Liens.
SECTION 9. Amendments. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
each Subsidiary Guarantor and the Agent with the consent of the Required Banks;
provided that no such amendment or waiver shall, unless signed by all the Banks,
release all or substantially all of the Subsidiary Guarantors.
5
<PAGE>
SECTION 10. Notices. All notices and other communications provided for
herein shall be in writing (including bank wire, telex, facsimile or similar
writing) and shall be delivered to the relevant party at such address, facsimile
number or telex number of such party set forth on the signature pages hereof, or
at such other address, facsimile number or telex number as such party may
hereafter specify for the purpose by notice to the Agent. Each such notice,
request or other communication shall be effective (i) if given by telex, when
transmitted to the telex number referred to in this Section and the appropriate
answerback is received, (ii) if given by facsimile, when transmitted to the
facsimile number referred to in this Section and confirmation of receipt is
received, (iii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iv) if
given by any other means, when delivered at the address referred to in this
Section.
SECTION 11. Right of Set-Off; Taxes. (a) If any Subsidiary Guarantor
fails to pay any Guaranteed Obligation when due, each Bank and each of its
affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Bank or affiliate to or for the
credit or the account of such Subsidiary Guarantor against any and all of the
obligations of such Subsidiary Guarantor now or hereafter existing under the
Loan Documents held by such Bank or any of its affiliates, irrespective of
whether or not such Bank shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Bank under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Bank may have.
(b) Each Subsidiary Guarantor agrees to be bound by the provisions of
Section 8.04 of the Credit Agreement and, for purposes hereof, all references to
"the Borrower" contained in such Section shall be deemed to be references to
each Subsidiary Guarantor, and all references to payments made under the Credit
Agreement or the Notes shall be deemed to include references to payments made
under this Agreement.
SECTION 12. Continuing Guarantee. This Guarantee is a continuing
Guarantee and shall be binding upon each of the Subsidiary Guarantors and its
successors and assigns, and inure to the benefit of and be enforceable by the
Agent or each Bank and its successors, transferees and assigns. This Guarantee
is for the benefit of each Bank and its successors and assigns, and in the event
of an assignment of all or any of any Bank's interest in and to its rights and
obligations under the Credit Agreement or any agreement with respect to any Bank
Derivatives Obligations in accordance with the Credit Agreement or such other
6
<PAGE>
agreement, the assignor's rights hereunder, to the extent applicable to the
indebtedness or obligation so assigned, shall automatically be transferred with
such indebtedness or obligation.
SECTION 13. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Banks in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
SECTION 14. Limitation on the Obligations. The obligations of each
Subsidiary Guarantor hereunder shall be limited to an aggregate amount that is
equal to the largest amount that would not render the obligations of such
Subsidiary Guarantor hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of applicable law.
SECTION 15. Governing Law; Jurisdiction; Consent to Service of Process.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York. Each Subsidiary Guarantor hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Subsidiary Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
SECTION 16. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 17. Counterparts; Integration; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when the Agent has received, from each of the
7
<PAGE>
parties listed on the signature pages hereof, a counterpart hereof signed by
such party or facsimile or other written confirmation satisfactory to the Agent
confirming that such party has signed a counterpart hereof.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be
duly executed by their respective authorized officers as of the day and year
first above written.
HOLLIS & EASTERN RAILROAD
COMPANY
By_______________________________
Name:
Title:
P.O. Box 1307
Hutchinson, KS 67504
REPUBLIC GYPSUM COMPANY
By_______________________________
Name:
Title:
P.O. Box 1307
Hutchinson, KS 67504
REPUBLIC PAPERBOARD COMPANY
By_______________________________
Name:
Title:
P.O. Box 1307
Hutchinson, KS 67504
<PAGE>
REPUBLIC PAPERBOARD COMPANY OF
WEST VIRGINIA
By_______________________________
Name:
Title:
P.O. Box 1307
Hutchinson, KS 67504
NATIONSBANK, N.A., as Administrative
Agent
By_______________________________
Name:
Title:
14 West 10th Street
Kansas City, MO 64105
<PAGE>
EXHIBIT 99(b)
================================================================================
REPUBLIC GROUP INCORPORATED, as Company
AND
UMB BANK, N.A., as Trustee
Indenture
Dated as of July 15, 1998
----------
$100,000,000
9.50% Senior Subordinated Notes due 2008
================================================================================
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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ARTICLE 1
DEFINITIONS
<S> <C>
SECTION 1.01. Certain Terms Defined...........................................................13
SECTION 1.02. Other Definitions...............................................................31
ARTICLE 2
ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES
SECTION 2.01. Authentication and Delivery of Securities.......................................32
SECTION 2.02. Execution of Securities.........................................................32
SECTION 2.03. Certificate of Authentication...................................................32
SECTION 2.04. Form, Denomination and Date of Securities; Payments of
Interest..............................................................................32
SECTION 2.05. Restrictive Legends.............................................................34
SECTION 2.06. Registration, Transfer and Exchange.............................................36
SECTION 2.07. Book-Entry Provisions for Global Securities.....................................37
SECTION 2.08. Special Transfer Provisions.....................................................39
SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Securities.......................43
SECTION 2.10. Cancellation of Securities......................................................44
SECTION 2.11. Temporary Securities............................................................44
SECTION 2.12. CUSIP and CINS Numbers..........................................................44
ARTICLE 3
COVENANTS OF THE COMPANY AND THE TRUSTEE.
SECTION 3.01. Payment of Principal and Interest...............................................45
SECTION 3.02. Offices for Payments, etc.......................................................45
SECTION 3.03. Appointment to Fill a Vacancy in Office of Trustee..............................46
SECTION 3.04. Paying Agents...................................................................46
SECTION 3.05. Certificates to Trustee.........................................................47
SECTION 3.06. Securityholders' Lists..........................................................47
SECTION 3.07. Reports by the Trustee..........................................................47
SECTION 3.08. Limitation on Restricted Payments...............................................48
SECTION 3.09. Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock....................................................................50
SECTION 3.10. Disposition of Proceeds of Asset Sales..........................................53
SECTION 3.11. Limitation on Liens.............................................................57
</TABLE>
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SECTION 3.12. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.....................................................57
SECTION 3.13. Limitation on Line of Business..................................................58
SECTION 3.14. Limitation on Senior Subordinated Debt...........................................58
SECTION 3.15. Limitation on Transactions with Affiliates......................................58
SECTION 3.16. Limitation on Issuance of Guarantees of Indebtedness by
Restricted Subsidiaries...............................................................59
SECTION 3.17. Change of Control...............................................................60
SECTION 3.18. Reports.........................................................................62
SECTION 3.19. Waiver of Stay, Extension or Usury Laws.........................................63
ARTICLE 4
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
SECTION 4.01. Events of Default...............................................................64
SECTION 4.02. Acceleration....................................................................66
SECTION 4.03. Other Remedies..................................................................66
SECTION 4.04. Waiver of Past Defaults.........................................................66
SECTION 4.05. Control by Majority.............................................................67
SECTION 4.06. Limitation on Suits
.....................................................................................67
SECTION 4.07. Rights of Holders to Receive Payment............................................67
SECTION 4.08. Collection Suit by Trustee......................................................68
SECTION 4.09. Trustee May File Proofs of Claim................................................68
SECTION 4.10. Priorities......................................................................68
SECTION 4.11. Undertaking for Costs...........................................................69
ARTICLE 5
CONCERNING THE TRUSTEE
SECTION 5.01. Duties and Responsibilities of the Trustee; During Default;
Prior to Default......................................................................69
SECTION 5.02. Certain Rights of the Trustee...................................................70
SECTION 5.03. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof.........................................72
SECTION 5.04. Trustee and Agents May Hold Securities; Collections, etc........................72
SECTION 5.05. Moneys Held by Trustee..........................................................72
SECTION 5.06. Notice of Default...............................................................73
SECTION 5.07. Compensation and Indemnification of Trustee and Its
Prior Claim...........................................................................73
SECTION 5.08. Right of Trustee to Rely on Officer's Certificate, etc..........................74
</TABLE>
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<S> <C>
SECTION 5.09. Persons Eligible for Appointment as Trustee.....................................74
SECTION 5.10. Resignation and Removal; Appointment of Successor
Trustee...............................................................................74
SECTION 5.11. Acceptance of Appointment by Successor Trustee..................................76
SECTION 5.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee...................................................................76
SECTION 5.13. Preferential Collection of Claims...............................................77
ARTICLE 6
CONCERNING THE HOLDERS
SECTION 6.01. Evidence of Action Taken by Holders.............................................77
SECTION 6.02. Proof of Execution of Instruments and of Holding of
Securities; Record Date...............................................................78
SECTION 6.03. Securities Owned by Company Deemed Not Outstanding..............................78
SECTION 6.04. Right of Revocation of Action Taken.............................................79
ARTICLE 7
SUPPLEMENTAL INDENTURES
SECTION 7.01. Supplemental Indentures Without Consent of Holders..............................79
SECTION 7.02. With Consent of Holders.........................................................80
SECTION 7.03. Effect of Supplemental Indenture................................................81
SECTION 7.04. Documents to Be Given to Trustee; Compliance with TIA...........................82
SECTION 7.05. Notation on Securities in Respect of Supplemental
Indentures............................................................................82
ARTICLE 8
CONSOLIDATION, MERGER OR SALE OF ASSETS
SECTION 8.01. When the Company May Merge, Etc.................................................82
SECTION 8.02. Successor Corporation Substituted...............................................83
SECTION 8.03. Opinion of Counsel to Trustee...................................................83
ARTICLE 9
SUBORDINATION
SECTION 9.01. Agreement to Subordinate........................................................84
SECTION 9.02. Liquidation; Dissolution; Bankruptcy............................................84
SECTION 9.03. Default on Designated Senior Debt...............................................85
SECTION 9.04. When Distributions Must Be Paid Over............................................85
</TABLE>
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<S> <C>
SECTION 9.05. Notice..........................................................................86
SECTION 9.06. Subrogation.....................................................................86
SECTION 9.07. Relative Rights.................................................................87
SECTION 9.08. The Company and Holders May Not Impair Subordination............................87
SECTION 9.09. Distribution or Notice to Representative........................................88
SECTION 9.10. Rights of Trustee and Paying Agent..............................................88
SECTION 9.11. Authorization to Effect Subordination
.....................................................................................89
SECTION 9.12. Payment.........................................................................89
ARTICLE 10
REDEMPTION OF SECURITIES
SECTION 10.01. Right of Optional Redemption; Prices...........................................89
SECTION 10.02. Notice of Redemption; Partial Redemptions......................................90
SECTION 10.03. Payment of Securities Called for Redemption....................................91
SECTION 10.04. Exclusion of Certain Securities from Eligibility for
Selection for Redemption..............................................................92
ARTICLE 11
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 11.01. Company's Option to Effect Defeasance or Covenant
Defeasance............................................................................92
SECTION 11.02. Legal Defeasance and Discharge.................................................92
SECTION 11.03. Covenant Defeasance............................................................93
SECTION 11.04. Conditions to Legal or Covenant Defeasance.....................................93
SECTION 11.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions..............................................95
SECTION 11.06. Repayment to the Company.......................................................96
SECTION 11.07. Reinstatement..................................................................96
ARTICLE 12
MISCELLANEOUS PROVISIONS
SECTION 12.01. Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability..............................................97
SECTION 12.02. Provisions of Indenture for the Sole Benefit of Parties and
Holders...............................................................................97
SECTION 12.03. Successors and Assigns of Company Bound by Indenture...........................97
SECTION 12.04. Notices and Demands on Company, Trustee and Holders............................97
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 12.05. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein....................................................98
SECTION 12.06. Payments Due on Saturdays, Sundays and Holidays................................99
SECTION 12.07. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939.................................................................99
SECTION 12.08. New York Law to Govern.........................................................99
SECTION 12.09. Third Party Beneficiaries......................................................99
SECTION 12.10. Counterparts.................................................................100
SECTION 12.11. Effect of Headings............................................................100
EXHIBIT A. Form of Certificate to be Delivered in
Connection with Transfers Pursuant to
Regulation S.........................................................................A-1
</TABLE>
v
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of July 15, 1998
Trust Indenture Indenture
Act Section Section
(S) 310 (a) (1) ................................... 5.09
(a) (2) ................................... 5.09
(b) ....................................... 5.10
(S) 312 (a) ....................................... 3.06
(S) 313 (a) ....................................... 3.07
(S) 314 (a) ....................................... 12.04
(c) (1) ................................... 12.05
(c) (2) ................................... 12.05
(e) ....................................... 12.05
(S) 315 (b) ....................................... 5.06
(S) 316 (a) (last
sentence) ............................. 1.01 ("Outstanding")
(a) (1) (A) ............................... 4.02, 4.05
(a) (1) (B) ............................... 4.04
(b) ....................................... 4.07
(c) ....................................... 6.02
(S) 317 (a) (1) ................................... 4.08
(a) (2) ................................... 4.09
(b) ....................................... 3.04
(S) 318 (a) ....................................... 12.07
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
vi
<PAGE>
THIS INDENTURE, dated as of July 15, 1998 between Republic Group
Incorporated, a Delaware corporation (the "COMPANY"), and UMB BANK, N.A. (the
"TRUSTEE"),
W I T N E S S E T H :
WHEREAS, the Company has duly authorized the issue of its 9.50% Senior
Subordinated Notes due 2008 (the "SECURITIES") and, to provide, among other
things, for the authentication, delivery and administration thereof, the Company
has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Securities and the Trustee's certificate of authentication
shall be in substantially the following form:
[FORM OF FACE OF SECURITY]
No. $
[CUSIP][CINS]
Republic Group Incorporated
9.50% Senior Subordinated Note Due 2008
Republic Group Incorporated, a Delaware corporation (the "COMPANY"),
for value received hereby promises to pay to _______________________________ or
registered assigns the principal sum of ____________ Dollars at the Company's
office or agency for said purpose in the City of New York on July 15, 2008, by
check or draft in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on January 15 and July 15 (each an
"INTEREST PAYMENT DATE") of each year, commencing with January 15, 1999, on said
principal sum by check or draft in like coin or currency at the rate per annum
set forth above at said office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from the date of this Security, or, if
no interest on the Securities [or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer]1 has been paid or duly provided
for, from July 15, 1998. Notwithstanding the foregoing, if the date hereof is
after January 1 or July 1 (each an "INTEREST RECORD DATE"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the
- -----------
/1/To be included in Exchange Securities.
<PAGE>
payment of interest due on such Interest Payment Date then this Security shall
bear interest from the next preceding Interest Payment Date to which interest on
the Securities has been paid or duly provided for. The interest so payable on
any Interest Payment Date will, except as otherwise provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose name this
Security is registered at the close of business on the Interest Record Date
preceding such Interest Payment Date whether or not such day is a business day;
provided that interest may be paid, at the option of the Company, by mailing a
check therefor payable to the registered holder entitled thereto at such
holder's last address as it appears on the Security register or by electronic
transfer, in immediately available funds, to such bank or other entity in the
continental United States as shall be designated in writing by such holder
(which written designation shall include the name, address and ABA routing
number of the receiving bank and the name, number and contact person related to
the account to be credited at such receiving bank) prior to the relevant
Interest Record Date and shall have appropriate facilities for such purpose.
Interest, other than default interest, on the Securities will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
REPUBLIC GROUP INCORPORATED
By:
------------------------------------
Name:
Title:
3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Republic Group Incorporated
9.50% Senior Subordinated Note Due 2008
This Security is one of a duly authorized issue of debt securities of
the Company, limited to the aggregate principal amount of $100,000,000 (except
as otherwise provided in the Indenture mentioned below), issued or to be issued
pursuant to an indenture dated as of July 15, 1998 (the "INDENTURE"), duly
executed and delivered by the Company to UMB Bank, N.A. as Trustee (herein
called the "TRUSTEE"). Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders (the words "HOLDERS" or "HOLDER" meaning the registered
holders or registered holder) of the Securities.
This Security will bear interest until final maturity at a rate per
annum shown above, except as provided in the next paragraph. The Company will
pay interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at a 9.50% rate per annum based on
a year of 360 days and actual days elapsed.
[In the event that (i) the Exchange Offer Registration Statement (as
defined in the Indenture) relating to the Exchange Offer (as defined in the
Indenture) is not filed with the Commission (as defined in the Indenture) on or
prior to the date that is 60 days after the Closing Date (as defined in the
Indenture), (ii) the Exchange Offer Registration Statement is not declared
effective on or prior to the date that is 120 days after the Closing Date, or
(iii) the Exchange Offer is not consummated or a Shelf Registration Statement
(as defined in the Indenture) with respect to resale of this Security is not
declared effective on or prior to the date that is 150 days after the Closing
Date (each such event referred to in clauses (i) through (iii), a "REGISTRATION
DEFAULT"), then the Company will pay additional interest (in addition to the
interest otherwise due hereon) ("ADDITIONAL INTEREST") to the holder during the
first 90-day period immediately following the occurrence of each such
Registration Default in an amount equal to 0.25% per annum for any and all
Registration Defaults. The amount of interest will increase by an additional
0.25% per annum for each subsequent 90- day period until such Registration
Default is cured, up to a maximum amount of additional interest of 1.00% per
annum for any and all Registration Defaults. Such additional interest will cease
accruing with respect to any Registration Default when such Registration Default
has been cured. The Company shall pay amounts due in respect of Additional
Interest on each Interest Payment Date (or, if the Company
4
<PAGE>
shall default in the payment of interest on any Interest Payment Date, on the
date such interest is otherwise paid as provided in the Indenture).]2
[There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.]3
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount of the Securities then outstanding and
that, prior to any such declaration, such holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of, premium, if any, or interest on any of the Securities. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Security and any Security which may be issued
in exchange or substitution herefor, whether or not any notation thereof is made
upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of
the holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities; provided that without the consent of each holder affected, no
such supplemental indenture shall (i) reduce the principal amount of Securities
whose holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any Security or alter the
provisions with respect to the redemption of the Securities (other than
provisions relating to the covenants described in Sections 3.10 and 3.17 in the
Indenture), (iii) reduce the rate of or change the time for payment of interest
on any Security, (iv) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on, the Securities (except a
rescission of acceleration of the Securities by the holders of at least a
majority in aggregate principal amount
- -------------------
/2/To be included in Securities not Exchange Securities.
/3/To be included in Exchange Securities.
5
<PAGE>
thereof and a waiver of the payment default that resulted from such
acceleration), (v) make any Security payable in money other than that stated in
the Securities, (vi) make any change in the provisions of the Indenture relating
to waivers of past Defaults or the rights of holders of Securities to receive
payments of principal of, premium, if any, or interest on the Securities, (vii)
waive a redemption payment with respect to any Security (other than a payment
required by one of the covenants described in Sections 3.10 and 3.17 in the
Indenture), (viii) modify the ranking or priority of the Securities or modify
the definition of Senior Debt or Designated Senior Debt or amend or modify the
subordination provisions of the Indenture in any manner adverse to the holders
or (ix) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may amend or supplement the Indenture or
the Securities to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to provide for the assumption of the Company's obligations to holders of
Securities in the case of a transaction described in Section 8.01, to make any
change that would provide any additional rights or benefits to the holders of
Securities or that does not adversely affect the legal rights under the
Indenture of any such holder, or to comply with requirements of the Commission
(as defined in the Indenture) in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act (as defined in the Indenture).
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities are issuable only as registered Securities without
coupons in denominations of $1,000 and any multiple of $1,000.
At the office or agency of the Company referred to on the face hereof
and in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of other authorized denominations.
Upon due presentment for registration of transfer of this Security at
the above-mentioned office or agency of the Company, a new Security or
Securities of authorized denominations, for a like aggregate principal amount,
will be issued to the transferee as provided in the Indenture. No service charge
shall be made against the holder for any such transfer, but the Company may
require payment of a sum
6
<PAGE>
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
The Securities may be redeemed at the option of the Company as a whole,
or from time to time in part, on any date on or after July 15, 2003, upon
mailing a notice of such redemption not less than 30 nor more than 60 days prior
to the date fixed for redemption to the holders of Securities to be redeemed,
all as provided in the Indenture, at the following redemption prices (expressed
in percentages of the principal amount) together in each case with accrued
interest to the date fixed for redemption:
If redeemed during the twelve-month period beginning July 15,
Year Percentage
2003............................................. 104.750%
2004.............................................. 103.167%
2005............................................. 101.583%
2006 and thereafter............................... 100.000%
provided that if the date fixed for redemption is an Interest Payment Date, then
the interest payable on such date shall be paid to the holder of record on the
next preceding Interest Record Date.
In addition, prior to July 15, 2001, the Company may redeem up to 35% of
the principal amount of the Notes with the net cash proceeds received by the
Company from one or more Public Equity Offerings, at a redemption price of
109.5% of the principal amount thereof, plus accrued and unpaid interest to the
date fixed for redemption (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on an Interest Payment
Date that is on or prior to the redemption date); provided, however, that at
least 65% of the aggregate principal amount of the Notes originally issued
remains outstanding immediately after any such redemption (excluding any
Securities owned by the Company or any of its Affiliates). Notice of redemption
pursuant to this paragraph must be mailed to holders of Securities not later
than 60 days following the consummation of such Public Equity Offering.
Subject to payment by the Company of a sum sufficient to pay the amount
due on redemption, interest on this Security (or portion hereof if this Security
is redeemed in part) shall cease to accrue upon the date duly fixed for
redemption of this Security (or portion hereof if this Security is redeemed in
part).
7
<PAGE>
Upon a Change of Control (as defined in the Indenture), any holder of
Securities will have the right to cause the Company to purchase the Securities
of such holder, in whole or in part in integral multiples of aggregate principal
amount of $1,000, at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to any Change of
Control Payment Date, as provided in, and subject to the terms of the Indenture.
All amounts owed under and in respect of this Security are subordinated
in right of payment, to the extent and in the manner provided in Article 9 of
the Indenture, to the prior payment in full in cash of all amounts owed under
and in respect of all Senior Debt, and the subordination of the Securities is
for the benefit of all holders of all Senior Debt, whether outstanding on the
Closing Date or incurred thereafter. The Company agrees, and each holder by
accepting a Security agrees, to the subordination.
The Company, the Trustee, and any authorized agent of the Company or
the Trustee, may deem and treat the registered holder hereof as the absolute
owner of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and none of the Company the
Trustee nor any authorized agent of the Company or the Trustee shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Security, for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company (or any subsidiary
thereof) or of any successor corporation, either directly or through the Company
(or any subsidiary thereof) or any successor corporation, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
The Indenture is hereby incorporated by the reference and to the extent
of any variance between the provisions hereof and the Indenture, the Indenture
shall control.
This Security shall be deemed to be a contract under the laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of said State, except as may otherwise be required by mandatory
provisions of law.
8
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
-------------------------
This is one of the Securities described in the within-mentioned Indenture.
UMB BANK, N.A.,
as Trustee
By:
---------------------------------
Authorized Signatory
9
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto Insert Taxpayer Identification No.
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer said Security on the
books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES,
PERMANENT OFFSHORE GLOBAL SECURITIES AND
OFFSHORE PHYSICAL SECURITIES]
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
two years after the later of the original issuance of this Security or the last
date on which this Security was held by the Company or an Affiliate of the
Company, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
10
<PAGE>
[Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Security
and the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Security in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer or
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:
---------------- ----------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "QUALIFIED
INSTITUTIONAL BUYER" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
---------------- ----------------------------------------------
NOTICE: To be executed by an executive officer
11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 3.10 or Section 3.17 of the Indenture, check the Box: o
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 3.10 or Section 3.17 of the Indenture, state the amount:
$______________.
Date:
----------------
Your Signature:
-----------------------------------------------------
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:
-------------------------
[Name of Eligible Guarantor Institution, as defined by
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, or any similar rule which Trustee deems
applicable.]
12
<PAGE>
AND WHEREAS, all things necessary to make the Securities, when executed
by the Company and authenticated and delivered by the Trustee as in the
Indenture provided, the valid, binding and legal obligations of the Company and
to constitute these presents a valid indenture and agreement according to its
terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by
the Holders thereof, the Company and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective Holders from time to time
of the Securities as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture which are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939 (except as herein otherwise expressly provided or
unless the context otherwise clearly requires), shall have the meanings assigned
to such terms in said Trust Indenture Act and in said Securities Act as in force
at the date of this Indenture. All accounting terms used herein and not
expressly defined shall have the meanings given to them in accordance with GAAP
(whether or not such is indicated herein). The words "HEREIN", "HEREOF" and
"HEREUNDER" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision. The terms
defined in this Article include the plural as well as the singular.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
13
<PAGE>
"ACQUIRED SUBSIDIARY DEBT" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
except to the extent such Indebtedness was incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person, except to the
extent such Lien was created or incurred in connection with, or in contemplation
of, such acquisition.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"AFFILIATE TRANSACTION" has the meaning provided in Section 3.15.
"AGENT MEMBERS" has the meaning provided in Section 2.07(a).
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition
of any assets (including, without limitation, by way of a sale and leaseback)
other than the disposition of inventory in the ordinary course of business (it
being understood that dispositions of inventory pursuant to long-term supply
agreements constitute the ordinary course of business); provided that the sale,
lease, conveyance or other disposition of all or substantially all of the
property or assets of the Company will be governed by Section 3.17 and/or
Article 8 and not by the provisions of Section 3.10, and (ii) the issuance or
sale by the Company or any of its Restricted Subsidiaries of Equity Interests of
any of the Company's Restricted Subsidiaries, in the case of either clause (i)
or (ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $1 million or (b) for net proceeds in
excess of $1 million. Notwithstanding the foregoing: (a) a transfer of assets by
the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the
Company or another Restricted Subsidiary or (b) an issuance of Equity Interests
by a Restricted Subsidiary to the Company or to another Restricted Subsidiary,
in each case, will not be deemed to be an Asset Sale.
"ASSET SALE OFFER PRICE" has the meaning provided in Section 3.10.
14
<PAGE>
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized by law to close.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means, at any time, (i) any evidence of Indebtedness
with a maturity of 180 days or less 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), (ii) repurchase obligations for investments of the
type described in clause (i) for which delivery of the investment is made
against payment, (iii) demand or time deposits, bankers' acceptances and
certificates of deposit or acceptances with a maturity of 180 days or less of
any financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$300,000,000, and (iv) commercial paper with a maturity of 180 days or less
issued by a corporation (except any Affiliate of the Company or Subsidiary of
the Company) organized under the laws of any state of the United States or the
District of Columbia and rated at least A-1 by S&P and at least P-1 by Moody's.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition, in one or a series
of related transactions, of all or substantially all of the properties or assets
of the Company and its Restricted Subsidiaries taken as a whole to any Person or
group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) other than Phil Simpson, his spouse, his descendants and their spouses,
trusts and estates of which any of them are primary beneficiaries and any
entities of which any of them are holders of a majority of the equity
securities, (ii) the acquisition by any Person or group (as defined above) of a
direct or indirect interest in more than 50% of the voting power of the voting
stock of the Company, by way of merger or consolidation or otherwise, other
than Phil Simpson, his spouse, his descendants and their spouses, trusts and
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estates of which any of them are primary beneficiaries and any entities of which
any of them are holders of a majority of the equity securities or (iii) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"CLOSING DATE" means July 15, 1998.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act.
"CONSOLIDATED EBITDA" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
asset sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) any non-cash charges (to the extent such
charges were deducted in computing such Consolidated Net Income), except for any
non-cash charges that represent accruals of, or reserves for, cash disbursements
to be made in any future accounting period, plus (iii) provision for taxes based
on income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent such provision for taxes was included in computing such
Consolidated Net Income, plus (iv) the Fixed Charges of such Person and its
Restricted Subsidiaries for such period, to the extent that such Fixed Charges
were deducted in computing such Consolidated Net Income, plus (v) depreciation,
amortization and depletion (including amortization of goodwill and all other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and depletion were
deducted in computing such Consolidated Net Income, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the amounts referred to in clauses (i) through (v) above as they
relate to a Restricted Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated EBITDA only to the extent (and
in same proportion) that the Net Income of such Restricted Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be paid
as a dividend or similar distribution to the Company by such Restricted
Subsidiary or by a Restricted Subsidiary which is the parent of such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with
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GAAP; provided that (i) the Net Income of any Person that is not Restricted
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Restricted Subsidiary thereof, (ii) the Net
Income of any Restricted Subsidiary shall be excluded to the extent that the
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted to be made to the
Company by such Restricted Subsidiary or by a Restricted Subsidiary which is the
parent of such Restricted Subsidiary without any prior approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) solely for the purpose of calculating the amount of
Restricted Payments that may be made pursuant to clause (c) of the first
paragraph of Section 3.08, the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (ii)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock),
less all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
in accordance with GAAP as a result of the acquisition of such business)
subsequent to the date of the Indenture in the book value of any asset owned by
such Person or a consolidated Restricted Subsidiary of such Person, and
excluding the cumulative effect of a change in accounting principles, all as
determined in accordance with GAAP.
"CONTINUING DIRECTOR" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of the Indenture, (ii) was nominated for election
or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) was nominated for election or elected to such
Board of Directors by the Company.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 928 Grand Boulevard, 13th Floor, Kansas City,
Missouri 64016.
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"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEPOSITARY" means The Depository Trust Company, its nominees, and
their respective successors.
"DESIGNATED SENIOR DEBT" means (i) so long as the New Credit Facility
is outstanding, all Indebtedness under the New Credit Facility and (ii)
thereafter, any other Senior Debt permitted under the Indenture the principal
amount of which is $5 million or more and that has been designated by the
Company as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the stated
date on which the Securities mature.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 4.01 which shall have continued for the period of time, if any, therein
designated.
"EXCESS PROCEEDS" has the meaning provided in Section 3.10.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" means the exchange offer by the Company of Exchange
Securities for Securities pursuant to the Registration Rights Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means a registration statement
relating to an Exchange Offer on an appropriate form and all amendments and
supplements to such registration statement, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"EXCHANGE SECURITIES" means any securities of the Company to be offered
to Securityholders in exchange for Securities pursuant to the Exchange Offer or
otherwise pursuant to a Registration of Exchange Securities containing terms
identical to the Securities for which they are exchanged (except that (i)
interest
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thereon shall accrue from the last date on which interest was paid on the
Securities or, if no such interest has been paid, from the date of issuance of
the Securities and (ii) the Exchange Securities will contain the alternative
third paragraph appearing on the reverse of the Securities in the form recited
above and will not contain terms with respect to transfer restrictions).
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Facility)
in existence on the date of the Indenture, until such amounts are repaid,
including all reimbursement obligations with respect to letters of credit
outstanding as of the date of the Indenture (other than letters of credit issued
pursuant to the New Credit Facility).
"FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any
period, the ratio of (i) the Consolidated EBITDA of such Person for such period
to (ii) the Fixed Charges of such Person for such period. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the four-quarter
reference period for which the Fixed Charge Coverage Ratio is being calculated
but on or prior to the date on which the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated by giving pro forma effect to such
incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock (and the application of the proceeds
of any such incurrence of Indebtedness or issuance of preferred stock), as if
the same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period, and (ii) the Consolidated EBITDA and Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded.
"FIXED CHARGES" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts, and other fees and charges incurred
in respect of letters of credit or bankers' acceptance
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financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all cash dividend payments (and non-cash
dividend payments in the case of a payor that is a Restricted Subsidiary) on any
Disqualified Stock of the Company and on any series of preferred stock of any
Restricted Subsidiary of the Company, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current combined
Federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"FLUOR DANIEL AGREEMENT" means that certain Agreement for Engineering,
Procurement and Construction among the Company, Republic Paperboard Company and
Fluor Daniel, Inc. dated as of June 25, 1998 as further amended, modified,
extended, renewed or replaced in whole or in part, from time to time.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the accounting
profession, as in effect on the Issue Date.
"GLOBAL SECURITIES" has the meaning provided in Section 2.04.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agree ments in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) foreign exchange
contracts or currency swap agreements, (iii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency values and (iv) other agreements or
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arrangements designed to protect such Person against fluctuations in raw
material prices.
"HOLDER", "HOLDER OF SECURITIES", "SECURITYHOLDER" or other similar
terms means the registered holder of any Security.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreement in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or Trade Payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person;
it being understood that the obligations incurred under the Fluor Daniel
Agreement of the Company or any Restricted Subsidiary in connection with the
Lawton Mill shall not constitute Indebtedness.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented.
"INSOLVENCY OR LIQUIDATION PROCEEDING" means, with respect to any
Person, (i) any insolvency or bankruptcy or similar case or proceeding, or any
reorganization, receivership, liquidation, dissolution or winding up of such
Person, whether voluntary or involuntary, or (ii) any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of such Person.
"INTEREST PAYMENT DATE" means each semiannual interest payment date on
January 15 and July 15 of each year, commencing January 15, 1999.
"INTEREST RECORD DATE" for the Interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the January1 or
July 1 (whether or not a Business Day) as the case may be, next preceding such
Interest Payment Date.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions, purchases or other acquisitions for
consideration of Indebtedness,
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Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
For purposes of the definition of "Unrestricted Subsidiary" and Section 3.08,
(i) "Investment" shall include the fair market value of the assets (net of
liabilities) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair
market value of the assets (net of liabilities) of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary and (ii) any property transferred to or from any Person shall be
valued at its fair market value at the time of such transfer, in each case as
determined in good faith by the Board of Directors of the Company.
"ISSUE DATE" means the original issue date of the Securities.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction with respect to any such lien, pledge, charge or
security interest).
"MOODY'S" means Moody's Investors Services, Inc. and its successors.
"NET INCOME" means, with respect to any Person for such period, the net
income (loss) of any such Person for such period, determined in accordance with
GAAP, excluding, however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with (a)
any asset sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) other than the disposition of inventory in the ordinary
course of business (it being understood that dispositions of inventory pursuant
to long-term supply agreements constitute the ordinary course of business) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or
loss, together with any related provision for taxes on such extraordinary or
nonrecurring gain or loss.
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions) and any
other expenses incurred or to be incurred by the Company or a Restricted
Subsidiary as a direct result of the sale of such assets (including, without
limitation, severance, relocation, lease termination
22
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and other similar expenses), taxes actually paid or payable as a result thereof,
payments made to retire Indebtedness where payment of such Indebtedness is
required in connection with such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"NEW CREDIT FACILITY" means that certain Credit Agreement, expected to
be dated as of July 15, 1998, by and among the Company and Morgan Guaranty Trust
Company of New York, as Syndication Agent, NationsBank, N.A., as Administrative
Agent, and the other lenders that are parties thereto (or, if such Credit
Agreement is not entered into with Morgan Guaranty Trust Company of New York and
NationsBank, N.A., then a similar senior credit facility entered into among the
Company, any one or more of its Subsidiaries and one or more banks or other
lenders), including any related notes, collateral documents, instruments and
agreements executed in connection therewith, and in each case as further
amended, modified, extended, renewed, refunded, replaced or refinanced in whole
or in part, from time to time (including amendments, modifications, extensions,
renewals, refundings, replacements or refinancings which increase the principal
amount of Indebtedness permitted thereunder; provided that any such increase
will not increase the amount of Indebtedness which may be incurred at the time
of such increase pursuant to clause (i) of the second paragraph of Section
3.09).
"NON-RECOURSE DEBT" means Indebtedness of a Subsidiary (i) as to which
neither the Company nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would consti tute Indebtedness of the Company or any of its Restricted
Subsidiaries), or (b) is directly or indirectly liable (as a guarantor or
otherwise) and (ii) no default with respect to which would permit (upon notice,
lapse of time or both) any holder of any other Indebtedness of the Company or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"NON-U.S. PERSON" means a person who is not a U.S. person, as defined
in Regulation S.
"OBLIGATIONS" means all principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of
the Board of Directors or the President or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after the
title "Vice President") of the Company and delivered to the Trustee. Each such
certificate shall
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comply with Section 314 of the Trust Indenture Act of 1939 and include the
statements provided for in Section 12.05.
"OFFSHORE GLOBAL SECURITIES" has the meaning provided in Section 2.04.
"OFFSHORE PHYSICAL SECURITIES" means Securities issued pursuant to
Section 2.01 in exchange for interests in the Offshore Global Security following
the Offshore Securities Exchange Date or pursuant to Section 2.07(b), in each
case in registered form substantially in the form hereinabove recited.
"OFFSHORE SECURITIES EXCHANGE DATE" has the meaning provided in Section
2.04.
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Company or who may be other
counsel satisfactory to the Trustee. Each such opinion shall comply with Section
314 of the Trust Indenture Act and include the statements provided for in
Section 12.05, and such others as may reasonably be requested by the Trustee, if
and to the extent required hereby.
"OUTSTANDING", when used with reference to Securities, subject to the
provisions of Article 11, means, as of any particular time, all Securities
authenticated and delivered by the Trustee under this Indenture, except
(a) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the
Company) or shall have been set aside, segregated and held in trust by
the Company (if the Company shall act as its own paying agent),
provided that if such Securities are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as
herein provided, or provision satisfactory to the Trustee shall have
been made for giving such notice; and
(c) Securities in substitution for which other Securities shall
have been authenticated and delivered, or which shall have been paid,
pursuant to the terms of Section 2.09 (unless proof satisfactory to the
Trustee and the Company is presented that any of such Securities is
held by a person in whose hands such Security is a legal, valid and
binding obligation of the Company).
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"PAYMENT DEFAULT" means any failure to pay any scheduled installment of
principal of, premium, if any, or interest on any Indebtedness within the grace
period provided for such payment in the documentation governing such
Indebtedness.
"PERMANENT OFFSHORE GLOBAL SECURITY" has the meaning provided in
Section 2.04.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used solely to extend, refinance, renew, replace, defease
or refund, other Indebtedness of the Company or any of its Restricted
Subsidiaries (other than Indebtedness constituting revolving credit loans under
the New Credit Facility permitted to be incurred under clause (i) of the second
paragraph of Section 3.09), provided that (i) the principal amount of such
Permitted Refinancing Indebtedness does not exceed the principal amount of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of any premiums paid and reasonable fees and expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final stated maturity date not earlier than the final stated maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Securities, such Permitted Refinancing
Indebtedness is subordinated in right of payment to the Securities on terms at
least as favorable to the Holders of Securities as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary which is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"POST-PETITION INTEREST" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the rate specified in such Indebtedness, whether or not
such interest is an allowed claim enforceable against such Person in a
bankruptcy case under Title 11 of the United States Code.
"PRINCIPAL" wherever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include "AND PREMIUM, IF
ANY".
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"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Securities in the form set forth in Section 2.05(a).
"PUBLIC EQUITY OFFERING" means an underwritten primary public offering
of common stock of the Company pursuant to an effective Registration Statement
under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"QUALIFIED EQUITY INTERESTS" means all Equity Interests of the Company
other than Disqualified Stock of the Company.
"REGISTRAR" has the meaning provided in Section 2.06.
"REGISTRATION" means a registered exchange offer for the Securities by
the Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of July 15, 1998, between the Company and the Initial
Purchasers and certain permitted assigns specified therein.
"REGISTRATION STATEMENT" means the Registration Statement pursuant to
and as defined in the Registration Rights Agreement.
"REGULATION S" means Regulation S under the Securities Act.
"REORGANIZATION SECURITIES" means, with respect to any Insolvency or
Liquidation Proceeding involving the Company, Capital Stock or any other
securities of the Company as reorganized or readjusted (or Capital Stock or any
other securities of any other Person provided for by a plan of reorganization or
readjustment) that are subordinated, at least to the same extent as the
Securities, to the payment of all outstanding Senior Debt after giving effect to
such plan of reorganization or readjustment; provided, however, that (i) the
Securities shall not be treated in any case or proceeding or other event
described above as part of the same class of claims as the Senior Debt or any
class of claim on a parity with or senior to the Senior Debt for any payment or
distribution, (ii) such securities are subordinated at least to the same extent
as the Securities to Senior Debt of the Company and any securities issued in
exchange for such Senior Debt and (iii) such securities are authorized by an
order or decree of a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy, insolvency or similar law that gives
effect to the subordination of the Securities to Senior Debt in a manner and
with an effect which would be required if this proviso were not included in this
paragraph; provided
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further that the Senior Debt is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment and issuing such
securities.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
vice president (whether or not designated by numbers or words added before or
after the title "vice president"), any corporate trust officer, any assistant
corporate trust officer, any assistant vice president, any assistant secretary,
any assistant treasurer, or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such corporate trust officers, respectively, or
to whom any corporate trust matter is referred because of his or her knowledge
of and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means any Investment by the Company or any
Restricted Subsidiary in any Person other than (i) an Investment in the Company
or a Restricted Subsidiary or in any Person that, as a result of such
Investment, becomes a Restricted Subsidiary or will be merged or consolidated
with or into or will transfer or convey all or substantially all of its assets
to, the Company or a Restricted Subsidiary and (ii) Temporary Cash Investments.
"RESTRICTED SUBSIDIARY" means any Subsidiary of any Person other than
an Unrestricted Subsidiary of such Person and any Subsidiary of an Unrestricted
Subsidiary of such Person.
"RULE 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" or "SECURITIES" means any Security or Securities, as the
case may be, authenticated and delivered under this Indenture. For all purposes
of this Indenture, the term "Securities" shall include any Exchange Securities
to be issued and exchanged for any Securities pursuant to the Registration
Rights Agreement and this Indenture and, for purposes of this Indenture, all
Securities and Exchange Securities shall vote together as one series of
Securities under this Indenture.
"SECURITY REGISTER" has the meaning provided in Section 2.06.
"SENIOR DEBT" means (i) all Indebtedness of the Company under the New
Credit Facility, including principal of, premium, if any, and interest on such
Indebtedness and all other amounts due on or in connection with such
Indebtedness including all charges, fees and expenses, (ii) all other
Indebtedness of the Company,
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including principal of, premium, if any, and interest on such Indebtedness,
unless the instrument under which such Indebtedness is created, incurred,
assumed or Guaranteed expressly provides that such Indebtedness is not senior or
superior in right of payment to the Securities, and all renewals, extensions,
modifications, amendments or refinancings thereof and (iii) all interest on any
Indebtedness referred to in clause (i) and (ii) accruing during the pendency of
any bankruptcy or insolvency proceeding whether or not allowed or allowable
thereunder. Notwithstanding the foregoing, Senior Debt shall not include (a)
Subordinated Debt of the Company; provided, however, that no Indebtedness shall
be deemed to be Subordinated Debt of the Company solely by reason of such other
Indebtedness being secured and such Indebtedness not being secured, (b) the
Securities, (c) any Indebtedness of the Company to any of its Restricted
Subsidiaries, (d) any Indebtedness which, when incurred and without respect to
any election under Section 1111 (b) of the Bankruptcy Code, is without recourse
to the Company, (e) any Indebtedness of the Company, to the extent not permitted
by Section 3.09, (f) any Indebtedness to any employee of the Company or any of
its Restricted Subsidiaries, (g) any liability for taxes owed or owing by the
Company and (h) Trade Payables.
"SHELF REGISTRATION STATEMENT" means a Shelf Registration Statement of
the Company pursuant to and as defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Subsidiary that, together with its Subsidiaries, (i) accounted for more than 10%
of the consolidated revenues of the Company and its consolidated Subsidiaries or
(ii) was the owner of more than 10% of the consolidated assets of the Company
and its consolidated Subsidiaries, all as set forth on the most recently
available audited financial statements of the Company.
"STOCKHOLDERS' EQUITY" means, with respect to any Person as of any
date, the stockholders' equity of such Person determined in accordance with GAAP
as of the date of the most recent available internal financial statements of
such Person, and calculated on a pro forma basis to give effect to any
acquisition or disposition by such Person consummated or to be consummated since
the date of such financial statements and on or prior to the date of such
calculation.
"SUBORDINATED DEBT" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter incurred) which is by its terms
expressly subordinate or junior in right of payment to the Securities.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the
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time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof). Unrestricted Subsidiaries shall not be included in the
definition of Subsidiary for any purposes of the Indenture (except, as the
context may otherwise require, for purposes of the definition of "Unrestricted
Subsidiary"). Unless otherwise specified or the context otherwise requires,
"Subsidiary" means a Subsidiary of the Company.
"TEMPORARY CASH INVESTMENT" means any of the following: (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, (ii)
time deposit accounts, bankers' acceptances, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by any office located in the United States of America of a bank or trust
company which is organized or licensed under the laws of the United States of
America or any state thereof and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $500 million and has
outstanding debt which is rated "P-1" (or higher) by Moody's or "A-1" (or
higher) by S&P or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with an office located in the United States of America of a
bank or trust company meeting the qualifications described in clause (ii) above,
(iv) commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized under the laws of the United States of America or any state thereof
with a rating, at the date of acquisition, of "P-1" (or higher) by Moody's or
"A-1" (or higher) by S&P, (v) securities with maturities of six months or less
from the date of acquisition issued or fully and unconditionally guaranteed by
any state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "P-1" (or
higher) by Moody's or "A-1" (or higher) by S&P and (vi) money market funds which
invest substantially all of their assets in securities described in the
preceding clauses (i) through (v).
"TEMPORARY OFFSHORE GLOBAL SECURITY" has the meaning provided in
Section 2.04.
"TRADE PAYABLES" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services.
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"TRUST INDENTURE ACT OF 1939" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was originally
executed, and "TIA", when used in respect of an indenture supplemental hereto,
means such Act as in force at the time such indenture supplemental hereto
becomes effective.
"TRUSTEE" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Five, shall also
include any successor trustee.
"U.S. GLOBAL SECURITY" has the meaning provided in Section 2.04.
"U.S. PERSON" has the meaning provided in Regulation S.
"U.S. PHYSICAL SECURITIES" means Securities issued in the form of
permanent certificated Securities in registered form in substantially the form
hereinabove recited.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a Board Resolution, but only if such Subsidiary (i) has no Indebtedness other
than Non-Recourse Debt, (ii) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company, (iii) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results and (iv) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries.
Notwithstanding the foregoing, an Unrestricted Subsidiary shall not
cease to qualify as an Unrestricted Subsidiary if the Company Guarantees
Indebtedness of such Unrestricted Subsidiary and such Guarantee is a Restricted
Investment which is permitted by Section 3.08.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted under the covenant described in Section 3.08. If at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted
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Subsidiary it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
the Indenture, the Company shall be in Default under the Indenture). The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the Indenture, and (ii) no Default or Event of Default would be in existence
following such designation.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Bankruptcy Law".................................... 4.01
"Change of Control Offer"........................... 3.17
"Change of Control Payment"......................... 3.17
"Change of Control Payment Date".................... 3.17
"Commencement Date"................................. 3.10
"Covenant Defeasance"............................... 11.03
"Custodian"......................................... 4.01
"incur"............................................. 3.09
"Legal Defeasance".................................. 11.02
"Offer Amount"...................................... 3.10
"Offer Period"...................................... 3.10
"Permitted Business" ............................... 3.13
"Purchase Date"..................................... 3.10
"Purchase Price".................................... 3.10
"Restricted Payments"............................... 3.08
"Secured Indebtedness" ............................. 3.11
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ARTICLE 2
ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES
SECTION 2.01. Authentication and Delivery of Securities. Upon the
execution and delivery of this Indenture, or from time to time thereafter,
Securities (including Exchange Securities) in an aggregate principal amount not
in excess of the amount specified in the form of Security hereinabove recited
(except as otherwise provided in Section 2.09) may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Securities to or upon the
written order of the Company, signed by its Chairman of the Board of Directors
or any Vice President (whether or not designated by a number or numbers or a
word or words added before or after the title "Vice President") without any
further action by the Company.
SECTION 2.02. Execution of Securities. The Securities shall be signed
on behalf of the Company by its Chairman of the Board of Directors or any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President"). Such signatures may be the
manual or facsimile signatures of the present or any future such officers.
In case any officer of the Company who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Company; and any Security may be signed on behalf of the Company by such
persons as, at the actual date of the execution of such Security shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Indenture any such person was not such officer.
SECTION 2.03. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinabove recited, executed by the Trustee by manual signature of one of its
authorized signatories, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon any
Security executed by the Company shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the Holder is entitled to the benefits of this Indenture.
SECTION 2.04. Form, Denomination and Date of Securities; Payments of
Interest. The Securities and the Trustee's certificates of authentication shall
be substantially in the form recited above; provided that Exchange Securities
(i) shall
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contain the alternative third paragraph appearing on the reverse of the
Securities in the form recited above and (ii) shall not contain terms with
respect to transfer restrictions. The Securities shall be issuable in
denominations provided for in the form of Security recited above. The Securities
shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the officers of the Company executing the same may
determine with the approval of the Trustee.
Any of the Securities may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, including those required by Section 2.05, or
with the rules of any securities market in which the Securities are admitted to
trading, or to conform to general usage.
Each Security shall be dated the date of its authentication, shall bear
interest from the applicable date and shall be payable on the dates specified on
the face of the form of Security recited above.
Securities offered and sold in reliance on Section 4(2) of and Rule
144A under the Securities Act shall be issued initially in the form of one or
more permanent global Securities in registered form, substantially in the form
hereinabove recited (the "U.S. GLOBAL SECURITY"), deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as herein provided. The aggregate principal amount of the U.S.
Global Security may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depositary or its
nominee, as hereinafter provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of a single temporary global
Security in registered form substantially in the form hereinabove recited (the
"TEMPORARY OFFSHORE GLOBAL SECURITY") deposited with the Trustee, as custodian
for the Depositary, duly executed by the Company and authenticated by the
Trustee as provided herein. At any time on and after August 24, 1998 (the
"OFFSHORE SECURITIES EXCHANGE DATE"), a single permanent global Security in
registered form substantially in the form hereinabove recited without the
Private Placement Legend (the "PERMANENT OFFSHORE GLOBAL SECURITY"; and together
with the Temporary Offshore Global Security, the "OFFSHORE GLOBAL SECURITIES")
duly executed by the Company and authenticated by the Trustee as provided herein
shall be deposited with the Trustee, as custodian for the Depositary, and the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of the Temporary
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Offshore Global Security in an amount equal to the principal amount of the
beneficial interest in the Temporary Offshore Global Security transferred.
The Offshore Physical Securities and U.S. Physical Securities are
sometimes collectively herein referred to as the "PHYSICAL SECURITIES". The U.S.
Global Security and the Offshore Global Security are sometimes referred to
herein as the "GLOBAL SECURITIES".
The person in whose name any Security is registered at the close of
business on any Interest Record Date with respect to any Interest Payment Date
shall be entitled to receive the interest, if any, payable on such Interest
Payment Date notwithstanding any transfer or exchange of such Security
subsequent to the Interest Record Date and prior to such Interest Payment Date,
except if and to the extent the Company shall default in the payment of the
interest due on such Interest Payment Date, in which case such defaulted
interest, plus (to the extent lawful) any interest payable on the defaulted
interest, shall be paid to the persons in whose names outstanding Securities are
registered at the close of business on a subsequent record date (which shall be
not less than five Business Days prior to the date of such payment) established
by notice given by mail by or on behalf of the Company to the holders of
Securities not less than 15 days preceding such subsequent record date.
SECTION 2.05. Restrictive Legends. (a) Unless and until a Security is
exchanged for an Exchange Security in connection with an effective Registration
pursuant to the Registration Rights Agreement, the U.S. Global Security,
Temporary Offshore Global Security, each U.S. Physical Security and each
Offshore Physical Security issued pursuant to Section 2.07(b), shall bear the
following legend on the face thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY
MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
SECOND ANNIVERSARY OF THE LATER OF THE DATE OF ORIGINAL ISSUANCE HEREOF
OR THE SALE HEREOF BY THE COMPANY OR ITS AFFILIATES OR (Y) BY AN
AFFILIATE OF THE COMPANY OR BY ANY HOLDER THAT WAS AN AFFILIATE OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED
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INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
TRANSFERORS PRIOR TO THE EXPIRATION OF THE "DISTRIBUTION COMPLIANCE
PERIOD" (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE
SECURITIES ACT), A CERTIFICATE THAT MAY BE OBTAINED FROM THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) A
NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902
UNDER) REGULATION S UNDER THE SECURITIES ACT.
(b) Each Global Security, whether or not an Exchange Security, shall
also bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR
SUCH OTHER NAME AS IS REQUESTED BY AN
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AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF THE INDENTURE.
SECTION 2.06. Registration, Transfer and Exchange. The Securities are
issuable only in registered form. The Company will keep at each office or agency
to be maintained for the purpose as provided in Section 3.02 (the "REGISTRAR") a
register or registers (the "SECURITY REGISTER(s)") in which, subject to such
reasonable regulations as it may prescribe, it will register, and will register
the transfer of, Securities as in this Article provided. Such Security Register
shall be in written form in the English language or in any other form capable of
being converted into such form within a reasonable time. At all reasonable times
such Security Register or Security Registers shall be open for inspection by the
Trustee.
Upon due presentation for registration of transfer of any Security at
each such office or agency, the Company shall execute and the Trustee shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Security or Securities, in each case, in authorized
denominations for a like aggregate principal amount.
A Holder may transfer a Security only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Security
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company the Trustee, and any agent of the Company shall treat the
person in whose name the Security is registered as the owner thereof for all
purposes whether or not the Security shall be overdue, and neither the Company
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Security shall, by acceptance of
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such Global Security, agree that transfers of beneficial interests in such
Global Security may be effected only through a book entry system maintained by
the Holder of such Global Security (or its agent) and that ownership of a
beneficial interest in the Security shall be required to be reflected in a book
entry. When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Securities of other authorized denominations (including an exchange of
Securities for Exchange Securities), the Registrar shall register the transfer
or make the exchange as requested if the requirements for such transactions set
forth herein are met; provided that no exchanges of Securities for Exchange
Securities shall occur until a Registration Statement shall have been declared
effective by the Commission and that any Securities that are exchanged for
Exchange Securities shall be cancelled by the Trustee. To permit registrations
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request.
The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities (other than any such transfer taxes or
other similar governmental charge payable upon exchanges pursuant to Section
2.11, 7.05 or 11.03) and such payment, if required, shall be paid before any new
Security shall be delivered. No service charge to any Holder shall be made for
any such transaction. In the event that any Holder of a Security fails to
provide a correct taxpayer identification number to the Trustee, the Trustee may
impose a charge against such Holder sufficient to pay any tax or other
governmental charge required to be paid as a result of such failure and the
Trustee may deduct the amount of such tax or other charge from amounts otherwise
payable to such Holder with respect to such Security.
The Company shall not be required to exchange or register a transfer of
(a) any Securities for a period of 15 days next preceding the first mailing of
notice of redemption of Securities to be redeemed, or (b) any Securities
selected, called or being called for redemption except, in the case of any
Security where public notice has been given that such Security is to be redeemed
in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Book-Entry Provisions for Global Securities. (a) The
U.S. Global Security and Offshore Global Security initially shall (i) be
registered in the name of the Depositary for such Global Securities or the
nominee of such Depositary,
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(ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear
legends as set forth in Section 2.05.
Members of, or participants in, the Depositary ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company the Trustee or any agent of the Company or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Security.
(b) Transfers of a Global Security shall be limited to transfers of
such Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary and the provisions of Section 2.08. In addition, U.S. Physical
Securities and Offshore Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in the U.S. Global
Security or the Offshore Global Security, respectively, if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the U.S. Global Security or the Offshore Global Security, as the case may
be, and a successor depositary is not appointed by the Company within 90 days of
such notice or (ii) an Event of Default of which the Trustee has actual notice
has occurred and is continuing and the Registrar has received a request from the
Depositary to issue such Physical Securities.
(c) Any beneficial interest in one of the Global Securities that is
transferred to a person who takes delivery in the form of an interest in the
other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Security for as long as it remains such an interest.
(d) In connection with any transfer of a portion of the beneficial
interests in the U.S. Global Security to beneficial owners pursuant to paragraph
(b) of this Section 2.07, the Registrar shall reflect on its books and records
the date and a decrease in the principal amount of the U.S. Global Security in
an amount equal to the principal amount of the beneficial interest in the U.S.
Global Security to be transferred, and the Company shall execute, and the
Trustee shall authenticate and
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make available for delivery, one or more U.S. Physical Securities of like tenor
and amount.
(e) In connection with the transfer of the entire U.S. Global Security
or Offshore Global Security to beneficial owners pursuant to paragraph (b) of
this Section, the U.S. Global Security or Offshore Global Security, as the case
may be, shall be deemed to be surrendered to the Trustee for cancellation, and
the Company shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the U.S. Global Security or Offshore Global Security, as
the case may be, an equal aggregate principal amount of U.S. Physical Securities
or Offshore Physical Securities, as the case may be, of authorized
denominations.
(f) Any U.S. Physical Security delivered in exchange for an interest
in the U.S. Global Security pursuant to paragraph (b) or (d) of this Section
shall, except as otherwise provided by paragraph 2.08(e), bear the legend
regarding transfer restrictions applicable to the U.S. Physical Security set
forth in Section 2.05.
(g) Any Offshore Physical Security delivered in exchange for an
interest in the Offshore Global Security pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph 2.08(e), bear the
legend regarding transfer restrictions applicable to the Offshore Physical
Security set forth in Section 2.05.
(h) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.08. Special Transfer Provisions. Unless and until a Security
is exchanged for an Exchange Security in connection with an effective
Registration pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Physical Security
or an interest in the U.S. Global Security to a QIB (excluding Non-U.S.
Persons):
(i) If the Security to be transferred consists of (x) U.S.
Physical Securities, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on the form of Security stating, or has otherwise
advised the Company and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form
of Security stating, or has otherwise advised the
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Company and the Registrar in writing, that it is purchasing the
Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account
is a QIB within the meaning of Rule 144A, and is aware that the sale
to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A or (y) an interest in the U.S.
Global Security, the transfer of such interest may be effected only
through the book entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the
Security to be transferred consists of U.S. Physical Securities, upon
receipt by the Registrar of the documents referred to in clause (i)
and instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of the U.S.
Physical Securities to be transferred and the Trustee shall cancel the
U.S. Physical Security so transferred.
(b) Transfers of Interests in the Temporary Offshore Global Security.
The following provisions shall apply with respect to registration of any
proposed transfer of interests in the Temporary Offshore Global Security:
(i) The Registrar shall register the transfer of any Security (x)
if the proposed transferee is a Non-U.S. Person and the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit A hereto or (y) if the proposed transferee is a
QIB and the proposed transferor has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and
the Registrar in writing, that the sale has been made in compliance
with the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Security stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Security for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance of Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A.
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(ii) If the proposed transferee is an Agent Member, upon receipt
by the Registrar of the documents referred to in clause (i)(y) above
and instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the U.S.
Global Security, in an amount equal to the principal amount of the
Temporary Offshore Global Security to be transferred, and the Trustee
shall decrease the amount of the Temporary Offshore Global Security in
a like amount.
(c) Transfers of Interests in the Permanent Offshore Global Security
or Offshore Physical Securities to U.S. Persons. The following provisions shall
apply with respect to any transfer of interests in the Permanent Offshore Global
Security or Offshore Physical Securities to U.S. Persons: The Registrar shall
register the transfer of any such Security without requiring any additional
certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Security to a Non-U.S.
Person:
(i) Prior to August 24, 1998, the Registrar shall register any
proposed transfer of a Security to a Non-U.S. Person upon receipt of a
certificate substantially in the form of Exhibit A hereto from the
proposed transferor.
(ii) On and after August 24, 1998, the Registrar shall register
any proposed transfer to any Non-U.S. Person (x) if the Security to be
transferred is a U.S. Physical Security or an interest in the U.S.
Global Security, upon receipt of a certificate substantially in the
form of Exhibit A from the proposed transferor or (y) if the Security
to be transferred is an Offshore Physical Security or an interest in
the Permanent Offshore Global Security, without requiring any
additional certification.
(iii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (ii) and
(y) instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Security to be transferred, and
(b) if the proposed transferee is an Agent Member, upon receipt by the
Registrar of instructions given in accordance with the Depositary's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Offshore Global Security in an amount equal to the principal
amount of the
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U.S. Physical Securities or the U.S. Global Security, as the case may
be, to be transferred, and the Trustee shall cancel the Physical
Security, if any, so transferred or decrease the amount of the U.S.
Global Security, as the case may be.
(e) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless the requested transfer is after the time
period referred to in Rule 144(k) under the Securities Act (or any successor
provision thereto) as in effect with respect to such transfer, or either (i) the
circumstances contemplated by the fifth paragraph of Section 2.04 or paragraph
(d)(ii) of this Section 2.08 exists or (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(f) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture. The Registrar shall not register a transfer of any Security
unless such transfer complies with the restrictions on transfer of such Security
set forth in this Indenture. In connection with any transfer of Securities, each
Holder agrees by its acceptance of the Securities to furnish the Registrar or
the Company such certifications, legal opinions or other information as either
of them may reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or a transaction not subject to, the registration
requirements of the Securities Act; provided that the Registrar shall not be
required to determine (but may rely on a determination made by the Company with
respect to) the sufficiency of any such certifications, legal opinions or other
information.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07(a) or this Section
2.08. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
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The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become mutilated,
defaced or be apparently destroyed, lost or stolen, the Company in its
discretion may execute, and upon the written request of any officer of the
Company, the Trustee shall authenticate and make available for delivery, a new
Security bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of and
substitution for the Security so apparently destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Company and
the Trustee and any agent of the Company or the Trustee such security or
indemnity as may be required by each of them to indemnify and defend and to save
each of them harmless and, in every case of destruction, loss or theft evidence
to their satisfaction of the apparent destruction, loss or theft of such
Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. In case any Security
which has matured or is about to mature, or has been called for redemption in
full, shall become mutilated or defaced or be apparently destroyed, lost or
stolen, the Company may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Company and to the Trustee and any agent of the Company or the
Trustee such security or indemnity as any of them may require to save each of
them harmless from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee and any agent of the Company or the Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Every substitute Security issued pursuant to the provisions of this
Section by virtue of the fact that any Security is apparently destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the apparently destroyed, lost or stolen Security shall be at any
time enforceable by
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anyone and shall be entitled to all the benefits of (but shall be subject to all
the limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities duly authenticated and
delivered hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.10. Cancellation of Securities. All Securities surrendered
for payment, redemption, registration of transfer or exchange, if surrendered to
the Company or any agent of the Company or the Trustee, shall be delivered to
the Trustee for cancellation or, if surrendered to the Trustee, shall be
cancelled by it; and no Securities shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee
shall deliver cancelled Securities to the Company. If the Company shall acquire
any of the Securities, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the same are delivered to the Trustee for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute and the Trustee shall
authenticate and make available for delivery temporary Securities (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities shall be issuable as
registered Securities without coupons, of any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company with the concurrence of the Trustee. Temporary
Securities may contain such reference to any provisions of this Indenture as may
be appropriate. Every temporary Security shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without
unreasonable delay the Company shall execute and shall furnish definitive
Securities and thereupon temporary Securities may be surrendered in exchange
therefor without charge at each office or agency to be maintained by the Company
for the purpose pursuant to Section 3.02, and the Trustee shall authenticate and
make available for delivery in exchange for such temporary Securities a like
aggregate principal amount of definitive Securities of authorized denominations.
Until so exchanged the temporary Securities shall be entitled to the same
benefits under this Indenture as definitive Securities.
SECTION 2.12. CUSIP and CINS Numbers. The Company in issuing the
Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and
the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in
notices of
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redemption or exchange as a convenience to Holders; provided that any such
notice shall state that no representation is made as the correctness of such
numbers either as printed on the Securities or as contained in any notice of
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Securities. The Company shall promptly
notify the Trustee of any change in the CUSIP numbers or CINS numbers.
ARTICLE 3
COVENANTS OF THE COMPANY AND THE TRUSTEE.
SECTION 3.01. Payment of Principal and Interest. The Company covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, and interest on, each of the Securities at the place or places, at
the respective times and in the manner provided in the Securities. Each
installment of interest on the Securities may be paid by mailing checks for such
interest payable to or upon the written order of the holders of Securities
entitled thereto as they shall appear on the registry books of the Company, or
by wire transfer to such holders in immediately available funds, to such bank or
other entity in the continental United States as shall be designated in writing
by such holders (which written designation should include the name, address and
ABA routing number of the receiving bank and the name, number and contact person
related to the account to be credited at the receiving bank) and shall have
appropriate facilities for such purpose, or in accordance with the standard
operating procedures of the Depositary.
SECTION 3.02. Offices for Payments, etc. So long as any of the
Securities remain outstanding, the Company will maintain in the City of New
York, the following: (a) an office or agency where the Securities may be
presented for payment, (b) an office or agency where the Securities may be
presented for registration of transfer and for exchange as in this Indenture
provided and (c) an office or agency where notices and demands to or upon the
Company in respect of the Securities or of this Indenture may be served. The
Company will give to the Trustee written notice of the location of any such
office or agency and of any change of location thereof. The Company hereby
initially designates the Trustee's office located c/o of United Missouri Trust
Company of New York, 1 Battery Park Plaza, 8th Floor, New York, New York
10004-1405 as the office or agency for each such purpose. In case the Company
shall fail to maintain any such office or agency or shall fail to give such
notice of the location or of any change in the location thereof, presentations
and demands may be made and notices may be served at the Corporate Trust Office
or at such New York office of the Trustee.
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SECTION 3.03. Appointment to Fill a Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 5.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 3.04. Paying Agents. Whenever the Company shall appoint a
paying agent other than the Trustee, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities (whether such sums
have been paid to it by the Company or by any other obligor on the Securities)
in trust for the benefit of the holders of the Securities or of the Trustee,
(b) that it will give the Trustee notice of any failure by the Company
(or any other obligor on the Securities) to make any payment of the principal of
or interest on the Securities when the same shall be due and payable, and
(c) pay any such sums so held in trust by it to the Trustee upon the
Trustee's written request at any time during the continuance of the failure
referred to in clause
(b) above.
The Company will, prior to 12:00 noon (New York time) on each due date
of the principal of or interest on the Securities, deposit with the paying agent
(including the Trustee should it be the paying agent), a sum in immediately
available funds, sufficient to pay such principal or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action.
If the Company shall act as paying agent, it will, on or before each
due date of the principal of or interest on the Securities, set aside, segregate
and hold in trust for the benefit of the holders of the Securities a sum
sufficient to pay such principal or interest so becoming due. The Company will
promptly notify the Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, the Company
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason, pay or cause to be paid to the Trustee
all sums held in trust by the Company or any paying agent hereunder, as required
by this Section, such sums to be held by the Trustee upon the trusts herein
contained.
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Anything in this Section to the contrary notwithstanding, the agreement
to hold sums in trust as provided in this Section are subject to the provisions
of Sections 11.05 and 11.06.
SECTION 3.05. Certificates to Trustee. (a) The Company will deliver to
the Trustee within 90 days after the end of each fiscal year of the Company,
commencing with the fiscal year ending June 30, 1999, a certificate from the
principal executive, financial or accounting officer of the Company as to his or
her knowledge of the Company's compliance with all conditions and covenants
under this Indenture (such compliance to be determined without regard to any
period of grace or requirement of notice provided under this Indenture) and
setting forth the details of any Event of Default or Default known to such
officer and the action which the Company proposes to take with respect thereto.
(b) The Company will deliver to the Trustee, as soon as possible and
in any event within 10 days after the Company becomes aware or should reasonably
become aware of the occurrence of an Event of Default or a Default, an Officer's
Certificate setting forth the details of such Event of Default or Default, and
the action which the Company proposes to take with respect thereto.
(c) The Company will deliver to the Trustee within 90 days after the
end of each fiscal year of the Company a written statement by the Company's
independent public accountants stating whether, in connection with their audit
examination, any Default has come to their attention and, if such a Default has
come to their attention, specifying the nature and period of the existence
thereof.
SECTION 3.06. Securityholders' Lists. If and so long as the Trustee
shall not be the Registrar, the Company will furnish or cause to be furnished to
the Trustee a list in such form as the Trustee may reasonably require of the
names and addresses of the holders of the Securities pursuant to Section 312 of
the Trust Indenture Act (a) semi-annually not more than 15 days after each
Interest Record Date as of such Interest Record Date, and (b) at such other
times as the Trustee may request in writing, within thirty days after receipt by
the Company of any such request as of a date not more than 15 days prior to the
time such information is furnished.
SECTION 3.07. Reports by the Trustee. (a) The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within sixty days after each July 1 following
the date of this Indenture deliver to Holders a brief report, dated as of such
July 1, which complies with the provisions of such Section 313(a).
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(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange, if any, upon which
the Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 3.08. Limitation on Restricted Payments. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any distribution on account
of the Company's or any Restricted Subsidiary's Equity Interests (other than (x)
dividends or distributions payable in Qualified Equity Interests of the Company
and (y) in the case of any Restricted Subsidiary, dividends or distributions
payable to the Company or any Restricted Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any of its Restricted Subsidiaries (other than any such Equity
Interests that are owned by the Company or a Restricted Subsidiary); (iii) make
any voluntary or optional principal payment on, or voluntary or optional
purchase, redemption, defeasance, or other acquisition or retirement for value
of, any Subordinated Debt; or (iv) make any Investment that is a Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment (the amount of
any such Restricted Payment, if other than cash, being the fair market value (as
conclusively evidenced by a resolution of the Board of Directors of the Company
set forth in an Officers' Certificate delivered to the Trustee within 60 days
prior to the date of such Restricted Payment) of the asset(s) proposed to be
transferred by the Company or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment):
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the most recently ended four full fiscal
quarter period for which internal financial statements are available
immediately preceding the date of such Restricted Payment, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 3.09; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after June 30, 1998 (excluding Restricted Payments permitted by clauses
(B), (C) and (D) of the next succeeding paragraph), is less than the
sum of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one
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accounting period) from the beginning of the first fiscal quarter
commencing after June 30, 1998 to the end of the Company's most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by
the Company from the issue or sale (other than to a Subsidiary of the
Company) since June 30, 1998 of Qualified Equity Interests of the
Company or of debt securities of the Company or any of its Restricted
Subsidiaries that have been converted into or exchanged for such
Qualified Equity Interests of the Company.
If no Default or Event of Default has occurred and is continuing, or
would occur as a consequence thereof, the foregoing provisions will not prohibit
the following Restricted Payments: (A) the payment of any dividend within 60
days after the date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of the Indenture; (B) the
payment of cash dividends on any series of Disqualified Stock issued after the
date of the Indenture in an aggregate amount not to exceed the cash received by
the Company since the date of the Indenture upon issuance of such Disqualified
Stock; (C) the redemption, repurchase, retirement or other acquisition of any
Equity Interests of the Company or any Restricted Subsidiary in exchange for, or
out of the net cash proceeds of, the substantially concurrent sale (other than
to a Subsidiary of the Company) of Qualified Equity Interests of the Company;
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition shall be excluded
from clause (c) (ii) of the preceding paragraph; (D) the defeasance, redemption
or repurchase of Subordinated Debt (including any Subordinated Debt that
constitutes Acquired Debt) with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness or in exchange for or out of the net cash
proceeds from the substantially concurrent sale (other than to a Subsidiary of
the Company) of Qualified Equity Interests of the Company; provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (E) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary held by any present or former member of the Company's
(or any of its Subsidiaries') management (which for purposes of this clause (E)
includes directors) or the heirs, estate or legatees of, or any entity
controlled by, any such member pursuant to any management equity subscription
agreement, stock option agreement or other employee benefit plan; provided that
the aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests pursuant to this Clause (E) shall not exceed $1 million in any
calendar year (with unused amounts in a calendar year being carried forward to a
subsequent calendar year, subject to a maximum of $2 million in any calendar
year); (F) the repurchase of any Subordinated Debt at a
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purchase price not greater than 101% of the principal amount of such
Subordinated Debt in the event of a Change of Control pursuant to a provision
similar to Section 3.17; provided that prior to such repurchase the Company has
made a Change of Control Offer as provided in Section 3.17 and has repurchased
all Securities validly tendered for payment in connection with such Change of
Control Offer and (G) any other Restricted Payment which, together with all
other Restricted Payments made pursuant to this clause (G) on or after the Issue
Date, does not exceed $7 million.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this covenant were computed.
SECTION 3.09. Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, Guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") after the
date of the Indenture any Indebtedness (including Acquired Debt) and that the
Company will not issue any Disqualified Stock and the Company will not permit
any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) and the Company may issue shares of Disqualified Stock if (i) no Default
or Event of Default will have occurred and be continuing or would occur as a
consequence thereof and (ii) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.5 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom) as if the additional Indebtedness had
been incurred, or the Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period. Indebtedness consisting of
reimbursement obligations in respect of a letter of credit will be deemed to be
incurred when the letter of credit is first issued. The Company will not permit
any of its Unrestricted Subsidiaries to incur any Indebtedness other than
Non-Recourse Debt.
The foregoing provisions will not apply to:
(i) the incurrence by the Company of Senior Debt under the New
Credit Facility, and Guarantees thereof by its Restricted
Subsidiaries, in an aggregate principal amount at any time
outstanding not to exceed an amount equal to $85 million less
the aggregate amount of all mandatory payments applied to
repay loans (other than revolving
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credit loans) outstanding thereunder or to permanently reduce
the revolving credit commitments thereunder;
(ii) the incurrence by the Company of Indebtedness
represented by the Securities;
(iii) Existing Indebtedness;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund, Indebtedness
that was permitted by the Indenture to be incurred (including,
without limitation, Existing Indebtedness);
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the
Company and any of its Restricted Subsidiaries; provided that
upon either (a) the transfer or other disposition by the
Company or a Restricted Subsidiary of any Indebtedness so
permitted under this clause (v) to a Person other than the
Company or a Restricted Subsidiary or (b) the issuance, sale,
transfer or other disposition of Equity Interests (including
by consolidation or merger) in a Restricted Subsidiary to a
Person other than the Company or a Restricted Subsidiary which
results in such Restricted Subsidiary ceasing to be a
Restricted Subsidiary, the provisions of this clause (v) shall
no longer be applicable to such Indebtedness and such
Indebtedness shall be deemed to have been incurred at the time
of any such issuance, sale, transfer or other disposition, as
the case may be;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations or Guarantees thereof,
provided that such Hedging Obligations are incurred for the
purpose of (A) fixing or hedging interest rate or currency
risk with respect to any fixed or floating rate Indebtedness
that is permitted by the Indenture to be outstanding or any
receivable or liability, the payment of which receivable or
liability is determined by reference to a foreign currency;
provided that the notional principal amount of any such
Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation relates or (B)
fixing or hedging risk with respect to fluctuations in the
cost of its raw materials; provided that such obligation is
entered into by the Company or a Restricted Subsidiary for
valid business purposes other than speculative purposes
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(as determined by the Company's or such Restricted
Subsidiary's chief financial officer in the exercise of his or
her good faith business judgment);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by performance bonds,
bankers' acceptances, standby letters of credit, mechanic's
lien bonds or appeal bonds, in each case to the extent
incurred in the ordinary course of business of the Company or
such Restricted Subsidiary;
(viii) the issuance by any of the Company's Restricted
Subsidiaries of shares of preferred stock to the Company or a
Restricted Subsidiary; provided that upon the transfer or
other disposition by the Company or a Restricted Subsidiary of
any such shares to a Person other than the Company or a
Restricted Subsidiary, the provisions of this clause (viii)
shall no longer be applicable to such preferred stock and such
preferred stock shall be deemed to have been issued to such
Person at the time of any such transfer or other disposition
and shall be required to satisfy the provisions of clause (ix)
hereof;
(ix) the incurrence by any Restricted Subsidiary of
Indebtedness, or the issuance by any Restricted Subsidiary of
preferred stock, the aggregate principal amount of which, in
the case of Indebtedness, or the total liquidation preference
of which, in the case of preferred stock, together with (x)
all other Indebtedness of the Company's Restricted
Subsidiaries (other than Guarantees of the New Credit
Facility) at the time outstanding and (y) the total
liquidation preference of all other preferred stock of the
Company's Restricted Subsidiaries at the time issued and
outstanding and, in each case, held by any Person other than
the Company or any Restricted Subsidiary, does not exceed the
greater of (1) 5% of the Company's Stockholders' Equity as of
the date of incurrence or (2) $2 million; provided that, in
the case of clause (1) only, the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available
immediately preceding the date on which such Indebtedness
(including Acquired Subsidiary Debt) is incurred would have
been at least 2.5 to 1, determined on a pro forma basis,
provided further, that solely for the purpose of determining
whether the aggregate principal amount of Indebtedness of the
Company's Restricted Subsidiaries at any time outstanding
exceeds 5% of the Company's Stockholders' Equity, Acquired
Subsidiary Debt shall be excluded;
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(x) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness arising from agreements providing
for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the
Company or any of its Restricted Subsidiaries pursuant to such
agreements, in each case incurred in connection with the
disposition of any business, assets or Restricted Subsidiary
(other than Guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the gross
proceeds actually received by the Company or any Restricted
Subsidiary in connection with such disposition; and
(xi) the incurrence by the Company of Indebtedness (in
addition to Indebtedness permitted by any other clause of this
paragraph) in an aggregate principal amount at any time
outstanding not to exceed $10 million.
SECTION 3.10. Disposition of Proceeds of Asset Sales. The Company will
not, and will not permit any of its Restricted Subsidiaries to, consummate an
Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale at least equal to the
fair market value (as conclusively determined by a resolution of the Board of
Directors of the Company set forth in an Officer's Certificate delivered to the
Trustee) of the assets or Equity Interests issued or sold or otherwise disposed
of and (ii) at least 75% of the consideration therefor received by the Company
or such Restricted Subsidiary is in the form of (x) cash or Temporary Cash
Investments or (y) property or assets that are used or useful in a Permitted
Business; provided that for purposes of this provision, the amount of (A) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto), of the Company or any Restricted
Subsidiary (other than, in the case of an Asset Sale by the Company, liabilities
that are by their terms subordinated to the Securities) that are assumed by the
transferee of any such assets and (B) any securities or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are immediately converted by the Company or such Restricted Subsidiary into
cash (or as to which the Company or such Restricted Subsidiary has received at
or prior to the consummation of the Asset Sale a commitment (which may be
subject to customary conditions) from a nationally recognized investment,
merchant or commercial bank to convert into cash within 90 days of the
consummation of such Asset Sale and which are thereafter actually converted into
cash within such 90-day period) will be deemed to be cash (but shall not be
deemed to be Net Proceeds for purposes of the following provisions until reduced
to cash). Notwithstanding the foregoing, it will not be a
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violation of the foregoing provisions if the Company or a Restricted Subsidiary
receives Investments as all or part of the consideration for an Asset Sale
(which consideration is not otherwise permitted), if such Investments constitute
Restricted Investments permitted by Section 3.08
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the Restricted Subsidiary, as the case may be, may apply
such Net Proceeds (i) to make a capital expenditure or to acquire other tangible
assets, in each case, that are used or useful in any Permitted Business or (ii)
to the extent not applied pursuant to clause (i), to permanently reduce Senior
Debt (and, in the case of revolving credit loans, to correspondingly reduce
commitments with respect thereto). Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess
Proceeds exceeds $5 million, the Company will be required to make an offer to
all Holders of Securities and holders of any other Indebtedness of the Company
ranking on a parity with the Securities from time to time outstanding with
similar provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds from any Asset Sales, pro rata in
proportion to the respective principal amounts of Securities and such other
Indebtedness then outstanding (an "ASSET SALE OFFER") to purchase the maximum
principal amount of the Securities and such other Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash equal to 100% of
the principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase (the "PURCHASE PRICE"), in accordance with the procedures set
forth below. To the extent that the aggregate amount of Securities and such
other Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Securities and such
other Indebtedness surrendered by holders thereof exceeds the amount of Excess
Proceeds, the Securities and such other Indebtedness will be purchased on a pro
rata basis. Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
No later than 5 Business Days after the date on which the aggregate
amount of Excess Proceeds exceeds $5 million, the Company shall notify the
Trustee of such Asset Sale Offer and provide the Trustee with an Officer's
Certificate setting forth the calculations used in determining the amount of Net
Proceeds to be applied to the purchase of Securities. The Company shall commence
or cause to be commenced the Asset Sale Offer on a date no later than 20
Business Days after such notice (the "COMMENCEMENT DATE").
The Asset Sale Offer shall remain open for at least 20 Business Days
after the Commencement Date relating to such Asset Sale Offer and shall remain
open for no more than such 20 Business Days, except to the extent required by
applicable law (as
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so extended, the "OFFER PERIOD"). No later than two Business Days after the
termina tion of the Offer Period (the "PURCHASE DATE"), the Company shall
purchase the principal amount (the "OFFER AMOUNT") of Securities required to be
purchased in such Asset Sale Offer pursuant to this Section or, if less than the
Offer Amount has been tendered, all Securities tendered in response to the Asset
Sale Offer, in each case for an amount in cash equal to the Purchase Price.
If the Purchase Date is on or after an interest payment record date and
on or before the related interest payment date, any accrued interest shall be
paid to the Person in whose name a Security is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Securities pursuant to the Asset Sale Offer.
On the Commencement Date of any Asset Sale Offer, the Company shall
send, or at the Company's request the Trustee shall send, by first class mail, a
notice to each of the Holders at their last registered address, with a copy to
the Trustee and the paying agent, offering to repurchase the Securities held by
such Holder pursuant to the procedure specified in such notice. Such notice,
which shall govern the terms of the Asset Sale Offer, shall contain all
instructions and materials necessary to enable the Holders to tender Securities
pursuant to the Asset Sale Offer and shall state:
(1) that the Asset Sale Offer is being made
pursuant to this Section and the length of time the
Asset Sale Offer shall remain open;
(2) the Offer Amount, the Purchase Price and the
Purchase Date;
(3) that any Security not tendered or accepted
for payment shall continue to accrue interest;
(4) that, unless the Company defaults in the
payment of the Purchase Price, any Security accepted
for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Security
purchased pursuant to any Asset Sale Offer shall be
required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Company, a
depositary, if appointed by the Company, or a paying
agent at the address specified in the notice prior to
the
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close of business on the Business Day next preceding
the Purchase Date;
(6) that Holders shall be entitled to withdraw
their election if the Company, depositary or paying
agent, as the case may be, receives, not later than
the close of business on the Business Day next
preceding the termination of the Offer Period, a
facsimile transmission or letter setting forth the
name of the Holder, the certificate number and
principal amount of the Security the Holder delivered
for purchase and a statement that such Holder is
withdrawing his election to have such Security
purchased;
(7) that, if the aggregate principal amount of
Securities surrendered by Holders exceeds the Offer
Amount, the Trustee shall select the Securities to be
purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Trustee so that
only Securities in denominations of $1,000, or
integral multiples thereof, shall be purchased);
(8) that Holders whose Securities were purchased
only in part shall be issued new Securities equal in
principal amount to the unpurchased portion of the
Securities surrendered; and
(9) the circumstances and relevant facts
regarding such Asset Sale and any other information
that would be material to a decision as to whether to
tender a Security pursuant to the Asset Sale Offer.
On the Purchase Date, the Company shall, to the extent lawful, (i)
accept for payment, on a pro rata basis to the extent necessary, an aggregate
principal amount equal to the Offer Amount of Securities tendered pursuant to
the Asset Sale Offer, or if less than the Offer Amount has been tendered, all
Securities or portion thereof so tendered, (ii) deposit with the paying agent
prior to 12:00 noon (New York time) on the Purchase Date an amount in
immediately available funds equal to the Purchase Price in respect of all
Securities or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Securities so accepted together with an Officer's
Certificate stating the aggregate principal amount of Securities or portions
thereof being purchased by the Company. The paying agent shall promptly mail to
each Holder of Securities so tendered payment in an amount equal to the Purchase
Price for such Securities and the Trustee shall promptly authenticate and mail
(or
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cause to be transferred by book entry) a new Security to such Holder equal in
principal amount to any unpurchased portion of the Securities surrendered, if
any; provided that each such new Security shall be in a principal amount of
$1,000 or an integral multiple thereof.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other United States Federal, state, or territorial
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of Securities as a
result of the Asset Sale Offer.
SECTION 3.11. Limitation on Liens. The Company will not, and will not
permit any of its Restricted Subsidiaries to, incur any Indebtedness secured by
a Lien ("SECURED INDEBTEDNESS") which is not Senior Debt unless
contemporaneously therewith effective provision is made to secure the Securities
equally and ratably with (or, if the Secured Indebtedness is Subordinated Debt,
on a basis senior to) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
SECTION 3.12. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends
or make any other distributions to the Company or any of its Restricted
Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest
or participation in, or measured by, its profits, or (b) pay any Indebtedness
owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries. The foregoing shall not restrict encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date of the Indenture, and any extensions, refinancings, renewals or
replacements of any of the foregoing; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no more restrictive than those contained in the initial agreement or instrument,
(b) the Indenture, (c) applicable law, (d) any instrument governing Indebtedness
or Capital Stock of a Person acquired by, or the properties or assets of which
Person are acquired by, the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition or in
violation of Section 3.09), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the Person
(including its Subsidiaries), or the property or assets of the Person (including
its Subsidiaries), so acquired, (e) any lease, license, conveyance or contract
insofar as the provisions thereof restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to such lease,
license, conveyance or
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contract, (f) purchase money obligations for acquired property that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (g) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced, (h) an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock of, or
property and assets of, a Restricted Subsidiary so long as such agreement is not
otherwise prohibited by the Indenture; provided that the restrictions contained
in such agreement are applicable only to such Restricted Subsidiary or its
assets and provided further that such sale or disposition is otherwise permitted
by the terms of the Indenture, (i) any agreement to transfer, an option or a
right with respect to any property of the Company or any of its Restricted
Subsidiaries that imposes restrictions of the nature described in clause (iii)
above so long as such agreement to transfer, option or right is not otherwise
prohibited by the Indenture, or (j) the New Credit Facility and related
documentation as the same is in effect on the date of the Indenture and as
amended or replaced from time to time; provided that no such amendment or
replacement is more restrictive as to the matters enumerated above than the New
Credit Facility and related documentation as in effect on the date of the
Indenture. Nothing contained in this paragraph shall prevent the Company or any
Restricted Subsidiary from incurring any Secured Indebtedness or from
restricting the sale or other disposition of property or assets that secure such
Secured Indebtedness; provided that the incurrence of such Secured Indebtedness
is otherwise permitted under Section 3.11.
SECTION 3.13. Limitation on Line of Business. The Company will not, and
will not permit any of its Restricted Subsidiaries to, engage to any material
extent in any business other than any one or more of the paperboard, packaging
and paper businesses, the gypsum wallboard and other gypsum businesses,
recycling businesses generally, and business related generally to any of the
foregoing (each, a "PERMITTED BUSINESS").
SECTION 3.14. Limitation on Senior Subordinated Debt. The Company will
not incur, create, issue, assume, Guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Securities.
SECTION 3.15. Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its Restricted Subsidiaries to, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make any contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that
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could have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to
the Trustee (a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $1 million, a resolution of the Board of Directors of
the Company set forth in an Officer's Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors of the Company and (b) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $5 million, an opinion as to the
fairness to the Company or such Restricted Subsidiary of such Affiliate
Transaction from a financial point of view issued by an investment banking firm
of national standing, or by another nationally recognized independent expert
with experience appraising the terms and conditions of transactions similar to
such Affiliate Transaction. Notwithstanding the foregoing: (A) transactions or
payments pursuant to any employment arrangements, employee relations or employee
or director benefit plans entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (B) transactions between
or among the Company and/or its Restricted Subsidiaries and (C) transactions
between a Person and an Affiliate existing at the time such Person is merged
with or into or becomes a Restricted Subsidiary, except to the extent such
transaction was entered into in connection with, or in contemplation of, such
Person merging with or into or becoming a Restricted Subsidiary, in each case,
shall not be deemed to be Affiliate Transactions.
Notwithstanding the foregoing, any Investment in Affiliates permitted
by Section 3.08 shall not be prohibited by the foregoing limitations on
Affiliate Transactions.
SECTION 3.16. Limitation on Issuance of Guarantees of Indebtedness by
Restricted Subsidiaries. The Company will not permit any Restricted Subsidiary,
directly or indirectly, to Guarantee or secure the payment of any other
Indebtedness of the Company or any of its Restricted Subsidiaries (except
Indebtedness of a Restricted Subsidiary of such Restricted Subsidiary) unless
(i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for the Guarantee of the
payment of the Securities by such Restricted Subsidiary, which Guarantee shall
be senior to or pari passu with such Restricted Subsidiary's Guarantee of or
pledge to secure such other Indebtedness and (ii) such Restricted Subsidiary
waives and will not in any manner whatsoever claim or take the benefit or
advantage of any rights of reimbursement, indemnity or subrogation or any other
rights against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under such Guarantee. Notwithstanding the
foregoing, any such Guarantee by a Restricted Subsidiary of the Securities shall
provide by its terms that it shall be automatically and
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unconditionally released and discharged upon a sale or other disposition, by way
of merger or otherwise, to any Person not an Affiliate of the Company, of the
Company's stock in, or the assets of, such Restricted Subsidiary, which sale or
other disposition results in such Restricted Subsidiary ceasing to be a
Restricted Subsidiary and such sale or other disposition is made in compliance
with, and the Net Proceeds therefrom are applied in accordance with, the
applicable provisions of the Indenture. The form of such supplemental indenture
will be attached as an exhibit to the Indenture. The foregoing provisions will
not be applicable to (i) Guarantees by Restricted Subsidiaries of Indebtedness
under the New Credit Facility, (ii) Guarantees of Indebtedness of a Person by
its subsidiaries in effect prior to the time such Person is merged with or into
or otherwise became a Restricted Subsidiary, provided that such Guarantees do
not extend to any other Indebtedness of such Person or any other Person and
(iii) any one or more Guarantees of up to $2 million in aggregate principal
amount of Indebtedness of the Company or any Restricted Subsidiary at any time
outstanding.
SECTION 3.17. Change of Control. Upon the occurrence of a Change of
Control, each Holder of Securities will have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Securities pursuant to the offer described below (the "CHANGE OF
CONTROL OFFER") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon to the date of
purchase (the "CHANGE OF CONTROL PAYMENT") on a date that is not more than 90
days after the occurrence of such Change of Control (the "CHANGE OF CONTROL
PAYMENT DATE"). Prior to the mailing of notice to Holders provided for in the
succeeding paragraph, but in any event within 30 days following any Change of
Control, the Company covenants to (i) repay in full all Senior Debt that would
prohibit the repurchase of the Securities as provided for in the succeeding
paragraph or (ii) obtain any requisite consents under instruments governing any
such Senior Debt to permit the repurchase of the Securities as provided for in
the succeeding paragraph. The Company shall first comply with the covenant in
the preceding sentence before it shall be required to repurchase Securities
pursuant to this Section 3.17.
Within 30 days following any Change of Control, the Company will mail,
or at the Company's request the Trustee will mail, a notice of a Change of
Control to each Holder (at its last registered address with a copy to the
Trustee and the paying agent) offering to repurchase the Securities held by such
Holder pursuant to the procedures specified in such notice. The Change of
Control Offer shall remain open from the time of mailing until the close of
business on the Business Day next preceding the Change of Control Payment Date.
The notice, which shall govern the terms of the Change of Control Offer, shall
contain all instructions and materials necessary to enable the Holders to tender
Securities pursuant to the Change of Control Offer and shall state:
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(1) that the Change of Control Offer is being
made pursuant to this Section 3.17 and that all
Securities tendered will be accepted for payment;
(2) the Change of Control Payment and the Change
of Control Payment Date, which date shall be no
earlier than 30 days nor later than 60 days from the
date such notice is mailed;
(3) that any Security not tendered will continue
to accrue interest in accordance with the terms of
this Indenture;
(4) that, unless the Company defaults in the
payment of the Change of Control Payment, all
Securities accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders electing to have a Security
purchased pursuant to any Change of Control Offer
will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the
Company, a depositary, if appointed by the Company,
or a paying agent at the address specified in the
notice prior to the close of business on the Business
Day next preceding the Change of Control Payment
Date;
(6) that Holders will be entitled to withdraw
their election if the Company, depositary or paying
agent, as the case may be, receives, not later than
the close of business on the Business Day next
preceding the Change of Control Payment Date, a
facsimile transmission or letter setting forth the
name of the Holder, the certificate number and
principal amount of the Security the Holder delivered
for purchase, and a statement that such Holder is
withdrawing his election to have such Security
purchased;
(7) that Holders whose Securities are being
purchased only in part will be issued new Securities
equal in principal amount to the unpurchased portion
of the Securities surrendered, which unpurchased
portion must be equal to $1,000 in principal amount
or an integral multiple thereof; and
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(8) the circumstances and relevant facts
regarding such Change of Control (including, but not
limited to, information with respect to pro forma
historical financial information after giving effect
to such Change of Control, information regarding the
Person or Persons acquiring control and such Person's
or Persons' business plans going forward) and any
other information that would be material to a
decision as to whether to tender a Security pursuant
to the Change of Control Offer.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Securities or portions thereof properly
tendered and not withdrawn pursuant to the Change of Control Offer, (ii) deposit
with the paying agent before 12:00 noon (New York time) on the Change of Control
Payment Date an amount in immediately available funds equal to the Change of
Control Payment in respect of all Securities or portions thereof so tendered and
(iii) deliver or cause to be delivered to the Trustee the Securities so accepted
together with an Officer's Certificate stating the aggregate principal amount of
Securities or portions thereof being purchased by the Company. The paying agent
will promptly mail to each Holder of Securities so tendered the Change of
Control Payment for such Securities, and the Trustee will promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new
Security equal in principal amount to any unpurchased portion of the Securities
surrendered, if any; provided that each such new Security will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other United States Federal, state, or territorial
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Securities as a
result of a Change of Control.
SECTION 3.18. Reports. (i) So long as any of the Securities remain
outstanding, the Company will furnish to the Trustee and the Holders of
Securities within 15 days after the filing thereof with the Commission copies of
the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may by rules
and regulations prescribe) that the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. All obligors on
the Securities shall comply with the provisions of the Trust Indenture Act
Section 314(a). The Company shall file with the Commission (a) within 90 days
after the end of each fiscal year, annual reports on Form 10-K (or any successor
or comparable form) containing the information required to be contained therein
(or required in such successor or
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comparable form), including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and a report thereon by the Company's
certified public accountants; (b) within 45 days after the end of each of the
first three fiscal quarters of each fiscal year, reports on Form 10-Q (or any
successor or comparable form) containing the information required to be
contained therein (or required in any successor or comparable form), including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"; and (c) promptly from time to time after the occurrence of an event
required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in any successor or comparable form); provided,
however, that the Company shall not be in default of the provisions of this
Section 3.18) for any failure to file reports with the Commission solely by the
refusal of the Commission to accept the same for filing. Each of the financial
statements contained in such reports shall be prepared in accordance with GAAP.
(ii) The Trustee, at the Company's expense, shall promptly mail
copies of all such annual reports, information, documents and other
reports provided to the Trustee pursuant to Section 3.18(i) hereof to
the Holders at their addresses appearing in the register of Securities
maintained by the Registrar.
(iii) Whether or not required by the rules and regulations of the
Commission, the Company shall file a copy of all such information and
reports with the Commission for public availability and make such
information available to securities analysts and prospective investors
upon request.
(iv) The Company shall provide the Trustee with a sufficient
number of copies of all reports and other documents and information
that the Trustee may be required to deliver to the Holders under this
Section 3.18.
(v) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officer's
Certificates).
SECTION 3.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not (i) at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on
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the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture and the Company will expressly waive all benefit or advantage of any
such law and (ii) by reason of any such law hinder, delay or impede the
execution of any power granted to the Trustee under this Indenture and will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE 4
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
SECTION 4.01. Events of Default. Each of the following constitutes an
"Event of Default":
(i) default for 30 days in the payment when due of interest on
the Securities (whether or not prohibited by the provisions described
in Article 9);
(ii) default in payment when due of the principal of or premium,
if any, on the Securities (whether or not prohibited by the provisions
described in Article 9);
(iii) failure by the Company to comply with the provisions of
Sections 3.08, 3.09, 3.10, or 3.17 hereof;
(iv) failure by the Company for 30 days after notice to comply
with any of its other covenants or agreements in the Indenture or the
Securities;
(v) any default that occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company
or any Significant Subsidiary of the Company (or the payment of which
is Guaranteed by the Company or any Significant Subsidiary of the
Company), whether such Indebtedness or Guarantee exists on the date
hereof or is created after the date hereof, which default (a)
constitutes a Payment Default or (b) results in the acceleration of
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
Payment Default or that has been so accelerated, aggregates $3 million
or more;
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(vi) failure by the Company or any Significant Subsidiary of the
Company to pay a final judgment or final judgments entered by a court
or courts of competent jurisdiction against the Company or any
Significant Subsidiary of the Company aggregating in excess of $3
million if such final judgment or judgments remain unpaid or
undischarged for a period (during which execution shall not be
effectively stayed) of 60 days after their entry;
(vii) the Company or any Significant Subsidiary of the Company
thereof pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case in which it is the debtor,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing its inability generally to pay its
debts as the same become due; and
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary of the Company in an involuntary case in which it
is the debtor,
(B) appoints a Custodian of the Company or any
Significant Subsidiary of the Company or for all or
substantially all of the property of the Company or any
Significant Subsidiary of the Company, or
(C) orders the liquidation of the Company or any
Significant Subsidiary of the Company,
and the order or decree remains unstayed and in effect for 60 days.
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The term "BANKRUPTCY LAW" means title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "CUSTODIAN" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
SECTION 4.02. Acceleration. If any Event of Default (other than an
Event of Default specified in clause (vii) or (viii) of Section 4.01 hereof)
occurs and is continuing, the Trustee by written notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Securities by written notice to the Company and the Trustee, may declare the
unpaid principal of, premium, if any, and any accrued and unpaid interest on all
the Securities to be due and payable immediately; provided that for so long as
the New Credit Facility is in effect, such declaration shall not become
effective until the earlier of (i) five Business Days after receipt of the
written notice declaring the Securities to be due and payable immediately by the
administrative agent under the New Credit Facility or (ii) acceleration of the
Indebtedness under the New Credit Facility. Except as set forth above, upon such
declaration the principal of, premium, if any, and interest shall be due and
payable immediately. If an Event of Default specified in clause (vii) or (viii)
of Section 4.01 hereof occurs with respect to the Company or any Significant
Subsidiary of the Company, the unpaid principal of, premium, if any, and any
accrued and unpaid interest on all the Securities shall ipso facto become and be
immediately due and payable without further action or notice on the part of the
Trustee or any Holder.
SECTION 4.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquies cence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 4.04. Waiver of Past Defaults. The Holders of not less than a
majority in aggregate principal amount of the Securities then outstanding by
written notice to the Trustee may on behalf of the Holders of all of the
Securities waive any existing Default or Event of Default and its consequences
under this Indenture except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on any Security. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been
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cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
SECTION 4.05. Control by Majority. Holders of a majority in aggregate
principal amount of the then outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture that
the Trustee determines may be unduly prejudicial to the rights of other Holders
or that may involve the Trustee in personal liability. The Trustee may take any
other action which it deems proper which is not inconsistent with any such
direction.
SECTION 4.06. Limitation on Suits. A Holder may pursue a remedy with
respect to this Indenture or the Securities only if:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
the then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
aggregate principal amount of the then outstanding Securities do not
give the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 4.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal, premium, if any, and interest on the Security , on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
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SECTION 4.08. Collection Suit by Trustee. If an Event of Default
specified in Section 4.01(i) or (ii) hereof occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Company or any other obligor for the whole amount of
principal, premium, if any, and interest remaining unpaid on the Securities and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover amounts due the Trustee under
Section 5.07 hereof, including the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 4.09. Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Securities),
its creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 5.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 5.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 4.10. Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 5.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
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Second: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Securities
for principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 4.10 upon five Business Days prior notice to
the Company.
SECTION 4.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 4.07 hereof, or a
suit by Holders of more than 10% in aggregate principal amount of the then
outstanding Securities.
ARTICLE 5
CONCERNING THE TRUSTEE
SECTION 5.01. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that
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(a) prior to the occurrence of an Event of Default of which the
Trustee has actual notice and after the curing or waiving of all such Events of
Default which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any statements,
Officer's Certificates or other certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but
in the case of any such statements, Officer's Certificates or other
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the holders of not less than a majority in principal amount of the Securities at
the time outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
This Section 5.01 is in furtherance of and subject to Sections 315 and
316 of the Trust Indenture Act of 1939.
SECTION 5.02. Certain Rights of the Trustee. In furtherance of and
subject to the Trust Indenture Act of 1939, and subject to Section 5.01:
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(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Company, as
the case may be;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder, of which
the Trustee has actual notice, and after the curing or waiving of all Events of
Default, the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless requested
in writing so to do by the holders of not less than a majority in aggregate
principal amount of the Securities then outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such examination shall be paid by
the Company or, if paid by the Trustee or any predecessor trustee, shall be
repaid by the Company upon demand;
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture;
(i) the permissive right of the Trustee to take an action enumerated in
this Indenture shall not be construed as a duty to take such action; and
(j) notwithstanding any other provision of this Indenture to the
contrary, any provision intended to provide authority to act, right to payment
of fees and expenses, protection, immunity and indemnification to the Trustee
shall be interpreted to include any action of the Trustee whether it is acting
in its capacity as Trustee, Registrar, or paying agent.
SECTION 5.03. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, any
supplemental indenture or instruments of further assurance or of the Securities.
The Trustee shall not be accountable for the use or application by the Company
of any of the Securities or of the proceeds thereof.
SECTION 5.04. Trustee and Agents May Hold Securities; Collections, etc.
The Trustee shall not be held accountable for the use by any Holder of any
Securities properly authenticated and delivered by the Trustee hereunder. The
Trustee or any agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and may otherwise
deal with the Company and receive, collect, hold and retain collections from the
Company with the same rights it would have if it were not the Trustee or such
agent.
SECTION 5.05. Moneys Held by Trustee. Subject to the provisions of
Section 11.06 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions
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of law. Neither the Trustee nor any agent of the Company or the Trustee shall be
under any liability for interest on any moneys received by it hereunder.
SECTION 5.06. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is actually
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in the manner and to the extent provided in Trust Indenture Act Section
313(c) notice of the Default or Event of Default within 45 days after it occurs,
unless such Default or Event of Default has been cured; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders.
SECTION 5.07. Compensation and Indemnification of Trustee and Its Prior
Claim. The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as shall be agreed in
writing among the Company and the Trustee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and the Company covenants and agrees to pay or reimburse the Trustee and each
predecessor Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by or on behalf of it in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also covenants to
indemnify the Trustee and each predecessor Trustee for, and to hold it harmless
against, any and all loss, liability, damage, claim or expense, including taxes
(other than taxes based on the income of the Trustee) incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including the costs and expenses of defending itself against
or investigating any claim of liability in the premises. The obligations of the
Company under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Securities, and the Securities and the Guarantee are hereby subordinated to such
senior claim.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 4.01(a)(vii) or Section 4.01(a)(viii),
the
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expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
SECTION 5.08. Right of Trustee to Rely on Officer's Certificate, etc.
Subject to Sections 5.01 and 5.02, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officer's Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 5.09. Persons Eligible for Appointment as Trustee. The Trustee
hereunder shall at all times be a corporation having a combined capital and
surplus of at least $100,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
SECTION 5.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee may at any time resign by giving written notice of
resignation to the Company. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor trustee,
or any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months may, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
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(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act of 1939, after written
request therefor by the Company or by any Securityholder who has been a
bona fide holder of a Security or Securities for at least six months;
or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 5.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to Section 315(e) of the Trust Indenture Act of 1939, any Securityholder
who has been a bona fide holder of a Security or Securities for at least six
months may on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Company the evidence provided for in
Section 6.01 of the action in that regard taken by the Securityholders.
If no successor trustee shall have been so appointed and have accepted
appointment 30 days after the mailing of such notice of removal, the trustee
being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section 5.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 5.11.
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SECTION 5.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.10 shall execute and
deliver to the Company and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 11.06, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument as may be reasonably requested by the Company
or such successor trustee transferring to such successor trustee all such
rights, powers, duties and obligations. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by such trustee to
secure any amounts then due it pursuant to the provisions of Section 5.07.
Upon acceptance of appointment by a successor trustee as provided in
this Section 5.11, the Company shall mail notice thereof by first-class mail to
the holders of Securities at their last addresses as they shall appear in the
Security register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.10.
If the Company fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
SECTION 5.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or to which the Trustee's assets
may be sold, or any corporation resulting from any merger, conversion,
consolidation or sale to which the Trustee shall be a party or by which the
Trustee's property may be bound, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 5.09, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication
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of any predecessor Trustee and deliver such Securities so authenticated; and, in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor Trustee; and in all
such cases such certificate shall have the full force which it is anywhere in
the Securities or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the certificate of authentication
of any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
SECTION 5.13. Preferential Collection of Claims. Reference is made to
Section 311 of the Trust Indenture Act. For purposes of Section 311(b) (4) and
(6) of such Act, the following terms shall mean:
(a) "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by the
Company for the purpose of financing the purchase, processing, manufacturing,
shipment, storage or sale of goods, wares or merchandise and which is secured by
documents evidencing title to, possession of, or a lien upon, the goods, wares
or merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
ARTICLE 6
CONCERNING THE HOLDERS
SECTION 6.01. Evidence of Action Taken by Holders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any
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instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 5.01 and 5.02) conclusive in
favor of the Trustee and the Company if made in the manner provided in this
Article. Any request, demand, authorization, direction, notice, consent, waiver
or other action issued or taken by any Holder of any Security shall be binding
upon any subsequent Holder of the same Security or any Security issued in
substitution therefor.
SECTION 6.02. Proof of Execution of Instruments and of Holding of
Securities; Record Date. Subject to Sections 5.01 and 5.02, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in accordance
with such reasonable rules and regulations as may be prescribed by the Trustee
or in such manner as shall be satisfactory to the Trustee. The holding of
Securities shall be proved by the Security register or by a certificate of the
Registrar thereof. The Company may set a record date for purposes of determining
the identity of holders of Securities entitled to vote or consent to any action
referred to in Section 6.01, which record date may be set at any time or from
time to time by notice to the Trustee, for any date or dates (in the case of any
adjournment or resolicitation) not more than 60 days nor less than five days
prior to the proposed date of such vote or consent, and thereafter,
notwithstanding any other provisions hereof, only holders of Securities of
record on such record date shall be entitled to so vote or give such consent or
to withdraw such vote or consent.
SECTION 6.03. Securities Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver only Securities which the Trustee actually knows are so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Securities.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Company shall furnish to the
Trustee promptly an Officer's Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of any of the above-described persons; and, subject to Sections 5.01 and
5.02, the Trustee shall be
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entitled to accept such Officer's Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are outstanding for the purpose of any such determination.
SECTION 6.04. Right of Revocation of Action Taken. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 6.01, of
the taking of any action by the holders of the percentage in aggregate principal
amount of the Securities specified in this Indenture in connection with such
action, any holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Article,
revoke such action so far as concerns such Security. Except as aforesaid any
such action taken by the holder of any Security shall be conclusive and binding
upon such holder and upon all future holders and owners of such Security and of
any Securities issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon any such Security.
Any action taken by the holders of the percentage in aggregate principal amount
of the Securities specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the holders of
all the Securities.
ARTICLE 7
SUPPLEMENTAL INDENTURES
SECTION 7.01. Supplemental Indentures Without Consent of Holders. The
Company and the Trustee may amend or supplement this Indenture or the Securities
without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(iii) to provide for any supplemental indenture required
pursuant to Section 3.16 hereof;
(iv) to provide for the assumption of the Company's
obligations to the Holders of the Securities in the case of any
transaction pursuant to Article 8 hereof;
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(v) to make any change that would provide any additional rights
or benefits to the Holders of the Securities or that does not adversely
affect the legal rights hereunder of any such Holder; or
(vi) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such supplemental indenture,
and upon receipt by the Trustee of the documents described in Section 7.04
hereof, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture which affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 7.02. With Consent of Holders. Except as provided in the next
succeeding paragraphs, this Indenture or the Securities may be amended or
supplemented with the consent of the Holders of at least a majority in aggregate
principal amount of the Securities then outstanding (including consents obtained
in connection with a tender offer or exchange offer for such Securities), and
any existing default or compliance with any provision of this Indenture or the
Securities may be waived with the consent of the Holders of a majority in
aggregate principal amount of the then outstanding Securities (including
consents obtained in connection with a tender offer or exchange offer for such
Securities).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence satisfactory to the Trustee of
the consent of the Holders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 7.04 hereof, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 7.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to
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mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver. Subject to
Sections 4.04 and 4.07 hereof, the Holders of a majority in aggregate principal
amount of the Securities then outstanding may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Securities.
Without the consent of each Holder affected, however, an amendment or waiver may
not (with respect to any Security held by a non-consenting Holder):
(i) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of
any Security (other than provisions relating to the covenants described
under 3.10 and 3.17);
(iii) reduce the rate of or change the time for payment of
interest on any Security;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Securities (except
a rescission of acceleration of the Securities by the Holders of at
least a majority in aggregate principal amount thereof and a waiver of
the payment default that resulted from such acceleration);
(v) make any Security payable in money other than that
stated in the Securities;
(vi) make any change in Section 4.04 or 4.07 hereof;
(vii) waive a redemption payment with respect to any Security
(other than a payment described by Section 3.10 or 3.17);
(viii) modify the ranking or priority of the Securities or the
Guarantee or modify the definition of Senior Debt or Designated Senior
Debt or amend or modify Article 9 in any manner adverse to the Holders;
or
(ix) make any change in this sentence of this Section 7.02.
SECTION 7.03. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Securities
shall thereafter be
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determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 7.04. Documents to Be Given to Trustee; Compliance with TIA.
Prior to the execution of any supplemental indenture, the Trustee shall receive
an Officer's Certificate and an Opinion of Counsel, each stating that in the
opinion of the signer thereof such supplemental indenture complies with the
applicable provisions of this Indenture and the TIA, and, subject to the
provisions of Sections 5.01 and 5.02, such Officer's Certificate and Opinion of
Counsel shall constitute conclusive evidence of the opinions and conclusions
therein stated. Every such supplemental indenture shall comply with the TIA.
SECTION 7.05. Notation on Securities in Respect of Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation approved by the Trustee as to form (but not as to substance) as to any
matter provided for by such supplemental indenture or as to any action taken at
any such meeting. If the Company or the Trustee shall so determine, new
Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors of the Company, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Securities then
outstanding.
ARTICLE 8
CONSOLIDATION, MERGER OR SALE OF ASSETS
SECTION 8.01. When the Company May Merge, Etc. The Company will not
consolidate or merge with or into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company in one or
more related transactions, to another corporation, Person or entity unless (i)
the surviving corporation or the entity or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (the "Surviving Entity") is a corporation organized or existing under the
laws of the United States, any state thereof or the District of Colombia; (ii)
the Surviving Entity assumes all the obligations of the Company under the
Securities and the Indenture pursuant to a supplemental Indenture in form
reasonably satisfactory to the Trustee;
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(iii) immediately before and after giving effect to such transaction, and
treating any Indebtedness which becomes an obligation of the Company as a result
of such transaction as having been incurred by the Company at the time of the
transaction, no Default or Event of Default shall have occurred and be
continuing; and (iv) the Company or the Surviving Entity (A) will have
Consolidated Net Worth immediately after the transaction and prior to any
purchase accounting adjustments equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
3.09.
SECTION 8.02. Successor Corporation Substituted. Upon any consolidation
or merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 8.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation), and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein.
Notwithstanding the foregoing, (i) a consolidation or merger by the
Company with or into, or (ii) the sale, assignment, transfer, lease, conveyance
or other disposition by the Company of all or substantially all of its property
or assets to, one or more of its Subsidiaries shall not relieve the Company from
its obligations under this Indenture or the Securities.
SECTION 8.03. Opinion of Counsel to Trustee. Prior to the consummation
of any transaction contemplated by this Article 8 or the execution of any
supplemental indenture related thereto, the Trustee shall receive an Opinion of
Counsel and an Officer's Certificate, each stating that in the opinion of the
signer thereof such consolidation, merger, conveyance, sale, transfer, lease,
exchange or other disposition complies with the applicable provisions of this
Indenture and any supplemental indenture complies with the terms of this
Indenture and the TIA, and, subject to Sections 5.01 and 5.02, such Officer's
Certificate and Opinion of Counsel shall constitute conclusive evidence of the
opinions and conclusions therein stated.
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ARTICLE 9
SUBORDINATION
SECTION 9.01. Agreement to Subordinate. The Company agrees, and each
Holder by accepting a Security agrees, any provision of this Indenture or the
Securities to the contrary notwithstanding, that all Obligations owed under and
in respect of the Securities are subordinated in right of payment, to the extent
and in the manner provided in this Article 9, to the prior payment in full in
cash or Cash Equivalents of all Obligations owed under and in respect of all
Senior Debt of the Company and that the subordination of the Securities pursuant
to this Article 9 is for the benefit of all holders of all Senior Debt of the
Company, whether outstanding on the Closing Date or incurred thereafter.
SECTION 9.02. Liquidation; Dissolution; Bankruptcy. (a) Upon any
distribution of cash, securities or other property of the Company to creditors
upon any Insolvency or Liquidation Proceeding with respect to the Company (i)
the holders of any Senior Debt of the Company will be entitled to receive
payment in full, in cash or Cash Equivalents, of all Obligations due in respect
of such Senior Debt (including Post-Petition Interest and, in the case of all
Designated Senior Debt, all Obligations with respect thereto) before the Holders
will be entitled to receive any payment or distribution with respect to the
Securities (including payment for the repurchase of Securities upon a Change of
Control), and (ii) until all Obligations with respect to such Senior Debt of the
Company are paid in full, in cash or Cash Equivalents, any payment or
distribution to which the Holders would be entitled shall be made to the holders
of the Company's Senior Debt on a pro rata basis (except payments made from the
trust described in Section 11.04 and except that Holders of the Securities may
receive Reorganization Securities).
Upon any Insolvency or Liquidation Proceeding with respect to the
Company, any payment or distribution of assets of the Company of any kind or
character, whether in cash, securities or other property, to which the Holders
or the Trustee would be entitled, except for the subordination provisions of
this Indenture, shall be paid by the Company, any paying agent or other Person
making such payment or distribution, or by the Holders or by the Trustee if
received by them, directly to the holders of the Company's Senior Debt (pro rata
to such holders on the basis of the amounts of the Obligations due in respect of
the Senior Debt held by them) or their representatives, as their interests may
appear, for application to the payment of all Obligations due in respect of such
Senior Debt (including Post-Petition Interest and, in the case of all Designated
Senior Debt, all Obligations with respect thereto) until all such Obligations
have been paid in full in cash, after giving effect to all other payments or
distributions to, or provisions made for, holders of the Company's Senior Debt.
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(b) A distribution may consist of cash, securities or other property,
by set-off or otherwise. For purposes of this Article 9, the words "cash,
securities or other property" shall not include any distribution of securities
of the Company or any other corporation provided for in any reorganization
proceeding under any Bankruptcy Law if (i) such securities constitute
Reorganization Securities, (ii) such distribution was authorized by an order or
decree of a court of competent jurisdiction, and (iii) such order gives effect
to (and states in such order or decree that effect has been given to) the
subordination of such securities to all Senior Debt of the Company not paid in
full in connection with such reorganization; provided that (a) all such Senior
Debt is assumed by the reorganized corporation and (b) the rights of the holders
of any such Senior Debt are not, without the consent of such holders, altered by
such reorganization, which consent shall be deemed to have been given if the
holders of such Senior Debt (or their representative), individually or as a
class, shall have approved such reorganization.
(c) Notwithstanding anything to the contrary in Section 9.02, Holders
of Securities may continue to receive payments from the trust established
pursuant to Section 11.04.
SECTION 9.03. Default on Designated Senior Debt. The Company may not
make any payment upon or in respect of the Securities (except in such
subordinated securities as described in Section 9.02(b) or from the trust
established pursuant to Section 11.04) if (i) a Payment Default on Designated
Senior Debt occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Debt that permits holders of the Designated Senior Debt as to which such
default relates to accelerate its maturity and the Trustee receives a written
notice of such default (a "PAYMENT BLOCKAGE NOTICE") from the Company or any
Representative of such Designated Senior Debt. Payments on the Securities may be
resumed and all past due amounts on the Securities shall be paid (a) in the case
of a Payment Default, upon the date on which such default is cured or waived and
(b) in case of any default other than a Payment Default, upon the earlier of (1)
the date on which such nonpayment default is cured or waived or (2) 179 days
after the date on which the applicable Payment Blockage Notice is received, in
each case, unless the maturity of such Designated Senior Debt has been
accelerated and the Company has defaulted with respect to the payment of such
Designated Senior Debt. No new period of payment blockage may be commenced
unless and until 360 days have elapsed since the date of receipt by the Trustee
of the immediately prior Payment Blockage Notice. No default other than a
Payment Default that existed or was continuing on the date any Payment Blockage
Notice was given shall be, or be made, the basis for a subsequent Payment
Blockage Notice.
SECTION 9.04. When Distributions Must Be Paid Over. If the Company
shall make any payment to the Trustee on account of the principal of, or
premium, if any,
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or interest on, the Securities, or any other Obligation in respect of the
Securities, or the Holders shall receive from any source any payment on account
of the principal of, premium, if any, or interest on, the Securities or any
Obligation in respect of the Securities, at a time when such payment is
prohibited by this Article 9, the Trustee or such Holders shall hold such
payment in trust for the benefit of, and shall pay over and deliver to, the
holders of the Company's Senior Debt (pro rata as to each of such holders on the
basis of the respective amounts of such Senior Debt held by them) or their
representative, as their respective interests may appear, for application to the
payment of all outstanding Senior Debt of the Company until all such Senior Debt
has been paid in full in cash, after giving effect to all other payments or
distributions to, or provisions made for, the holders of the Company's Senior
Debt.
With respect to the holders of Senior Debt of the Company, the Trustee
undertakes to perform only such obligations on its part as are specifically set
forth in this Article 9, and no implied covenants or obligations with respect to
any holders of the Company's Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of the Company's Senior Debt, and shall not be liable to any
holders of such Senior Debt if the Trustee shall pay over or distribute to, or
on behalf of, Holders or the Company or any other Person, money or assets to
which any holders of such Senior Debt are entitled pursuant to this Article 9,
except if such payment is made at a time when a Responsible Officer has actual
knowledge that the terms of this Article 9 prohibit such payment.
SECTION 9.05. Notice. Neither the Trustee nor the paying agent shall at
any time be charged with the knowledge of the existence of any facts that would
prohibit the making of any payment to or by the Trustee or paying agent under
this Article 9 unless and until the Trustee or paying agent shall have received
written notice thereof from the Company or one or more holders of the Company's
Senior Debt or a Representative of any holders of such Senior Debt; and, prior
to the receipt of any such written notice, the Trustee or paying agent shall be
entitled to assume conclusively that no such facts exist. The Trustee shall be
entitled to rely on the delivery to it of written notice by a Person
representing itself to be a holder of the Company's Senior Debt (or a
Representative thereof) to establish that such notice has been given.
The Company shall promptly notify the Trustee and the paying agent in
writing of any facts it knows that would cause a payment of principal of,
premium, if any, or interest on, the Securities or any other Obligation in
respect of the Securities to violate this Article 9, but failure to give such
notice shall not affect the subordination of the Securities to the Senior Debt
of the Company provided in this Article 9 or the rights of holders of such
Senior Debt under this Article 9.
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SECTION 9.06. Subrogation. After all Senior Debt of the Company has
been paid in full in cash and until the Securities are paid in full, Holders
shall be subrogated (equally and ratably with all other Indebtedness pari-passu
with the Securities) to the rights of holders of such Senior Debt to receive
distributions applicable to such Senior Debt to the extent that distributions
otherwise payable to the Holders have been applied to the payment of such Senior
Debt. A distribution made under this Article 9 to holders of the Company's
Senior Debt that otherwise would have been made to Holders is not, as between
the Company and Holders, a payment by the Company on its Senior Debt.
SECTION 9.07. Relative Rights. This Article 9 defines the relative
rights of Holders and holders of the Company's Senior Debt. Nothing in this
Indenture shall: (1) impair, as between the Company and Holders, the Company's
Obligations, which are absolute and unconditional, to pay principal of, premium,
if any, and interest on the Securities in accordance with their terms; (2)
affect the relative rights of Holders and the Company's creditors other than
their rights in relation to holders of the Company's Senior Debt; or (3) prevent
the Trustee or any Holder from exercising its available remedies upon a Default
or Event of Default, subject to the rights of holders of the Company's Senior
Debt to receive distributions and payments otherwise payable to Holders.
The failure to make a payment on account of principal of or interest on
the Securities by reason of any provision of this Article 9 shall not be
construed as preventing the occurrence of an Event of Default under Section
4.01.
SECTION 9.08. The Company and Holders May Not Impair Subordination. (a)
No right of any holder of the Company's Senior Debt to enforce the subordination
as provided in this Article 9 shall at any time or in any way be prejudiced or
impaired by any act or failure to act by the Company or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture, the
Securities or any other agreement regardless of any knowledge thereof with which
any such holder may have or be otherwise charged.
(b) Without in any way limiting Section 9.08(a), the holders of any
Senior Debt of the Company may, at any time and from time to time to the extent
not otherwise prohibited by this Indenture, without the consent of or notice to
any Holders, without incurring any liabilities to any Holder and without
impairing or releasing the subordination and other benefits provided in this
Indenture or the Holders' obligations to the holders of such Senior Debt, even
if any Holder's right of reimbursement or subrogation or other right or remedy
is affected, impaired or extinguished thereby, do any one or more of the
following: (i) amend, renew, exchange, extend, modify, increase or supplement in
any manner such Senior Debt or any instrument evidencing or guaranteeing or
securing such Senior Debt or any
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agreement under which such Senior Debt is outstanding (including, but not
limited to, changing the manner, place or terms of payment or changing or
extending the time of payment of, or renewing, exchanging, amending, increasing
or altering, (1) the terms of such Senior Debt, (2) any security for, or any
Guarantee of, such Senior Debt, (3) any liability of any obligor on such Senior
Debt (including any guarantor) or any liability incurred in respect of such
Senior Debt) (ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing such Senior Debt or any liability of any obligor
thereon, to such holder, or any liability incurred in respect thereof; (iii)
settle or compromise any such Senior Debt or any other liability of any obligor
of such Senior Debt to such holder or any security therefor or any liability
incurred in respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including, without limitation, payment of any of the
Company's Senior Debt) in any manner or order; and (iv) fail to take or to
record or otherwise perfect, for any reason or for no reason, any lien or
security interest securing such Senior Debt by whomsoever granted, exercise or
delay in or refrain from exercising any right or remedy against any obligor or
any guarantor or any other Person, elect any remedy and otherwise deal freely
with any obligor and any security for such Senior Debt or any liability of any
obligor to the holders of such Senior Debt or any liability incurred in respect
of such Senior Debt.
(c) Each Holder by accepting a Security agrees not to compromise,
release, forgive or otherwise discharge the Company's Obligations with respect
to such Holder's Security unless holders of a majority of the outstanding amount
of each class of Senior Debt consent to such compromise, release, forgiveness or
discharge.
SECTION 9.09. Distribution or Notice to Representative. Whenever a
distribution is to be made, or a notice given, to holders of Senior Debt of the
Company, the distribution may be made and the notice given to their
Representative, if any. If any payment or distribution of the Company's assets
is required to be made to holders of any of the Company's Senior Debt pursuant
to this Article 9, the Trustee and the Holders shall be entitled to rely upon
any order or decree of any court of competent jurisdiction, or upon any
certificate of a Representative of such Senior Debt or a Custodian, in
ascertaining the holders of such Senior Debt entitled to participate in any such
payment or distribution, the amount to be paid or distributed to holders of such
Senior Debt and all other facts pertinent to such payment or distribution or to
this Article 9.
SECTION 9.10. Rights of Trustee and Paying Agent. The Trustee or paying
agent may continue to make payments on the Securities unless prior to any
payment date it has received written notice of facts that would cause a payment
of principal of, or premium, if any, or interest on, the Securities to violate
this Article 9. Only the
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Company, a representative of Senior Debt, or a holder of Senior Debt that has no
representative may give such notice.
To the extent permitted by the TIA, the Trustee in its individual or
any other capacity may hold Indebtedness of the Company (including Senior Debt)
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
Nothing in this Article 9 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 5.07.
SECTION 9.11. Authorization to Effect Subordination. Each Holder of a
Security by its acceptance thereof authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 9, and appoints the Trustee as such
Holder's attorney-in-fact for any and all such purposes (including, without
limitation, the timely filing of a claim for the unpaid balance of the Security
that such Holder holds in the form required in any Insolvency or Liquidation
Proceeding and causing such claim to be approved).
If a proper claim or proof of debt in the form required in such
proceeding is not filed by or on behalf of all Holders prior to 30 days before
the expiration of the time to file such claims or proofs, then the holders or a
representative of any Senior Debt of the Company are hereby authorized, and
shall have the right (without any duty), to file an appropriate claim for and on
behalf of the Holders.
SECTION 9.12. Payment. A payment on account of or with respect to any
Security shall include, without limitation, any Additional Interest, principal,
premium or interest with respect to or in connection with any optional
redemption or purchase provisions, any direct or indirect payment payable by
reason of any other Indebtedness or Obligation being subordinated to the
Securities, and any direct or indirect payment or recovery on any claim as a
Holder relating to or arising out of this Indenture or any Security, or the
issuance of any Security, or the transactions contemplated by this Indenture or
referred to herein.
ARTICLE 10
REDEMPTION OF SECURITIES
SECTION 10.01. Right of Optional Redemption; Prices. On or after July
15, 2003, the Company at its option may, at any time, redeem all, or from time
to time any part of, the Securities upon payment of the optional redemption
prices set forth
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in the form of Security hereinabove recited, together with accrued and unpaid
interest to the date fixed for redemption.
In addition, prior to July 15, 2001, the Company may redeem up to 35%
of the principal amount of the Securities with the net cash proceeds received by
the Company from one or more Public Equity Offerings, at a redemption price of
109.5% of the principal amount thereof, plus accrued and unpaid interest to the
date fixed for redemption (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on an Interest Payment
Date that is on or prior to the redemption date); provided, however, that at
least 65% of the aggregate principal amount of the Securities originally issued
remains outstanding immediately after any such redemption (excluding any
Securities owned by the Company or any of its Affiliates). Notice of redemption
pursuant to this paragraph must be mailed to holders of Notes not later than 60
days following the consummation of such Public Equity Offering.
SECTION 10.02. Notice of Redemption; Partial Redemptions. Notice of
redemption to the holders of Securities to be redeemed as a whole or in part
shall be given by mailing notice of such redemption by first class mail, postage
prepaid, at least 30 days and not more than 60 days prior to the date fixed for
redemption to such holders of Securities at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the Holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
The notice of redemption to each such Holder shall identify the
Securities to be redeemed (including CUSIP numbers) and shall specify the
principal amount of each Security held by such Holder to be redeemed, the date
fixed for redemption, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of such Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. In case any Security is to be
redeemed in part only the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof will be
issued.
The notice of redemption of Securities to be redeemed at the option of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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No later than 12:00 noon (New York time) on the redemption date
specified in the notice of redemption given as provided in this Section, the
Company will deposit with the Trustee or with one or more paying agents, in
immediately available funds, (or, if the Company is acting as its own paying
agent, set aside, segregate and hold in trust as provided in Section 3.04) an
amount of money sufficient to redeem on the redemption date all the Securities
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption. The Company will deliver to
the Trustee at least 35 days prior to the date fixed for redemption (and no
later than 5 days prior to the mailing of notice of such redemption to the
Holders) an Officer's Certificate stating the aggregate principal amount of
Securities to be redeemed.
If less than all the Securities are to be redeemed, the Trustee shall
select, either pro rata, by lot or by any other method it shall deem fair and
reasonable, Securities to be redeemed in whole or in part. Securities may be
redeemed in part in multiples of $1,000 only. The Trustee shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed. For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.
SECTION 10.03. Payment of Securities Called for Redemption. If notice
of redemption has been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption, and on and after said
date (unless the Company shall default in the payment of such Securities at the
redemption price, together with interest accrued to said date) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue and, except as provided in Sections 5.05 and 11.06, such Securities shall
cease from and after the date fixed for redemption to be entitled to any benefit
or security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption. On presentation
and surrender of such Securities at a place of payment specified in said notice,
said Securities or the specified portions thereof shall be paid and redeemed by
the Company at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that any semi-annual payment
of interest becoming due on the date fixed for redemption shall be payable to
the holders of such Securities registered as such on the relevant Interest
Record Date subject to the terms and provisions of Section 2.04 hereof.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Security.
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to or on the order of the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations, in principal amount equal to
the unredeemed portion of the Security so presented.
SECTION 10.04. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Company and
delivered to the Trustee at least 40 days prior to the last date on which notice
of redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by either (a) the Company or (b) an entity specifically
identified in such written statement as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
ARTICLE 11
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 11.01. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may, at its option, by resolution of the Board of
Directors, at any time, elect to have either Section 11.02 or Section 11.03
applied to the outstanding Securities upon compliance with the conditions set
forth below in this Article 11.
SECTION 11.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 11.01 hereof of the option applicable to this Section
11.02, the Company shall be deemed to have been discharged from its Obligations
with respect to all outstanding Securities on the date the conditions set forth
below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, such
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Securities,
which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 11.05 hereof and the other Sections of this Indenture referred to in
clauses (i) and (ii) of this Section 11.02, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper
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instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the rights
of Holders of outstanding Securities to receive solely from the trust fund
described in Section 11.04 hereof, and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (ii) the Company's obligations with
respect to such Securities under Sections 2.01, 2.02, 2.05, 2.06, 2.07, 2.08,
2.09, 2.11, 3.01, 3.02, 3.04 and 11.05 hereof, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder, including, without limitation,
the Trustee's rights under Section 5.07 hereof, and the Company's obligations in
connection therewith and with this Article 11. Subject to compliance with this
Article 11, the Company may exercise its option under this Section 11.02
notwithstanding the prior exercise of its option under Section 11.03 hereof with
respect to the Securities.
SECTION 11.03. Covenant Defeasance. Upon the Company's exercise under
Section 11.01 hereof of the option applicable to this Section 11.03, the Company
shall be released from their obligations under the covenants contained in
Sections 3.08 through 3.17 and clause (iv) of Section 8.01 hereof with respect
to the outstanding Securities on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Securities
shall thereafter be deemed not outstanding for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
outstanding for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 4.01(iii) or (iv) hereof, but, except as
specified above, the remainder of this Indenture, such Securities shall be
unaffected thereby. In addition, upon the Company's exercise under Section 11.01
hereof of the option applicable to this Section 11.03, Sections 4.01(v) and
4.01(vi) hereof shall not constitute Events of Default.
SECTION 11.04. Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to application of either Section 11.02 or
Section 11.03 hereof to the outstanding Securities:
(i) The Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 5.10 who shall agree to comply with the
provisions of this Article 11 applicable to it) as trust funds in trust
for the purpose of making the following
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payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) cash in U.S.
Dollars in an amount, or (b) non-callable Government Securities that
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, cash in U.S. Dollars in an
amount, or (c) a combination thereof, in such amounts, whether
deposited under clause (a), (b) or (c), as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof addressed and
delivered to the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest on such
outstanding Securities on the stated maturity date of such principal or
installment of principal, premium, if any, or interest; provided that
the Company may deposit amounts sufficient to pay and discharge the
principal of, premium, if any and interest on such outstanding
Securities through a scheduled redemption date if the Company, at the
time of such deposit, causes to be addressed and delivered to the
Trustee a written certification of independent certified public
accountants verifying such sufficiency and irrevocably authorizes the
Trustee to issue a timely notice of redemption and to take such other
steps reasonably requested by the Trustee to ensure that such
redemption will be effectuated.
(ii) In the case of an election under Section 11.02 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the
date hereof, there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for Federal income
tax purposes as a result of such Legal Defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had
not occurred.
(iii) In the case of an election under Section 11.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
confirming that the Holders of the outstanding Securities will not
recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred.
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(iv) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as Section 4.01(viii) or 4.01(ix) hereof is
concerned, at any time in the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not
be deemed satisfied until the expiration of such period).
(v) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Restricted Subsidiaries is a party or by
which the Company or any of its Restricted Subsidiaries is bound (other
than a breach, violation or default resulting from the borrowing of
funds to be applied to such deposit).
(vi) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally.
(vii) The Company shall have delivered to the Trustee an
Officer's Certificate stating that the deposit made by the Company
pursuant to its election under Section 11.02 or 11.03 hereof was not
made by the Company with the intent of preferring the Holders of the
Securities over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the Company
or others.
(viii) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 11.02 hereof or the Covenant Defeasance under
Section 11.03 hereof (as the case may be) have been complied with as
contemplated by this Section 11.04.
SECTION 11.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 11.06 hereof, all
money and non-callable Government Securities (including the proceeds thereof)
deposited with the Trustee pursuant to Section 11.04 hereof in respect of the
outstanding Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any paying agent (including the Company
acting as paying agent) as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal of,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
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The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 11.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article 11 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 11.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered and addressed to the Trustee (which may be the opinion delivered under
Section 11.04(i) hereof), are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 11.06. Repayment to the Company. Any money deposited with the
Trustee or any paying agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on any Security and
remaining unclaimed for two years after such principal, premium, if any, or
interest has become due and payable shall be paid to the Company on its written
request or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such paying agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such paying agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in The
New York Times and The Wall Street Journal (national edition), notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 11.07. Reinstatement. If the Trustee or paying agent is unable
to apply any U.S. Dollars or non-callable Government Securities in accordance
with Section 11.02 or 11.03 hereof, as the case may be, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 11.02 or 11.03 hereof until such time
as the Trustee or paying agent is permitted to apply all such money in
accordance with Section 11.02 or 11.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Security following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of
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such Security to receive such payment from the money held by the Trustee or
paying agent.
ARTICLE 12
MISCELLANEOUS PROVISIONS
SECTION 12.01. Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such or against any past, present or future stockholder,
officer or director, as such, of the Company, or of a Subsidiary thereof, or of
any successor, either directly or through the Company, or of a Subsidiary
thereof, or any successor, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and released
by the acceptance of the Securities by the holders thereof and as part of the
consideration for the issue of the Securities.
SECTION 12.02. Provisions of Indenture for the Sole Benefit of Parties
and Holders. Except as set forth in Section 12.09, nothing in this Indenture or
in the Securities, expressed or implied, shall give or be construed to give to
any person, firm or corporation, other than the parties hereto and their
successors and the holders of the Securities, any legal or equitable right,
remedy or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors and of the holders of the Securities.
SECTION 12.03. Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or in behalf of the Company shall bind their successors and
assigns, whether so expressed or not.
SECTION 12.04. Notices and Demands on Company, Trustee and Holders. Any
notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders of Securities
to or on the Company may be given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Company is filed by the Company with the Trustee)
to Republic Group Incorporated, 811 East 30th Avenue, Hutchinson, Kansas 67503,
Attention: Doyle R. Ramsey. Any notice, direction, request or demand by the
Company or any
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Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made at the Corporate Trust Office.
Where this Indenture provides for notice to Holders, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. The Trustee may waive notice
to it of any provision herein, and such waiver shall be deemed to be for its
convenience and discretion. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Company and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 12.05. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Company to the Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officer's Certificate
stating that all conditions precedent provided for in this Indenture relating to
the proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or
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condition has been complied with and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or Opinion of Counsel may be based, insofar as it relates
to factual matters or information which is in the possession of the Company,
upon the certificate, statement or opinion of or representations by an officer
or officers of the Company unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company unless such officer or counsel knows
that the certificate or opinion or representations with respect to the
accounting matters upon which his certificate, statement or opinion may be based
as aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
SECTION 12.06. Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or principal of the Securities or the date fixed
for redemption of any Security shall not be a Business Day, then payment of
interest or principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date.
SECTION 12.07. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act of
1939 (an "incorporated provision"), such incorporated provision shall control.
SECTION 12.08. New York Law to Govern. This Indenture and each Security
shall be deemed to be a contract under the laws of the State of New York, and
for all
99
<PAGE>
purposes shall be construed in accordance with the laws of said State, except as
may otherwise be required by mandatory provisions of law.
SECTION 12.09. Third Party Beneficiaries. Holders of Senior Debt of the
Company are third party beneficiaries of this Indenture, and any of them (or
their representative) shall have the right to enforce the provisions of this
Indenture that benefit such holders.
SECTION 12.10. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 12.11. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
100
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of July 15, 1998.
REPUBLIC GROUP INCORPORATED,
as Company
By:/s/ PHIL SIMPSON
-------------------------------------
Name: Phil Simpson
Title: Chairman & CEO
UMB BANK, N.A.
as Trustee
By:/s/ R. WILLIAM BLOEMKER
-------------------------------------
Name: R. William Bloemker
Title: Vice President
101
<PAGE>
EXHIBIT A
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------, ----
UMB BANK, N.A.
928 Grand Boulevard, 13th Floor
Kansas City, Missouri 64106
Attention: Corporate Trust Department
Re: Republic Group Incorporated (the "Company")
9.50% Senior Subordinated Notes due 2008 (the "Securities")
-----------------------------------------------------------
Dear Sirs:
In connection with our proposed sale of U.S.$________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------------
Authorized Signature
A-2
<PAGE>
EXHIBIT 99(c)
Certain confidential information has been omitted from this Exhibit
pursuant to a confidential treatment request filed separately with the
Commission. The omitted information is indicated by the symbol "***" at each
place in the Exhibit where the omitted information appeared in the original.
PAPERBOARD SUPPLY AGREEMENT
This PAPERBOARD SUPPLY AGREEMENT (this "Agreement") is entered into
effective the 14th day of May, 1998, by and among REPUBLIC PAPERBOARD COMPANY, a
Kansas corporation (hereinafter referred to as "Republic"), REPUBLIC GROUP
INCORPORATED, a Delaware corporation ("Republic Parent"), and JAMES HARDIE
GYPSUM, INC., a Nevada corporation (hereinafter referred to as "Hardie");
W I T N E S S E T H:
--------------------
WHEREAS, Republic is proposing to develop a new paperboard mill (the
"Project Gazelle Mill") to produce recycled gypsum-grade paperboard;
WHEREAS, potential providers of financing for the Project Gazelle Mill have
indicated that they will require Republic to have in place long-term agreements
for the sale of a substantial portion of the output of the Project Gazelle Mill
as a condition to providing such financing;
WHEREAS, Hardie desires to ensure that it will have an assured supply of
paperboard on a long-term basis, and Republic desires to have Hardie as a
customer on such basis;
WHEREAS, Republic has offered to Hardie, pursuant to Hardie's request,
selling prices and pricing formulas designed to meet pricing proposals offered
by other current and potential suppliers competing for Hardie's business;
WHEREAS, Hardie and Republic have entered into that certain letter of
intent dated April 8, 1998 in which they expressed their intent to enter into,
and outlined their rights and obligations with respect to, a long-term supply
agreement for recycled gypsum-grade paperboard;
WHEREAS, Hardie and Republic desire to formalize the terms of such
agreement; and
WHEREAS, Republic Parent expects to derive substantial benefit from its
subsidiary's entry into such an agreement, and Hardie requires that Republic
Parent execute and deliver any such agreement as a condition to its execution
and delivery thereof;
NOW, THEREFORE, in consideration of the foregoing, and in consideration of
the mutual covenants hereinafter contained, and of other good and valuable
consideration, the receipt and sufficiency which are hereby acknowledged, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF PRODUCTS. Subject to the terms and conditions of
-----------------------------
this Agreement, Republic agrees to sell to Hardie, and Hardie agrees to purchase
from Republic, at the Selling Price (as hereinafter defined), a portion of
Hardie's recycled gypsum-grade paperboard requirements (including Creamface,
Grayback, Green-Lined, Brown Sheathing, Shaftwall Liner
<PAGE>
Green and Veneer Plaster Base paperboard) which is more specifically identified
on Exhibit A attached hereto. (Any paperboard products sold or agreed to be sold
---------
by Republic to Hardie hereunder are referred to herein as "Products".) Products
consisting of Creamface, Grayback, Green-Lined and Brown Sheathing paperboard
will be produced at the Project Gazelle Mill, except to the extent expressly
permitted hereby to be produced at another of Republic's recycled paperboard
mills or as otherwise agreed by the parties. Products consisting of Shaftwall
Liner Green and Veneer Plaster Base paperboard may be produced at Republic's
recycled paperboard mills other than the Project Gazelle Mill, unless otherwise
agreed by the parties.
2. PRICE AND ADJUSTMENTS.
---------------------
(a) The Selling Price for a particular order shall be computed by a
formula whereby an initial base price (the "Base Price") is
adjusted as set forth in this paragraph 2 quarterly (other than
the adjustments set forth in subparagraphs (c), (d) and (e) of
this paragraph 2, which will be made annually), or at such other
times or on such other schedule as agreed by the parties, for
changes in the cost of certain key grades of paper stock. In each
case, the selling price shall be F.O.B. the carrier at the
Project Gazelle Mill or when expressly contemplated by this
Agreement or when otherwise agreed by the parties at another of
Republic's paperboard mills (the "Shipping Mill"). In the event
that Republic ships an order from a Shipping Mill other than the
Project Gazelle Mill, Republic shall equalize Hardie's freight
costs so that Hardie's freight cost is no higher or lower than it
would have been had the order been shipped from the Project
Gazelle Mill.
(b) The initial Base Prices for the Products shall be as set forth on
Exhibit B attached hereto.
---------
(c) As of January 1, 2001, the initial Base Prices of recycled
gypsum-grade paperboard will be adjusted upward or downward, as
the case may be, for purchases made during calendar year 2001, by
an amount per MSF computed as (i) the sum of (A)(x) the
difference between the actual average cost during the six (6)
months ended November 30, 2000, of purchased electricity per
kilowatt hour ("KWH") and the initial projected average base cost
of purchased electricity of $*** per KWH, multiplied by (y) the
actual total KWH used during such six-month period and (B)(x) the
difference between the actual average cost during such six-month
period of purchased natural gas, which includes transportation
costs and line shrinkage costs, per million British thermal units
("MMBTU") and the initial projected average base cost of
purchased natural gas, which includes transportation costs and
line shrinkage costs, of $*** per MMBTU, multiplied by (y) the
actual total MMBTU's used during such six-month period, divided
by (ii) the actual gross thousand square feet ("MSF") of
paperboard produced during such six-month period. The same
adjustments will be made to be effective each January 1,
thereafter, based on the actual costs and quantities during the
2
<PAGE>
twelve-month period ending on November 30 of the preceding year.
Hardie shall have the right to review and audit the underlying
information and calculations that form the basis for any change
in price based upon this subparagraph.
(d) As of January 1, 2002 and each January 1 thereafter, each of the
initial Base Prices will be increased or decreased, as the case
may be, by an amount equal to the sum of (i) $*** per MSF
multiplied by the percentage increase or decrease in the ***
Index ***, from September 1997 to the September immediately
preceding the effective date of the adjustment, which index is
published by the United States Department of Labor, Bureau of
Labor Statistics and (ii) $*** per MSF multiplied by the
percentage increase or decrease in the*** Index *** from
September 1997 to the September immediately preceding the
effective date of the adjustment, which index is published by the
United States Department of Labor, Bureau of Labor Statistics.
(e) As of January 1, 2002 and each January 1 thereafter, the average
basis weight pounds per MSF of each grade of the Products
purchased by Hardie during the preceding twelve (12) months shall
be calculated. For each one-half pound that the average basis
weight for a grade of the Products is less than the average basis
weight set forth in Exhibit C for such grade, the initial Base
---------
Price for such grade shall be reduced by $*** per MSF. This
provision shall apply to reductions of basis weight down to a
basis weight of *** pounds per MSF. Republic and Hardie will
cooperate with each other in seeking to achieve reductions in the
basis weights of the Products. Republic and Hardie each, insofar
as their own operations are involved, will diligently pursue
methods of achieving, and use commercially reasonable efforts to
achieve, reductions in basis weights of the Products, targeting
an ultimate basis weight of *** pounds per MSF by the fifth
anniversary of the Commercial Production Date. The parties will
not be deemed to have succeeded in reducing the basis weight of
the Products, and Hardie shall be under no obligation to purchase
such lower basis weight Products under this Agreement, unless,
all things considered, it is economically feasible for Hardie to
utilize such lower basis weight Products in Hardie's
manufacturing process. For example, if utilization of the lower
basis weight Products causes Hardie to run its equipment at
slower speeds to accommodate the lower basis weight paper, such
that the loss of production offsets any benefits of a lower basis
weight, the parties will not be deemed to have succeeded in
reducing the basis weight of the Products. Republic and Hardie
each will furnish the other with regular reports on the plans for
and the progress of the efforts in achieving lower basis weights.
3
<PAGE>
(f) The Selling Price for Creamface paperboard will be computed as
of the first day of each calendar quarter during the term of this
Agreement by increasing or decreasing the Base Price, as adjusted
theretofore pursuant to subparagraphs (c), (d) and (e) of this
paragraph 2, for Creamface paperboard by the sum of the positive
and negative amounts per MSF computed in (i) through (iv) below,
as follows:
(i) (A)(x) the average of the high per ton transacted prices for
***, as reported in the second issue of the Official Board
Markets during the immediately preceding three calendar
months, less (y) the high per ton transacted price for ***,
as reported in the second issue of the Official Board
Markets during February 1998, multiplied by (B) the assumed
percentage of the furnish to be composed of *** (***%),
multiplied by (C) the assumed ratio of tons of paper stock
required to manufacture one ton of paperboard (***),
multiplied by (D) the assumed basis weight of Cream Face
(*** pounds/MSF), divided by (E) the number of pounds in a
short ton (2,000);
(ii) (A)(x) the average of the high per ton transacted prices for
***, as reported in the second issue of the Official Board
Markets during the immediately preceding three calendar
months, less (y) the high per ton transacted price for ***,
as reported in the second issue of the Official Board
Markets during February 1998, multiplied by (B) the assumed
percentage of the furnish to be composed of *** (***%),
multiplied by (C) the assumed ratio of tons of paper stock
required to manufacture one ton of paperboard (***),
multiplied by (D) the assumed basis weight of Cream Face
(*** pounds/MSF), divided by (E) the number of pounds in a
short ton (2,000);
(iii) (A)(x) the average of the high per ton transacted prices for
***, as reported in the second issue of the Official Board
Markets during the immediately preceding three calendar
months, less (y) the high per ton transacted price for ***,
as reported in the second issue of the Official Board
Markets during February 1998, multiplied by (B) the assumed
percentage of the furnish to be composed of *** (***%),
multiplied by (C) the assumed ratio of tons of paper stock
required to manufacture one ton of paperboard (***),
multiplied by (D) the assumed basis weight of Cream Face
(*** pounds/MSF), divided by (E) the number of pounds in a
short ton (2,000); and
4
<PAGE>
(iv) (A)(x) the average of the high per ton transacted prices for
***), as reported in the second issue of the Official Board
Markets during the immediately preceding three calendar
months, less (y) the high per ton transacted price for ***,
as reported in the second issue of the Official Board
Markets during February 1998, multiplied by (B) the assumed
percentage of the furnish to be composed of *** (***%),
multiplied by (C) the assumed ratio of tons of paper stock
required to manufacture one ton of paperboard (***),
multiplied by (D) the assumed basis weight of Cream Face
(*** pounds/MSF), divided by (E) the number of pounds in a
short ton (2,000).
(g) The Selling Price for Grayback paperboard will be computed as of
the first day of each calendar quarter during the term of this
Agreement by increasing or decreasing the Base Price, as adjusted
theretofore pursuant to subparagraphs (c), (d) and (e) of this
paragraph 2, for Grayback paperboard by the sum of the positive
and negative amounts per MSF computed in (i) and (ii) below, as
follows:
(i) (A)(x) the average of the high per ton transacted prices for
***, as reported in the second issue of the Official Board
Markets during the immediately preceding three calendar
months, less (y) the high per ton transacted price for ***,
as reported in the second issue of the Official Board
Markets during February 1998, multiplied by (B) the assumed
percentage of the furnish to be composed of *** (***%),
multiplied by (C) the assumed ratio of tons of paper stock
required to manufacture one ton of paperboard (***),
multiplied by (D) the assumed basis weight of Gray Back (***
pounds/MSF), divided by (E) the number of pounds in a short
ton (2,000); and
(ii) (A)(x) the average of the high per ton transacted prices for
***, as reported in the second issue of the Official Board
Markets during the immediately preceding three calendar
months, less (y) the high per ton transacted price for ***,
as reported in the second issue of the Official Board
Markets during February 1998, multiplied by (B) the assumed
percentage of the furnish to be composed of *** (***%),
multiplied by (C) the assumed ratio of tons of paper stock
required to manufacture one ton of paperboard (***),
multiplied by (D) the assumed basis weight of Gray Back (***
pounds/MSF), divided by (E) the number of pounds in a short
ton (2,000).
5
<PAGE>
(h) The Selling Price for Green-Lined paperboard will be computed as
of the first day of each calendar quarter during the term of
this Agreement by increasing or decreasing the Base Price, as
adjusted theretofore pursuant to subparagraphs (c), (d) and (e)
of this paragraph 2, for Green-Lined paperboard by the sum of the
positive and negative amounts per MSF computed pursuant to (f)(i)
through (f)(iv) above.
(i) The Selling Price for Brown Sheathing paperboard will be computed
as of the first day of each calendar quarter during the term of
this Agreement by increasing or decreasing the Base Price, as
adjusted theretofore pursuant to subparagraphs (c), (d) and (e)
of this paragraph 2, for Brown Sheathing paperboard by the sum of
the positive and negative amounts per MSF computed pursuant to
(g)(i) through (g)(ii) above.
(j) The Selling Price for Shaftwall Liner Green paperboard will be
computed as of the first day of each calendar quarter during the
term of this Agreement by increasing or decreasing the Base
Price, as adjusted theretofore pursuant to subparagraphs (c) and
(d) of this paragraph 2, for Shaftwall Liner Green paperboard by
the sum of the positive and negative amounts per MSF computed
pursuant to (f)(i) through (f)(iv) above; provided, however that
an assumed basis weight of *** pounds per MSF shall be used.
(k) The selling price for Veneer Plaster Base paperboard will be
computed as of the first day of each calendar quarter during the
term of this Agreement by increasing or decreasing the Base
Price, as adjusted theretofore pursuant to subparagraphs (c) and
(d) of this paragraph 2, for Veneer Plaster Base paperboard by
the sum of the positive and negative amounts per MSF computed
pursuant to (g)(i) through (g)(ii) above; provided, however that
an assumed basis weight of *** pounds per MSF shall be used.
(l) With respect to shipments to Hardie's Las Vegas, Nevada and
Seattle, Washington gypsum wallboard plants, the Selling Prices
for each grade of recycled gypsum-grade paperboard will be
reduced by a freight allowance, which is provided in
acknowledgment of the shipping distances from the Project Gazelle
Mill to those plants. The freight allowance will be $*** per MSF
with respect to shipments to the Las Vegas, Nevada plant and $***
per MSF with respect to shipments to the Seattle, Washington
plant. As of January 1, 2001, and each January 1 thereafter,
each of the initial freight allowances will be increased or
decreased, as the case may be, by an amount equal to such freight
allowance per MSF multiplied by the percentage increase or
decrease in the *** from September 1997 to the September
immediately preceding the effective date of the adjustment, which
index is published by the United States Department of Labor,
Bureau of Labor Statistics.
6
<PAGE>
(m) For purposes of this subparagraph (m), Effective FOB Third Party
Price ("EFTPP") is the price charged or offered in writing to a
Non-Affiliate Third Party (measured on a per/MSF basis) adjusted
to take into account any effective price reductions due to all
freight, shipping, insurance or other allowances, discounts,
rebates, price or credit considerations (as such price may be
adjusted from time to time pursuant to Republic's arrangement
with the Non-Affiliate Third Party). For purposes of this
subparagraph (m), the Western Region is defined as that portion
of North America consisting of ***; the Eastern Region is defined
as all other portions of North America. If Republic sells or
contracts to sell one hundred Tons or more of Product to a Non-
Affiliate Third Party or Parties:
(i) all or any portion of which is for delivery in the
Eastern Region at an EFTPP lower than the Selling Price,
then the Selling Price to Hardie for such Product for any of
its plants shall be automatically reduced by the difference
between the Selling Price and the EFTPP (the "Adjustment
Amount"), for all subsequent Hardie purchases of that
Product, up to the volume(s) sold to the Non-Affiliate Third
Party or Parties at the EFTPP;
(ii) all or any portion of which is for delivery in the
Western Region, at an EFTPP, which is lower than the average
of the Selling Price for Hardie's Las Vegas and Seattle
plants, after adjustment for the freight allowance as
described in paragraph 2(l) plus *** cents (the "Hardie
Effective Western Region Price" or HEWRP), the Selling Price
for such Product to Hardie for any of its plants shall be
automatically reduced by an amount equal to the difference
between the HEWRP and the EFTPP (the "Adjustment Amount")
for all subsequent Hardie purchases of the Product up to the
volume(s) sold to the Non-Affiliate Third Party or Parties.
If a sale or contract to sell that would cause the pricing
mechanisms under subparagraphs (i) and (ii) above to be operative
occurs during a period that the pricing mechanism under (i) or
(ii) is in effect due to a prior sale or contract to sell with a
Non-Affiliated Third Party, then the volumes as to which such
prices would be in effect shall be purchased consecutively and
not concurrently so that at any particular time the Selling Price
would have been reduced by only one Adjustment Amount. In
addition to the foregoing, if an EFTPP is established pursuant to
a contract whose term or pricing provisions are effective for
more than *** ("Long Term Contract") the Selling Price for the
Product to Hardie, regardless of volume, shall be automatically
reduced by the Adjustment Amount for all subsequent Hardie
purchases of the Product so long as said EFTPP is available to
the Non-Affiliate Third Party. With respect to Long Term
Contracts, the Adjustment Amount shall be based upon the lowest
EFTPP in effect at any
7
<PAGE>
given time. The pricing mechanisms set forth in subparagraphs (i)
and (ii) above will continue in effect during the time that any
Long Term Contract is in effect such that if a sale of the kind
described in subparagraphs (i) and (ii) occurs during such time
that would cause the Selling Price for a specified volume to be
lower than the Selling Price as adjusted pursuant to the
Adjustment Amount calculated on the basis of the Long Term
Contract, the Selling Price for such specified volume would be
such lower price. This subparagraph (m) applies only to recycled
gypsum-grade paperboard Products produced at the Project Gazelle
Mill and, with respect to Shaftwall Liner Green and Veneer
Plaster Base paperboard, to such Products produced at Republic's
other paperboard mills, and further shall not apply to test
quantities of less than 100 short tons done on an isolated basis
and sold to third parties to demonstrate the characteristics of
the paperboard manufactured at Republic's paperboard mills.
Republic shall cause its outside auditors to certify to Hardie on
an annual basis that Republic has complied with this
subparagraph.
(n) If any of the high per ton transacted prices referred to in
subparagraphs (f) and (g) above cease to be reported monthly or
if the indexes referred to in subparagraphs (d) and (l) cease to
be published, the parties shall select a similar published
statistic or index to use as the basis for making the adjustments
provided in subparagraphs (d), (f), (g), (h), (i), (j), (k) or
(l), as the case may be. If the parties cannot agree on such new
statistic or index, the parties will resolve such dispute
according to the dispute resolution procedures set forth in this
Agreement.
3. TERM.
----
(a) Subject to the provisions of paragraph 12 hereof, the term of
this Agreement shall commence on the date hereof and shall
terminate on October 1, 2010, or ten (10) years after the
Commercial Production Date, whichever is later.
(b) Republic shall diligently pursue the completion of the Project
Gazelle Mill and shall use commercially reasonable efforts to
cause the Project Gazelle Mill to commence production on or
before the date that is 22 months after the date of this
Agreement. The obligation of Republic to supply, and, subject to
Exhibit A, the obligation of Hardie to purchase, Products
---------
hereunder shall not commence until Commercial Production has been
achieved (the "Commercial Production Date"). For purposes of
this Agreement, "Commercial Production" shall mean that the
Project Gazelle Mill has produced, for two consecutive months,
paperboard meeting the quality specifications set forth in
Exhibit C, in an amount equal to or greater than thirty percent
---------
(30%) of the Project Gazelle Mill's planned monthly capacity.
When Republic believes that the Project Gazelle Mill has achieved
Commercial Production, it shall give written notice to that
effect to Hardie
8
<PAGE>
(the "Commencement Notice"), and Hardie shall not unreasonably
object to the propriety of the Commencement Notice. From the date
on which Hardie receives the Commencement Notice, Hardie shall
have fifteen (15) days to: (i) observe the production of paper at
the Project Gazelle Mill; (ii) observe the conversion to
wallboard of such paper at Republic Parent's wallboard facility
in Duke, Oklahoma; and (iii) test the conversion of the paper at
each of Hardie's facilities. The Vice Presidents of Production of
Hardie and of Republic shall each personally observe the
production, conversion and testing under clauses (i), (ii) and
(iii) of the preceding sentence, which shall be performed by the
parties in good faith. At the end of such fifteen (15) day
testing period, the Commencement Notice shall become effective.
If Hardie does not object in writing within fifteen (15) days
after the Commencement Notice becomes effective, then Commercial
Production shall be deemed to have been achieved as of the date
the Commencement Notice became effective. If Hardie does object
in writing to the propriety of the Commencement Notice, then the
dispute resolution procedures of paragraph 28 shall be invoked,
and the achievement of Commercial Production shall be determined
in accordance therewith or by subsequent agreement of Republic
and Hardie.
(c) Republic shall keep Hardie regularly and adequately informed
regarding the construction progress of the Project Gazelle Mill
and shall provide Hardie with monthly written progress reports.
If Republic is unable to cause the Project Gazelle Mill to
commence Commercial Production prior to the later of: (i) October
1, 2000 or (ii) the date that is 22 months after the date of this
Agreement, Republic shall supply Hardie, at the prices
established pursuant to this Agreement, the quantity of recycled
gypsum-grade paperboard that it would otherwise be obligated to
supply under this Agreement from its other recycled paperboard
mills, through purchases from recycled paperboard mills owned by
third parties, or both, until such time as the Project Gazelle
Mill commences Commercial Production. Any such recycled gypsum-
grade paperboard supplied otherwise than from the Project Gazelle
Mill shall have the specifications set forth in Exhibit C hereto,
---------
excepting the specifications regarding basis weights. If
Republic is unable to supply the quantity and quality of Products
required by Hardie under this Agreement at the prices established
pursuant to this Agreement, Republic will compensate Hardie for
the additional costs reasonably incurred by Hardie in obtaining
replacement paperboard. Notwithstanding the foregoing, if, by
July 1, 2001, Republic has not given the Commencement Notice,
Hardie may, at its sole discretion and option, terminate this
Agreement. So long as Republic supplies paper to Hardie from
mills other than the Project Gazelle Mill, any adjustments to
price shall be based only upon changes in the price of furnish as
specified elsewhere in this agreement, and shall not be based
upon changes in the cost of gas, electricity, or other expenses.
9
<PAGE>
(d) During the period beginning on October 1, 2005 or the fifth
anniversary of the Commercial Production Date, whichever is
later, and ending on October 1, 2007 or the seventh anniversary
of the Commercial Production Date, whichever is later, Republic
and Hardie will negotiate in good faith in an effort to agree to
a long-term extension of the initial term of this Agreement or a
further long-term supply agreement on such terms as are mutually
acceptable to each party, in its sole discretion.
(e) If: (i) Republic sells or otherwise transfers ownership or
operating control of the Project Gazelle Mill (otherwise than as
a Security Device (as that term is defined below) to obtain or
secure financing) to a party that is not an Affiliate (as that
term is defined below) of Republic such that Republic no longer
maintains a direct or indirect majority ownership interest in the
Project Gazelle Mill or is no longer, directly or indirectly, the
operator thereof, or a Change of Control (as that term is defined
below) of Republic occurs, in either case prior to the sixth
anniversary of the Commercial Production Date and (ii) Hardie and
Republic (or the then current owner of the Project Gazelle Mill)
have not negotiated an extension of the initial term of this
Agreement prior to October 1, 2006 or the sixth anniversary of
the Commercial Production Date, whichever is later, then the
initial term of this Agreement shall automatically, and without
any action by Hardie, Republic or the then-current owner of the
Project Gazelle Mill or any assignee of Republic's rights
hereunder, be extended for an additional five (5) years on the
same terms and conditions applicable to the initial term hereof.
Notwithstanding the foregoing sentence, Hardie shall have the
right, exercisable by Hardie for a period of sixty (60) days
beginning on October 1, 2006 or the sixth anniversary of the
Commercial Production Date, whichever is later, to terminate such
five-year extension by delivering a written notice of such
termination to the then-current owner of the Project Gazelle
Mill.
(f) For purposes of this Agreement,
(i) an "Affiliate" of a party shall mean any other person who
beneficially owns, directly or indirectly, a majority of the
voting securities and a majority of the equity securities of
such party or of whom a majority of the voting securities
and a majority of the equity securities are beneficially
owned, directly or indirectly, by such party;
(ii) a "Change of Control" shall be deemed to have occurred with
respect to Republic if: (A) Republic Parent, no longer
beneficially owns a majority of the voting securities and a
majority of the equity securities of Republic; (B) a merger
or consolidation of Republic Parent has been consummated
pursuant to which a majority of the voting securities and a
majority of the equity securities of the surviving or
resulting entity are not beneficially owned by the persons
10
<PAGE>
who were the stockholders of Republic Parent immediately
prior to the consummation of such merger or consolidation;
(C) a sale or transfer of all or substantially all of the
assets of Republic Parent other than to an Affiliate of
Republic Parent; (D) the stockholders of Republic Parent
have approved a plan or proposal for the liquidation or
dissolution of Republic Parent; (E) any person or group (as
defined in Rule 13d-5(b) under the Securities Exchange Act
of 1934, as amended) (other than Phil Simpson, his spouse,
his descendants and their spouses, trusts and estates of
which any of them are the primary beneficiaries and any
entities of which any of them are holders of a majority of
the voting securities and a majority of the equity
securities) shall become the beneficial owner of a majority
of Republic Parent's voting securities or equity securities;
or (F) during any period of two years or less individuals
who at the beginning of such period constitute the entire
board of directors of Republic Parent shall for any reason
cease to constitute a majority thereof unless the election
or nomination for election by Republic Parent's stockholders
or the appointment by the remaining directors, as
applicable, of each new director was approved by a majority
of the directors then still in office who were directors at
the beginning of the period (for purposes of this
subparagraph (f)(ii), Republic Parent shall be deemed to
include any successor thereto); and
(iii) "Beneficial ownership" shall be determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934,
as amended.
4. PRODUCTS. Republic will supply to Hardie, pursuant to this Agreement,
--------
Hardie's requirements (as described in Exhibit A hereto) for recycled gypsum-
---------
grade paperboard meeting the specifications set forth on Exhibit C hereto,
---------
except as otherwise expressly provided herein.
5. ORDERS AND SHIPMENT.
-------------------
(a) On or before the twentieth day of each calendar month, Hardie
shall deliver to Republic its orders for the next succeeding
month specifying the grade, quantity, requested shipment date or
dates and destination of the Products being ordered. Orders for
Products, unless rightfully rejected when permitted under
commercially reasonable standards to be rejected hereunder, will
be confirmed by Republic's written acknowledgment (by fax or
otherwise), within five (5) business days after each order is
placed. All orders and all acknowledgments shall be on the forms
attached hereto as Exhibit D and Exhibit E, respectively.
--------- ---------
Republic may reject any orders that are not on the form attached
hereto as Exhibit D or that add any terms thereto. Hardie may
---------
reject any acknowledgments that are not on the form attached
hereto as Exhibit E or that add any terms thereto.
---------
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<PAGE>
(b) Shipments of Products shall be routed as determined by Hardie.
Hardie shall arrange for delivery of Products and shall notify
Republic of its delivery arrangements at the time Hardie places
an order for Products with Republic. Title to the Products sold
hereunder shall pass from Republic to Hardie when placed F.O.B.
the carrier at the Shipping Mill, and Republic shall thereafter
be released from all responsibility and liability for any loss
of, or damage to, the Products in transit or delivery to Hardie
and shall have no responsibility or liability for any delay in
delivery, provided that the Products have been properly prepared
for shipment and properly delivered F.O.B. the carrier at the
Shipping Mill. All shipping and insurance costs shall be at
Hardie's expense.
(c) Commencing on October 1, 2000 and at all times thereafter,
Republic shall maintain a minimum emergency product inventory of
*** tons, meeting Hardie's product specifications as set forth in
Exhibit C hereto, in an approximate ratio of sixty percent
---------
(60%) Creamface and forty percent (40%) Grayback, *** and which
inventory will be maintained at the Project Gazelle Mill and will
be paid for as ordered by Hardie, in accordance with the
provisions of Paragraph 8 below.
6. QUALITY.
-------
(a) Each grade of the Products to be manufactured and sold by
Republic hereunder shall, within the customary commercial
tolerances of the paperboard industry for such grade and except
as otherwise expressly provided herein, meet the specifications
for such grades which are attached hereto as Exhibit C (the
---------
"Specifications"), and Hardie agrees that it will accept Products
meeting the Specifications. The parties agree that, as a result
of their experience hereunder and their technical cooperation
under paragraph 9 hereof, the Specifications may be varied by
mutual agreement to fit the particular characteristics of
Hardie's machinery and products. Such Specifications, when and
as modified, shall be deemed to supersede the Specifications
attached hereto as Exhibit C, shall become part of this Agreement
---------
and are hereby incorporated by reference.
(b) Republic shall provide Hardie a Certificate of Analysis with
respect to each set of rolls of the Products purchased by Hardie.
The Certificate of Analysis shall be delivered to Hardie no later
than the date on which the set of rolls covered thereby are
received by Hardie at its gypsum wallboard facility. The
Certificate of Analysis shall certify that a sample from the set
was physically tested in accordance with testing methods accepted
by the recycled paperboard industry. The Certificate of Analysis
further shall certify that the sample in question met the
Specifications. Republic shall retain samples for six (6) months
for purposes of verification of test results.
12
<PAGE>
(c) EXCEPT AS SPECIFIED IN THIS PARAGRAPH 6, REPUBLIC MAKES NO OTHER
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS SOLD
HEREUNDER AND EXPRESSLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, EITHER EXPRESS OR IMPLIED.
7. CLAIMS.
------
(a) Hardie shall make a reasonable inspection of the Products and the
Certificate of Analysis related thereto upon delivery or within
sixty (60) days thereafter. Hardie shall have the right to reject
any Products that do not conform to the Specifications. If
Hardie believes that any Products do not conform to the
Specifications, it shall promptly, and not later than sixty (60)
days after receipt thereof, notify Republic in writing of its
rejection of such Products for failure to conform to the
Specifications. If no such written notice is received by
Republic, pursuant to paragraph 21, within sixty (60) days after
receipt thereof, Hardie shall be deemed to have accepted the
Products, except as set forth in subparagraph (b) below.
Republic may inspect any Products that Hardie so rejects. Upon
verification by Republic of nonconformity of the rejected
Products to the Specifications, Republic will issue Hardie a
credit memorandum for the purchase price of the non-conforming
Products and the cost of freight from the Project Gazelle Mill to
Hardie's plant. Republic will arrange for the disposition of the
non-conforming Products, at Republic's expense, in each case
within 10 business days after notice of rejection by Hardie,
unless the parties agree to some other settlement of the claim in
question. If Republic disputes Hardie's rejection of such
Products, it shall promptly notify Hardie in writing of such
dispute and the dispute will be determined in accordance with
subparagraph (c) hereof.
(b) If the nonconformity to the Specifications of any Products could
not be discovered through a commercially reasonably inspection
prior to their use by Hardie and such use results in the
manufacture of defective gypsum wallboard, Hardie shall promptly
notify Republic in writing. Republic may inspect such defective
wallboard. Upon verification by Republic that the manufacture of
the defective wallboard resulted from nonconformity to the
Specifications of the Products in question, Republic will issue
Hardie a credit memorandum for: (i) the purchase price of the
non-conforming Products; (ii) the cost of freight of such
Products from the Shipping Mill to Hardie's plant; (iii)
additional Products manufactured by Republic and used by Hardie
on the other side of such defective wallboard, whether or not
such additional Products conform to the Specifications; and (iv)
the cost of freight of such additional Products from the Shipping
Mill to Hardie's plant. Republic's liability under (i), (ii),
(iii) and (iv) above shall not extend to defective wallboard
manufactured after Hardie has discovered, or in the exercise of
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<PAGE>
commercially reasonable supervision of its manufacturing
processes should have discovered, that Hardie is manufacturing
defective wallboard. If Republic disputes the cause of the
manufacture of the defective gypsum wallboard, it shall promptly
notify Hardie in writing of such dispute, and the dispute will be
determined in accordance with subparagraph (c) of this paragraph.
(c) Republic's technical support personnel and Hardie's gypsum plant
quality personnel shall jointly investigate any disputed
rejection of the Products and any dispute regarding a claim that
the Products caused the manufacture of defective gypsum
wallboard. If such joint investigation fails to settle the
dispute to the mutual satisfaction of both parties, it shall be
referred to the Vice President, Operations, of each party for
settlement. Any dispute that cannot be settled in accordance
with this subparagraph (c) will be determined in accordance with
paragraph 28 hereof. At Republic's request, Hardie will effect
trial runs of Products that it has rejected so long as it can do
so without undue effort or expense.
(d) If a Claim (as defined below) is made by a customer, end-user or
ultimate consumer that gypsum wallboard manufactured by Hardie
that contains a Product is defective and Republic has agreed, or
pursuant to subparagraph (c) and/or paragraph 28 hereof or
otherwise it has been finally determined, subject to no further
rights of appeal or reconsideration, that the failure of such
Product to meet the Specifications as of the date of sale of such
Product to Hardie has caused the defect in the gypsum wallboard
asserted in such Claim and that such failure of the Product to
meet Specifications could not have been discovered through a
commercially reasonable inspection by Hardie prior to shipment of
the gypsum wallboard, then in addition to the credit memorandum
issuable pursuant to subparagraph (b) above, Republic shall pay,
or reimburse Hardie for, the liability of Hardie to such
customer, end-user or ultimate consumer resulting from the
defective paperboard and Hardie's reasonable third party expenses
in defending against such Claim; provided, that Republic shall
not be obligated to pay, or reimburse Hardie for, any such
liability unless such liability exceeds $*** with respect to any
single Claim or unless the aggregate of all such liabilities with
respect to Claims exceeds $***during any calendar year, in which
cases Republic shall be responsible for all such liabilities in
excess of such amount or amounts, as applicable. Hardie shall
promptly notify Republic of any Claim as to which it intends to
seek reimbursement from Republic or which it intends to apply
against the $***limit. Hardie shall, except to the extent not
reasonably practicable, afford Republic at least three business
days after such notice to inspect the defective gypsum wallboard
prior to its demolition or repair. Any authorization by Hardie
of repairs shall be for the lowest commercially reasonable method
of repair. Hardie shall consult with Republic regarding any
settlement of any Claim. Any such settlement not approved by
Republic
14
<PAGE>
shall not in any way impair the ability of Republic to
dispute the amount of the settlement in connection with any claim
by Hardie against Republic for a reimbursement of the related
Claim. A "Claim" means a claim that gypsum wallboard sold by
Hardie was defective and that relates to a single dwelling, a
single tract of dwellings under development by the same owner or
developer, or a single structure at a commercial or multi-family
residential project.
(e) EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN SUBPARAGRAPH 7(D)
ABOVE, REPUBLIC SHALL NOT BE LIABLE FOR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND WITH RESPECT TO
CLAIMS ASSERTED BY THIRD PARTIES AGAINST HARDIE ARISING FROM
DEFECTIVE PRODUCTS OR FROM PRODUCT LIABILITY. REPUBLIC SHALL NOT
BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND FOR WHICH IT OTHERWISE HAS LIABILITY FOR
LOSSES SUFFERED BY HARDIE AS A RESULT OF A FAILURE OF PRODUCTS TO
SUCCESSFULLY CONVERT TO PRODUCE ACCEPTABLE GYPSUM WALLBOARD AT
HARDIE'S PLANTS UNLESS HARDIE HAS FIRST USED COMMERCIALLY
REASONABLE EFFORTS TO CONVERT THE PRODUCTS INTO GYPSUM WALLBOARD
AND SUCH COMMERCIALLY REASONABLE EFFORTS HAVE PROVEN
UNSUCCESSFUL.
8. PAYMENT.
-------
(a) Republic shall render its invoices covering shipments as soon as
practicable after each shipment. Payment terms shall be net ***
days after the date Hardie receives Republic's invoice.
(b) All payments shall be made at Republic's principal place of
business or the place specified for payment on the applicable
Republic invoice.
(c) All amounts not paid within seven (7) days after the date due
hereunder shall bear interest from the date due until paid at a
rate equal to the lesser of (i) *** percent (***%) per month or
(ii) the maximum rate permitted under applicable law.
15
<PAGE>
(d) If any invoice remains unpaid over sixty (60) days after the date
the invoice is received and the failure to pay is not based upon
a bona-fide dispute over whether the amount is owed, Republic may
suspend shipments of Products until payment has been made.
9. TECHNICAL COOPERATION.
---------------------
(a) The parties agree to use commercially reasonable efforts to
achieve efficient conversion of the Products at each of Hardie's
wallboard manufacturing operations, without creating an undue
burden or expense for either party.
(b) Technical support personnel from Republic and production and
quality management of each Hardie gypsum wallboard plant shall
meet at least monthly to discuss any operating issues being
experienced by Hardie that it believes to be related to the
Products and opportunities for reducing the basis weight of the
Products, so long as there are technical issues that need to be
discussed.
(c) In the event that Hardie encounters difficulty converting one or
more rolls of the Products that appear to meet the Specifications
at any of its gypsum wallboard manufacturing operations, it will
promptly give Republic notice of the problems that it is
encountering. Not later than five (5) calendar days after
receipt of such notice, Republic shall send technical support
personnel to the operation experiencing difficulty. Hardie shall
permit Republic access to the affected operation for purposes of
observation, sampling, testing and inspection, in cooperation
with Hardie's personnel. Hardie's facility management and
Republic's technical support personnel will mutually develop a
plan for reducing problems associated with conversion of the
Products, which plan may include, without limitation, trial
modifications to the Specifications, trial adjustments to the
operation of the gypsum wallboard production line, observations
of trials by representatives of both parties, data collection and
statistical evaluation of collected data.
10. HARDIE'S REPRESENTATIONS AND WARRANTIES. Hardie hereby makes the
---------------------------------------
following representations and warranties to Republic:
(a) All of the assets of the gypsum wallboard plants located at
Nashville, Arkansas, Las Vegas, Nevada and Seattle, Washington
referred to in Exhibit A hereto and all of Hardie's gypsum mining
---------
facilities are owned by Hardie, free and clear of liens and
encumbrances (other than routine matters of record that have no
material adverse effect on their value).
(b) The net worth of Hardie as of March 31, 1998, determined in
accordance with generally accepted accounting principles, exceeds
the consolidated net worth of Republic Parent as of March 31,
1998, as reflected in Republic Parent's
16
<PAGE>
Form 10-Q for the quarter ended March 31, 1998, and no material
adverse change in Hardie's net worth has occurred since that
date.
(c) Neither Hardie nor any Affiliate of Hardie has any present
intention or plan to engage in the manufacture of paperboard, and
neither Hardie nor any such Affiliate has received any offer to
sell, lease or otherwise convey to Hardie or any such Affiliate a
paperboard mill or any interest therein, whether direct or
indirect, which offer has not been either withdrawn by the
offeror or rejected by Hardie.
11. REPUBLIC'S REPRESENTATIONS AND WARRANTIES. Republic hereby makes the
-----------------------------------------
following representations and warranties to Hardie:
(a) The Lawton Industrial Foundation either owns or has acquired
options to purchase land in Lawton, Oklahoma sufficient for the
construction and operation of the Project Gazelle Mill (the
"Land") and has proposed to transfer the Land to Republic.
(b) The Land has access or will have access to truck and rail
transportation and loading facilities for same that are
appropriate for the efficient operation of the Project Gazelle
Mill.
(c) Republic believes it can obtain all necessary permits, approvals,
consents, and financing necessary to allow it to construct the
Project Gazelle Mill on the Land.
(d) To Republic's knowledge and belief, after investigation, it is
feasible to construct the Project Gazelle Mill on the Land.
(e) Republic has engaged consultants and advisors, has conducted test
runs with the proposed Project Gazelle Mill technology and, on
that basis, Republic believes that the Project Gazelle Mill is
technologically feasible and can meet Hardie's needs.
(f) The Project Gazelle Mill will be constructed and outfitted
substantially in accordance with the summary descriptions
Republic has provided to Hardie, subject to modifications deemed
desirable by Republic and, with regard to substantial
modifications, agreed to by Hardie, as the project progresses.
(g) Republic, or its agent, has entered into letters of intent with
key vendors and contractors.
(h) Republic believes that it can meet Hardie's quantity and quality
requirements for recycled gypsum-grade paperboard, tailored to
suit the specific
17
<PAGE>
requirements, for both processing and marketing of, and the
machinery in operation at, each of its facilities.
(i) Republic is experienced in and knowledgeable concerning the
production of recycled gypsum-grade paperboard, and acknowledges
that Hardie is relying on such expertise. To Republic's
knowledge and belief, after investigation, the Project Gazelle
Mill will utilize modified gap-former and Fourdrinier technology,
which technology is current recycled paperboard production
technology to Republic's knowledge and belief, after
investigation. To Republic's knowledge and belief, after
investigation, after construction, the Project Gazelle Mill will
be viable and will be able to provide, in a timely manner,
sufficient recycled gypsum-grade paperboard to meet Hardie's
quality and quantity requirements for both processing and
marketing for its various gypsum plants within the limits of the
projected furnish requirements, energy consumption and labor
costs.
(j) Republic believes that it can obtain sufficient financing to
construct and operate the Project Gazelle Mill. Republic has
received proposals from lenders and investment bankers to lend
funds or cause the placement of debt securities sufficient to
finance the Project Gazelle Mill.
(k) Republic has reported to Hardie the summary results of its "paper
trials" and engineering feasibility studies prepared by
Republic's consultants and advisors in connection with the
Project Gazelle Mill, and will continue to provide updates
thereon to Hardie during the course of development of the Project
Gazelle Mill.
(l) Republic anticipates that it initially will sell up to twenty-
five percent of the capacity of the Project Gazelle Mill to its
own gypsum plant in Duke, Oklahoma.
12. OTHER COVENANTS OF REPUBLIC.
---------------------------
(a) Republic will review and become familiar with the process
requirements and unique needs of Hardie's gypsum facilities and
equipment.
(b) Republic will obtain performance guarantees and warranties from
its key vendors and contractors.
13. OTHER COVENANTS OF HARDIE. Until the later of October 1, 2005 or the
-------------------------
fifth anniversary of the Commercial Production Date, Hardie will promptly advise
Republic in writing if it or any United States Affiliate of Hardie offers to
buy, lease or otherwise acquire any North American paperboard mill, or any
interest therein, whether direct or indirect.
18
<PAGE>
14. TERMINATION. In the event of a material breach of this Agreement,
-----------
either party shall give written notice to the defaulting party of the breach and
of the non-defaulting party's intention to terminate this Agreement if the non-
defaulting party is not, within thirty (30) days from and after receipt of the
written notice of default, provided with a plan of corrective action and if
substantial efforts to cure the default in accordance with the plan have not
commenced. If such substantial efforts to cure the default as provided above
have not commenced within such thirty (30) day period, the non-defaulting party
may terminate this Agreement by sending written notice to the other party of
such termination, whereupon this Agreement shall terminate and the non-
defaulting party, subject to the terms of this Agreement, shall be entitled to
pursue any remedies provided by law. In the event the non-defaulting party
elects to terminate this Agreement, the notice of termination must be sent to
the defaulting party within five (5) days after the expiration of the thirty
(30) day period first mentioned above. The failure of any party to exercise its
option to terminate this Agreement shall not affect any other rights the party
may have in law or equity.
15. FORCE MAJEURE.
-------------
(a) In the event of an Act of God, explosion, accident, fire,
drought, flood, earthquake, tornado, hurricane, strike, labor
disturbance, insurrection, riot, war, act of a public enemy, the
acts or orders of a governmental unit, freight embargo, power or
utility shortage, or any other similar cause beyond Republic's or
Hardie's reasonable control, interfering with the production,
supply, transportation or consumption of the Products or with the
supply of raw materials or utilities used in connection therewith
(a "Force Majeure Event"), the obligation of Republic to supply,
and the obligation of Hardie to purchase, Products hereunder
shall be proportionately reduced or held in abeyance for the
duration of the Force Majeure Event and the term of this
Agreement shall be extended for a period equal thereto. The
failure or inability of any one or all of Republic's advisors,
agents, consultants, designers, engineers, lenders, suppliers or
vendors to perform their contractual or other obligations to
Republic in connection with the development, construction or
operation of the Gazelle Mill shall not be considered a Force
Majeure Event. The affected party shall promptly notify the
other of any Force Majeure Event, and the expected duration of
the party's inability to perform under the terms of this
Agreement. If a Force Majeure Event results in or may reasonably
be expected to result in an inability of Republic to ship
Products for more than seven days past their scheduled shipping
dates, then Hardie may purchase the Products covered by any
orders so affected by the Force Majeure Event from other
suppliers. NEITHER REPUBLIC NOR HARDIE SHALL BE LIABLE FOR ANY
DAMAGES, DIRECT OR CONSEQUENTIAL, ARISING OUT OF ANY DELAY IN
DELIVERY OR FAILURE TO DELIVER OR ACCEPT ANY OF THE PRODUCTS SOLD
HEREUNDER IF SUCH DELAY OR FAILURE TO DELIVER OR ACCEPT IS DUE TO
A FORCE MAJEURE EVENT FOR WHICH APPROPRIATE NOTICE HAS BEEN
GIVEN.
19
<PAGE>
(b) Any suspension or reduction of deliveries of Products under this
Agreement due to the occurrence of any Force Majeure Event shall
not invalidate or be a basis for termination of this Agreement,
and, upon the removal or termination of the Force Majeure Event
during the term of this Agreement, delivery shall be made and
taken, as the case may be, on the specified terms in effect
immediately prior to such suspension or reduction. The foregoing
notwithstanding, if Republic is unable to resume shipments of
Products from the Project Gazelle Mill within one hundred eighty
(180) days after the occurrence of a Force Majeure Event, Hardie
may, in its sole discretion, terminate this Agreement, with no
further obligation to Republic.
(c) If in consequence of any Force Majeure Event, Republic's
production is partially curtailed, Republic shall limit its
reductions of shipments to its then-present customers to the same
percentage in each case.
(d) The provisions of this paragraph 15 shall not be available to any
party hereto that shall fail to use reasonable diligence to
remedy the situation and that shall fail to remove the Force
Majeure Event affecting its performance hereunder with all
reasonable dispatch, or to give timely notice of the occurrence
of the Force Majeure Event. The requirement that any Force
Majeure Event be remedied with all reasonable dispatch shall not
require the settlement of strikes or labor controversies by
acceding to the demands of the opposing party or parties.
16. MUTUAL INDEMNIFICATION. Except as otherwise expressly provided
----------------------
herein, Republic shall indemnify and hold harmless Hardie and its Affiliates and
each of the heirs, executors, successors and assigns of Hardie or any such
Affiliate from and against, and will pay the amount of, any loss, liability,
claim, damage, obligation, fine, proceeding and expense (including reasonable
costs of investigation and defense and reasonable attorney's fees and other
incidental costs and expenses) suffered or incurred by Hardie arising from,
relating to or in connection with: (i) any breach of any representation or
warranty made by Republic in this Agreement; (ii) any breach by Republic of any
covenant or obligation of Republic in this Agreement, including any such breach
caused by the failure of any of Republic's contractors or suppliers to fulfill
their obligations to Republic in connection with the development or construction
of the Project Gazelle Mill; or (iii) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof or in enforcing this indemnity. Except as otherwise expressly provided
herein, Hardie shall indemnify and hold harmless Republic and its Affiliates and
each of the heirs, executors, successors and assigns of Republic or any such
Affiliate from and against, and will pay the amount of, any loss, liability,
claim, damage, obligation, fine, proceeding and expense (including reasonable
costs of investigation and defense and reasonable attorney's fees and other
incidental costs and expenses) suffered or incurred by Republic arising from,
relating to or in connection with: (x) any breach of any representation or
warranty made by Hardie in this Agreement; (y) any breach by Hardie of its
obligations under this Agreement; or (z) any and all actions, suits,
proceedings, claims, demands,
20
<PAGE>
assessments, judgments, costs and expenses (including reasonable legal fees and
expenses) incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof or in enforcing
this indemnity.
17. BANKRUPTCY. In the event of any voluntary or involuntary bankruptcy,
----------
receivership, insolvency or reorganization proceedings involving either party or
its property, or the assignment of all, or substantially all, of the assets of
either party for the benefit of creditors, or a receiver is appointed for it or
any substantial part of its property, the other party may terminate its
obligations hereunder by giving written notice of such termination which shall
become effective upon the giving of such notice. Such right of termination
shall be in addition to, and not in lieu of, any other rights or remedies
available to the non-breaching party.
18. ASSIGNMENT.
----------
(a) This Agreement shall be binding upon and inure to the benefit of
the successors of the parties hereto but shall not be assignable
by either party without the written consent of the other party
except:
(i) subject to compliance with the other subparagraphs of this
paragraph 18, this Agreement may be assigned by operation of
law to the surviving or resulting entity in connection with
a merger or consolidation of such party;
(ii) subject to compliance with the other subparagraphs of this
paragraph 18, this Agreement may be assigned by either party
to the purchaser or transferee of substantially all the
other assets of the assigning party in connection with a
sale or other transfer of all or substantially all of the
assets of the assigning party;
(iii) subject to compliance with the other subparagraphs of this
paragraph 18, Hardie may assign this Agreement to the
purchaser or transferee of all of Hardie's gypsum wallboard
manufacturing plants referenced on Exhibit A hereto (the
---------
"Hardie Plants") or Hardie may assign its rights under this
Agreement insofar as they relate to any Hardie Plant to the
purchaser or transferee of such Hardie Plant;
(iv) subject to compliance with the other subparagraphs of this
paragraph 18, Republic may assign this Agreement to a
purchaser or transferee of the Project Gazelle Mill;
(v) nothing in this Agreement shall prevent Hardie or Republic
from entering into a mortgage, deed of trust, grant of a
security interest, sale and leaseback or other security
device (a "Security Device") with respect to any or all of
the Hardie Gypsum Plants or the Project Gazelle Mill,
respectively, to obtain or secure financing; provided,
21
<PAGE>
that any such Security Device shall expressly provide and
require that upon any foreclosure, taking, lease termination
or other exercise of remedies pursuant thereto, the parties
thereto shall take all such action as shall be required to
cause the person or persons owning or controlling the Hardie
Gypsum Plants or the Project Gazelle Mill, as applicable,
after such exercise of remedies to assume in writing the
provisions of this Agreement insofar as they relate to the
Hardie Gypsum Plant or the Project Gazelle Mill, as
applicable, owned or controlled by such person; provided,
further, that Republic shall not enter into any such
Security Device with respect to the Project Gazelle Mill
without a provision in the Security Device that obligates
the secured party to give Hardie notice of any proposed
exercise of remedies affecting the Project Gazelle Mill with
respect to a default by Republic thereunder, and without
first providing such language to Hardie.
(b) Notwithstanding subparagraph (a) above, in the event that Hardie
shall merge or consolidate with another entity or sell or
otherwise transfer any of the Hardie Plants (whether pursuant to
a sale or transfer of all or substantially all of its assets or
the sale or transfer of one or more of the Hardie Plants), Hardie
shall require the surviving company in such merger or any such
transferee to assume and agree to perform in writing the
provisions of this Agreement for the full term of this Agreement
(or if less than all the Hardie Plants are sold or transferred,
then the provisions of this Agreement insofar as they relate to
the Hardie Plants sold or transferred), and in the event that
Republic shall merge or consolidate with another entity or sell
or transfer the Project Gazelle Mill, Republic shall require the
surviving company in such merger or any such transferee to assume
and agree to perform in writing the provisions of this Agreement
for the full term of this Agreement.
(c) No such assignment or assumption of this Agreement, in whole or
in part, shall relieve the assigning party of any of its
obligations hereunder.
(d) If Republic proposes to sell, transfer or otherwise dispose of
the Project Gazelle Mill (other than pursuant to a Security
Device that complies with paragraph 18(a)(v) hereof) or merge or
consolidate with another entity or sell or transfer all or
substantially all of its assets to another person, or receives
any bona fide, firm proposal from a third party to purchase or
otherwise acquire the Project Gazelle Mill or for the merger or
consolidation of Republic into or with another entity or for the
sale of all or substantially all its assets to another person
which proposal it proposes to accept, then Republic must first:
(i) promptly inform Hardie that Republic intends to so dispose of
the Project Gazelle Mill and (ii) keep Hardie informed of the
progress Republic is making in disposing of the Project Gazelle
Mill. Republic shall consult with Hardie concerning methods of
ensuring, and shall
22
<PAGE>
take commercially reasonable steps to ensure, that any
disposition of the Project Gazelle Mill will not have a material
adverse effect on Hardie. Nothing contained herein shall prevent
Hardie, upon receipt of any such notice from Republic, from
making an offer to Republic to acquire the Project Gazelle Mill.
19. CONFIDENTIALITY.
---------------
(a) Hardie and Republic acknowledge and agree that they may come into
possession of certain information about each other's operations,
either through visits to each other's facilities or through an
exchange of documents or other information, including, but not
limited to, specific designs and specifications of their
respective facilities, the speed, throughput and other
performance characteristics of their respective facilities, their
cost of production and the specifications and selling prices of
their products, all of which are confidential and proprietary
information of the respective parties (the "Confidential
Information"). Hardie and Republic further acknowledge and agree
that the other would be damaged by the disclosure of the
Confidential Information to competitors or to others, and by the
use of the Confidential Information to compete with the other.
Accordingly, each of Hardie and Republic agrees that it will
maintain the confidentiality of, and not disclose to persons
other than its employees with a specific need to know such
information and who have been advised of and who have agreed to
be bound by this covenant, any of the Confidential Information,
or use such Confidential Information to compete with the other.
(b) "Confidential Information" does not include information which:
(i) is or becomes generally available to the public other than as
a result of a disclosure by the receiving party, its Affiliates
or employees; (ii) was within the possession of the receiving
party, its Affiliates or employees prior to its being furnished
to such party by or on behalf of the furnishing party, provided
that the source of such information was not known by the
receiving party, its Affiliates or employees to be bound by a
confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the furnishing party
or any other party with respect to such information; or (iii)
becomes available to the receiving party on a non-confidential
basis from a source other than Republic or any of its Affiliates
or employees, provided that such source is not bound by a
confidentiality agreement with or other contractual legal or
fiduciary obligation of confidentiality to the furnishing party
or any other party with respect to such information.
Notwithstanding any other provision of this Agreement, the
Confidentiality Agreement dated March 4, 1997 between Republic
Parent and James Hardie Industries (USA) Inc. shall remain in
full force and effect. To the extent there is any conflict
between such Confidentiality Agreement and this Agreement, this
Agreement shall control.
23
<PAGE>
(c) In the event that Hardie or Republic or any of their Affiliates
or employees are requested or required (by deposition,
interrogatories, request for information or documents, subpoena,
civil investigative demand or other similar process in legal
proceedings) to disclose any of the other's Confidential
Information, the receiving party shall provide the furnishing
party with prompt written notice of any such request or
requirement so that it may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of
this Paragraph. If, in the absence of a protective order or
other remedy or the receipt of a waiver from the furnishing
party, the receiving party or any of its Affiliates or employees
are nonetheless, in the opinion of counsel, legally compelled to
disclose any Confidential Information to any tribunal or else
stand liable for contempt or suffer other censure or penalty, the
receiving party or its Affiliates or employees may, without
liability hereunder, disclose to such tribunal only that portion
of the Confidential Information which such counsel advises the
receiving party is legally required to be disclosed, provided
that the receiving party exercises its commercially reasonable
efforts to preserve the confidentiality of the Confidential
Information including, without limitation, by cooperating with
the furnishing party to attempt to obtain an appropriate
protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information by such
tribunal. The furnishing party will promptly reimburse the
receiving party for any and all costs and expenses (including
attorneys' fees and expenses) which it may suffer or incur as a
result of its compliance with this subparagraph (c) unless the
proceeding in which such disclosure is being sought results in
substantial part from a breach by the receiving party of its
obligations hereunder.
20. NON-SOLICITATION. Hardie and Republic each agree that, during the
----------------
term of this Agreement and for a period of one year thereafter, it will not, and
will not permit any of its Affiliates to, directly solicit, other than through
normal advertising for employees, or knowingly hire, any former, present or
future management employee, engineer, technician or salesperson of the other;
provided, that this paragraph 20 shall not apply to any person who has not been
employed by the other party or its Affiliates for a period of at least one year.
21. NOTICES. All notices, requests or other communications hereunder
-------
shall be in writing, addressed to Republic or Hardie at the following addresses:
REPUBLIC PAPERBOARD COMPANY OR REPUBLIC GROUP INCORPORATED
(for notices by personal delivery, overnight express or telecopy):
811 East 30th Avenue
Hutchinson, Kansas 67502
Attention: Mr. Doyle R. Ramsey
Telecopier: (316) 727-2727
24
<PAGE>
(for notices by registered or certified mail):
P.O. Box 1307
Hutchinson, Kansas 67504-1307
Attn: Mr. Doyle R. Ramsey
with a copy to:
Bryan E. Bishop, Esq.
. Locke Purnell Rain Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Telecopier: (214) 740-8800
JAMES HARDIE GYPSUM, INC.
26300 La Alameda, Suite 250
Mission Viejo, California 92691
Attention: Mr. Robert F. Rugg
Telecopier: (949) 367-1294
with a copy to:
Howard J. Barnhorst, Esq.
Barnhorst, Schreiner & Goonan
550 West C St., Ste. 1350
San Diego, CA 92101
Telecopier: (619) 544-0703
The address of either party may be changed by giving notice in writing at any
time to the other party. Any notice to be given under this Agreement shall be
deemed duly given if: (i) delivered personally; (ii) sent by telecopy (if
followed by delivery of a hard copy by first class mail, postage prepaid); (iii)
delivered by overnight express; or (iv) sent by United States registered or
certified mail, postage prepaid. Any notice that is delivered personally, or
sent by telecopy or overnight express in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party. Any notice that is addressed and mailed in the manner
provided herein shall be conclusively presumed to have been given to the party
to which it is addressed at the close of business, local time of the recipient,
on the third day after it is so placed in the mail.
22. NON-WAIVER. The failure of either party to insist in any one or more
----------
instances upon strict performance of any of the provisions of this Agreement or
to take advantage of any of its rights hereunder shall not be construed as a
waiver of any such provisions or the relinquishment of any such rights, but the
same shall continue and remain in full force and effect.
25
<PAGE>
23. ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto which
----------------
are an integral part hereof) sets forth the entire agreement between the parties
hereto with respect to the subject matter hereof, and the parties shall not be
bound by any representations or agreements which are not expressly set forth in
this Agreement.
24. AMENDMENTS. No modification, amendment or waiver of any provision of
----------
this Agreement shall be effective unless in writing signed by an authorized
officer of each of the parties hereto.
25. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which together shall constitute one and the same instrument.
26. CAPTIONS. The captions of the various paragraphs of this Agreement
--------
are for convenience of reference only and shall not affect the interpretation of
the provisions hereof.
27. GOVERNING LAW. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Texas (other than its choice of law
principles).
28. DISPUTE RESOLUTION; MEDIATION AND ARBITRATION.
---------------------------------------------
(a) If any controversy, dispute, difference or claim between the
parties hereto shall arise concerning the performance,
enforcement or interpretation of this Agreement (collectively, a
"Dispute"), prior to the initiation of any proceedings pursuant
to any other provisions of this paragraph 28, the Dispute shall
be referred to the chief executive officers of Republic and
Hardie for resolution.
(b) If a Dispute is not resolved pursuant to subparagraph (a) within
fifteen (15) business days after it is referred to the chief
executive officers of Republic and Hardie, either party may by
notice to the other party require mediation of the Dispute. Each
party agrees to participate in mediation of the Dispute and will
in good faith attempt to agree upon a mediator. If the parties
are unable to agree upon a mediator within ten (10) business days
after such notice or if such Dispute shall not have been resolved
by mediation within twenty (20) business days after such notice,
then either party may file for arbitration pursuant to
subparagraph (c) below. All expenses of the mediator shall be
equally shared.
(c) If the parties to this Agreement are unable to settle a Dispute
through direct negotiation in good faith or through mediation
pursuant to subparagraphs (a) and (b) within the time period
specified therein, the Dispute shall be submitted to binding
arbitration. Except as otherwise provided herein, the
arbitration shall be conducted in accordance with the then
effective Commercial Rules of Practice and Procedure of American
Arbitration
26
<PAGE>
Association ("AAA"). The arbitration proceedings shall take place
in Dallas, Texas.
(d) Within five (5) business days after notice from one party to the
other requesting binding arbitration, the parties shall agree on
and select one arbitrator from the AAA panel. If within such five
(5) business-day period, the parties are unable to agree upon an
arbitrator, each of them shall have five (5) business days
following the expiration of that period to select an arbitrator
from the AAA panel that is not an affiliate of a party to this
Agreement. If either party fails to timely select an arbitrator,
AAA shall make the selection for such party. Within five (5)
business days following their selection, the two selected
arbitrators shall agree upon and select a third arbitrator for
the AAA panel. The arbitrator or arbitrators, whether one or
three persons, are hereinafter called "Arbitrators." If the
parties are unable to agree on a time and place in Dallas, Texas
for arbitration, the Arbitrators shall decide the time and place.
The Arbitrators shall hear the matter within thirty (30) days
after selection and shall render a decision promptly after the
hearing. The Arbitrators shall make a final decision that, in
their judgment, (i) is consistent with, and does not add to,
subtract from, or otherwise modify, the provisions of this
Agreement or related agreements or (ii) if the subject matter of
the Dispute is not specifically addressed in this Agreement, is
determined under this Agreement consistent with the intent of the
parties as supported by evidence presented in the arbitration
proceedings. The Arbitrators shall send a signed written
statement of their decision to AAA and both parties. In awarding
damages or other remedies or relief, the Arbitrators must honor
and abide by any applicable limitations or restrictions expressed
or described in the Agreement. The Arbitrators are not empowered
to award damages in excess of compensatory damages, and each
party hereby irrevocably waives any right to recover such damages
with respect to any Dispute resolved by arbitration.
(e) To the extent permissible under Texas law, the parties agree that
the award of the Arbitrators shall be final and not subject to
judicial review. Judgment on the arbitration award may be
entered and enforced in any court having jurisdiction over the
parties or their respective assets. It is the intent of the
parties that the arbitration provisions hereof be enforced to the
fullest extent permitted by Texas law.
(f) Nothing in the foregoing arbitration provisions shall limit the
rights of the parties otherwise described in this Agreement to
obtain provisional, ancillary, or equitable remedies, such as
injunctive relief or specific performance.
(g) Each party shall pay its own expenses of arbitration and the
expenses of the Arbitrators shall be equally shared; provided,
however, if in the opinion of the Arbitrators any claim by either
party hereunder or any defense or
27
<PAGE>
objection thereto by the other party was unreasonable and not
made in good faith, the Arbitrators may assess, as part of the
award, all or any part of the arbitration expense (including,
without limitation, reasonable attorneys' fees) of the other
party and of the Arbitrators against the party raising such
unreasonable claim, defense, or objection. Nothing herein set
forth shall prevent the parties from settling any dispute by
mutual agreement at any time.
29. SPECIFIC PERFORMANCE; INJUNCTIVE AND OTHER EQUITABLE RELIEF. Each
-----------------------------------------------------------
party hereto acknowledges that a violation or attempted violation of any of the
covenants and agreements in paragraphs 3(e), 16, 17, 18 and 19 hereof, and in
Exhibit A hereof, will cause such damage to the other party as will be
- ---------
irreparable, the exact amount of which would be difficult or impossible to
ascertain and for which there will be no adequate remedy at law, agrees that the
other party hereto shall be entitled as a matter of right to specific
performance and injunctive and other equitable relief in case of such violation
or attempted violation as well as any and all costs and expenses sustained or
incurred in obtaining any such equitable relief, including, without limitation,
reasonable attorneys' fees, and agrees to waive any requirement for the securing
or posting of any bond or other security in connection with the obtaining of any
such injunction or other equitable relief.
30. PUBLIC ANNOUNCEMENTS. Neither Hardie nor Republic shall make, nor
--------------------
permit any Affiliate or representative to make, any public statements,
including, without limitation, any press releases, with respect to this
Agreement or the transactions contemplated thereby without the prior written
consent of the other parties hereto, except to the extent required by law or the
rules of any national securities exchange or automated quotation system on which
such party's securities are listed or traded.
31. TIME OF THE ESSENCE. With regard only to the dates specified in: (i)
-------------------
the last sentence of paragraph 3(c) hereof; (ii) the last sentence of paragraph
3(e) hereof; and (iii) the last sentence of paragraph 15(b), time is of the
essence.
32. NO JOINT VENTURE. The parties hereto have not entered into any
----------------
partnership, joint venture, agency or other such relationship by virtue of this
Agreement.
[The remainder of this page is intentionally left blank.]
28
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by the respective officers as of the date first written above.
REPUBLIC PAPERBOARD COMPANY
By: /s/ Phil Simpson
-------------------------------
Phil Simpson, Chairman of the
Board, President and Chief
Executive Officer
JAMES HARDIE GYPSUM, INC.
By: /s/ Robert F. Rugg
-------------------------------
Robert F. Rugg, President
Republic Parent shall cause Republic to perform, and hereby guarantees the
performance by Republic of, all of Republic's obligations under this Agreement.
The obligations of Republic Parent under this paragraph shall not be modified,
released, diminished or affected by: (i) any modification, amendment, waiver,
release, adjustment, indulgence, forbearance, compromise, deferral or extension
of or with respect to any obligations of Republic hereunder; (ii) any delay or
forbearance or lack of diligence by Hardie in exercising its rights hereunder
against Republic; (iii) the bankruptcy, insolvency, rearrangement, adjustment,
composition, liquidation or dissolution of Republic or any action taken,
election made, preference or claim for refund asserted or sustained in any
proceeding with respect thereto; (iv) any lack of power or authority of
Republic; (v) the taking or accepting by Hardie of any other security,
collateral or guaranty or other assurance by Republic of performance; or (vi)
any other action taken or omitted to be taken with respect to the covenants,
agreements and obligations of hereunder, whether or not such action or omission
prejudices Republic Parent or increases the likelihood that Republic Parent will
have to perform the obligations of Republic.
REPUBLIC GROUP INCORPORATED
By: /s/ Phil Simpson
--------------------------------
Phil Simpson, Chairman of the
Board, President and Chief
Executive Officer
29
<PAGE>
EXHIBIT A
- ---------
RECYCLED GYPSUM GRADE PAPERBOARD REQUIREMENTS
The volume of recycled gypsum-grade paperboard to be purchased by Hardie
and to be supplied by Republic is as follows:
(i) 7% of the recycled gypsum-grade paperboard requirements of the gypsum
wallboard plant located near Nashville, Arkansas that is currently
owned by Hardie until December 31, 2000;
(ii) 95% (plus or minus 5%) of the recycled gypsum-grade paperboard
requirements of the gypsum wallboard plant located near Nashville,
Arkansas that is currently owned by Hardie beginning on January 1,
2001; and
(iii) 95% (plus or minus 5%) of the recycled gypsum-grade paperboard
requirements of the gypsum wallboard plants located at or near Las
Vegas, Nevada and Seattle, Washington that are currently owned by
Hardie beginning on October 1, 2000.
Prior to the Commencement Notice, Republic and Hardie contemplate that test
quantities of the Products produced at the Project Gazelle Mill will be
furnished by Republic and purchased by Hardie and manufactured into gypsum
wallboard. In addition, prior to the Commercial Production Date, Hardie may
purchase and, if requested, Republic will supply, Shaftwall Liner Green and
Veneer Plaster Base pursuant to subparagraph (i) above from its mills other than
the Project Gazelle Mill, provided that, with respect to such Products sold
prior to the Commercial Production Date, the porosity Specification shall be
determined by mutual agreement between the Vice Presidents, Operations, of
Hardie and Republic.
***
If during the term of this Agreement Hardie shall desire to expand the
gypsum wallboard capacity of any of its Nashville, Arkansas, Las Vegas, Nevada
or Seattle, Washington gypsum wallboard plants, Hardie shall promptly notify
Republic in writing of such desire to expand capacity. Republic shall supply and
Hardie shall purchase the recycled gypsum-grade paperboard requirements of such
expanded capacity at the Nashville, Arkansas, Las Vegas, Nevada or Seattle,
Washington gypsum wallboard plants on the same terms and conditions that are
specified in this Paperboard Supply Agreement.
Notwithstanding the foregoing paragraphs on this Exhibit A, the parties
anticipate that the output of the Project Gazelle Mill will be ramping up during
approximately the first twelve months of Commercial Production. During such
ramp-up period, the obligations of Hardie to purchase its
<PAGE>
requirements and Republic to sell such amounts will be adjusted proportionally
to the mutual satisfaction of both parties, to accommodate an orderly transition
of supply.
During the term of this Agreement, wallboard production technology may
change so as to make it substantially more economical to utilize paper of a kind
that is not presently commercially available and that Republic does not
contemplate producing at the Project Gazelle Mill. In such a case, Republic
agrees that it will use commercially reasonable efforts to develop the
production capacity at the Project Gazelle Mill for such paper, and Hardie and
Republic will negotiate in good faith to include such paper within the ambit of
this Agreement to be sold pursuant to pricing mechanism similar to this
Agreement. During such development phase, or if Republic is unwilling or unable
to produce such paper at the Project Gazelle Mill, or if the parties cannot
reach agreement regarding such paper after negotiating in good faith, commencing
on October 1, 2004 and during the remainder of the term of this Agreement,
Hardie may purchase such paper from other suppliers, and Hardie's demand for
such paper will not be considered part of Hardie's recycled gypsum-grade
paperboard requirements for purposes of this Agreement.
2
<PAGE>
EXHIBIT B
- ---------
INITIAL BASE PRICES
The initial Base Prices are as follows:
- ------------------------------
GRADE $/MSF
- ------------------------------
Cream Face $ ***
- ------------------------------
Gray Back ***
- ------------------------------
Green-Lined ***
- ------------------------------
Brown Sheathing ***
- ------------------------------
Shaftwall Liner Green ***
- ------------------------------
Veneer Plaster Base ***
- ------------------------------
3
<PAGE>
EXHIBIT C
- ----------
All specifications on this Exhibit C refer to the test value to be obtained at
the Paperboard Mill at the time of manufacture. For purposes of this Exhibit C,
"NS" shall be defined to mean none specified.
JAMES HARDIE GYPSUM
PAPER SPECIFICATIONS
TYPE: CREAMFACE
MIN. AVE. MAX.
BASIS WEIGHT: (#/MSF) *** *** ***
MOISTURE CONTENT (%): *** *** ***
CALIPER: (INCHES) *** *** ***
POROSITY: ( SECONDS) *** *** ***
WATER ABSORPTION: (COBB)
- ------------------------
TOP LINER: (GRAMS) *** *** ***
(CURED) BOND LINER: (GRAMS) *** *** ***
TENSILE STRENGTH:
- -----------------
MACHINE DIRECTION (#/INCH): *** *** ***
ACROSS MACHINE DIRECTION (#/INCH): *** *** ***
SATURATION: ( SECONDS) *** *** ***
WIDTH: (INCHES)
a. *** *** ***
b. *** *** ***
c. *** *** ***
DIAMETER: (INCHES) *** *** ***
BRIGHTNESS (% REFLECTANCE @457 NM): *** ***(desired) ***
MULLEN PLY-BOND (PSI): *** *** ***
SHEFFIELD SMOOTHNESS (SHEFFIELD UNITS): *** ***(desired) ***
APPEARANCE: ***
4
<PAGE>
CONVERSION
PROPERTIES: ***
5
<PAGE>
JAMES HARDIE GYPSUM
PAPER SPECIFICATIONS
TYPE: GREYBACK
MIN. AVE. MAX.
BASIS WEIGHT: (#/MSF) *** *** ***
MOISTURE CONTENT (%): *** *** ***
CALIPER: (INCHES) *** *** ***
POROSITY: ( SECONDS) *** *** ***
WATER ABSORPTION: (COBB)
- ------------------------
TOP LINER: (GRAMS) *** *** ***
(CURED) BOND LINER: (GRAMS) *** *** ***
TENSILE STRENGTH:
- -----------------
MACHINE DIRECTION (#/INCH): *** *** ***
ACROSS MACHINE DIRECTION (#/INCH): *** *** ***
SATURATION: ( SECONDS) *** *** ***
WIDTH: (INCHES)
a. ***
b. ***
c. ***
DIAMETER: (INCHES) *** *** ***
MULLEN PLY-BOND (PSI): *** *** ***
APPEARANCE: ***
CONVERSION
PROPERTIES: ***
6
<PAGE>
JAMES HARDIE GYPSUM
PAPER SPECIFICATIONS
TYPE: GREEN-LINED
MIN. AVE. MAX.
BASIS WEIGHT: (#/MSF) *** *** ***
MOISTURE CONTENT (%): *** *** ***
CALIPER: (INCHES) *** *** ***
POROSITY: ( SECONDS) *** *** ***
WATER ABSORPTION: (COBB)
- ------------------------
TOP LINER: (GRAMS) *** *** ***
(CURED) BOND LINER: (GRAMS) *** *** ***
TENSILE STRENGTH:
- -----------------
MACHINE DIRECTION (#/INCH): *** *** ***
ACROSS MACHINE DIRECTION (#/INCH): *** *** ***
SATURATION: ( SECONDS) *** *** ***
WIDTH: (INCHES) *** *** ***
a. *** *** ***
DIAMETER: (INCHES) *** *** ***
MULLEN PLY-BOND (PSI): *** *** ***
SHEFFIELD SMOOTHNESS (SHEFFIELD UNITS): *** *** ***
APPEARANCE: ***
CONVERSION
PROPERTIES: ***
7
<PAGE>
JAMES HARDIE GYPSUM
PAPER SPECIFICATIONS
TYPE: BROWN SHEATHING
MIN. AVE. MAX.
BASIS WEIGHT: (#/MSF) *** *** ***
MOISTURE CONTENT (%): *** *** ***
CALIPER: (INCHES) *** *** ***
POROSITY: ( SECONDS) *** *** ***
WATER ABSORPTION: (COBB)
- ------------------------
TOP LINER: (GRAMS) *** *** ***
(CURED) BOND LINER: (GRAMS) *** *** ***
TENSILE STRENGTH:
- -----------------
MACHINE DIRECTION (#/INCH): *** *** ***
ACROSS MACHINE DIRECTION (#/INCH): *** *** ***
SATURATION: ( SECONDS) *** *** ***
WIDTH: (INCHES)
a. *** *** ***
b. *** *** ***
c. *** *** ***
d *** *** ***
DIAMETER: (INCHES) *** *** ***
MULLEN PLY-BOND (PSI): *** *** ***
APPEARANCE: ***
CONVERSION
PROPERTIES: ***
8
<PAGE>
JAMES HARDIE GYPSUM
PAPER SPECIFICATIONS
TYPE: SHAFTWALL LINER GREEN
MIN. AVE. MAX.
BASIS WEIGHT: (#/MSF) *** *** ***
MOISTURE CONTENT (%): *** *** ***
CALIPER: (INCHES) *** *** ***
POROSITY: ( SECONDS) *** *** ***
WATER ABSORPTION: (COBB)
- ------------------------
TOP LINER: (GRAMS) *** *** ***
(CURED) BOND LINER: (GRAMS) *** *** ***
TENSILE STRENGTH:
- -----------------
MACHINE DIRECTION (#/INCH): *** *** ***
ACROSS MACHINE DIRECTION (#/INCH): *** *** ***
SATURATION: ( SECONDS) *** *** ***
WIDTH: (INCHES) *** *** ***
a. *** *** ***
b. *** *** ***
DIAMETER: (INCHES) *** *** ***
MULLEN PLY-BOND (PSI): *** *** ***
SHEFFIELD SMOOTHNESS (SHEFFIELD UNITS): *** *** ***
APPEARANCE: ***
CONVERSION
PROPERTIES: ***
9
<PAGE>
JAMES HARDIE GYPSUM
PAPER SPECIFICATIONS
TYPE: VENEER PLASTER BASE
MIN. AVE. MAX.
BASIS WEIGHT: (#/MSF) *** *** ***
MOISTURE CONTENT (%): *** *** ***
CALIPER: (INCHES) *** *** ***
POROSITY: ( SECONDS) *** *** ***
WATER ABSORPTION: (COBB)
- ------------------------
TOP LINER: (GRAMS) *** *** ***
(CURED) BOND LINER: (GRAMS) *** *** ***
TENSILE STRENGTH:
- -----------------
MACHINE DIRECTION (#/INCH): *** *** ***
ACROSS MACHINE DIRECTION (#/INCH): *** *** ***
SATURATION: ( SECONDS) *** *** ***
WIDTH: (INCHES)
a. *** *** ***
DIAMETER: *** *** ***
MULLEN PLY-BOND (PSI): *** *** ***
APPEARANCE: ***
CONVERSION
PROPERTIES: ***
10
<PAGE>
EXHIBIT D
- ---------
HARDIE'S REQUIRED FORM OF PURCHASE ORDER
11
<PAGE>
[LOGO OF JAMES HARDLE PURCHASE ORDER
APPEARS HERE] DATE
PAGE
SUPPLIER: DELIVER TO: INVOICE TO:
- --------------------- --------------------- ---------------------
Phone Phone Phone
Fax Fax Fax
- --------------------- --------------------- ---------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTACT NAME BUYER PREFERRED CARRIER SHIPPING TERMS CREDIT TERMS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ITEM QUANTITY QTY PART DESCRIPTION UNIT PER REQUIRED EXTENDED PRICE
CODE U/M PRICE DATE (EXCLUDING TAX)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LINE VALUE
MARK OUR ORDER No. ON INVOICE AND ALL CORRESPONDENCE SALES TAX
FREIGHT
GRAND TOTAL
- -------------------------------------
PURCHASING AND ADMINISTRATION MANAGER
</TABLE>
<PAGE>
EXHIBIT E
- ---------
REPUBLIC'S REQUIRED FORM OF ACKNOWLEDGMENT
12
<PAGE>
Order Date Republic Order
MANUFACTURING FACILITY:
[LOGO OF REPUBLIC GYPSUM COMPANY
APPEARS HERE]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CUSTOMER NO TERMS: F.O.B. FREIGHT CUSTOMER P.O.# SALES TERRITORY CPA # OR FORMULA REQUIRED DATE
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sold Ship
to: to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99(d)
Certain confidential information has been omitted from this Exhibit pursuant to
a confidential treatment request filed separately with the Commission. The
omitted information is indicated by the symbol "***" at each place in the
Exhibit where the omitted information appeared in the original.
AMENDED AND RESTATED
AGREEMENT
FOR
ENGINEERING, PROCUREMENT AND CONSTRUCTION
BETWEEN
REPUBLIC PAPERBOARD COMPANY
AND
FLUOR DANIEL, INC.
RELATING TO THE
LAWTON MILL
Dated As Of June 26, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 GENERAL PROVISIONS.............................. 1
1.1 Team Relationship............................. 1
1.2 Architect/Engineer............................ 1
1.3 Definitions................................... 2
1.4 Contract Time................................. 3
ARTICLE 2 FLUOR DANIEL'S RESPONSIBILITIES................. 3
2.1 Description of Work........................... 3
2.2 Drawings and Specifications................... 4
2.3 Construction Phase Services................... 4
2.4 Royalties, Patents and Copyrights............. 6
2.5 Purchase of Machinery and Equipment........... 6
ARTICLE 3 OWNER'S RESPONSIBILITIES........................ 7
3.1 Construction Phase Responsibilities........... 7
3.2 Start-Up Responsibilities..................... 7
3.3 Taxes......................................... 8
3.4 Environmental Responsibilities................ 8
ARTICLE 4 SUBCONTRACTS.................................... 8
4.1 Retaining Subcontractors...................... 8
4.2 Management of Subcontractors.................. 8
4.3 Assignment of Subcontract Agreements.......... 8
ARTICLE 5 CHANGES IN THE WORK............................. 8
5.1 Change Orders................................. 8
5.2 Procedure for Changes......................... 8
5.3 Emergencies................................... 9
5.4 Scope Change Order............................ 9
ARTICLE 6 COMPENSATION.................................... 9
6.1 Reimbursable Costs............................ 9
6.2 Fixed Price................................... 9
6.3 Fixed Fee..................................... 9
6.4 Schedule and Cost Incentive Fees.............. 9
6.5 Value Awareness............................... 10
6.6 Rework and Warranty Cost...................... 10
6.7 Non-Reimbursable Items........................ 10
6.8 Example....................................... 11
ARTICLE 7 TERMS OF PAYMENT................................ 11
7.1 Funding of Reimbursable Costs................. 11
7.2 [Intentionally Omitted.]...................... 12
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7.3 Payment of Fixed Prices and Fees................ 12
7.4 Final Payment................................... 12
7.5 Interest........................................ 13
ARTICLE 8 WARRANTIES AND GUARANTEES......................... 13
8.1 Fluor Daniel Services Warranty.................. 13
8.2 Construction Warranty........................... 14
8.3 Accounting for Rework and Warranty Costs........ 14
8.4 Third Party Warranty and Guarantee.............. 15
8.5 Limitations..................................... 15
8.6 Delivery of Certificates and Other Materials.... 16
ARTICLE 9 INDEMNIFICATION................................... 16
9.1 Bodily Injury and Property Damage Liability..... 16
9.2 Protection of the Facilities.................... 16
9.3 Owner's Property ............................... 17
9.4 Limitations .................................... 17
ARTICLE 10 INSURANCE......................................... 17
10.1 Commitment...................................... 17
10.2 Certificates.................................... 18
10.3 Professional Liability Insurance................ 18
ARTICLE 11 TRANSFER AND ACCEPTANCE........................... 18
11.1 Care, Custody and Control....................... 18
11.2 Acceptance of the Work.......................... 19
11.3 Limitation...................................... 19
ARTICLE 12 TERMINATION, CANCELLATION AND SUSPENSION.......... 19
12.1 Termination by Owner for Default................ 19
12.2 Termination by Fluor Daniel for Default......... 20
12.3 Cancellation for Convenience.................... 20
12.4 Suspension by Owner............................. 20
ARTICLE 13 SAFETY, ENVIRONMENTAL............................. 21
13.1 Compliance with Laws............................ 21
13.2 Pre-Existing Conditions......................... 21
ARTICLE 14 FORCE MAJEURE..................................... 22
ARTICLE 15 INTELLECTUAL PROPERTY............................. 23
15.1 Title to Plans and Drawings and Specifications.. 23
15.2 Secrecy Agreements.............................. 23
15.3 Patents......................................... 23
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ARTICLE 16 DISPUTE RESOLUTION................................ 23
16.1 General Disputes................................ 23
16.2 Disputes........................................ 24
16.3 Waiver of Jury Trial............................ 24
ARTICLE 17 GENERAL PROVISIONS................................ 24
17.1 Independent Contractor.......................... 24
17.2 Related Party Contracts......................... 24
17.3 Assignment...................................... 25
17.4 Audit and Maintenance of Records................ 25
17.5 Liens........................................... 25
17.6 Surplus Material................................ 25
17.7 Notices......................................... 25
17.8 Representations and Remedies.................... 26
17.9 Damages......................................... 26
17.10 Solicitation of Employment...................... 27
17.11 Interpretation.................................. 27
17.12 Entire Agreement................................ 28
17.13 Venue........................................... 29
EXHIBIT 1 - Scope of the Work
EXHIBIT 2 - Cost Estimate Basis
EXHIBIT 3 - Detail Cost Estimate Report
EXHIBIT 4 - Drawings
EXHIBIT 5 - Commercial Terms
EXHIBIT 6 - Schedule
EXHIBIT 7 - Voith Sulzer Paper Technology "As Purchased" Technical
Specifications dated 26 March 1998
EXHIBIT 8 - Environmental Documents
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<PAGE>
AMENDED AND RESTATED
AGREEMENT
FOR
ENGINEERING, PROCUREMENT AND CONSTRUCTION
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") for the performance
of services is executed on July 21, 1998, but is effective for all purposes as
of June 26, 1998, between REPUBLIC PAPERBOARD COMPANY ("Owner") and FLUOR
DANIEL, INC. ("Fluor Daniel").
WHEREAS, Owner and Fluor Daniel entered into a letter of intent dated March
24, 1998, as amended (collectively, the "Letter of Intent"), relating to Owner's
new recycled paperboard mill to be constructed in Oklahoma (the "Facilities");
WHEREAS, Owner desires to contract with Fluor Daniel to perform all
necessary engineering, procurement and construction services in connection with
the Facilities, as specifically set forth and described in this Agreement and
Exhibit 1 attached hereto (the "Work");
- ---------
WHEREAS, Fluor Daniel has agreed to design and build the Facilities;
WHEREAS, Owner and Fluor Daniel entered into an Agreement for Engineering,
Procurement and Construction dated June 26, 1998 (the "Original Agreement") that
superseded the Letter of Intent except as otherwise provided therein; and
WHEREAS, Owner and Fluor Daniel desire to amend and restate the Original
Agreement to reflect certain changes;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto mutually agree is follows:
ARTICLE 1
GENERAL PROVISIONS
1.1 Team Relationship. Owner and Fluor Daniel agree to proceed with the Work
-----------------
on the basis of trust, good faith and fair dealing.
1.2 Architect/Engineer. Architectural and engineering services shall be
------------------
procured from licensed, independent design professionals retained by Fluor
Daniel or furnished by licensed employees of Fluor Daniel or by such other
persons permitted by the law of the State of Oklahoma to perform such services.
The person or entity providing the primary architectural and engineering
services shall be referred to as the "Architect/Engineer." Such primary
architectural and engineering services shall be procured pursuant to a separate
agreement between Fluor Daniel
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and the Architect/Engineer. Fluor Daniel will be responsible to Owner for the
acts and omissions of the Architect/Engineer as well as any of its own employees
and others who provide architectural and engineering services to the same extent
that Fluor Daniel is responsible to Owner for other services rendered hereunder.
The Architect/Engineer for the Work is Marathon Engineers/Architects/Planners,
LLC.
1.3 Definitions.
-----------
(a) "Change Order." A written instrument, issued after execution of this
------------
Agreement, signed by Owner and Fluor Daniel stating their agreement upon a
change and the adjustment in the cost of the Work, Drawings and Specifications,
Construction Phase Services and/or the date of Substantial Completion or any
portion of the Work.
(b) "Contamination." Any substance or material identified now or in the
-------------
future as hazardous under any federal, state or local law or regulation, or any
other substance or material which may be considered hazardous or otherwise
subject to statutory or regulatory requirements governing handling, disposal
and/or clean-up present at the site that has not been introduced to the site by
Fluor Daniel or any Subcontractor.
(c) "Contract Documents." All of the following:
------------------
(i) this Agreement and the Exhibits hereto;
(ii) Change Orders and written amendments to this Agreement signed by
both Owner and Fluor Daniel; and
(iii) the start-up and commissioning plan and schedule referred to in
Section 2.3(p) below.
In case of any inconsistency, conflict or ambiguity among the Contract
Documents, the Contract Documents shall govern in the order in which they are
listed above.
(d) "Day." A calendar day.
---
(e) "Equipment Vendor." An entity with which Fluor Daniel has contracted
----------------
to purchase machinery and equipment for the Facilities, but that does not
install such machinery and equipment at the Facilities, including, but not
limited to, Voith Sulzer Paper Technology North America, Inc. and the suppliers
of the boiler and any other Equipment Vendors, all of which will be selected by
Owner after the execution of this Agreement.
(f) "Final Completion." The point at which Fluor Daniel has completed all
----------------
the Work, all permits that Fluor Daniel is required to obtain have been
obtained, all releases of liens have been received, a final payment application
has been submitted and all other things required to be done by Fluor Daniel for
full use and occupancy of the Facilities by Owner have been done.
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(g) "Mechanical Completion." The point at which the Facilities, or the
---------------------
applicable portion thereof, have been erected in accordance with the drawings,
specifications, codes, applicable laws and regulations. At this point testing,
checks and motor rotations have been completed and accepted by Owner, and the
Facilities, or the applicable portion thereof, are ready for raw material to be
introduced to the process.
(h) "Schedule." A schedule of the Work prepared by Fluor Daniel and
--------
attached hereto as Exhibit 3 that includes the dates for the start and
---------
completion of the various construction activities in connection with the
Facilities, including the dates on which information and approvals are required
from Owner. The Schedule will be revised as required by the conditions of the
Work and as agreed to by the Parties.
(i) "Subcontractor." A person or entity who has an agreement with Fluor
-------------
Daniel to perform any portion of the Work. The term Subcontractor includes the
Architect/Engineer but does not include an Equipment Vendor in its capacity as
an Equipment Vendor.
(j) "Substantial Completion." The date on which construction is
----------------------
sufficiently complete in accordance with the Contract Documents so that Owner
can occupy or utilize the Facilities as contemplated by the Contract Documents,
unless the parties otherwise agree for a portion of the Facilities. This date
shall be confirmed by a certificate of Substantial Completion signed by Owner
and Fluor Daniel. The certificate shall state the respective responsibilities
of Owner and Fluor Daniel for security, maintenance, heat, utilities, damage to
the Facilities and insurance. The certificate shall also list the items to be
completed or corrected, and establish the time for their completion and
correction.
(k) "Target Completion Dates." The target completion date for Substantial
-----------------------
Completion is as set forth on Exhibit 6.
---------
(l) "Value Awareness Program." The value awareness program is as described
-----------------------
on Exhibit 5 hereto.
---------
1.4 Contract Time. Fluor Daniel agrees to accomplish Substantial Completion of
-------------
the Work not later than November 19, 1999.
ARTICLE 2
FLUOR DANIEL'S RESPONSIBILITIES
2.1 Description of Work. Fluor Daniel agrees to provide all necessary
-------------------
engineering, procurement and construction services, and all raw materials,
equipment (including equipment provided by Equipment Vendors), tools and
supplies, necessary for the design and construction of the Facilities,
including, without limitation, those specifically set forth and described in the
Exhibits hereto. Fluor Daniel's services shall include, without limitation, all
- --------
engineering, procurement and construction services necessary to integrate the
equipment supplied by
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Equipment Vendors into the Facilities. The parties agree that any and all work
done by Fluor Daniel prior to the date of this Agreement and pursuant to the
Letter of Intent shall be considered to be Work pursuant to the terms of, and
governed by, this Agreement.
2.2 Drawings and Specifications. Fluor Daniel shall submit for Owner's written
---------------------------
approval drawings and specifications (the "Drawings and Specifications") based
on the other Contract Documents or any further development of such Contract
Documents that have been approved in writing by the Owner, including, without
limitation, those drawings and specifications called for by Exhibit 4. The
---------
Drawings and Specifications shall set forth in detail the requirements for
construction of the Facilities, and shall be based upon and shall comply with
all applicable codes, laws or regulations enacted at the time of their
preparation. Construction shall be in accordance with these approved Drawings
and Specifications. One set of Drawings and Specifications shall be furnished
to Owner prior to commencement of construction.
2.3 Construction Phase Services. The Construction Phase will commence upon the
---------------------------
issuance by Owner of a written notice to proceed. As required for the Work,
Fluor Daniel shall, subject to the terms and provisions of this Agreement:
(a) Furnish all necessary construction supervision, inspection,
construction equipment, labor, materials, tools and subcontracted items;
(b) Furnish all necessary supervisors, engineers, designers, draftsmen and
other personnel necessary for the preparation of drawings and specifications;
(c) Furnish all necessary buyers, inspectors, expediters and all other
personnel necessary to procure all materials, supplies and equipment;
(d) Furnish all necessary supervisors, foremen, skilled and unskilled
labor, and all other personnel; provided that, to the extent available, such
personnel shall be individuals with Fluor Daniel experience;
(e) Procure or supply all necessary machinery, equipment, materials,
expendable construction items and supplies, related services, subcontracts and
construction utilities;
(f) Prepare, submit, update and revise, as necessary, the Schedule and an
estimate of the cost of the Work ("Cost Estimate");
(g) Give all notices and comply with all laws and ordinances legally
enacted at the date of execution of the Agreement that govern the proper
performance of the Work;
(h) Obtain all licenses which are required to be obtained by and in the
name of Fluor Daniel in connection with the Work and the Facilities, and assist
and provide Owner with support in obtaining the permits and licenses described
in Article 3.1(b);
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(i) Supply, or to the extent not available directly to Fluor Daniel
procure, all necessary major construction tools and equipment, and supply small
tools and consumables;
(j) Keep such full and detailed accounts as may be necessary for proper
financial management under this Agreement. Owner shall be afforded access to
all Fluor Daniel's records relating to Reimbursable Costs and Rework and
Warranty Costs (in the case of Rework and Warranty Costs, if such costs exceed
the Warranty Limit), books, correspondence, instructions, drawings, receipts,
vouchers, memoranda and similar data relating to this Agreement (collectively,
the "Records"), and shall have the right to audit such Records for a period of
three years after the final payment. Fluor Daniel shall preserve all such
Records for such three-year period, after the final payment, or longer where
required by law;
(k) At all times, maintain the site of the Facilities and Work free from
debris and waste materials resulting from the Work, and at the completion of the
Work, remove from the premises all construction equipment, tools, surplus
materials, waste materials and debris;
(l) Appoint one or more individuals who shall be authorized to act on
behalf of Fluor Daniel and with whom Owner may consult at all reasonable times,
and whose instructions, requests and decisions will be binding upon Fluor Daniel
as to all matters pertaining to this Agreement and the performance of the
parties hereunder. The individuals referred to in the preceding sentence shall
be Carl Fisher or an alternate designated in writing by Fluor Daniel and
approved by Owner, such approval not to be unreasonably withheld or delayed;
(m) Manage and administer all Equipment Vendors' and other suppliers'
warranties and guarantees through the completion of any performance tests or the
expiration of workmanship or warranties whichever occurs later;
(n) Provide assistance to Owner in determining the applicable taxes related
to the operation and maintenance of the Facilities;
(o) Investigate the site of the Facilities to confirm that the site is
clean and free of aboveground or underground obstructions, fissures, faults or
other similarly hidden features, which could reasonably be expected to interfere
with the completion of the Facilities, and obtain soil data which shall be
evidence to such effect;
(p) Prepare the start-up and commissioning plan and schedule for the
Facilities in conjunction with Owner and subject to approval by Owner, such
approval not to be unreasonably withheld or delayed, and provide necessary
personnel to support Owner in the start-up referred to as Owner's responsibility
in Section 3.2; and
(q) Provide Owner's On-Site Representative with full access to the job site
and to all Records, allow the Owner's On-Site Representative to attend and
participate in all construction meetings (other than confidential, internal
Fluor Daniel meetings), deliver copies of all minutes of such meetings to the
Owner's On-Site Representative, advise Owner's On-Site Representative in writing
of any rework or warranty work to be performed, including an estimate of the
cost of
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such work (such estimate to be provided not later than three business days after
the commencement of such rework or warranty work), and prepare and deliver to
Owner a monthly report in summary form setting forth the rework and warranty
work performed during such period, the details of which report shall be
determined by mutual agreement of the parties.
All personnel furnished by Fluor Daniel shall be fully qualified to perform all
functions that are assigned to them.
2.4 Royalties, Patents and Copyrights. Fluor Daniel shall pay all royalties
---------------------------------
and license fees which may be due on the inclusion of any patented or
copyrighted materials, methods or systems selected by Fluor Daniel and
incorporated in the Work or the Facilities. Fluor Daniel shall defend, indemnify
and hold Owner harmless from all suits or claims for infringement of any patent
rights or copyrights arising out of such selection.
2.5 Purchase of Machinery and Equipment.
-----------------------------------
(a) Fluor Daniel shall acquire for resale to Owner all machinery and
equipment for the Facilities (collectively the "Facilities Equipment") and
perform other services in connection therewith, including, without limitation,
the expediting, inspection and administration necessary to the furnishing of all
or any part of such Facilities Equipment, all as required by Owner.
(b) Purchases under this Section 2.5 shall be made on printed "purchase
order" forms mutually agreed to by Owner and Fluor Daniel which shall contain
such provisions as are necessary to comply with applicable sales and use tax
requirements and to assure the availability of exemptions from applicable sales
and use taxes.
(c) Fluor Daniel shall be responsible for negotiating purchase orders for
the Facilities Equipment and monitoring the performance of purchase orders for
the Facilities Equipment. In the event an Equipment Vendor fails to perform
under its purchase order with Fluor Daniel, until the sale, re-sale or transfer
of the Facilities Equipment to Owner pursuant to Section 7.1(d) Fluor Daniel
shall pursue the remedies available under such purchase order for such Equipment
Vendor's failure to perform, and Owner will cooperate with Fluor Daniel in
connection therewith.
(d) Owner agrees that the machinery or equipment purchased hereunder for
installation at, addition to, or incorporation into the Work or Facilities is
for sale, re-sale or other transfer to the Owner. Following the sale, re-sale
or transfer thereof by Fluor Daniel to Owner pursuant to Section 7.1(d), all
obligations relating to the purchase, performance or operation of such machinery
or equipment shall be as transferred or passed through by its manufacturers or
vendors. Therefore, following the sale, re-sale or transfer thereof by Fluor
Daniel to Owner pursuant to Section 7.1(d), Owner hereby indemnifies, releases
and holds Fluor Daniel forever harmless from any and all purchase, performance
and/or operation obligations, including, but not limited to, warranty,
indemnity, and all personal or property damages related to or occurring from the
user of such machinery of equipment, except that Fluor Daniel will render
reasonable assistance to Owner for the purpose of enforcing warranties and
guaranties against Equipment Vendors as provided in Section 8.2 and except that
this indemnity and release does not extend to Fluor
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<PAGE>
Daniel's Work relating to the installation of such machinery and equipment (as
distinguished from the machinery and equipment itself).
(e) Fluor Daniel as a policy requires payment and performance bonds from
Subcontractors and Equipment Vendors for contracts involving the supply of goods
and services and purchases of machinery and equipment, as applicable, where the
contract price exceeds a predetermined level. Owner may in certain cases desire
not to require such payment and performance bonds to reduce costs. Fluor Daniel
will consult with Owner whenever under Fluor Daniel's policies a payment or
performance bond would be required of a Subcontractor or an Equipment Vendor.
If Owner instructs Fluor Daniel in writing to waive the requirement for a
payment or performance bond from the Subcontractor or the Equipment Vendor, (i)
Fluor Daniel shall not require a payment or performance bond from the
Subcontractor or the Equipment Vendor, as applicable, and (ii) Fluor Daniel
shall have no liability or obligation to Owner for any loss or damage suffered
by Owner as a result of the failure of such Subcontractor or Equipment Vendor to
have furnished a payment or performance bond.
ARTICLE 3
OWNER'S RESPONSIBILITIES
3.1 Construction Phase Responsibilities. Owner shall at such times as may be
-----------------------------------
required by Fluor Daniel for the successful and expeditious completion of the
Work:
(a) Provide a site for the construction of the Facilities, suitable access
thereto and an adequate area or areas adjoining such site for Fluor Daniel's
office, warehouse, craft change rooms, shop buildings, welding facilities,
materials storage, lay-down area and employee parking;
(b) Obtain any process and other licenses which are required for the
Facilities, except where such licenses are specifically identified as being the
responsibility of Fluor Daniel as part of its Work and provide Fluor Daniel with
any necessary governmental allocation or priorities and obtain all permits and
licenses required to be taken out in the name of Owner which are necessary for
the performance of the Work; and
(c) Appoint one or more individuals who shall be authorized to act on
behalf of Owner, with whom Fluor Daniel may consult at all reasonable times, and
whose instructions, requests and decisions will be binding upon Owner as to all
matters pertaining to this Agreement and the performance of the parties
hereunder. The individuals referred to in the preceding sentence shall be James
Nelson, Todd T. Brown, and an on-site representative to observe the performance
of the Work ("Owner's On-Site Representative"). The Owner's On-Site
Representative shall, to the extent reasonably applicable, comply with all job
site rules established for Fluor Daniel's own on-site personnel.
3.2 Start-Up Responsibilities. Owner shall start up the Facilities in
-------------------------
accordance with the start-up and commissioning plan and schedule described in
Section 2.3(p) and shall and provide all personnel, feedstock and supplies
necessary for commissioning, start-up, operation and maintenance thereof.
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3.3 Taxes. Owner shall pay all taxes assessed against the Facilities,
-----
including sales taxes, if any, on Fluor Daniel lump sum amounts included in
Articles 6.2 and 6.3.
3.4 Environmental Responsibilities. Owner shall advise of the existence and,
------------------------------
to the extent required by law, undertake the abatement and disposal of any
Contamination which is encountered by Fluor Daniel in the performance of the
Work. Fluor Daniel hereby acknowledges the receipt of copies of all documents
listed on Exhibit 8 hereto.
---------
ARTICLE 4
SUBCONTRACTS
Work not performed by Fluor Daniel with its own forces shall be performed by
Subcontractors.
4.1 Retaining Subcontractors. Owner shall have the right to approve all
------------------------
Subcontractors. Fluor Daniel shall not retain any Subcontractor to whom Owner
has objected. In no case shall Owner's approval of any subcontract relieve
Fluor Daniel of any of its obligations under this Agreement.
4.2 Management of Subcontractors. Fluor Daniel shall be responsible for the
----------------------------
management of the Subcontractors in the performance of their portions of the
Work.
4.3 Assignment of Subcontract Agreements. Fluor Daniel shall provide for
------------------------------------
assignment of Subcontractor agreements in the event that Owner terminates this
Agreement for cause as provided in Section 12.1. Following such termination,
Owner shall notify in writing those Subcontractors whose assignments will be
accepted, subject to the rights of sureties.
ARTICLE 5
CHANGES IN THE WORK
5.1 Change Orders. Changes in the Work which are within the general scope of
-------------
this Agreement may be accomplished by Change Order without invalidating this
Agreement.
5.2 Procedure for Changes. Owner may initiate a change by advising Fluor
---------------------
Daniel in writing of the change believed to be necessary. As soon thereafter as
practicable, Fluor Daniel shall prepare and forward to Owner an estimate of the
cost and schedule impact of the change, and advise Owner of any effect the
change may have on Fluor Daniel's ability to comply with any of its obligations
under this Agreement, including its ability to comply with warranties and
guarantees. Fluor Daniel shall be reimbursed for the reasonable costs incurred
to prepare such estimate. Owner shall advise Fluor Daniel in writing of its
approval or disapproval of the change. If Owner approves the change, Fluor
Daniel and Owner shall prepare a Change Order and Fluor Daniel shall perform the
Work as changed. Fluor Daniel may initiate changes by advising Owner
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in writing that in Fluor Daniel's opinion a change is necessary; provided,
--------
however, that Fluor Daniel shall not proceed with any Work related to such a
- -------
change until it has received written approval from Owner to do so. Thereafter,
the change shall be handled as if initiated by Owner. Notwithstanding the
foregoing provisions of this Section 5.2, if the change is due to rework or
warranty work under Article 8, the rework and warranty work and the cost of the
estimate shall be treated as Rework and Warranty Costs in accordance with
Article 8.
5.3 Emergencies. In any emergency affecting the safety of persons and/or
-----------
property, Fluor Daniel shall act, in its reasonable judgment, to prevent
threatened damage, injury or loss. Any change in the cost of the Work or Fluor
Daniel's fees under Sections 6.2 and 6.3, and any extension of the date of
Substantial Completion, on account of emergency work shall be determined as
provided in this Article.
5.4 Scope Change Order. Fluor Daniel and Owner agree that the design of the
------------------
project is not complete and that Change Orders may be necessary in connection
with design development. For purposes of this Agreement a "Scope Change Order"
is a Change Order (or a portion thereof) that represents the addition of a new
feature to, or the deletion of a planned feature of, the existing design of the
project, but does not include a Change Order (or a portion thereof) that
represents the completion, detailing or refinement of already existing designs,
concepts or plans for the project.
ARTICLE 6
COMPENSATION
6.1 Reimbursable Costs. The term "Reimbursable Costs" shall include all costs
------------------
incurred by Fluor Daniel that are specifically described in Exhibit 5 as
---------
Reimbursable Costs.
6.2 Fixed Price. The total fixed price for the services and other items that
-----------
are listed as included within the Fixed Price in Exhibit 5 is $***. The total
---------
price for temporary construction equipment (as defined in Section 3.1 of Exhibit
-------
2) and for Craft Burdens and Benefits (as defined in Section 3.2 of Exhibit 2)
- - ---------
shall be determined in accordance with the formulas set forth in Section 2.0 of
Exhibit 5 and shall not include the cost of any equipment supplied by Equipment
- ---------
Vendors.
6.3 Fixed Fee. The total fixed fee payable to Fluor Daniel is $***, and the
---------
fixed fee will be payable to Fluor Daniel in accordance with the Payment
Schedule as described in Exhibit 5. For all Scope Change Orders authorized
---------
under Section 5.2, the total fixed fee will be adjusted by an amount equal to
1.33 percent of the amount of the Change Order.
6.4 Schedule and Cost Incentive Fees. All fees earned under Sections 6.4(a)
--------------------------------
and (b) will be payable (or credited) to Fluor Daniel or Owner within 30 days
following Final Completion.
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(a) Fluor Daniel shall be paid a schedule incentive of $*** per day for
each day that Substantial Completion precedes the Target Substantial Completion
Date (as reflected on Exhibit 6) up to a maximum total of $***. Fluor Daniel's
---------
fixed fee described in Section 6.3 will be reduced by $*** per day for each day
that Substantial Completion exceeds the Target Substantial Completion Date up to
a maximum reduction of $***.
(b) Fluor Daniel will be paid a cost incentive equal to *** percent of any
amount that the actual total installed project cost (as defined in Section 4.0
of Exhibit 5) is less than the Target Price (as defined in Section 4.0 of
---------
Exhibit 5) up to a maximum cost incentive award of $***. Fluor Daniel's fixed
- ---------
fee described in Section 6.3 will be reduced by an amount equal to *** percent
of any amount that the actual total installed project cost is more than the
Target Price up to a maximum reduction of $***.
6.5 Value Awareness. Fluor Daniel shall be paid an amount equal to *** percent
---------------
of the aggregate amount of all Value Awareness cost savings. The Value
Awareness Program will be described in the Project Procedures Manual, as such
manual will be agreed upon by the parties, Value Awareness cost savings will be
administered using the procedure for Changes in The Work as described in Section
5.2 and will be payable as described in the Project Procedures Manual. For
purposes of calculating the cost incentive described in Section 6.4, the
cumulative Value Awareness cost savings will be subtracted from the target
price.
Owner agrees to implement an incentive program for the craft workers and
architect/engineer which cost shall be reimbursable and be part of total
installed project cost. Fluor Daniel agrees to implement an incentive program
for the Fluor Daniel staff which cost shall be borne by Fluor Daniel. Fluor
Daniel will prepare and administer these programs, Owner shall have the right to
approve the program for craft workers and architect/engineer, and Owner will
have final authority for the release of any payments pursuant to the
reimbursable programs.
6.6 Rework and Warranty Cost. Included in the fixed price as described in
------------------------
Section 6.2 is the total cost for Fluor Daniel's rework and warranty
obligations, as described in Article 8 of this Agreement which is $***;
provided, however, that if Change Orders are authorized under Section 5.2, the
aggregate cost of which exceeds ***% of the Target Price (the "Agreed Amount"),
then there shall be added to the fixed price under Section 6.2, an amount equal
to ***% of the amount by which the Change Orders have caused the Agreed Amount
to be exceeded. (For reference purposes, the parties agree that the date of
execution of this Agreement, the Target Price is $***.)
6.7 Non-Reimbursable Items. The following costs and expenses are included in
----------------------
Sections 6.2, 6.3, 6.4 and 6.6 and, as such, are expressly not reimbursable or
payable directly to Fluor Daniel:
(a) Fluor Daniel's officers and managers, including, without limitation,
the Chairman of the Board, President, Vice Presidents (except as provided for
herein), Secretary, Treasurer and Controller except that the costs and expenses
of those managers listed on Exhibit 6, when directly engaged in the Work, shall
---------
be reimbursable under Section 6.1;
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(b) Fluor Daniel's medical personnel, when not directly engaged in the
Work, as well as office and maintenance personnel, consisting of sales, public
relations and advertising personnel, telephone and teletype operators, guards,
word processors, accountants, bookkeepers, receptionists, mail room, janitorial
and maintenance employees;
(c) Home office general expenses, including, without limitation, other
personnel expenses, depreciation, rent and maintenance of home office
facilities, furniture, office equipment, light, heat, cafeteria service and
parking space;
(d) General overhead expenses, including, without limitation, the
development of engineering and construction standards and programs not specific
to the Work, entertainment and charitable and other contributions;
(e) Property taxes on Fluor Daniel's real and personal property at the home
office and sites other than the site of the Facilities and taxes assessed
against net income; and
(f) Any and all costs incurred by Fluor Daniel in connection with its
maintenance of the Records or in connection with any audit by Owner of the
Records pursuant to Section 2.3(j) above; and
(g) Rework and Warranty Costs (as defined below), except to the except
otherwise provided in Section 8.2(b).
6.8 Example. An example of the method of calculation of the Schedule and Cost
-------
Incentive Fees, Value Awareness and Cost Incentive Program for Craft Workers is
shown in Section 5.0 of Exhibit 5.
---------
ARTICLE 7
TERMS OF PAYMENT
7.1 Funding of Reimbursable Costs.
-----------------------------
(a) Owner shall fund the Work by establishing and maintaining payable and
general disbursement bank-draft, interest-fund or other zero-balance accounts.
Fluor Daniel shall administer such funds and be paid its invoiced Reimbursable
Costs therefrom, weekly, in accordance with the procedures set forth in the
Project Procedures Manual, as such manual will be agreed upon by the parties.
Commencing on or about the first day of the calendar month following execution
of this Agreement and weekly thereafter, Fluor Daniel shall furnish Owner with a
billing covering fees and costs accrued during the previous week, plus any
interest due under Section 7.6.
(b) Fluor Daniel agrees, warrants and guarantees that title to the
Facilities, all Facilities Equipment, all other materials and equipment and any
other property resulting from the Work
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covered by an application for payment, whether or not incorporated in the
Facilities, will pass to Owner free and clear of all liens, claims, security
interests or encumbrances, including, without limitation, any mechanic's or
materialmen's liens (hereinafter referred to as "Liens"), upon receipt of full
payment under such application by Fluor Daniel. Fluor Daniel shall obtain
releases or waivers of any Liens of Subcontractors or other Equipment Vendors as
a condition to payment of such Subcontractors or Equipment Vendors for their
services or material and equipment supplied.
(c) Owner's progress payments or occupancy or use of the Facilities,
whether in whole or in part, shall not be deemed an acceptance of any defective
Work or property resulting from any defective Work or Work or property not
conforming to the requirements of the Contract Documents.
(d) All Facilities Equipment shall be resold to Owner pursuant to bills of
sale or other instruments or agreements mutually acceptable to Fluor Daniel and
Owner and consistent with the terms of this Agreement.
7.2 [Intentionally Omitted.]
7.3 Payment of Fixed Prices and Fees. The Fixed Price will be paid in
--------------------------------
installments based on the schedule set forth in Exhibit 5. The fixed fee under
---------
Section 6.3 and the fee for rework and warranty obligations under Section 6.6
shall be payable upon the terms and conditions more specifically described in
Exhibit 5.
- ---------
7.4 Final Payment.
-------------
(a) Final payment, consisting of any unpaid balance of all amounts due
hereunder shall be due and payable when Final Completion has occurred. Before
issuance of final payment, Owner may request satisfactory evidence that all
payrolls, materials bills and other indebtedness connected with the Work have
been paid or otherwise satisfied.
(b) In making final payment Owner waives all claims against Fluor Daniel,
except for:
(i) Fluor Daniel's responsibility to remove all outstanding Liens;
(ii) improper workmanship or defective materials;
(iii) Work not in conformance with the Contract Documents;
(iv) terms of any special warranties and indemnities under the
Contract Documents; and
(v) those claims previously made in writing which remain unsettled.
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(c) In accepting final payment, Fluor Daniel waives all claims, except the
terms of any special indemnities under the Contract Documents and those claims
previously made in writing which remain unsettled.
7.5 Interest. If Fluor Daniel advances any of its funds for payment of
--------
Reimbursable Costs and Fixed Prices and if Owner is delinquent in the
reimbursement of such funds, or if any payments of fees hereunder are
delinquent, interest shall accrue on, the amounts so advanced or which are
delinquent from the date of the advance or due date until Fluor Daniel is
reimbursed or paid at in annual rate equal to one and twenty-five hundredths
(1.25) times the prime rate then currently charged by the Chase Manhattan Bank
in New York, New York, but in no event shall such rate exceed the maximum legal
rate allowed by applicable usury laws. Payment of interest shall not excuse or
cure any default or delay in payment of amounts due. Notwithstanding the
foregoing provisions of this Section 7.6, no interest shall accrue on any
amounts claimed by or owed to Fluor Daniel which Owner has disputed in good
faith by written notice to Fluor Daniel.
ARTICLE 8
WARRANTIES AND GUARANTEES
8.1 Fluor Daniel Services Warranty.
------------------------------
(a) Fluor Daniel warrants it and its Subcontractors shall perform the
engineering, procurement and other services to be performed under this Agreement
and the Contract Documents that are not Construction Work (as defined below) in
accordance with the current standards of professional care and diligence
normally practiced by recognized firms in performing services of similar nature.
If, prior to Substantial Completion of the Facilities and/or during the one-year
period following Substantial Completion of the Facilities, it is shown that
there is an error in the Work as a result of Fluor Daniel's or a Subcontractor's
failure to meet those standards and Owner has notified Fluor Daniel in writing
of any such error prior to the end of that one-year period, Fluor Daniel shall
perform such corrective services as, subject to the limitations in Sections
8.2(a), (b) and (c), may be necessary to remedy such error, as well as any and
all of the Construction Phase Services described in Section 2.3, as may be
necessary to remedy such error.
(b) Notwithstanding the foregoing provisions of subsection 8.1(a), if,
prior to Substantial Completion of the Facilities and/or during the one-year
period following Substantial Completion of the Facilities, it is shown that
there is an error in the Work as a result of the Architect/Engineer's failure to
meet the current standards of professional care and diligence normally practiced
by recognized firms in performing design services of a similar nature and Owner
has notified Fluor Daniel in writing of any such error prior to the end of that
one-year period, Fluor Daniel and/or the Architect/Engineer shall perform,
solely at their cost, such corrective services as may be necessary to remedy
such error, including, without limitation, additional Drawings and
Specifications, as well as any and all of the Construction Phase Services
described in Section 2.3, as may be necessary to remedy such error; provided
that Fluor Daniel's
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obligations under this Section 8.1(b) shall be subject to the limitations in
Sections 8.2(a), (b) and (c).
8.2 Construction Warranty. Fluor Daniel warrants that all materials and
---------------------
equipment (other than equipment supplied by Equipment Vendors) furnished
pursuant to this Agreement will be new, of good quality and in conformance with
the Contract Documents and free from defects; provided, however, that such
warranty will not apply to materials and equipment covered by warranties by
Equipment Vendors in favor of or passed through to Owner and delivered to Owner
pursuant to Sections 8.4 and 8.6(b). Fluor Daniel warrants that it and its
Subcontractors will perform their construction services that are part of the
Work (the "Construction Work") in accordance with the current standards of care
and diligence normally practiced by recognized construction firms in performing
services of a similar nature and that such Construction Work shall be free from
material defects in workmanship. If, prior to Substantial Completion of the
Facilities and/or during the one (1) year period following Substantial
Completion of the Facilities, it is shown that there is an error in the
Construction Work as a result of Fluor Daniel's or a Subcontractor's failure to
meet those standards and Owner has notified Fluor Daniel in writing of any such
error prior to the end of that one-year period, Fluor Daniel shall re-perform
such Construction Work and take such other action as may be necessary to remedy
such error. If any such Work, materials or equipment is covered by a warranty
from a third party, Fluor Daniel shall cooperate with Owner in seeking recovery
under such warranty.
(a) All costs incurred by Fluor Daniel in performing such corrective
services and warranty work shall be borne by Fluor Daniel until the aggregate
amount of such costs reaches a total of ***% of the total direct cost of the
Work. (For reference purposes, the parties agree that at the date of execution
of this Agreement the total direct cost of the Work is estimated to be $***.)
(The aforesaid ***% of the total direct cost of the work shall be referred to as
the "Warranty Limit.")
(b) If Owner requires Fluor Daniel to perform such corrective services or
warranty work that exceeds the Warranty Limit, all costs in excess of the
Warranty Limit incurred in performing such corrective services and warranty work
shall be reimbursable costs due Fluor Daniel under Sections 6.1 and 7.1 hereof;
provided, however, if such corrective services or warranty work are required due
to the gross negligence or willful misconduct of Fluor Daniel's or a
Subcontractor's supervisory personnel down through the level of project
superintendents, procurement managers and lead process engineers, then such
costs will be borne by Fluor Daniel.
(c) In no event shall Fluor Daniel, under any Section of this Agreement
whatsoever, be obligated to perform any corrective services or warranty work or
pay any rework or warranty costs once the aggregate total of such rework or
warranty costs exceeds $***, and in no event shall Owner be obligated to pay any
additional fee to Fluor Daniel in connection with any corrective services or
warranty work under this Article 8.
8.3 Accounting for Rework and Warranty Costs. Fluor Daniel shall utilize cost
----------------------------------------
accounting systems sufficient to accurately account for all costs of re-
performing Work that does not meet the warranties and guarantees contained in
this Article 8 and other warranty costs (collectively,
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"Rework and Warranty Costs") and shall accurately record in such accounting
system all such Rework and Warranty Costs incurred prior to Substantial
Completion of the Facilities and during the one-year period following
Substantial Completion.
8.4 Third Party Warranty and Guarantee.
----------------------------------
(a) Fluor Daniel shall, for the protection of Owner, demand from all
Equipment Vendors, suppliers and Subcontractors from which Fluor Daniel procures
machinery, equipment or materials or services, warranties and guarantees with
respect to such machinery, equipment, materials or services, which shall be
passed through and made available to Owner to the full extent of the terms
thereof. Fluor Daniel's liability with respect to machinery, equipment and
materials or services obtained from Equipment Vendors shall be limited to
procuring warranties and guarantees from such Equipment Vendors upon which by
their respective terms, both Fluor Daniel and Owner may specifically rely, and
rendering all reasonable assistance to Owner for the purpose of enforcing the
same. The limitations on the warranty obligations of Fluor Daniel under Section
8.1, 8.2 and 8.5 shall not apply to any warranties or guarantees of any
Equipment Vendor, supplier or Subcontractor under this Section 8.4.
(b) Fluor Daniel agrees that prior to seeking reimbursement from Owner
pursuant to Section 8.2(b) relating to the failure to meet standards or an error
that is attributable to a Subcontractor or supplier (other than an Equipment
Vendor), it will pursue all available remedies against such Subcontractor or
supplier, including, if necessary, the filing and diligent prosecution of a suit
to final judgment or settlement. Notwithstanding the above, to the extent that
Fluor Daniel has been unable to cause such Subcontractor or supplier to perform
the corrective services or pay its cost of performing such corrective services
within six months after the date reimbursement from Owner would otherwise be due
under Section 8.2(b), Owner shall reimburse Fluor Daniel for its unrecovered
costs to the extent required by such Section. In that event, Flour Daniel will
assign its claim to the Owner while continuing to pursue recovery on the Owner's
behalf.
8.5 Limitations. Fluor Daniel shall have no warranty obligation or liability
-----------
for any errors or defects in the Work to the extent that: (i) the warranty
claim is attributable to Fluor Daniel's reliance upon or use of data, design
criteria, drawings, specifications or other information furnished by Owner (it
being agreed that any data, design criteria, drawings, specifications or other
information furnished by an Equipment Vendor or prepared by Fluor Daniel or its
Subcontractors is not furnished by Owner); or (ii) the warranty claim is
attributable to the failure of Owner to operate and maintain the Facilities in a
reasonable manner in accordance with industry standards. Owner shall provide
Fluor Daniel an opportunity to make such tests and perform such remedial
services as Fluor Daniel deems appropriate in its reasonable discretion to
investigate the warranty claim. Fluor Daniel shall conduct any such testing
promptly after notice of any such warranty claim. If it is necessary to perform
a shut-down of the Facilities to allow investigation of the warranty claim,
Owner and Fluor Daniel shall coordinate such Facility shutdown, if any, during
the warranty period in a manner designed to minimize disruption of Owner's
production at the Facilities.
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<PAGE>
8.6 Delivery of Certificates and Other Materials.
--------------------------------------------
(a) Fluor Daniel shall secure all certificates of inspection, testing or
approval that are required by law to be obtained for the Facilities, including,
without limitation, a certificate reflecting that all pressure vessels in the
Facilities meet the code requirements of the American Society of Mechanical
Engineers (the "ASME"). Fluor Daniel shall deliver such certificates to Owner
within 30 Days of Substantial Completion of the Work.
(b) Fluor Daniel shall collect all written warranties and equipment manuals
and deliver them to Owner.
ARTICLE 9
INDEMNIFICATION
9.1 Bodily Injury and Property Damage Liability. To the fullest extent
-------------------------------------------
permitted by law, Fluor Daniel shall indemnify, defend and hold harmless Owner,
Owner's consultants, agents, employees and other representatives of any of them,
from and against any and all claims, damages, losses and expenses, including,
without limitation, attorneys' fees, arising out of or resulting from
performance of the Work, provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Work itself or other Owner's
property covered by Owner's property insurance) including loss of use resulting
therefrom, but only to the extent caused in whole or in part by negligent acts
or omissions of Fluor Daniel, anyone directly or indirectly employed by Fluor
Daniel, any subcontractor of Fluor Daniel or anyone for whose acts Fluor Daniel
may be liable, regardless of whether or not such claim, damage, loss or expense
is caused in part by a party indemnified hereunder. Such obligation shall not
be construed to negate, abridge or reduce other rights or obligations of
indemnity which otherwise exist as to a party or person described in this
Section 9.1. In claims against any person or entity indemnified under this
Section 9.1 by an employee of Fluor Daniel, anyone directly or indirectly
employed by Fluor Daniel or any subcontractor of Fluor Daniel or anyone for
whose acts Fluor Daniel may be liable, the indemnification obligation under this
Section 9.1 shall not be limited by a limitation on amount or type of damages,
compensation or benefits payable by or for Fluor Daniel or any subcontractor of
Fluor Daniel under workers' compensation acts, disability benefit acts or other
employee benefit acts.
9.2 Protection of the Facilities. Fluor Daniel shall be responsible for and
----------------------------
obligated to replace, repair or reconstruct, and to furnish any material,
equipment or supplies furnished by Fluor Daniel which are lost, damaged or
destroyed prior to transfer of care, custody and control of the Facilities or
the affected portion thereof to Owner. Fluor Daniel shall be entitled to
receive the proceeds, if any, of insurance maintained pursuant to Section
10.1(c) which relate specifically to the material, equipment or supplies
replaced, repaired or reconstructed by Fluor Daniel. Owner assumes all
responsibility for such loss, damage or destruction after such transfer of care,
custody and control to Owner.
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9.3 Owner's Property. Commencing with the Substantial Completion of the
----------------
Facilities, or if by agreement of the parties, any portion thereof is
transferred to the care, custody and control of Owner prior to Substantial
Completion, then upon such transfer, Owner will maintain property damage
insurance fully covering the Facilities from the risk of loss or damage, shall
name Fluor Daniel as an additional loss payee on such insurance policy and shall
cause its insurers to waive rights of subrogation against Fluor Daniel and its
vendors and subcontractors under any insurance which Owner may carry.
9.4 Limitations. Fluor Daniel shall have no obligation to Owner with respect
-----------
to any damage or loss to property caused by the perils of war, insurrection,
revolution, nuclear reaction or other like perils as may be excluded under the
scope and limits of the insurance coverage provided pursuant to Section 10.1.
ARTICLE 10
INSURANCE
10.1 Commitment. Commencing with the performance of its Work hereunder, and
----------
continuing until the order of acceptance of the Work or termination of this
Agreement (except with regard to "Builder's Risk" Course of Construction
Insurance which shall commence and continue for the period specified in
subparagraph (c) below), Fluor Daniel shall maintain, or in the case of Section
10.1(d) cause Equipment Vendors to maintain, standard insurance policies as
follows:
(a) Workers' Compensation and/or all other social insurance in accordance
with the statutory requirements of the state, province or country having
jurisdiction over Fluor Daniel's employees who are engaged in the Work, with
Employer's Liability of One Million Dollars ($1,000,000) for each accident;
(b) Commercial General Liability, including Automobile (owned, non-owned or
hired vehicle) Insurance in a combined single limit of Two Million Dollars
($2,000,000) for each occurrence for bodily injury to or death of persons and/or
loss of or damage to property of parties other than Owner, which policy shall
contain contractual liability coverage;
(c) "Builder's Risk" Course of Construction Insurance protecting the
respective interests of Owner, Fluor Daniel and Fluor Daniel's Subcontractors of
all tiers covering physical loss or damage (the "Builder's Risk Policy"). The
Builder's Risk Policy shall have an effective date commencing with the
Construction Phase and continuing during the course of construction and testing
at least until Substantial Completion of the Facilities as described on
Exhibit 1. The Builder's Risk Policy shall cover any and all materials and
- ---------
equipment for the Facilities, while in transit (other than in the course of
ocean marine or air transit movement, which is to be provided for pursuant to
subsection (d) below), while at the job site, awaiting and during erection, and
until transfer of care, custody and control of the Facilities or portion thereof
to Owner pursuant to Section 11.1. The Builder's Risk Policy shall be maintained
to cover the replacement value of the Facilities at risk. This insurance shall
not cover losses caused by the perils of war or nuclear
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<PAGE>
action as defined in the policy of insurance nor shall it cover loss of use,
business interruption or loss of product. Owner shall be included as an
additional loss payee and Fluor Daniel shall cause its insurer to waive rights
of subrogation against Owner under such insurance. A deductible of Twenty-Five
Thousand Dollars ($25,000) shall apply to each and every covered loss, except
earthquake, flood, windstorm, hot testing and other deductibles as specified in
the contract of insurance and the policy limit shall not be less than
$***;
(d) Ocean Marine Cargo Insurance covering any and all materials and
equipment which may be in transit to the job site by wet marine bottoms, or by
air transportation and/or by connecting conveyances. Such insurance shall be
maintained in sufficient amounts to cover the full replacement value of the
materials and equipment at risk and the policy limit shall not be less than the
declared value of such shipments; and
(e) Deductibles paid as part of this Article 10 shall be reimbursed as part
of Section 6.1, but without prejudice to any rights Owner may have under Section
7.5(b) and Article 8.
10.2 Certificates. The foregoing insurance shall be maintained with carriers
------------
satisfactory to Owner, and the terms of coverage shall be as evidenced by
certificates to be furnished to Owner. Such certificates shall provide that
thirty (30) Days' written notice shall be given to Owner prior to cancellation
of any policy.
10.3 Professional Liability Insurance. Fluor Daniel shall cause the
--------------------------------
Architect/Engineer to maintain professional liability insurance for claims
arising from the negligent performance of professional services under this
Agreement written for not less than $5,000,000 in the aggregate per year with a
deductible not to exceed $2,000. These requirements shall be continued in
effect for two years after the date of Substantial Completion. If the
Architect/Engineer retains consultants for a portion of the design, Fluor Daniel
shall cause their professional liability insurance coverage, including
deductible amounts, to be as set forth in this Section 10.3. The Parties hereto
acknowledge and agree that no rights of Owner to take any action against the
Architect/Engineer in connection with the Work conducted by the
Architect/Engineer with respect to the Facilities shall be limited in any way by
any provisions of this Agreement.
ARTICLE 11
TRANSFER AND ACCEPTANCE
11.1 Care, Custody and Control. When Fluor Daniel believes that the Facilities
-------------------------
are Substantially Complete and ready for operation, it shall so advise owner.
Unless Owner shall advise Fluor Daniel within five business days thereafter why
the Facilities are not Substantially Complete and ready for operation,
Substantial Completion shall be deemed to have occurred and the care, custody
and control thereof shall pass to Owner at the expiration of such five business
days. In any event, the care, custody and control of the Facilities or portion
thereof pass to Owner no later than the time when Owner takes physical
possession thereof. From and after the
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date of the transfer of the care, custody and control of the Facilities or Phase
thereof, Owner shall assume all risks of physical loss or damage thereto and
shall and does hereby release Fluor Daniel from, and Owner will and shall cause
its insurers to waive rights of subrogation against Fluor Daniel and its vendors
and Subcontractors for, loss or damage to the Facilities which may thereafter
occur. Notwithstanding the foregoing limitation, if by agreement with Owner
Fluor Daniel transfers to Owner the care, custody and control of a portion of
the Facilities at such time as Fluor Daniel or its Subcontractors are continuing
the Work on other portions of the Facilities, Owner shall not assume any risks
of physical loss or damage caused by Fluor Daniel or its Subcontractors, to the
remainder of the Facilities as to which care, custody and control have not been
turned over to Owners, and Owner shall not release Fluor Daniel from, or cause
its insurers to waive rights of subrogation against Fluor Daniel, its vendors
and Subcontractors for, any such loss or damage to the Facilities.
11.2 Acceptance of the Work. When Fluor Daniel deems it has completed the Work,
----------------------
it shall so notify Owner in writing. Within five business days thereafter,
Owner shall advise Fluor Daniel in writing of any defects in the Work, other
than defects that are not reasonably ascertainable by Owner within such five
business day period, for which Fluor Daniel is responsible under this Agreement.
As soon as any such defects are corrected (or as soon as the five business day
period for such notice has expired if Owner does not advise Fluor Daniel of any
such defects within the period), Owner shall accept the Work in writing or the
Work shall be deemed accepted; provided, however, that Owner shall not be deemed
-------- -------
to have accepted the Work to the extent of any defects that are not reasonably
ascertainable by Owner within such five business day period.
11.3 Limitation. Notwithstanding the foregoing provisions, nothing in this
----------
Article 11 shall affect the respective rights of the parties under Section 7.5
and under Articles 8 and 9 hereof.
ARTICLE 12
TERMINATION, CANCELLATION AND SUSPENSION
12.1 Termination by Owner for Default. Should Fluor Daniel become insolvent or
--------------------------------
bankrupt, or should Fluor Daniel commit a substantial breach of a material
provision of this Agreement, and should Fluor Daniel thereafter fail to commence
proceedings in good faith to remedy such breach within ten (10) Days after
written demand by Owner and thereafter to proceed diligently in remedying the
same and to remedy the same within 45 Days, then Owner may terminate this
Agreement and enter upon the premises and take possession thereof and at the
same time instruct Fluor Daniel to remove from the premises all of its tools,
equipment and supplies, or Owner may take possession of any and all of such
tools, equipment and supplies for the purpose of completing the Work. Upon any
such termination, Fluor Daniel shall be compensated for all reasonable costs
then incurred and the portion of the Fixed Price accrued to such date in
accordance with the provisions of Sections 6.1 and 6.2 hereof, plus the earned
portion of the Fixed Fee provided for in Section 6.3, less any costs incurred by
Owner to transition the Work to another contractor. In the event that Owner
uses any of Fluor Daniel's equipment or tools,
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Owner shall return the same to Fluor Daniel in good condition and repair,
reasonable wear and tear excepted, and shall pay Fluor Daniel for the use
thereof as provided in Section 6.1.
12.2 Termination by Fluor Daniel for Default. Should Owner become insolvent or
---------------------------------------
bankrupt or commit a substantial breach of a material provision of this
Agreement and: (i) fail to remedy the same within ten (10) Days after written
notice thereof from Fluor Daniel, if the breach constitutes a failure to pay
money or (ii) fail to commence proceedings to remedy the same within ten (10)
Days after written notice thereof from Fluor Daniel and thereafter to proceed
diligently in remedying the same and to remedy such default within 45 Days, if
the breach is other than to pay money, then Fluor Daniel may, at its option,
suspend performance of the Work or terminate this Agreement. Should Fluor
Daniel so suspend such performance or terminate this Agreement, it shall be paid
for all reasonable costs incurred and the portion of the Fixed Price accrued to
the date of suspension/termination in accordance with the provisions of Sections
6.1 and 6.2, including any reasonable cancellation charges by vendors and
Subcontractors, and the reasonable cost of all standby and
demobilization/remobilization expenses plus the earned portion of the Fixed Fee
provided for in Section 6.3 based on the percent of the Work that has been
Substantially Completed.
12.3 Cancellation for Convenience. Owner reserves the right to cancel the Work
----------------------------
hereunder upon notice in writing to Fluor Daniel (a "Cancellation for
Convenience"). Should the Work be so canceled by Owner, Fluor Daniel shall be
paid for all costs incurred and the portion of the Fixed Price accrued to date
of cancellation and through demobilization in accordance with Sections 6.1 and
6.2 hereof, including any reasonable cancellation charges by vendors and
Subcontractors, in accordance with the provisions of Article 6, and, if such
Cancellation for Convenience is at any time after Owner gives Fluor Daniel a
notice to proceed in accordance with Section 2.3, the earned portion of the
Fixed Fee provided for in Section 6.3 based on the percent of the Work that has
been completed. In the event Owner elects to utilize another contractor for the
performance of all or a part of the cancelled Work within a one (1) year period
following the cancellation of the Work, Owner shall pay a cancellation charge
equal to any remaining portion of the Fixed Fee that has not theretofore been
paid, which amount shall be due and payable upon the recommencement by the
contractor of the previous cancelled Work. Owner acknowledges and agrees that
the cancellation charge has been agreed after negotiations as the parties'
reasonable estimate of Fluor Daniel's lost business opportunities.
12.4 Suspension by Owner. Owner reserves the right to suspend the Work upon ten
-------------------
(10) Days' written notice to Fluor Daniel, unless Fluor Daniel agrees in writing
to a shorter notice period. Should the Work be so suspended, Fluor Daniel shall
be paid for all costs incurred and the portion of the Fixed Price then accrued
in accordance with the provisions of Sections 6.1 and 6.2 and the portion of the
Fixed Fee under Section 6.3 earned for Work performed to the date of suspension
and through demobilization, including any suspension or cancellation charges by
vendors and Subcontractors. When a suspension equals or exceeds ninety (90)
Days in the aggregate, Fluor Daniel may elect to treat such suspension as a
Cancellation for Convenience of Owner pursuant to Section 12.3; provided,
--------
however, that such suspension may not be treated as a Cancellation for
- -------
Convenience if the suspension is the result of: (i) identification of
Contamination or any other environmental condition on the premises; (ii) a
breach by Fluor
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Daniel of its obligations under this Agreement; or (iii) failure of Owner to
obtain any environmental permits required for the Work.
ARTICLE 13
SAFETY, ENVIRONMENTAL AND OTHER LAWS
13.1 Compliance with Laws.
--------------------
(a) Fluor Daniel shall design the Facilities so that the Facilities are
capable of complying with all applicable safety, environmental and other laws,
rules and regulations in force at the effective date of this Agreement. If
during the course of the Work, any questions should arise regarding safety,
environmental or other regulated aspects of the Work, Fluor Daniel and Owner
shall mutually agree upon any changes required in the Work and such changes
shall be treated as changes in the Work under Article 5;
(b) Fluor Daniel shall take necessary precautions for the safety of its
employees on the Work, shall comply with all applicable provisions of federal,
state and municipal safety laws to prevent accidents or injury to persons on,
about or adjacent to the site of the Facilities or the Work and shall cause its
Subcontractors to do likewise. Fluor Daniel, directly or through its
Subcontractors, shall erect and properly maintain at all times, as required by
the conditions and progress of the Work, necessary safeguards for the protection
of workers and the public. Fluor Daniel, however, shall not be responsible for
the elimination or abatement of safety hazards created or otherwise resulting
from Work at the site carried on by Owner or its employees, agents, separate
contractors or tenants. Owner agrees to cause its employees, agents, separate
contractors and tenants to abide by and fully adhere to all applicable
provisions of federal, state and municipal safety laws and regulations. The
above provision shall not relieve Subcontractors of their responsibility for the
safety of persons or property in the performance of their work, nor for
compliance with all applicable provisions of relevant laws. Fluor Daniel shall,
and shall require each Subcontractor to, have an appropriate safety program
covering the Subcontractor's employees;
(c) During the course of construction Fluor Daniel shall perform its Work
in accordance with applicable laws, rules, regulations and orders relating to
environmental concerns; and
(d) From and after transfer to Owner of care, custody and control of the
Facilities or portion thereof, Owner assumes all responsibility for compliance
by the Facilities or any portion thereof with applicable safety, environmental
and other laws, rules and regulations and orders.
13.2 Pre-Existing Conditions
-----------------------
(a) Owner warrants it has disclosed or it shall immediately disclose as
information becomes available to it: (i) any and all reports, test results,
public records and other sources of
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information known to Owner which show areas of Contamination at the site and
(ii) all other material information known by Owner and relevant to the conduct
of the Work at the site. Anything herein to the contrary notwithstanding, as
between Owner and Fluor Daniel, legal responsibility and liability for any and
all Contamination shall at all times remain with Owner.
(b) Owner shall, at Owner's sole expense and risk, arrange for handling,
storage, transportation, treatment and delivery for disposal of Contamination.
Owner shall be solely responsible for obtaining a disposal site for such
material. Owner shall look to the disposal facility and/or transporter for any
responsibility or liability arising from improper disposal or transportation of
such waste. Fluor Daniel shall not have or exert any control over Owner in
Owner's obligations or responsibilities as a generator in the storage,
transportation, treatment or disposal of any Contamination. Owner shall
complete and execute any required governmental forms relating to regulated
activities, including, but not limited to, generation storage, handling,
treatment, transportation or disposal of Contamination. Owner shall indemnify,
release and save Fluor Daniel harmless from all damages or penalties paid by
Owner or Fluor Daniel resulting from Contamination.
ARTICLE 14
FORCE MAJEURE
Any delays in or failure of performance by Owner or Fluor Daniel, other
than payment of money, shall not constitute a default hereunder if and to the
extent such delays or failures of performance are caused by occurrences beyond
the reasonable control of Owner or Fluor Daniel, as the case may be, including
but not limited to: (i) acts of God or the public enemy; (ii) expropriation or
confiscation of facilities; (iii) compliance with any order of any governmental
authority; (iv) changes in law; (v) acts of war (declared or undeclared),
hostilities or acts of terrorism; (vi) rebellion or sabotage or damage resulting
therefrom; (vii) fires, floods or other unusually severe weather conditions,
(i.e. tornadoes, hurricanes, blizzards, etc.); (viii) explosions; (ix)
accidents; (x) riots or strikes or other concerted acts of workmen, whether
direct or indirect; or (xi) any causes, whether or not of the same class or kind
as those specifically above named, which are not within the control of Owner or
Fluor Daniel respectively, and which by the exercise of reasonable diligence,
Owner or Fluor Daniel, respectively, is unable to prevent. Fluor Daniel's
scheduled completion date shall be adjusted to account for any force majeure
delay and it shall be reimbursed by Owner under Article 2 for all costs incurred
in connection with or arising from a force majeure event, including, but not
limited to, those costs incurred in the exercise of reasonable diligence to
avoid or mitigate a force majeure event. Notwithstanding anything to the
contrary contained herein, the parties agree that Fluor Daniel will not be
entitled to relief under this Article for delays or failures of performance
caused by or resulting from the acts or omissions of its Subcontractors,
suppliers or the Equipment Vendors.
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<PAGE>
ARTICLE 15
INTELLECTUAL PROPERTY
15.1 Title to Plans and Drawings and Specifications. The Drawings and
----------------------------------------------
Specifications shall become the property of Owner. Fluor Daniel acknowledges
and agrees that the specific designs embodied in the Work and the Facilities,
the cost of the Work and the Facilities, the cost of materials and equipment,
and all other costs hereunder, the performance and other specifications of the
Facilities and the machinery and equipment, including, without limitation, the
paper machine operating speed, design capacity, mill layout, and operating
procedures, are confidential and proprietary information of Owner (the
"Confidential Information"). Fluor Daniel also acknowledges and agrees that
Owner would be damaged by the disclosure of the Confidential Information to
Owner's competitors or to others, and by the use or knowledge of the
Confidential Information in connection with the performance of similar work for
any of Owner's competitors or others. Accordingly, Fluor Daniel agrees that it
will maintain the confidentiality of, and not disclose to persons other than its
employees, subcontractors, suppliers and the Equipment Vendors with a specific
need to know such information and who have executed similar confidentiality
agreements (and only to the extent of such specific need), the Confidential
Information or use the Confidential Information other than in the performance of
its Work hereunder. Nothing herein shall be construed as limiting Fluor
Daniel's ownership of all rights to use its basic know-how, experience and
skills, whether or not acquired during performance of the Work, or to perform
any independently developed engineering design or other services for any other
party.
15.2 Secrecy Agreements. Any written agreements between Fluor Daniel and Owner
------------------
entered into prior to the effective date hereof relating to secrecy or
confidentiality of information exchanged between Fluor Daniel and Owner shall be
deemed incorporated herein by reference as if fully set forth in this Agreement.
15.3 Patents. Fluor Daniel agrees to include, as a term or condition of each
-------
purchase order and each subcontract entered into by it in the performance of the
Work, a patent indemnification provision extending from the Equipment Vendor,
other supplier or Subcontractor under such purchase order or subcontract to
Owner and Fluor Daniel. Fluor Daniel further agrees to render such assistance
to Owner is may be reasonably required on a reimbursable cost basis to enforce
the terms of such indemnification by Equipment Vendors, other suppliers and
Subcontractors. In addition, Fluor Daniel shall indemnify and hold harmless
Owner from and against any and all claims, disputes, actions or proceedings
resulting from patent, trademark, copyright or other infringement arising from
the performance of the Work.
ARTICLE 16
DISPUTE RESOLUTION
16.1 General Disputes. In the event of a dispute between the parties arising
----------------
under or relating to this Agreement which cannot be amicably resolved by the
individuals appointed pursuant to
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Sections 2.3(l) and 3.1(c) hereof, such dispute shall, in the first instance, be
referred to a representative of senior management of the parties hereto for
resolution.
16.2 Disputes.
--------
(a) In the event a dispute arises pursuant to the provisions of Article 5
hereof, which is unresolved pursuant to Section 16.1, solely at the parties'
---------------------
mutual option, such dispute may be decided by binding arbitration with the firm
- -------------
of Judicial Arbitration & Mediation Services, Inc. ("JAMS"), acting as the sole
arbitrator.
(b) All claims, disputes and other matters in question arising out of or
relating to this Agreement or the breach thereof, if the parties mutually agree,
may be decided by mediation or arbitration by JAMS in accordance with the Rules
of Practice and Procedure of JAMS (the "Rules").
(c) If the parties agree to arbitrate a dispute pursuant to Subsections
(a) or (b) above, except as specifically modified by this Subsection, the Rules
shall govern. In the event of a dispute pursuant to the provisions of Article 5
hereof, the Rules shall be modified by changing the stated time periods to five
(5) Days in Rules 2, 5-D and 7.D.
(d) If the parties agree to arbitrate a dispute pursuant to Subsections
(a) or (b) above, judgment may be entered on the award, the award may be
judicially enforced, the award will be final and binding and no appeal may be
taken on the grounds of error in the application of the law or finding of fact.
16.3 Waiver of Jury Trial. Solely at the parties' mutual option, the parties
-------------------- ------------------------------------
may agree to knowingly, voluntarily and intentionally waive any rights they may
have to a trial by jury in respect to any litigation based hereon, or arising
out of, under, or in connection with, this Agreement, or any course of conduct,
course of dealing, statements (whether oral or written) or actions of Owner or
Fluor Daniel.
ARTICLE 17
GENERAL PROVISIONS
17.1 Independent Contractors. Fluor Daniel shall be an independent contractor
-----------------------
with respect to the Work to be performed hereunder. Neither Fluor Daniel nor
its subcontractors, nor the employees of either, shall be deemed to be the
servants, employees, or agents of Owner.
17.2 Related Party Contracts. Fluor Daniel may have portions of the Work
-----------------------
performed by its affiliated entities or their employees at the same prices,
rates and other terms as would be negotiated at arms length between unaffiliated
parties, in which event Fluor Daniel shall be responsible for such Work and
Owner will look solely to Fluor Daniel as if the Work was performed by Fluor
Daniel.
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<PAGE>
17.3 Assignment. This Agreement shall not be assignable by either party
----------
without the prior written consent of the other party hereto, except that it may
be assigned without such consent to the successor of either party, or to a
person, firm or corporation acquiring all or substantially all of the business
assets of such party or, to a wholly owned subsidiary of either party, but such
assignment shall not relieve the assigning party of any of its obligations under
this Agreement. Any attempted assignment without such consent shall be null and
void. No assignment of this Agreement shall be valid until this Agreement shall
have been assumed by the assignee. When duly assigned in accordance with the
foregoing, this Agreement shall be binding upon and shall insure to the benefit
of the assignee.
17.4 Audit and Maintenance of Records. Owner shall have the right to audit and
--------------------------------
inspect Fluor Daniel's records and accounts covering reimbursable costs
hereunder at all reasonable times during the course of the Work and for a period
of one (1) year after the date of the invoice related thereto, provided,
however, the purpose of any such audit shall be only for verification of such
costs and that Fluor Daniel shall not be required to keep records of or provide
access to those of its costs covered by the Fee, allowances, fixed rates, fixed
prices or of costs which are expressed in terms of percentages of other costs.
17.5 Liens. Fluor Daniel shall deliver the Facilities to Owner free and clear
-----
of any Lien arising from the Work and Fluor Daniel shall discharge any such
Liens and the costs incurred by Fluor Daniel in so doing shall be reimbursable
under Article 3.
17.6 Surplus Material. It is understood that in performing work of the scope
----------------
and complexity of the Work to be performed hereunder, it is necessary and
inevitable that certain surplus material be purchased provided that such
surpluses are at a reasonable amount for the Work. The purchase price and
transportation costs of such surplus materials shall be considered costs of the
Work to the same extent as any materials incorporated into the Work. Fluor
Daniel shall, as soon as it is feasible to do so, determine and advise Owner
what materials are surplus materials and thereafter shall dispose of such
materials as directed by Owner, and the proceeds shall be credited to Owner in
an amount equal to the net proceeds therefrom.
17.7 Notices. Any notice, request, instruction, document or other
-------
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy (with oral confirmation), (iii) delivered by overnight express,
or (iv) sent by registered or certified mail, postage prepaid, as follows:
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If to Owner:
Republic Group Inc.
for delivery other than by mail:
811 East 30th Avenue
Hutchinson, Kansas 67504-1307
Attention: Todd T. Brown
for delivery by mail:
P.O. Box 1307
Hutchinson, Kansas 67504-1307
Attention: Todd T. Brown
If to Fluor Daniel:
Fluor Daniel, Inc.
100 Fluor Daniel Drive
Greenville, South Carolina 29607-2762
Attention: Carl Fisher
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally, or sent by telecopy or overnight express
in the manner provided herein shall be deemed to have been duly given to the
party to whom it is directed upon actual receipt by such party. Any notice
which is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been given to the party to whom it is addressed at
the close of business, local time of the recipient, on the fifth day after the
day it is so placed in the mail.
17.8 Representations and Remedies. Neither Fluor Daniel nor Owner makes any
----------------------------
representations, covenants, warranties or guarantees, express or implied, other
than those expressly set forth herein. The parties' rights, liabilities,
responsibilities and remedies with respect to the Work shall be exclusively
those expressly set forth in this Agreement.
17.9 Damages.
-------
(a) Fluor Daniel shall in no event be responsible or held liable for
consequential, incidental, special or indirect damages, including without
limitation, liability for loss of use of the Facilities or Owner's existing
property, loss of profits, interest, product or business interruption, increased
costs of operations and maintenance or staffing needs, however the same may be
caused. Owner shall in no event be responsible or held liable for
consequential, incidental, special or indirect damages, including without
limitation, liability for loss of use of the Facilities or Fluor Daniel's
existing property, loss of profits, interest, product or business
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<PAGE>
interruption, increased costs of operations and maintenance or staffing needs,
however the same may be caused.
(b) Owner hereby releases, indemnifies and agrees to hold Fluor Daniel
harmless from any liability arising from the ownership, use or operation of the
Facilities, or any part thereof, subsequent to the transfer of care, custody and
control to Owner, except only as provided in Section 7.5(b) and Article 8.
(c) If Owner is not the sole owner of the Facilities or existing
property at or adjacent to the job site, or if the Facilities are to be owned or
operated by a person or entity other than Owner, Owner shall obtain waivers
and/or releases from the other owners or operators thereof sufficient to provide
to Fluor Daniel the same protection from liability for loss or damage that would
be afforded to Fluor Daniel under this Agreement as if Owner were the sole owner
or operator.
17.10 Solicitation of Employment. For a period of 180 Days after Final
--------------------------
Completion, neither party, directly or indirectly for itself or on behalf of, or
in conjunction with, any other person, partnership, corporation, business or
organization, shall solicit, hire, contract with or engage the employment of an
employee of the other with whom that party or its personnel, excluding
construction craft personnel, have had contact in the course of providing Work
under this Agreement, unless that party has obtained the written consent of the
other to such hiring and that party pays to the other a fee to be mutually
agreed upon. Fluor Daniel, to the extent possible under the terms and
conditions described, will work with Owner to attempt to incorporate certain
future employees of Owner into the engineering and skilled trade work for the
Facilities. Any employees of Owner so utilized shall agree to work under the
direct supervision and control of Fluor Daniel, the costs related to the
employment of Owner's employees under this Article shall be considered
reimbursable costs.
17.11 Interpretation.
--------------
(a) This Agreement shall be governed by and interpreted in accordance
with the laws of Oklahoma, without regard to its choice of law principles.
(b) Headings and titles of articles, sections and other subparts of
this Agreement are for convenience of reference only and shall not be considered
in interpreting the text of this Agreement. Modifications or amendments to this
Agreement must be in writing and executed by a duly authorized representative of
each party.
(c) INDEMNITIES AGAINST, RELEASES FROM, ASSUMPTIONS OF AND LIMITATIONS
ON LIABILITY EXPRESSED IN THIS AGREEMENT, AS WELL AS WAIVERS OF SUBROGATION
RIGHTS, SHALL APPLY EVEN IN THE EVENT OF THE FAULT, NEGLIGENCE OR STRICT
LIABILITY OF THE PARTY INDEMNIFIED OR RELEASED OR WHOSE LIABILITY IS LIMITED OR
ASSUMED OR AGAINST WHOM RIGHTS OF SUBROGATION ARE WAIVED AND SHALL EXTEND TO THE
OFFICERS, DIRECTORS, EMPLOYEES, LICENSORS, AGENTS, PARTNERS AND RELATED ENTITIES
OF SUCH PARTY AND ITS PARTNERS AND RELATED ENTITIES.
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<PAGE>
(d) The parties agree to look solely to each other with respect to the
obligations and liability arising in connection with this Agreement and the Work
performed hereunder. This Agreement and each and every provision hereof is for
the exclusive benefit of Owner and Fluor Daniel and not for the benefit of any
third party, except to the extent such benefits have been expressly extended
pursuant to Section 17.11(c).
(e) In the event that any portion or all of this Agreement is held to
be void or unenforceable, the parties agree to negotiate in good faith to amend
the commercial and other terms of this Agreement in order to effect the intent
of the parties as set forth in this Agreement.
(f) The provisions of this Agreement which by their nature are
intended to survive the termination, cancellation, completion or expiration of
the Agreement, including but not limited to any expressed limitations of or
releases from liability, shall continue as valid and enforceable obligations of
the parties notwithstanding any such termination cancellation, completion or
expiration.
17.12 Entire Agreement.
----------------
(a) This Agreement consists of the Contract Documents and the
following exhibits attached hereto:
EXHIBIT 1 - Scope of the Work
EXHIBIT 2 - Cost Estimate Basis
EXHIBIT 3 - Detail Cost Estimate Report
EXHIBIT 4 - Drawings
EXHIBIT 5 - Commercial Terms
EXHIBIT 6 - Schedule
EXHIBIT 7 - Voith Sulzer Paper Technology "As Purchased"
Technical Specifications dated 26 March 1998
EXHIBIT 8 - Environmental Documents
(b) This Agreement, as defined in this Section 17.12, including,
without limitation, Section 15.2 hereof, sets forth the full and complete
understanding of the parties as of the date first above stated, and it
supersedes any and all agreements and representations made or dated prior
thereto except that the parties agree that all interim services and expenses
provided or incurred pursuant to the Letter of Intent and all payments made
pursuant thereto shall be covered by this Agreement and treated as if provided,
incurred or paid pursuant hereto, and all services provided pursuant to the
Letter of Intent or provided by the Architect/Engineer pursuant to the letter of
intent dated April 15, 1998 between Fluor Daniel and the Architect/Engineer, as
the same may have been amended, shall be covered by the warranties contained in
this Agreement. In the event of any conflict between this contract document and
any of the Exhibits hereto, the terms and provisions of this contract document
shall control. In the event of any conflict among the Exhibits, the Exhibit of
the latest date shall control. Notwithstanding the foregoing provision, the
parties hereto acknowledge and agree that all confidentiality provisions
contained in the letter agreements between Fluor Daniel, as agent for Owner, and
Voith Sulzer Paper Technology, Inc.
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<PAGE>
and the Architect/Engineer shall remain in full force and effect pursuant to
their terms notwithstanding the execution and delivery of this Agreement.
(c) THE PARTIES ACKNOWLEDGE AND AGREE THE TERMS AND CONDITIONS OF THIS
AGREEMENT HAVE BEEN FREELY, FAIRLY AND THOROUGHLY NEGOTIATED. FURTHER, THE
PARTIES ACKNOWLEDGE AND AGREE SUCH TERMS AND CONDITIONS, INCLUDING BUT NOT
LIMITED TO THOSE RELATING TO WAIVERS, ALLOCATIONS OF, RELEASES FROM, INDEMNITIES
AGAINST AND LIMITATIONS OF, LIABILITY, WHICH MAY REQUIRE CONSPICUOUS
IDENTIFICATION, HAVE NOT BEEN SO IDENTIFIED BY MUTUAL AGREEMENT AND THE PARTIES
HAVE ACTUAL KNOWLEDGE OF THE INTENT AND EFFECT OF SUCH TERMS AND CONDITIONS.
EACH PARTY ACKNOWLEDGES THAT IN EXECUTING THIS AGREEMENT THEY RELY SOLELY ON
THEIR OWN JUDGMENT, BELIEF, AND KNOWLEDGE, AND SUCH ADVICE AS THEY MAY HAVE
RECEIVED FROM THEIR OWN COUNSEL, AND THEY HAVE NOT BEEN INFLUENCED BY ANY
REPRESENTATION OR STATEMENTS MADE BY ANY OTHER PARTY OR ITS COUNSEL. NO
PROVISION IN THIS AGREEMENT IS TO BE INTERPRETED FOR OR AGAINST ANY PARTY
BECAUSE THAT PARTY OR ITS COUNSEL DRAFTED SUCH PROVISION.
17.13 Venue. The parties hereto agree and acknowledge that any dispute, claim
-----
or litigation arising out of, or in any way related to, this Agreement shall be
exclusively litigated in the appropriate state court located in Comanche County,
Oklahoma or federal court located in Oklahoma City, Oklahoma.
IN WITNESS WHEREOF, the parties hereto have executed this contract document
as of the date and year first above written.
REPUBLIC PAPERBOARD COMPANY
By: /s/ Todd T. Brown
-----------------------------------------
Name: Todd T. Brown
---------------------------------------
Title: Vice President--Paperboard Operations
--------------------------------------
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<PAGE>
FLUOR DANIEL, INC.
By: /s/ J. William Liestner
-----------------------------------------
Name: J. William Liestner
---------------------------------------
Title: President--Manufacturing
--------------------------------------
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<PAGE>
EXHIBIT 1
---------
SCOPE OF THE WORK
-----------------
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT
PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED SEPARATELY WITH
THE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "***" AT EACH PLACE IN THE EXHIBIT WHERE THE OMITTED
INFORMATION APPEARED IN THE ORIGINAL.
EXHIBIT 1 - SCOPE OF WORK
- --------------------------------------------------------------------------------
1.0 SUMMARY
1.1 PROJECT OBJECTIVES
The project objectives are to:
. produce *** tons/year of gypsum paperboard.
. consistently produce the best quality gypsum paperboard available.
. be a low cost gypsum paperboard manufacturer.
. operate using low cost raw materials, including mixed waste.
. meet sheet performance characteristics at the design basis weights.
. meet cream face appearance requirements at ***lb/1000 ft/2/ or less top
ply basis weight.
. begin commercial production in November of 1999.
1.2 FACILITY DESCRIPTION
The proposed facility will produce *** tons/year of gypsum paperboard in
roll form. Rolls will be strapped and wrapped prior to storage and
shipping. The facility includes a 37,500 sq. ft. warehouse capable of
holding up to 1,140 rolls, or several days of average machine production.
The single paper machine will operate at up to *** fpm with a usable winder
trim of *** inches. The machine will be capable of producing a four ply
sheet with overall basis weight ranging from 30 to 50 lb/1,000 ft/2/.
Machine design is based on producing gray back at *** lb/1,000 ft/2/ and
cream face at *** lb/1,000 ft/2/.
The sheet will be dried using conventional, fully-felted, steam-heated,
drying cylinders, followed by a calender, ***, a reel and a two-drum
winder.
The press section will use two, *** presses. This technology was selected
to provide good water removal while minimizing sheet densification and loss
of porosity.
*** This arrangement allows independent control of the stock properties and
sheet forming conditions for each ply. Long fiber will be concentrated in
the filler ply to optimize sheet strength and performance characteristics.
Sizing and refining for the back ply can be optimized for dimensional
stability, porosity and water pickup when rewet.
A separate top stock system will provide equipment required to produce good
visual appearance in the top ply. A filler stock line will fractionate
incoming waste paper to produce a relatively long fiber fraction and a
short fiber fraction. The long fiber fraction will be used predominately in
the filler ply. This filler system will allow less expensive, mixed paper
to be used as part of the furnish. The filler stock line includes equipment
designed to reduce the amount of waxes and stickies present in the filler
stock. These materials can develop into objectionable spots during high
temperature drying of the gypsum board.
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Page 1
<PAGE>
EXHIBIT 1 - SCOPE OF WORK
- --------------------------------------------------------------------------------
Raw material will be delivered to the mill by either railcar or truck. The
facility includes a 37,200 sq. ft. warehouse capable of storing up to 3800
tons of baled wastepaper and a 17,500 sq. ft. outside storage area capable
of storing up to 2000 tons of baled wastepaper. This represents about eight
days of operation at the average production rate.
Utility services for the mill will include:
. Natural gas from an existing gas main.
. Steam generated on-site by a natural gas fired package boiler.
. Process and potable water from a municipal treatment plant and
distribution system.
. Electrical power purchased from a local utility company.
. Process effluent discharged to a publicly owned treatment works after
on-site treatment.
. Sanitary sewer discharged to an existing municipal treatment facility.
. Solid waste disposal under contract to local disposal company.
General arrangement drawings are based on preliminary vendor information.
The final plant layout will be adjusted to accommodate operator and
maintenance access requirements. Platforms or other safe access will be
designed for operator control, adjustment or monitoring locations. The
layout will provide for maintenance access using lift trucks or other
mobile equipment. Monorails or other systems may be used in places of
mobile equipment with Owner's approval. General arrangement drawings must
be approved by the Owner before design is released for construction.
1.3 SITE DESCRIPTION
The facility will be built on a 69 acre site in Lawton, Oklahoma with
relatively level topography. The site will be fully fenced. Site roads,
parking lots, and storm run-off control will be provided. Boring data from
adjacent sites was used to estimate site conditions for the cost estimate.
A site soil testing report has been completed.
Offices, conference rooms, locker rooms and other common facilities will be
provided. This facility is based on a total employee count of approximately
***. About 25 of these employees will be supervisory or front office
personnel. The remainder will be operating or maintenance crews.
1.4 PROJECT TEAM
The scope of work includes engineering, procurement, construction,
training, commissioning and startup services required to complete the
project. The project plan is based on:
. Fluor Daniel providing the procurement and construction management
services in accordance with this Agreement.
. Marathon Engineers/Architects/Planners, LLC providing engineering
design services under a not-to-exceed sub contract with Fluor Daniel.
. Voith Sulzer providing main process equipment under a fixed price
contract entered into by Fluor Daniel as agent for the Owner.
1.5 PROJECT PERFORMANCE
The Voith Sulzer contract will include the following performance
specifications:
. Fiber loss to sewer less than *** %
. Production of *** tpd of filler pulp.
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<PAGE>
EXHIBIT 1 - SCOPE OF WORK
- --------------------------------------------------------------------------------
. A defined fractionation efficiency
. Top stock production rate of *** OD tpd (with *** tpd of filler
production)
. Top stock ash content between *** %
. Stickies and lightweight contaminants removal efficiency greater than
***%.
. Maximum reel production rate of *** machine dry tons/hr at 6% reel
moisture.
. Reel average cross direction moisture variance less than ***%.
. Machine direction basis weight variance less than ***%
. Cross machine direction basis weight variance less than ***%
. Residual basis weight variance less than ***%
. Sheffield smoothness less than *** seconds.
. Top side brightness greater than ***.
. MD tensile greater than *** lb/inch
. CD tensile greater than *** lb/inch
. Z Direction tensile greater than *** lb/inch/2/
. Gurley porosity less than *** seconds.
. Cobb sizing
. Top Maximum - ***g/100cm/2/
. Back Maximum - ***g/100cm/2/
. Sizing saturation minimum *** seconds
. Final product free from pinholes
. Formation comparable to a mutually acceptable reference sheet
The Voith Sulzer contract specifies the furnish requirements and test
conditions under which the performance criteria will be evaluated. It also
specifies remedies if the performance criteria cannot be achieved.
1.6 INTENT
The intent of this Agreement, the Exhibits to such Agreement, the Plans and
the Specifications is to describe the Work to be performed. Any work
necessary to complete performance not specifically provided in such
documents but which is reasonably inferable therefrom is included in the
original Scope of Work. In this regard, Fluor Daniel and Owner agree that
the design of the Project is not complete and items that represent the
completion detailing or refinement of already existing designs, concepts or
plans, whether or not covered by Change Orders, will not be the basis for
changing the schedule of the Project or the cost target. Only those items
that represent the addition of a new feature or the deletion of a planned
feature shall be the basis for a Change Order.
2.0 INTRODUCTION
Fluor Daniel will manage engineering, procurement, construction, training,
commissioning and startup services for the Republic Paperboard. The
services are associated with a greenfield, recycled paperboard mill.
The site for the new facility is located in Lawton, Oklahoma.
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<PAGE>
EXHIBIT 1 - SCOPE OF WORK
- --------------------------------------------------------------------------------
2.1 AREA BREAKDOWN
The description of the proposed facility is presented in the following area
breakdowns:
. Area 01 - Raw Material Receiving and Storage
. Area 02 - Recycled Fiber Plant
. Area 03 - Paper Machine and Roll Handling
. Area 04 - Roll Storage and Shipping
. Area 05 - Boiler and Utilities
. Area 06 - Effluent Treatment/Water Recycle
. Area 07 - Power Distribution
. Area 08 - Storeroom, Shops and Offices
. Area 09 - Site General
2.2 PROJECT PERFORMANCE
The facility design is based on the performance specifications described in
Section 1.5 of this Exhibit. The values shown reflect performance
warranties in Voith Sulzer's equipment supply contract.
A paper machine acceptance test run will be scheduled after machine
operation has stabilized. The acceptance criteria will be as described in
Exhibit 7.
A recycled fiber plant acceptance test run will be scheduled separate from
the paper machine acceptance test in accordance with Exhibit 7.
3.0 RAW MATERIAL RECEIVING AND STORAGE
This area includes the raw material warehouse building shell, mechanical
components, HVAC and electrical systems.
The warehouse is designed to hold a maximum of 3800 tons of baled
wastepaper with an outside storage area capable of storing 2000 tons of
bales. This represents about eight days of operation at average production
rate.
The detailed cost estimate in this area is based upon the following
assumptions:
. 37,200 sq ft warehouse for inside storage of bales and 17,500 sq ft
fenced slab for outside storage of bales
. *** truck docks
. *** outside rail docks with overhead canopy.
. Pulper conveyors begin in this building and extend into the Recycled
Fiber Plant.
3.1 GENERAL ARRANGEMENT
The general arrangement for the raw material warehouse is shown in the
project drawings.
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<PAGE>
EXHIBIT 1 - SCOPE OF WORK
- --------------------------------------------------------------------------------
3.2 CIVIL AND STRUCTURAL
A 192' X 175' raw material warehouse will be provided for enclosed
wastepaper storage. This is connected with a 48' x 75' pulper load area. A
100' x 175' concrete slab with perimeter fencing will be used to store
wastepaper outside.
3.2.1 Site Preparation
The warehouse floor will be located slightly above grade level at a
nominal elevation of 104'-0". This is four feet higher than the
Recycled Fiber Plant. Site preparation consists of minimal
excavation and backfill for:
. the floor slab
. building footings
. grounding cable
The outside storage area will be surrounded by 16 ft tall fencing
with slats to contain loose paper.
The railroad siding and associated civil work is described in
Section 11 of this Exhibit.
3.2.2 Concrete
The building will be founded on virgin soils using shallow spread
footings.
The warehouse floor will be a 6 inch thick slab on grade
construction. The outside storage area will be an 8 inch thick slab
on grade.
The concrete truck apron is described in Section 11 Site General.
3.2.3 Steel and Miscellaneous Metal
A pre-engineered building will be provided consisting of open web
purlins and girders with structural steel columns spaced on an
approximate 50' x 48' grid.
Insulated metal siding will complete the exterior wall closure
where fire walls are not required. The roof will be standing seam,
metal construction.
Miscellaneous metal installations will include:
. interior wall protection using independent 6 foot high highway
type guard rail
. stairs with railings to the exterior grade level
. supports for unit heaters and other miscellaneous equipment
. all columns in storage areas protected with concrete to a
height of four feet
3.3 ARCHITECTURAL
3.3.1 Doors and Interior Walls
The will be *** truck docks with levelers, lights, door seals and
overhead doors.
A dock plate, railroad dock shelter, door seals and an overhead
door will be provided for *** railcar unloading doors.
Deluge showers will be provided for conveyor openings into the
recycled fiber plant.
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<PAGE>
EXHIBIT 1 - SCOPE OF WORK
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A concrete block wall with a four hour fire resistant rating will
separate this structure from the recycled fiber plant. This wall
will be primed and painted.
3.3.2 Fire Protection
The warehouse is classified as an Extra Hazard by Industrial Risk
Insurers for fire protection purposes. The entire building area
will be sprinkled. The cost estimate is based on a wet pipe system
with a sprinkler density of 0.40 gpm/2,000 S.F.
Water will be supplied to the sprinkler system from the mill fire
protection loop. The fire protection loop is described in the
Section 11 Site General.
Seven fire hose stations will be provided.
Ten fire extinguishers will be provided.
3.3.3 Roof Drains
Rainwater will be diverted to exterior gutters and downspouts.
Interior roof drains are not required.
3.3.4 Potable Water and Sanitary Sewer
The area will be serviced by a 22ft x 12ft break and restroom
facility located near the truck docks.
3.4 EQUIPMENT
3.4.1 Process Equipment
There is no process equipment in this area. In-floor pulper loading
conveyors start in this area but are included in the recycled fiber
plant area.
3.4.2 Mobile Equipment
Mobile equipment for the facility is described in Section 11 of
this volume.
3.5 PIPING
There is no process piping in this area. Utility piping will be provided
for unit heaters and the restroom facility.
The piping will be supported by individual hangers in this area.
Fire protection systems are described in Section 3.3 Architectural.
3.6 ELECTRICAL
3.6.1 Process Electrical
There is no process electrical system required in this area.
3.6.2 Lighting and Electrical Systems
Electrical power for this area will be provided from MCCs located
in the paper machine area electrical room.
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Power for truck doors, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 20 foot-candles when the warehouse is
in use and 5 foot-candles in inactive mode. Lighting panel boards
will be 480/277V. Separate standby panels will be established for
egress and EXIT sign lights. Lighting fixtures will be 277 volt
high pressure sodium HID fixtures. Switch rated circuit breakers
will be provided in the lighting panels.
The building structural columns will be grounded via the concrete
footings, "Ufer" style. Adequate rebar will be welded to the column
anchor bolts to satisfy NEC 250-81(c).
Outdoor platforms, walkways and fences will be grounded "Ufer"
style to concrete footings.
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
A #4/0, bare, copper wire will be buried for grounding and bonding
this building to the site general grounding grid.
Six, grounding type welding outlets will be provided. These outlets
will be 480V, 60A, 3 wire configuration.
Twenty four, grounding type, 20 amp, 120 volt convenience and
maintenance outlets will be provided within the warehouse area.
Weather-proof covers will be provide on all outside receptacles.
208Y/120V panel boards for convenience receptacles, office
lighting, control, heat tracing and instrumentation power will be
wall mounted within the recycled fiber plant electric room. Ground
fault circuit breakers will be installed both for 120V convince
receptacle and heat tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
3.6.3 Spare Parts
An allowance for electrical spare parts has been included in the
cost estimate.
3.7 PROCESS CONTROL
3.7.1 PROCESS
There is no process control system required in this area.
3.7.2 Communication and Alarm Systems
Speakers for the voice paging system will be provided in this area.
The same system will provide fire, tornado and other required
alarms.
One telephone system extension and a pay telephone will be provided
in the warehouse area.
The communication system for the entire facility is described in
Section 11 Site General.
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3.8 HEATING AND VENTILATION
3.8.1 Make-up Air
Make-up air will be supplied to the raw material warehouse from a
50,000 CFM, direct gas-fired, air handling unit located on grade
adjacent to the roof of the recycled fiber plant building. The air
will be distributed in the warehouse through a duct system. Make-up
air can be heated to maintain approximately 55 degrees F. in the
warehouse during winter design conditions.
3.8.2 Unit Heaters
Three, gas fired, unit heaters will be located above the truck dock
doors. Four single, gas fired unit heater will be located above the
rail car doors.
3.8.3 Ventilation
Ventilation will be provided by four, exhaust fans. The fans will
have a total capacity of approximately 50,000 CFM.
3.8.4 Duct Work
Duct will be galvanized steel with thickness appropriate for the
duct size. Duct will be either rectangular or spiral reinforced,
round cross section. Exterior duct runs will be insulated.
3.8.5 Spare Parts
An allowance for HVAC spare parts has been included in the cost
estimate.
4.0 RECYCLED FIBER PLANT
This area includes the recycled fiber building shell, mechanical
components, HVAC and electrical systems. All process equipment from the
pulper feed conveyors through the thickener into the high density stock
storage tanks is also included in this area.
The recycled fiber plant processes various grades of waste paper into two
stock streams; top ply stock and filler stock. The recycled fiber plant is
divided into two systems, one for top stock and the other for the filler
stock.
The recycled fiber plant process is summarized on mass flow diagrams.
References to specific drawings are included in Exhibit 5 of the Agreement
for Engineering Procurement And Construction.
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4.1 GENERAL ARRANGEMENT
The general arrangement for the recycled fiber plant is shown in the
project drawings.
Most of the main process equipment is housed in a single building adjacent
to part of the raw material warehouse and in line with the paper machine
building. Some equipment is located on structural steel mezzanines within
this single building.
The main HD stock chests are located to the north and in between the main
recycled fiber plant building, and the raw material receiving building.
The two *** clarifiers are located in a structure northwest of the main
building. The area below the thickener structure is also enclosed to
provide protection for some small tanks and pumps. A rain roof is over the
structures.
The electrical substations and switchgear are located in a fenced, graveled
area northwest of the main recycled fiber plant building.
Two pulper conveyors will bring recycled fiber into the pulpers from the
raw material warehouse. Rejects will be transferred to compactors on the
east side of the building.
4.2 CIVIL AND STRUCTURAL
A 100' X 175' primary recycled fiber plant building will be provided.
Separate elevated structures will be provided to enclose thickeners and a
process water clarifiers. An area at the base of the clarifiers and tanks
will have partial walls.
4.2.1 Site Preparation
The recycled fiber plant floor will be located slightly above grade
level at a nominal elevation of 100'-0". Site preparation consists
of minimal excavation and backfill for:
. the floor slab
. building footings
. tank and pulper foundations
. grounding cable
Deep foundations are provided in the recycled fiber plant area as
required by soil reports from adjacent properties.
4.2.2 Concrete
The primary building will be founded on caissons.
The main building floor will be a six inch slab. Elevated concrete
slabs for the thickener area and mezzanines will also be eight
inches thick.
Twenty four inch wide, concrete floor drains will be included.
Equipment foundations and pads will be provided, including concrete
piers for the filler pulper.
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4.2.3 Steel and Miscellaneous Metal
The primary building will be a pre-engineered structure consisting
of open web purlins and girders with structural steel columns
spaced on an approximate 25' x 50' grid.
Insulated metal siding will complete the exterior wall closure in
areas where fire walls are not required. The roof will be standing
seam, metal construction.
Structural steel mezzanines within the main building will support
the cleaners, some rejects handling equipment and the recycled
fiber plant electrical room.
MCCs for the recycled fiber plant equipment will be housed in an
enclosure on the operating floor of the paper machine building.
The elevated structure for the thickeners will be supported by the
tile chests below. The access platforms will be reached by a
dedicated walkway from the recycled fiber plant mezzanine.
Floor trench grating covers will be provided. The grating will be
able to support a lift truck in aisle or maintenance access areas.
4.3 ARCHITECTURAL
4.3.1 Doors and Interior Walls
An enclosure at grade level beneath the clarifier platform will
enclose pumps, valves and instruments. Sheet metal panels as well
as the tanks will form the sidewalls.
The following doors will be provided:
. Three, 9 ft X 9 ft, overhead sectional doors
. Eight, hollow metal doors
4.3.2 Fire Protection
The recycled fiber plant is classified as an ordinary Hazard Group
II by Industrial Risk Insurers for fire protection purposes. This
would require sprinkling the entire building. Fluor Daniel's
experience is that recycled fiber processing areas are only
sprinkled in areas where dry paper can be present. The cost
estimate is based on sprinkling 4000 SF using a wet pipe system
with a sprinkler density of 0.17 gpm/3,000 SF.
Water will be supplied to the sprinkler system from the mill fire
protection loop. The fire protection loop is described in the site
general area.
Four hose stations will be provided.
4.3.3 Roof Drains
Rainwater will be diverted to exterior gutters and downspouts.
4.3.4 Potable Water and Sanitary Sewer
There will be a 15 ft x 10 ft restroom area located adjacent to the
pulper conveyors. The cost estimate is based on metal stud and
painted gypsum board walls. A suspended, acoustical tile ceiling
will be provided.
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A unisex toilet facility with two fixtures and a drinking fountain
will be provided.
4.4 EQUIPMENT
4.4.1 Process Equipment
Detailed descriptions of the equipment are given in the vendor
proposals. The process scope is based on the Voith Sulzer quoted
scope of supply described in the specification dated March 26,
1998.
4.4.2 Mobile Equipment
Mobile equipment for the facility is described in Section 11 of
this volume.
4.4.3 Other Equipment
The cost estimate assumes that two compactors, trash dumpsters and
rejects dumpsters are supplied by the trash hauling company as part
of the mill service contract.
4.4.4 Spare Parts
An allowance for process and mechanical spare parts has been
included in the cost estimate.
4.5 PIPING
All process and utility piping will be provided. Stock and white water
piping is generally 316 L stainless steel. Compressed air and fresh water
piping is 304 L stainless steel.
Much of the piping will be supported by individual hangers. Gang supports
will be used where a sufficient number of lines can be grouped to make this
cost effective.
Fire protection, potable water and sanitary sewer systems are described in
Section 4.3 Architectural.
An allowance for valve and piping specialty spare parts has been included
in the cost estimate.
4.6 ELECTRICAL
4.6.1 Process Electrical
Motor Control Centers (MCCs) and medium voltage starters will be
located in an electrical room within the paper machine building.
480V MCCs will be either 1200 amp or 1600 amp, 3 Phase, 3 wire in
front mounting arrangements. Motor starters will use MCP type
circuit breakers and feeder circuits will use thermal/magnetic
breakers.
Motor controls will be through a DCS or PLC based central control
system. Local start/stop buttons will not be provided, except in
areas where an emergency stop is required. Emergency stops will be
provided for both pulper and conveyor systems.
Feeder, power, control and instrumentation distribution inside and
outside the structure will use aluminum cable trays. Cable tray
will be 6" high, NEMA class 12A, ladder type with 9" rung spacing.
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Separate tray systems will be provided for feeders, power with
control and instrumentation. The instrument tray will use barriers
for the analog, and discrete signals.
Conduits will be Rigid Galvanized Steel (RGS). Minimum conduit size
will be 3/4". Trade sizes of 1-1/4" and 2-1/2" will not be used.
Cable tray drop out channels and conduits will be sized to
accommodate both the power and the control cable if the load
requires a local control push-button station and conduit is being
used.
Power cables for 480 V loads will be 600 V, tray rated, type 1AC
cables with THHN/THWN or XHHW insulation. Power cables for 4,000 V
motor loads will be 5,000 V, type 1AC cables with 133% EPR
insulation and overall PVC jacket. Control multi-conductor cables
will be 600 V, tray rated, type 1AC or TC with THHN/THWN or XHHW
insulation.
Waterproof armored cable will be used to connect between MCCs and
all main process loads such as process motors. Conduit will only be
used for instrument drops and building facility loads such as unit
heaters, panels, lights and receptacles.
4.6.2 Lighting and Building Electrical Systems
Electrical power for this area will be provided from MCCs located
in the paper machine electrical room.
Power for truck doors, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 40 foot-candles in the process areas.
Lighting panel boards will be 480/277V. Separate standby panels
will be established for egress and EXIT sign lights.
Lighting fixtures will be 277 volt high pressure sodium HID
fixtures in process areas and florescent in office, electric,
instrument rooms, etc. Rooms with suspended ceiling, will use lay-
in fluorescent troffers. Electric and utility areas will use open
two lamp industrial fixtures. Strategic light fixtures and EXIT
signs located along routes of egress will be battery-pack type.
Grounding triads consisting of three interconnected 3/4" x 10'
copper clad steel ground rods will be established for the power,
instrumentation and a master ground reference.
The building structural columns will be grounded directly to the
buried grounding grid cable.
Outdoor platforms, walkways and fences will be grounded "Ufer"
style to concrete footings.
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
Lightning protection will be provided for buildings and structures
in the form of air terminals bonded to the vertical columns.
Eight, grounding type welding outlets will be provided. These
outlets will be 480V, 60A, 3 wire configuration.
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Twenty four, grounding type, 20 amp, 120 volt convenience and
maintenance outlets will be provided within the warehouse area.
Weather-proof covers will be provide on all outside receptacles.
208Y/120V panel boards for convenience receptacles and
instrumentation power will be wall mounted within the electric
room. Ground fault circuit breakers will be installed both for 120V
convince receptacle and heat tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
4.6.3 Spare Parts
An allowance for electrical spare parts has been included in the
cost estimate.
4.7 PROCESS CONTROL
4.7.1 Process
Field instruments not included as part of the process equipment
will be installed in the piping or tanks as required. Compressed
air connections will be provided for air actuated equipment.
Electrical distribution will generally be made using cable tray
with conduit drops to each device. Junction boxes may be used in
areas of high density controls to minimize cable runs. Multiple
conductor cable will be used where feasible. Analog instrument
cables will be 300 volt rated, #14 or #16 AWG shielded with foil
shields. Two, four and six conductor cables will be used. Cable
assembly will be tray rated.
All control will be through a DCS or PLC based central control
system. Local control will not be provided, except in areas where
the vendor provides integrated, local controls as part of their
supply. A single, hardened control console will be located near the
pulper area.
A separate, isolated, master control system grounding system will
be furnished.
4.7.2 Communication and Alarm Systems
Speakers for the voice paging system will be provided in this area.
The same system will provide fire, tornado and other required
alarms.
One mill telephone extension will be provided in the recycled fiber
plant area. A computer terminal connected to the mill wide LAN will
also be provided, housed in a hardened console.
The communication system for the entire facility is described in
Section 11 Site General.
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4.7.3 Spare Parts
An allowance for process control spare parts has been included in
the cost estimate.
4.8 HEATING AND VENTILATION
4.8.1 Make-up Air
Make-up air will be supplied to the recycled fiber plant from an
80,000 CFM, direct gas-fired, air handling unit located on the roof
of the paper machine building. The air will be distributed in the
plant through a duct system. Make-up air will be heated to maintain
approximately 55 degrees F during winter design conditions.
4.8.2 Ventilation
Ventilation will be provided by eight, exhaust fans located in the
exterior walls of the buildings. The fans will have a total
capacity of approximately 296,000 CFM.
4.8.3 Duct Work
Duct will be galvanized steel with thickness appropriate for the
duct size. Duct will be either rectangular or spiral reinforced,
round cross section. Exterior duct runs will be insulated.
4.8.4 Spare Parts
An allowance for HVAC spare parts has been included in the cost
estimate.
5.0 PAPER MACHINE AND ROLL HANDLING
This area includes the paper machine building shell, mechanical components,
HVAC and electrical systems. All process equipment from the stock storage
chests throughout the roll handling system is included in this area. Broke
and white water systems are also included in this area.
The paper machine stock preparation system provides fractionation of the
filler stock as well as refining and cleaning for the three stock streams,
top ply stock, long fiber stock and short fiber stock. The paper machine
wet end equipment forms the stock streams into a four ply sheet and presses
most of the water out of the sheet. Steam heated cylinders dry the ***. A
two roll calender provides final surface finishing before the sheet is
wound onto reel spools. The parent reels are slit into 85 inch diameter
rolls with various widths by a two drum winder. Individual rolls are banded
and may be plastic wrapped before being sent to shipping or storage.
The paper machine and ancillary systems are summarized in mass flow
diagrams included with the project drawings referenced in Exhibit 5 of this
Agreement For Engineering, Procurement And Construction.
5.1 GENERAL ARRANGEMENT
The general arrangement for the paper machine area is shown in the project
drawings referenced in Exhibit 5 of this Agreement For Engineering,
Procurement And Construction.
Most of the main process equipment is housed in a single paper machine
building. The "basement" level will be slightly above grade level. An
operating floor will be approximately 20 ft. above the basement level. A
mezzanine will be located along the drive side of the paper machine to
support
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air handling equipment. The building height will be about 63 ft. in the
paper machine area and 39 ft. in the stock preparation area.
The white water and broke tanks are located north of the main building.
An extension of the paper machine building on the wet end drive side will
house the vacuum pumps.
Another extension of the paper machine building on the drive side will
house the transformers and switchgear at grade level and the electrical and
rack rooms at operating floor level. The saveall mezzanine will be extended
west to house the wet end control room.
5.2 CIVIL AND STRUCTURAL
5.2.1 Site Preparation
Due to the sensitive nature of the paper machine and the heavy
loads that this structure must support, the building foundation
system and the machine track foundation will consist of drilled
concrete piers founded on an assumed unyielding material.
The paper machine basement floor will be located slightly above
grade level. Site preparation consists of minimal excavation and
backfill for:
. the floor slab
. building caisson caps and grade beams
. tank and pulper foundations
. grounding cable
5.2.2 Concrete
All "basement" level floor will be six inch slab on grade.
Elevated operating and mezzanine level floors will be 8 inch
concrete slab.
The paper machine will be supported by a separate concrete pier and
beam machine track.
Concrete foundations and pads will be provided for equipment, as
required.
A trench and sump area under the vacuum pumps will be provided. The
trench will be arranged to accommodate a future vacuum pump.
Twenty four inch wide U-drains will be provided along the length of
the machine. There will be two effluent sumps in the building that
are pumped to a main collection sump in the recycled fiber plant.
The alum tank area will not have full containment walls. It will be
curbed and drain to the main process sewer.
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5.2.3 Steel and Miscellaneous Metal
The main paper machine building will be conventionally framed using
steel rolled sections. The machine track will be isolated. Two
house bridge cranes with a ***-ton capacity will be incorporated
into the steel frame design. Exterior closure will utilize
insulated metal siding.
The vacuum pump enclosure will be a one-story, conventionally
framed structure using steel rolled sections. The roof will be
standing seam, metal construction. The exterior closure will
utilize insulated metal siding.
The electrical building will be a two-story, conventionally framed
structures using steel rolled sections. The lower section will be
enclosed with fencing to meet electrical code requirements. The
roof will consist of galvanized metal decking covered by an
insulated 4-ply smooth surface membrane. The exterior closure
around the second story will utilize insulated metal siding.
Floor trench grating covers will be provided. The grating will be
able to support a lift truck in aisle or maintenance access areas.
Miscellaneous steel allowances have been included for pipe
supports, machine roll storage racks and for miscellaneous
platforms.
5.3 ARCHITECTURAL
5.3.1 Roof and Roof Drains
The roof for the main paper machine building will consist of
galvanized metal decking covered by a built-up, insulated 4-ply
membrane system. The electrical roof will use the same built-up
system over concrete, roof planks.
5.3.2 Doors, Interior Walls and Finished Spaces
Finished space construction will consist of metal stud and painted
gypsum board walls, suspended acoustical ceiling and vinyl
flooring. Windows will be included in all spaces. Control room
windows will overlook the forming section. Most wiring and services
will be routed through the wall studs to avoid exposed services.
The control room will not be designed to meet "Westvaco", dust free
room standards.
The estimate contains an allowance for minimal furnishings in the
finished spaces.
A 500 ft/2/ office space will be provided at the wet end of the
machine room for the superintendent, tour foreman and technical
assistant.
A 300 ft/2/ office space will be provided at the dry end of the
machine room for two technical offices.
A 170 ft/2/ employee break room will be located near the dry end
office and lab.
A 12 ft x 36 ft control room at the wet end is planned. The room
will be elevated and positioned so that the machine tender can
monitor forming section operation.
A 10 ft x 18 ft, wet end test lab will be provided. The estimate
includes an allowance for the following test equipment:
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. Canadian Standard Freeness tester
. electronic balance
. handsheet drying oven
. pH meter
. hand sheet mold, press and dryer
. light box for speck count
A 10 ft x 25 ft, dry end test lab will be provided. The estimate
includes an allowance for the following test equipment:
. high temperature furnace for ash testing
. electronic balance
. circulating drying oven
. brightness meter
. Sheffield smoothness test device
. Gurley Densometer test device
. Instron tensile test device with Z direction test attachment
. Cobb sizing test device
. light table for sheet inspection
5.3.3 Fire Protection
The paper machine building is classified as an Extra Hazard area by
Industrial Risk Insurers for fire protection purposes. This would
require sprinkling the entire building. Fluor Daniel's experience
is that paper machine buildings are only sprinkled in areas where
dry paper can be present.
The cost estimate is based on providing fire suppression systems
for the machine dryer hoods, lube oil reservoir, hydraulic units,
finished spaces and some electrical spaces.
Twenty two interior fire hose racks are included.
Twenty two fire extinguishers will be provided.
Water will be supplied to the sprinkler system from the mill fire
protection loop. The fire protection loop is described in Section
11 Site General.
5.3.4 Potable Water and Sanitary Sewer
Four drinking fountains will be provided.
Two, 8 ft x 10 ft restrooms will be provided at the wet end
operating floor of the paper machine. Location will be determined
after the process equipment layout is finalized. One 8 ft x 10 ft
restroom will be provided at the dry end.
Potable water and sanitary sewer piping will be provided.
Essentially all of this piping will be supported by individual
hangers.
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5.4 EQUIPMENT
5.4.1 Process Equipment
Detailed descriptions of the equipment are given in the vendor
proposals.. The process scope is based on the Voith Sulzer paper
machine scope of supply described in the specification dated March
26, 1998.
5.4.2 Mobile Equipment
Mobile equipment for the facility is described in Section 11 of
this exhibit.
5.4.3 Other Equipment
Two, *** ton capacity bridge cranes are provided to service the
paper machine. The crane will have three trolleys, 2 rated for 17.5
tons, and one rated for 35 tons.
One, *** ton capacity strongback with motorized rotation is
provided for placing parent rolls into the winder unwind stand.
One dedicated monorail hoists is included in the paper machine area
for servicing the mezzanine storage area on the wet end.
5.4.4 Spare Parts
An allowance for process and mechanical spare parts has been
included in the cost estimate.
5.5 PIPING
All process and utility piping not included in the equipment vendor's scope
of supply will be provided.
Some of the piping will be supported by individual hangers. Gang supports
will be used where a sufficient number of lines can be grouped to be cost
effective. The building design will include structural steel beams in the
tending side basement aisle to support piping and cable trays.
Fire protection, potable water and sanitary sewer systems are described in
Section 5.3 Architectural.
An allowance for valve and piping specialty spare parts has been included
in the cost estimate.
5.6 ELECTRICAL
5.6.1 Process Electrical
A variable-speed drive system will be provided for the paper
machine and fan pump motors. Primary control will be through the
central control system with interface points coordinated with the
paper machine vendor. Control will also be available at key points
on the paper machine for use during threading and maintenance
operations.
An uninterruptable power source for computers and key process
control equipment will be provided.
Motor Control Centers (MCCs) and medium voltage starters will be
located in an enclosure at the wet end of the paper machine
building.
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480V MCCs will be either 1200 amp or 1600 amp, 3 Phase, 3 wire in
front mounting arrangements. Motor starters will use MCP type
circuit breakers and feeder circuits will use thermal/magnetic
breakers.
Motor controls will be through a DCS or PLC based central control
system. Local start/stop buttons will not be provided, except in
areas where an emergency stop is required. Emergency stops will be
provided for the paper machine, under machine pulper, couch pit
agitator and winder.
Feeder, power, control and instrumentation distribution inside and
outside the structure will use aluminum cable trays. Cable tray
will be 6" high, NEMA class 12A, ladder type with 9" rung spacing.
Separate tray systems will be provided for feeders, power with
control and instrumentation. The instrument tray will use barriers
for the analog, and discrete signals.
Conduits will be Rigid Galvanized Steel (RGS). Minimum conduit size
will be 3/4". Trade sizes of 1-1/4" and 2-1/2" will not be used.
Cable tray drop out channels and conduits will be sized to
accommodate both the power and the control cable if the load
requires a local control push-button station and conduit is being
used.
Power cables for 480 V loads will be 600 V, tray rated, type 1AC
cables with THHN/THWN or XHHW insulation. Power cables for 4,000 V
motor loads will be 5,000 V, type 1AC cables with 133% EPR
insulation and overall PVC jacket. Control multi-conductor cables
will be 600 V, tray rated, type 1AC or TC with THHN/THWN or XHHW
insulation.
Armored cable will be used to connect between MCCs and all main
process loads such as process motors. Conduit will only be used for
instrument drops and building facility loads such as unit heaters,
panels, lights and receptacles.
5.6.2 Building Lighting and Electrical Systems
Electrical power for this area will be provided from MCCs located
in the paper machine electrical room.
Power for truck doors, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 30 foot-candles minimum in the basement
area, 50 foot-candles on the operating floor and 30 foot-candles on
the mezzanine. Lighting panel boards will be 480/277V. Separate
standby panels will be established for egress and EXIT sign lights.
Lighting fixtures will be 277 volt high pressure sodium HID
fixtures in process areas and florescent in office, electric,
instrument rooms, etc. Rooms with suspended ceiling, will use lay-
in fluorescent troffers. Electric and utility areas will use open
two lamp industrial fixtures. Strategic light fixtures and EXIT
signs located along routes of egress will be battery-pack type.
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Grounding triads consisting of three interconnected 3/4" x 10'
copper clad steel ground rods will be established for the power,
instrumentation and a master ground reference.
A #4/0, bare, copper ground grid system for grounding and bonding
the plant electrical distribution equipment, large motors, paper
machines and substations will be installed. The building structural
columns will be grounded directly to the buried grounding grid.
Outdoor platforms, walkways and fences will be grounded "Ufer"
style to concrete footings.
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
Lightning protection will be provided for buildings and structures
in the form of air terminals bonded to the vertical columns.
Twenty, grounding type welding outlets will be provided. These
outlets will be 480V, 60A, 3 wire configuration.
One hundred and seventy grounding type, 20 amp, 120 volt
convenience and maintenance outlets will be provided within the
warehouse area. Weather-proof covers will be provide on all outside
receptacles. 208Y/120V panel boards for convenience receptacles,
office lighting, control, heat tracing and instrumentation power
will be wall mounted within the electric room. Ground fault circuit
breakers will be installed both for 120V convince receptacle and
heat tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
5.6.3 Spare Parts
An allowance for electrical spare parts has been included in the
cost estimate.
5.7 PROCESS CONTROL
5.7.1 On-Line Scanner and Closed Loop Control
The paper machine will include a paper scanner located near the
reel. This analyzer will provide continuous machine and cross
machine web measurements.
Machine direction basis weight will be closed looped control using
one or more of the basis weight valves.
Machine direction moisture control will be closed loop control
using the dryer steam control valves.
Cross machine basis weight will be closed loop control using
dilution control devices on the filler ply headbox.
Caliper will be monitored but there will be no closed loop control
function.
The control requirements will be coordinated with the paper machine
vendor.
5.7.2 Roll Tracking and Labeling
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A roll tracking system will be provided. The system will include
four bar code scanners and two printers. Information from the roll
tracking system will be available to the mill wide communication
system.
5.7.3 Field Instruments and Installation
Field instruments not included as part of the process equipment
will be installed in the piping or tanks as required. Compressed
air connections will be provided for all air actuated devices.
Electrical distribution will generally be made using cable tray
with conduit drops to each device. Junction boxes may be used in
areas of high density controls to minimize cable runs. Multiple
conductor cable will be used where feasible. Analog instrument
cables will be 300 volt rated, #14 or #16 AWG shielded with foil
shields. Two, four and six conductor cables will be used. Cable
assembly will be tray rated.
All control will be through a DCS or PLC based central control
system. Local control will not be provided, except in areas where
the vendor provides integrated, local controls as part of their
supply.
5.7.4 Master Control System
This master control system is a microprocessor technology based,
process control and data acquisition system. The digital technology
allows for a distributed architecture in which the system's
components can be located closer to the points of measurement and
are connected by communication networks. In this master control
system, primary operator interface is by way of a CRT (Cathode Ray
Tube)/keyboard/mouse/function keys. Some operator interface is by
alarm bells, signal lights, pilot lights, and printers for outputs
and selector switches, buttons and other specific inputs. These
hardwired inputs and outputs shall be provided where appropriate.
One necessary system shall be hardwired Emergency Stop circuits
which will communicate to the master control system.
This master control system may have control systems consisting of
DCS (Distributed Control Systems), PLC (Programmable Logic
Controllers), PC (Personal Computers) and other devices that are
linked together electronically to accomplish the desired control,
interface, and acquisition functions.
Each master control will link to vendor provided PLCs via high
speed dedicated process quality data highways with watchdog timers.
The handshaking and watchdog timer techniques will insure data
integrity continuously and initiate major alarms upon loss of
handshake.
The TAG Database of the MCS will be arranged to write its contents
periodically to the management information system server
electronically. Thus the minute by minute process data would be
able to be read by any PC in the facility that is electronically
linked to the LAN server.
5.7.5 Isolated Ground
A separate, isolated, grounding system will be furnished for the
master control system.
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5.7.6 Communication and Alarm Systems
Speakers for the voice paging system will be provided in this area.
The same system will provide fire, tornado and other required
alarms.
Eight telephone extensions will be provided in the paper machine
area. Each of the offices and labs will be connected to the mill
wide LAN.
The communication system for the entire facility is described in
Section 11 Site General.
5.7.7 Spare Parts
An allowance for process control spare parts has been included in
the cost estimate.
5.8 HEATING AND VENTILATION
The building ventilation system is based on Valmet's proposal. The
proposal is included with Volume 3 - Cost Estimate and Proposals.
The system includes:
. 11 Building Ventilation Fans
. 4 Wet End False Ceiling Fans
. 1 Roof Supply System Fan
. 10 Roof Exhaust Fans
. 11 Air Make-up Units
Make-up air will be supplied to the paper machine building from air
handling units located on the roof. The air will be distributed in
the building through a duct system. Make-up air will be heated to
maintain approximately 65 degrees F. during winter design
conditions.
Ventilation for the main building will be provided by ten roof
mounted exhaust fans.
Offices and control rooms will be heated and air conditioned. There
is no provision for activated carbon or other chemical filtering of
the supply air for control room or electrical spaces.
The wet end lab will be ventilated but not air conditioned or
humidity controlled.
The dry end lab will be temperature and humidity controlled to
maintain 72 deg. F. +/- 3 deg. and 50 % RH +/- 5 %.
An allowance for HVAC spare parts has been included in the cost
estimate.
6.0 ROLL STORAGE AND SHIPPING
This area includes the roll storage warehouse building shell,
mechanical components, HVAC and electrical systems.
The warehouse is designed to hold up to 1,140 finished rolls. This
represents up to 5.7 days of storage at design production rates.
Roll dimensions, weights and other design information is documented
in the project design criteria, included in Section 12 of this
volume.
6.1 GENERAL ARRANGEMENT
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The general arrangement for the roll storage warehouse is shown in
the project drawings.
6.2 CIVIL AND STRUCTURAL
A 250' X 150' warehouse will be provided for finished roll storage
and shipping.
6.2.1 Site Preparation
The warehouse floor will be located slightly above grade level at a
nominal elevation of 104'-0". This is four feet higher than the
paper machine ground floor. Site preparation consists of minimal
excavation and backfill for:
. the floor slab
. building footings
. grounding cable
The railroad spur and associated civil work are described in
Section 11 Site General.
6.2.2 Concrete
The building will be founded on virgin soils using shallow spread
footings.
The floor will be 6 inch thick slab on grade construction.
The concrete truck apron is described in Section 11 Site General.
6.2.3 Steel and Miscellaneous Metal
A pre-engineered building will be provided consisting of open web
purlins and girders with structural steel columns spaced on an
approximate 50' x 50' grid.
Insulated metal siding will complete the exterior wall closure
where fire walls are not required. The roof will be standing seam,
metal construction.
A pre-engineered rigid frame structure with a standing seam metal
roof and open sides will provide a canopy for loading and tarping
trucks.
Miscellaneous metal installations will include:
. interior wall protection using independent 6 ft high highway
type guard rail
. stairs with railings to the exterior grade level
. supports for unit heaters and other miscellaneous equipment
. a safety restraint system for personnel safety during truck
tarping
. all columns in storage area protected with concrete to a height
of 4 ft.
6.3 ARCHITECTURAL
6.3.1 Doors and Interior Walls
The will be *** truck docks with levelers, lights, door seals and
overhead doors. The truck doors are covered with a canopy for
weather protection when tarps are being installed after loading.
The structure incorporates a tie-off system for operator safety
during this operation. The truck doors have wider than standard
spacing to further improve visibility and safety.
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An overhead door will be provided for the rail siding entry.
Two (2) deluge showers will be provided for the opening into the
paper machine building.
Concrete block walls with a four hour fire resistant rating will
separate this structure from the paper machine building and the
shops area. These walls will be primed and painted.
6.3.2 Fire Protection
The warehouse is classified as an Extra Hazard by Industrial Risk
Insurers for fire protection purposes. The entire building area
will be sprinkled. The cost estimate is based on a wet pipe system
with a sprinkler density of 0.40 gpm/2,000 S.F.
Water will be supplied to the sprinkler system from the mill fire
protection loop. The fire protection loop is described in the
Section 11 Site General.
Seven fire hose stations will be provided.
Twenty fire extinguishers will be provided.
6.3.3 Roof Drains
Rainwater will be diverted to exterior gutters and downspouts.
Interior roof drains are not required.
6.3.4 Potable Water and Sanitary Sewer
There will be a 10 ft X 25 ft break and restroom area in the corner
of the roll storage and shipping warehouse truck docks. The cost
estimate is based on metal stud and painted gypsum board walls. A
suspended, acoustical tile ceiling will be provided.
A pay telephone will be provided for use by truck drivers. A unisex
toilet facility with two fixtures and a drinking fountain will be
provided.
Potable water and sanitary sewer piping will be provided.
Essentially all of this piping will be supported by individual
hangers.
6.4 EQUIPMENT
6.4.1 Process Equipment
There is no process equipment in this area.
6.4.2 Mobile Equipment
Mobile equipment for the facility is described in Section 11 of
this Exhibit.
6.5 PIPING
There is no process piping in this area. Utility piping will be provided
for unit heaters.
The piping will be supported by individual hangers in this area.
6.6 ELECTRICAL
6.6.1 Process Electrical
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There is no process electrical system required in this area.
6.6.2 Lighting and Electrical Systems
Electrical power for this area will be provided from MCCs located
in the paper machine area electrical room.
Power for truck doors, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 30 foot-candles when the warehouse is
in use and 5 foot-candles in inactive mode. Lighting panel boards
will be 480/277V. Separate standby panels will be established for
egress and EXIT sign lights. Lighting fixtures will be 277 volt
high pressure sodium HID fixtures. Switch rated circuit breakers
will be provided in the lighting panels.
The building structural columns will be grounded via the concrete
footings, "Ufer" style. Adequate rebar will be welded to the column
anchor bolts to satisfy NEC 250-81(c).
Outdoor platforms, walkways and fences will be grounded "Ufer"
style to concrete footings.
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
A #4/0, bare, copper wire will be buried for grounding and bonding
this building to the site general grounding grid.
Six, grounding type welding outlets will be provided. These outlets
will be 480V, 60A, 3 wire configuration.
24, grounding type, 20 amp, 120 volt convenience and maintenance
outlets will be provided within the warehouse area. Weather-proof
covers will be provide on all outside receptacles. 208Y/120V panel
boards for convenience receptacles, office lighting, control, heat
tracing and instrumentation power will be wall mounted within the
recycled fiber plant electric room. Ground fault circuit breakers
will be installed both for 120V convince receptacle and heat
tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
6.6.3 Spare Parts
An allowance for electrical spare parts has been included in the
cost estimate.
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6.7 PROCESS CONTROL
6.7.1 PROCESS
There is no process control system required in this area.
Inventory control will be maintained using a bar code scanning and
roll tracking system. This system will communicate with the mill
wide information system. This system is described in Section 5
Paper Machine and Roll Handling.
6.7.2 Communication and Alarm Systems
Speakers for the voice paging system will be provided in this area.
The same system will provide fire, tornado and other required
alarms. One telephone system extension and a pay telephone will be
provided in the warehouse area.
The communication system for the entire facility is described in
Section 11 Site General.
6.8 HEATING AND VENTILATION
6.8.1 Make-up Air
Make-up air will be supplied to the warehouse from a 50,000 CFM,
direct gas-fired, air handling unit located on the roof of the
paper machine building. The air will be distributed in the
warehouse through a duct system. Make-up air can be heated to
maintain approximately 55 degrees F. in the warehouse during winter
design conditions.
6.8.2 Unit Heaters
Three, gas fired, unit heaters will be located above the truck dock
doors. A single, gas fired unit heater will be located above the
rail car door.
6.8.3 Ventilation
Ventilation will be provided by four, exhaust fans located in the
south wall of the warehouse. The fans will have a total capacity of
approximately 30,000 CFM.
6.8.4 Duct Work
Duct will be galvanized steel with thickness appropriate for the
duct size. Duct will be either rectangular or spiral reinforced,
round cross section. Exterior duct runs will be insulated.
6.8.5 Spare Parts
An allowance for HVAC spare parts has been included in the cost
estimate.
7.0 BOILER AND UTILITIES
This area includes the utility building shell, mechanical components, HVAC
and electrical systems. A natural gas fired boiler designed for 150,000
lb/hr at *** psig and all boiler ancillary systems are included in this
area. The mill compressed air system is included in this area. The chilled
water system is included in this area.
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The boiler and other utilities systems are shown on block flow diagrams
included with this report.
Design criteria for the paper machine and sub-systems are documented in
Section 12 of this volume.
7.1 GENERAL ARRANGEMENT
The general arrangement for the boiler and utility area is shown in
drawings referenced in Exhibit 5 of this Agreement.
Most of the equipment is located at grade level in a building adjacent to
the drive side of the paper machine building. The deaerator tank is
supported on a mezzanine level within the boiler building.
The oil storage tank is located near the perimeter road. A pipe bridge
connects the tank area with the utility building.
7.2 CIVIL AND STRUCTURAL
A 60 ft x 80 ft utility building will be provided.
7.2.1 Site Preparation
The utility building floor will be located slightly above grade
level. Site preparation consists of minimal excavation and backfill
for:
. the floor slab
. building footings
. tank and boiler foundations
There is no provision for deep foundations in the boiler and
utility area.
7.2.2 Concrete
The primary building will be founded on virgin soils using shallow
spread footings.
The main building floor will be six inch slab on grade.
There are no elevated concrete slabs in this area.
Twenty four inch wide, concrete floor drains will be included.
Equipment foundations and pads will be provided, including
containment walls for the fuel oil storage tank area.
7.2.3 Steel and Miscellaneous Metal
The primary building will be a pre-engineered structure consisting
of purlins and girders with a single interior structural steel
column.
Insulated metal siding will complete the exterior wall closure. The
roof will be standing seam, metal construction.
A structural steel mezzanine within the main building will support
the deaerator. It is assumed that process tubing for continuous
emission monitoring systems are routed to the mezzanine, ie. no
special platforms for monitoring the systems are included.
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Floor trench grating covers will be provided. The grating will be
able to support a lift truck in aisle or maintenance access areas.
7.3 ARCHITECTURAL
7.3.1 Doors and Interior Walls
The following doors will be provided:
. One, 9 ft x 9 ft, overhead sectional door
. Four, hollow metal doors
7.3.2 Fire Protection
The utility building is classified as an ordinary Hazard Group II
by Industrial Risk Insurers for fire protection purposes. The cost
estimate is based on a wet pipe system with a sprinkler density of
0.17 gpm/3,000 S.F.
Water will be supplied to the sprinkler system from the mill fire
protection loop. The fire protection loop is described in the site
general area.
Four hose stations
Walls with a four hour fire resistant rating will separate this
structure from the paper machine building. The cost is included in
the paper machine area cost estimate.
7.3.3 Roof Drains
Internal roof drains are not required in this area. Run-off will be
handled through the gutter and downspout system.
7.3.4 Potable Water and Sanitary Sewer
There is no provision for restrooms, drinking fountains or other
personnel facilities in this area.
7.4 EQUIPMENT
7.4.1 Process Equipment
Detailed descriptions of the equipment are given in the vendor
proposals.
7.4.2 Mobile Equipment
No mobile equipment is required in this area.
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7.4.3 Spare Parts
An allowance has been included in the cost estimate for process and
mechanical spare parts.
7.5 PIPING
All utility piping not included in the equipment vendor's scope of supply
will be provided. Compressed air and fresh water piping will be 304 L
stainless steel.
Much of the piping will be supported by individual hangers. Gang supports
will be used where a sufficient number of lines can be grouped to be cost
effective.
An allowance has been included in the cost estimate for valve and piping
specialty spare parts.
Fire protection, potable water and sanitary sewer systems are described in
Section 7.3 Architectural.
7.6 ELECTRICAL
7.6.1 Process Electrical
Motor Control Centers (MCCs) will be located in a structure
adjacent to the drive side of the paper machine building.
480V MCCs will be either 1200 amp or 1600 amp, 3 Phase, 3 wire in
front mounting arrangements. Motor starters will use MCP type
circuit breakers and feeder circuits will use thermal/magnetic
breakers.
Motor controls will be through a DCS or PLC based central control
system. Local start/stop buttons will not be provided, except in
areas where an emergency stop is required. Emergency stops will be
provided for the paper machine, under machine pulper, couch pit
agitator and winder.
Feeder, power, control and instrumentation distribution inside and
outside the structure will use aluminum cable trays. Cable tray
will be 6" high, NEMA class 12A, ladder type with 9" rung spacing.
Separate tray systems will be provided for feeders, power with
control and instrumentation. The instrument tray will use barriers
for the analog, and discrete signals.
Conduits will be Rigid Galvanized Steel (RGS). Minimum conduit size
will be 3/4". Trade sizes of 1-1/4" and 2-1/2" will not be used.
Cable tray drop out channels and conduits will be sized to
accommodate both the power and the control cable if the load
requires a local control push-button station where conduit is
required.
Power cables for 480 V loads will be 600 V, tray rated, type 1AC
cables with THHN/THWN or XHHW insulation. Power cables for 4,000 V
motor loads will be 5,000 V, type 1AC cables with 133% EPR
insulation and overall PVC jacket. Control multi-conductor cables
will be 600 V, tray rated, type 1AC or TC with THHN/THWN or XHHW
insulation.
Armored cable will be used to connect between MCCs and all main
process loads such
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as process motors. Conduit will only be used for
instrument drops and building facility loads such as unit heaters,
panels, lights and receptacles.
7.6.2 Building Lighting and Electrical Systems
Electrical power for this area will be provided from MCCs located
in the paper machine electrical room adjacent to the drive side of
the paper machine building.
Power for truck doors, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 25 foot-candles minimum. Lighting panel
boards will be 480/277V. Separate standby panels will be
established for egress and EXIT sign lights.
Lighting fixtures will be 277 volt high pressure sodium HID
fixtures in process areas and florescent in office, electric,
instrument rooms, etc. Strategic light fixtures and EXIT signs
located along routes of egress will be battery-pack type.
Grounding triads consisting of three interconnected 3/4" x 10'
copper clad steel ground rods will be established for the power,
instrumentation and a master ground reference.
A #4/0, bare, copper ground grid system for grounding and bonding
the plant electrical distribution equipment, large motors, main
process equipment. The building structural columns will be grounded
directly to the buried grounding grid.
Outdoor platforms, walkways and fences will be grounded "Ufer"
style to concrete footings.
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
Lightning protection will be provided for buildings and structures
in the form of air terminals bonded to the vertical columns.
Four grounding type welding outlets will be provided. These outlets
will be 480V, 60A, 3 wire configuration.
Twenty grounding type, 20 amp, 120 volt convenience and maintenance
outlets will be provided within the warehouse area. Weather-proof
covers will be provided on all outside receptacles. 208Y/120V panel
boards for convenience receptacles, office lighting, control, heat
tracing and instrumentation power will be wall mounted within the
electric room. Ground fault circuit breakers will be installed both
for 120V convince receptacle and heat tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
7.6.3 Spare Parts
An allowance for electrical spare parts has been included in the
cost estimate.
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7.7 PROCESS CONTROL
7.7.1 Field Instruments
Field instruments not included as part of the process equipment
will be installed in the piping or tanks as required. Compressed
air connections will be provided for all air actuated devices.
Electrical distribution will generally be made using cable tray
with conduit drops to each device. Junction boxes may be used in
areas of high density controls to minimize cable runs. Multiple
conductor cable will be used where feasible. Analog instrument
cables will be 300 volt rated, #14 or #16 AWG shielded with foil
shields. Two, four and six conductor cables will be used. Cable
assembly will be tray rated.
7.7.2 Control Systems
The boiler, compressed air system and chiller system will have
stand alone control systems provided by the vendor. These systems
will be able to communicate status information to a DCS or PLC
based central control system.
Emergency stops will be provided for some critical systems.
7.7.3 Communication and Alarm Systems
Speakers for the voice paging system will be provided in this area.
The same system will provide fire, tornado and other required
alarms.
One telephone extension will be provided in the area.
The communication system for the entire facility is described in
Section 11 Site General.
7.7.4 Spare Parts
An allowance for process control spare parts has been included in
the cost estimate.
7.8 HEATING AND VENTILATION
Ventilation will be provided by two exhaust fans located in the wall of the
utility building. The fans will have a total capacity of approximately
10,000 CFM.
Separate HVAC spare parts are not required for this area since the
equipment will duplicate items spared for other areas.
8.0 EFFLUENT TREATMENT/WATER RECYCLE
Environmental permits for the new facility have not been obtained. The
scope and cost estimate is based on a mill designed for minimal water
consumption and discharge. Primary and secondary treatment would be
provided. The treated effluent stream would be discharged to the municipal
sewer system for further treatment prior to discharge. The scope and cost
estimate does not include provisions for an outfall or other stream
discharge facilities.
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The detailed scope and cost estimate in this area is based upon the
following assumptions:
. average flow of influent to plant wastewater treatment facility of
*** gpm or *** gal/day
. average BOD to plant wastewater treatment facility of *** lb/day
. average COD to plant waste water treatment facility of *** lb/day
. average TSS to plant wastewater treatment facility of *** lb/day
Maximum discharge to Municipal Treatment Facility:
. less than *** BOD
. less than *** TSS
. less than ***ppm Ammonia
. less than *** ppm Chlorides
. pH not less than *** or greater than ***
8.1 GENERAL ARRANGEMENT
The effluent treatment area layout is shown in the project drawings. It
occupies an area of 324 feet by 355 feet. The size and layout can be
modified to fit constraints of the site when it is selected.
Major items include:
. *** gallon concrete influent sump tank
. *** ft diameter primary clarifier
. *** gallon cooling tank.
. *** ft diameter sequencing batch reactors
. *** gallon SBR equalization tank.
. gravity filter
. *** gallon sludge chest
. two sludge presses with conveyors
. sludge dewatering building.
8.2 CIVIL AND STRUCTURAL
8.2.1 Site Preparation
The sludge press building floor and concrete tank bottoms will be
located slightly above grade level. Site preparation consists of
minimal excavation and backfill for:
. the floor slab (by subcontractor)
. building footings (by subcontractor)
. tank bases (by subcontractor)
8.2.2 Concrete
The building will be founded on virgin soils using shallow spread
footings.
The floor will be 6 inch thick slab on grade construction.
Bases for the major tanks will be reinforced concrete slabs.
The influent sump and clearwell will be site constructed concrete
tanks.
The concrete truck apron is described in Section 11 Site General.
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8.2.3 Steel and Miscellaneous Metal
Insulated metal siding will complete the exterior wall closure. The
roof will be standing seam, metal construction.
Miscellaneous metal installations will include:
. steel supports for elevated sludge presses
. stairs with railings
. supports for unit heaters and other miscellaneous equipment
8.3 ARCHITECTURAL
8.3.1 Doors and Interior Walls
One overhead door will be provided for the sludge press building.
Two, hollow metal doors will be provided.
There are no interior walls in this area.
8.3.2 Fire Protection
Two fire hose stations will be provided.
Two fire extinguishers will be provided.
There is no provision for a sprinkler system in the sludge
building. Fluor Daniel does not expect a sprinkler system to be
required for this building.
8.3.3 Roof Drains
Rainwater will be diverted to exterior gutters and downspouts.
Interior roof drains are not required.
8.3.4 Potable Water and Sanitary Sewer
There will be no drinking fountains, restroom or wash-up facilities
in the sludge press building. The area will be serviced by a break
and restroom facilities in the warehouses.
8.4 EQUIPMENT
8.4.1 Process Equipment
8.4.2 Mobile Equipment
There is no mobile equipment dedicated to this area.
Mobile equipment for the facility is described in Section 11 of
this volume.
8.4.4 Spare Parts
An allowance for process and mechanical spare parts has been
included in the cost estimate.
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8.5 PIPING
All process and utility piping not included in the equipment
vendor's scope of supply will be provided.
Some of the piping will be supported by individual hangers. Gang
supports will be used where a sufficient number of lines can be
grouped to be cost effective.
An allowance for valve and piping specialty spare parts has been
included in the cost estimate.
8.6 ELECTRICAL
8.6.1 Process Electrical
Motor Control Centers (MCCs) will be located in the sludge press
building.
480V MCCs will be either 1200 amp or 1600 amp, 3 Phase, 3 wire in
front mounting arrangements. Motor starters will use MCP type
circuit breakers and feeder circuits will use thermal/magnetic
breakers.
Motor controls will be through a PLC based central control system.
Local start/stop buttons will not be provided, except in areas
where an emergency stop is required.
Feeder, power, control and instrumentation distribution inside and
outside the structure will use 4 inch channel. Separate channel
will be provided for feeders, power with control and
instrumentation.
Conduits will be Rigid Galvanized Steel (RGS). Minimum conduit size
will be 3/4". Trade sizes of 1-1/4" and 2-1/2" will not be used.
Drops out channels will be sized to accommodate both the power and
the control cable if the load requires a local control push-button
station and conduit is being used.
Power cables for 480 V loads will be 600 V, tray rated, type 1AC
cables with THHN/THWN or XHHW insulation. Power cables for 4,000 V
motor loads will be 5,000 V, type 1AC cables with 133% EPR
insulation and overall PVC jacket. Control multi-conductor cables
will be 600 V, tray rated, type 1AC or TC with THHN/THWN or XHHW
insulation.
Armored cable will be used to connect between MCCs and all main
process loads such as process motors. Conduit will only be used for
instrument drops and building facility loads such as unit heaters,
panels, lights and receptacles.
8.6.2 Building Lighting and Electrical Systems
Electrical power for this area will be provided from MCCs located
in the sludge press building. Contractor to provide one 13.8 kV
feeder to subcontractor's transformer.
Power for truck doors, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 30 foot-candles minimum in the process
areas. Lighting panel boards will be 480/277V. Separate standby
panels will be established for egress and EXIT sign lights.
Lighting fixtures will be 277 volt high pressure sodium HID
fixtures in process areas and
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florescent in office, electric, instrument rooms, etc. Strategic
light fixtures and EXIT signs located along routes of egress will
be battery-pack type.
Grounding triads consisting of three interconnected 3/4" x 10'
copper clad steel ground rods will be established for the power,
instrumentation and a master ground reference.
A #4/0, bare, copper ground grid system for grounding and bonding
the plant electrical distribution equipment, large motors, paper
machines and substations will be installed. The building structural
columns will be grounded directly to the buried grounding grid.
Outdoor platforms, walkways and fences will be grounded "Ufer"
style to concrete footings.
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
Two, grounding type welding outlets will be provided. These outlets
will be 480V, 60A, 3 wire configuration.
Twelve grounding type, 20 amp, 120 volt convenience and maintenance
outlets will be provided within the warehouse area. Weather-proof
covers will be provide on all outside receptacles. 208Y/120V panel
boards for convenience receptacles, office lighting, control, heat
tracing and instrumentation power will be wall mounted within the
electric room. Ground fault circuit breakers will be installed both
for 120V convince receptacle and heat tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
8.7 PROCESS CONTROL
8.7.1 Field Instruments and Installation
Field instruments not included as part of the process equipment
will be installed in the piping or tanks as required. Compressed
air connections will be provided for all air actuated devices.
Electrical distribution will generally be made using cable tray
with conduit drops to each device. Junction boxes may be used in
areas of high density controls to minimize cable runs. Multiple
conductor cable will be used where feasible. Analog instrument
cables will be 300 volt rated, #14 or #16 AWG shielded with foil
shields. Two, four and six conductor cables will be used. Cable
assembly will be tray rated.
All control will be through a PLC based central control system.
Local control will not be provided, except in areas where the
vendor provides integrated, local controls as part of their supply.
8.7.2 Communication and Alarm Systems
Speakers for the voice paging system will be provided in this area.
The same system will provide fire, tornado and other required
alarms.
Two telephone extension will be provided in the paper machine area.
Each of the offices and labs will be connected to the mill wide
LAN.
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The communication system for the entire facility is described in
Section 11 Site General.
8.7.3 Spare Parts
An allowance for process control spare parts has been included in
the cost estimate.
8.8 HEATING AND VENTILATION (by subcontractor)
8.8.1 Unit Heaters
One, gas fired, unit heater will be located in the sludge press
building
8.8.2 Ventilation
Ventilation will be provided by an exhaust fan located in the
sludge building wall.
8.8.3 Spare Parts
No separate allowance for HVAC spare parts is required.
9.0 POWER DISTRIBUTION
This area will include electrical power distribution systems
starting at the main utility company substation and continuing
through the MCCs. Electrical or drive rooms civil, structural and
architectural costs, are be included in that area's building cost.
All electrical power will be purchased from the local utility. This
proposal is based on a nominal 15 kV distribution system within the
mill site.
Voltage levels on this project include:
. 13.2 kV, 3Ph-----Utility service
. 13.2 kV, 3Ph ----Plant distribution
. 4160 V, 3Ph------Motors above 200Hp
. 480 V, 3Ph ------Motor and process loads 200Hp and below
. 277 V, 1Ph-------HID lighting
. 120 V, 1Ph ------Control and convenience receptacles
9.1 GENERAL ARRANGEMENT
A main utility substation and switchgear will be located on the
site. This area will include a perimeter fence and a gravel base.
The cost estimate is based on the entire utility substation,
including site preparation, being designed and installed by the
local utility. Size and configuration will be determined by the
utility company.
All transformers and switch gear for the paper machine and recycled
fiber areas will be located adjacent to the paper machine building.
The floor will be slab on grade construction with pads for the
individual pieces of equipment. The area will be enclosed on three
sides by fencing.
The power distribution system was sized under the assumption that
any future infrared dryer installations would be natural gas fired
and not electric.
9.2 CIVIL AND STRUCTURAL
There are no special requirements for this area.
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9.3 ARCHITECTURAL
9.3.1 FIRE PROTECTION
The cast coil, dry type transformers proposed do not require any
special fire protection or alarm systems.
9.4 EQUIPMENT
9.4.1 Process Equipment
There is no process equipment in this area.
9.4.2 Mobile Equipment
The is no dedicated mobile equipment in this area.
The facility mobile equipment is described in Section 11.
9.5 PIPING
There is no process or utility piping in this area.
9.6 ELECTRICAL
9.6.1 Utility Substation
The main plant substation will be designed and supplied by the
local utility. The demand load will be 30 MVA. Connected load will
be approximately 39 MVA.
The site plan is based on one outdoor, oil filled, medium voltage
transformer, 40/53/66 MVA, supplied by the local utility line at a
voltage of 34.5kV or higher. Fluor Daniel expects the transformer
will be low resistive grounded. The utility source will be from two
separate lines, if possible.
9.6.2 Distribution To Area Transformers and Switchgear
MV underground cable will feed a 15 kV lineup of metal clad main
switchgear located adjacent to the utility substation. The 15kV
switchgear will be rated at 750 MVA. It will consist of a 3,000 A
main breaker and two, 1,200 A feeder breakers equipped with solid
state relaying.
The main switchgear will include two, 1200 A, feeder breakers for
the 4160V, and 480V step-down transformers. The feeder breakers
will be connected to the area transformers by 15 kV direct burial,
metal clad cable and overhead cable tray raceway systems.
9.6.3 Area Transformers
The following area transformer and switchgear arrangements will be
provided.
. Recycled Fiber Plant 480 VAC
1200 A load break and fuse
2500/3333 KVA Transformer
4000 AF Main Breaker
480 V Bus
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Three, 1600 AF Breakers and Bus to MCCs
One, 1200 AF Breaker and Bus to MCCs
One, 1600 AF Breaker and Bus Spare
Space for an Additional Breaker On The 480 V Bus
. Recycled Fiber Plant and PM Auxiliaries 4160 VAC
1200 A load break and fuse
5000/6666 KVA Transformer
1200 A Main Breaker
4160 V Bus
Seven Medium Voltage Starters to Process Motors
Two, fused disconnects to VFDs
Space for an Additional Medium Voltage Starter
. Paper Machine Auxiliaries No. 1 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 V Bus
Three, 1600 AF Breakers and Bus To MCCs
One, 1200 AF Breaker and Bus to MCCs
One, 1600 AF Breaker and Bus Spare
Space for an Additional Breaker On The 480 V Bus
. Paper Machine Auxiliaries No. 2 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 V Bus
Three, 1600 AF Breakers and Bus to MCCs
One, 1200 AF Breaker and Bus to MCCs
One, 1200 AF Breaker and Bus Spare
Space for an Additional Breaker on the 480 V Bus
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. Paper Machine Auxiliaries No. 3 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 V Bus
Three, 1600 AF Breakers and Bus to MCCs
One, 1200 AF Breaker and Bus to MCCs
One, 1200 AF Breaker and Bus Spare
Space for an Additional Breaker on the 480 V Bus
. Paper Machine Drives No. 1 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 V Feed to Drive
. Paper Machine Drives No. 2 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 Feed to Drive
. Paper Machine Drives No. 3 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 V Feed to Drive
. Paper Machine Drives No. 4 480 VAC
1200 A load break and fuse
2500/3300 KVA Transformer
4000 AF Main Breaker
480 V Feed to Drive
. PM Auxiliaries No. 4 4160 VAC
1200 A load break and fuse
5000/6666 KVA Transformer
1200 A Main Breaker
4160 V Bus
Space for an Additional Breaker on the 4160 V Bus
. PM Auxiliaries No. 5 4160 VAC
1200 A load break and fuse
5000/6666 KVA Transformer
1200 A Main Breaker
4160 V Bus
Space for an Additional Breaker on the 4160 V Bus
9.7 PROCESS CONTROL
There is no process control equipment in this area.
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10.0 STOREROOM, SHOPS AND OFFICES
The office area will include the building shell, mechanical components,
HVAC and electrical systems required for the following functions.
. accounting and management offices/conference rooms
. training room
. locker rooms and restroom
The shops area will include the building shell, mechanical components, HVAC
and electrical systems required for the following functions.
. maintenance shops
. storeroom
. large spare parts storage
. engineering and maintenance offices/conference rooms
. time clock area
. restroom.
10.1 GENERAL ARRANGEMENT
General offices, reception areas, conference rooms, central (single) rest
room and locker/shower rooms will be housed in a building to the West of
the paper machine building. The two main gates will be observed by the
office reception area via video camera.
Engineering offices, conference rooms, rest rooms, maintenance shops and
storerooms will be housed in a building to the North of the paper machine
building.
10.2 CIVIL AND STRUCTURAL
The office and shop buildings area one-story structures with the nominal
floor elevation at 100'-0".
10.2.1 Site Preparation
The building floors will be located slightly above grade level.
Site preparation consists of minimal excavation and backfill for:
. the floor slab
. building footings
. grounding cable
10.2.2 Concrete
The buildings will be founded on virgin soils using shallow spread
footings.
The floors will be 6 inch thick slab on grade construction.
Concrete pads will be provided for shop equipment, as required.
10.2.3 Steel and Miscellaneous Metals
Pre-manufactured structures will be used for this area. Structural
elements will consist of open web purlins and girders with columns
spaced on an approximate 50' x 50' grid.
Insulated metal siding and window banding for finished areas will
complete the exterior
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wall closure. The roof will be standing seam, metal construction.
A miscellaneous metals allowance for the shops area includes:
. materials storage racks
. lifting monorails or beams
. expanded metal "lockup" areas
10.3 ARCHITECTURAL
10.3.1 Fire Protection
Industrial Risk Insurers rate the offices and locker rooms as an
ordinary Hazard Group I density of 0.15 gpm/2,000 S.F. The shops
and storeroom is rated as a Hazard Group II and sprinkled at a
density of 0.17 gpm/3,000 S.F.
Six fire hose stations will be provided.
Twelve fire extinguishers will be provided.
10.3.2 Potable Water and Sanitary Sewer Piping
Potable water and sanitary sewer piping will be provided.
Essentially all of this piping will be supported by individual
hangers.
10.3.3 Office and Conference Room Area
Approximately 8,400 SF of finished area for engineering,
accounting, maintenance and management is provided. The area will
consist of conference rooms; one for 8 occupants and the other for
45 occupants. Open office area is shown that can be subdivided as
necessary using demountable partitions. The reception area is
located to be able to monitor and control the 2 main gate entrances
to the site. Additional space is provided for a central restroom,
kitchen, file storage, and a break room.
The manufacturing area is internally accessible from the
engineering office core.
Construction will consist of metal stud walls, painted gypsum board
walls, suspended acoustical ceiling and vinyl or carpeted flooring.
The estimate contains an allowance for furnishings.
10.3.4 Locker and Toilet Rooms
The employee entrance is contiguous to the plant's main toilet and
locker room facilities.
Showers and lockers are provided to accommodate the employees and
consists of *** women's lockers and *** men's lockers.
A separate men's and women's restroom facility is planned. Each
unit will contain 5 fixtures and will be handicap accessible.
Construction will consist of metal stud and gypsum board walls and
sealed concrete floors.
Construction will consist of epoxy painted concrete block walls,
sealed concrete floor and a vinyl covered suspended ceiling.
10.3.5 Shops and Storeroom
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Approximately 12,500 SF of area is provided. The area will consist
of three shop areas, a storeroom and a large spare parts storage
area. The shops will serve for maintenance of rolling stock,
mechanical shop, and electrical and instrumentation repair.
Six separate areas are provided for use as offices, storage, or as
a "clean-room" for instrumentation repair.
A large training center is located contiguous to the office and
shops areas. An exterior entrance is close by.
A central corridor will provide access to all areas of the shops as
well as the main offices and a time keeping station. This corridor
and the employee entrance is monitored by a security counter.
Shops and storeroom construction will generally consist of painted
concrete block walls, insulated metal siding and sealed concrete
floors. The ceiling will be exposed construction.
The cost estimate includes an allowance for simple, open, metal
shelving in the storeroom and for heavy duty, open, metal shelving
in the large equipment storage area.
An allowance is included for shop equipment. The allowance is based
on the following equipment.
10.3.5.1 Mechanical Shop
. six foot lathe
. drill press
. equipment for boring couplings
. hand held vibration monitoring equipment
. two welding booths
. pipe threading equipment
. vices
. rigging equipment including slings and chains
. portable hoists
. impact wrenches and other small power tools
10.3.5.2 Rolling Stock Shop
. hydraulic jacks and jack stands
. facilities for changing oil and coolant
10.3.5.3 E & I Shop
. portable test gauges
. benches set up for minor motor maintenance
. benches set up for minor instrument repairs
. instrument calibration equipment
Instrument calibration will be provided for use during
construction. This equipment will remain as part of the
facility after construction is complete.
10.4 EQUIPMENT
10.4.1 Process Equipment
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There is no process equipment in this area. Shop equipment is
included in Section 10.3 Architectural.
10.4.2 Mobile Equipment
Mobile equipment required for normal maintenance will be provided.
All mobile equipment is described in Section 11 Site General.
10.5 PIPING
10.5.1 Process Piping
There is no process piping in this area. Utility piping will be
provided for unit heaters, air conditioning equipment and shop
requirements.
The piping will be supported by individual hangers in this area.
Piping insulation for steam and condensate piping is included in
the piping scope of supply.
An allowance has been included in the cost estimate for valve and
piping specialty spare parts.
Fire protection systems are described in Section 10.3
Architectural.
10.6 ELECTRICAL
10.6.1 Process Electrical
There are no process electrical items in this area.
10.6.2 Lighting and Building Electrical
Electrical power for this area will be provided from MCCs located
in the main electrical room adjacent to the paper machine building.
Power for shop equipment, ventilation fans and other ancillary
equipment will be provided.
Illumination levels will be 40 foot-candles minimum in the shop
areas. Lighting panel boards will be 480/277V. Separate standby
panels will be established for egress and EXIT sign lights.
Lighting fixtures will be 277 volt high pressure sodium HID
fixtures in shop areas and florescent in office, electric,
instrument rooms, etc. Rooms with suspended ceiling, will use lay-
in fluorescent fixtures. Electric and utility areas will use open
two lamp industrial fixtures. Strategic light fixtures and EXIT
signs located along routes of egress will be battery-pack type.
The building structural columns will be grounded via the concrete
footings, "Ufer" style. Adequate rebar will be welded to the column
anchor bolts to satisfy NEC 250-81(c).
A separate equipment ground conductor will be specified in each
power cable to motors and loads.
A #4/0, bare, copper ground loop will be provided for grounding and
bonding this building
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to the ground grid.
Six, grounding type welding outlets will be provided. These outlets
will be 480V, 60A, 3 wire configuration.
Two hundred forty, grounding type, 20 amp, 120 volt convenience and
maintenance outlets will be provided within the warehouse area.
Weather-proof covers will be provide on all outside receptacles.
208Y/120V panel boards for convenience receptacles, office
lighting, control, heat tracing and instrumentation power will be
wall mounted within the electric room. Ground fault circuit
breakers will be installed both for 120V convince receptacle and
heat tracing circuits.
Freeze protection heat tracing is not required in this area.
Cathodic protection is not required in this area.
10.7 PROCESS CONTROL
10.7.1 Process
There are no field instruments or process control items required
for this area. HVAC systems will be supplied with integrated
control systems.
10.7.2 Communications Systems
The telephone equipment will reside in the main computer room. This
proposal assumes that approximately eighty voice lines will be
installed. These lines can be either digital or analog type,
depending on the particular phone, fax machine or modem used. This
is configurable through installation of modules inside the PBX
(Private Branch Exchange).
The intercom/paging equipment will be located in the main computer
room. It will interface to the telephone system and operators will
be capable of paging from any telephone. The system will have
numerous speakers located throughout the facility. The intercom
system could be supplied with features such as machine alarm
announcements and emergency warning announcements.
10.7.3 Radio System
The two-way radio system will consist of an estimate of two
repeaters and antennas, located strategically on-site, and
approximately twenty five portable radios. Each portable radio
would be supplied with a ni-cad battery. The radio system can be
supplied with such features as privacy channels and telephone
interconnect, which would allow radio users to patch into the
telephone system or vice versa.
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10.7.4 LAN and Computers
The mill-wide LAN (Local Area Network) network will operate on an
Ethernet platform. A robust operating system, such as Microsoft
Windows NT, will be installed on all network servers. These servers
will use TCP/IP protocol, built into Windows NT, to distribute data
to the client computers on the network.
Plant-wide information, such as production data, scheduling,
inventory, quality assurance, marketing, engineering, accounting,
and typical office software will be stored on one or more computers
in a main computer room. These computers will be connected to a hub
containing various network components, such as a switch, router,
bridge and/or repeaters, as required. This hub will provide a
backbone to other hubs located throughout the site.
The system will include dual servers for machine and process
control data, thus allowing one server to act as a hot backup, in
case the first server should fail. These servers will be connected
to a hub, located in the electrical room, and will run an MMI (Man
Machine Interface) software, such as Intellution Fix or Wonderware.
RG-58U cable will be used for the backbone hub connections. RV-45
twister pair cable will be used for connection of the information
outlets, where operator devices such as personal computers, modems,
printers, fax machines, telephones, and PLCs are connected.
Communications equipment, such as hubs, servers and PLCs, will have
a UPS (Uninterruptable Power Supply) power.
The allowance includes *** personal computers. The typical personal
computer will be a Pentium based system with a 15 inch color
monitor, CD-ROM drive, 2.0 gigabyte hard drive and 16K RAM.
Standard office software such as Microsoft Office will be provided.
Five Laserjet type printers will be provided on the network.
*** CAD capable personal computer systems will be provided. These
systems will be Pentium based personal computers with 20 inch
monitors, CD-ROM drives, 4 gigabyte hard drives and 32 megabytes of
RAM. AutoCad version 13 and standard office software will be
provided.
A pen type plotter will be provided on the network.
10.8 HEATING, VENTILATION AND AIR CONDITIONING
10.8.1 Finished Areas
The office, conference rooms, training room, locker rooms and
restrooms will be heated and air conditioned. The make-up air units
will be indirect, natural gas fired units.
10.8.2 Shops and Storerooms
The shops and storeroom will be heated with indirect gas fired unit
heaters. Ventilation will be provided by area exhaust fans. Air
conditioning is not provided for the shops and storerooms.
11.0 SITE GENERAL
This proposal is based on a 69 acre site with generally level topography
and free from permanent structures and contamination. Geotechnical
information for the adjacent site indicates that the soils include red to
dark brown clay to a depth of approximately eight feet. If not removed,
these materials are expected to manifest significant heave if used with
slab-on-grade construction directly
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over the unmodified soils. Moderately loaded structures can use spread type
footings with minimal excavation. This proposal includes planning for
collecting surface runoff and minor subsurface water. Construction below
the local water table is not expected. Open areas of the site will be
grassed over to conform to local ordinances. Minimal landscaping is
planned.
11.1 SITE PREPARATION
11.1.1 GENERAL SITE PREPARATION
Allowances have been included in the cost estimate to clear the
site and complete rough grading. This allowance is not site
specific.
A general allowance for dewatering has also been included.
11.1.2 FENCING
An eight foot high, cyclone type fence will be provided around the
perimeter of the site. Separate gates are provided for truck
arrivals and automobiles.
11.1.3 Parking and Roads
Roadways are configured to accommodate material deliveries and
finish goods shipping. For trucks arriving during off hours, a
parking lane has been established. A perimeter road provides truck
access to all of the buildings on the site.
Adequate parking for mill employees and visitors is provided
adjacent to the paper machine and office buildings.
Parking lots and mill roads are covered with bituminous paving.
11.1.4 Railroad
Two sets of railroad spurs will be utilized for delivery of raw
material and shipping finished rolls. One set of tracks will be
located within the finished roll storage building and the other
will be located outside of the raw material storage building. The
layout will allow for a total of seven rail cars to be utilized for
raw material unload or finished roll loading.
11.1.5 Storm Water
A storm retention pond will be constructed to drain new constructed
areas. The pond will accommodate a 10 year, 24 hour storm of 5
inches of rainfall. The pond will be deepened and lined to contain
an additional 400,000 gallons of water to supply the fire
protection system. A dedicated well will be used to make-up for
evaporation losses from the pond to maintain a minimum of 400,000
gallons of water for fire suppression.
11.1.6 UNDERGROUND UTILITIES
The project scope includes on-site distribution of natural gas,
electrical power, fire protection water, sanitary sewer, and
potable water. The project scope does not include off-site utility
supply systems.
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The facility will be designed for minimal water consumption and low
or zero effluent. This proposal is based on fresh water supply from
a municipal treatment facility. The incoming water system consists
of a surge storage tank and distribution piping.
Effluent from the various process areas will be collected and
treated on-site. A portion of the effluent will be reused for
process make-up. The effluent system will include up to three
treatment stages.
Any effluent that leaves the site will be discharged to a POTW. The
project scope does not include any effluent piping beyond the site
boundaries or any outfall structures.
11.1.7 Solid Waste
Solid waste will be collected and sent to existing, off-site
landfills. The project includes provisions for compactor pads and
loading facilities. It does not include any on-site storage or
disposal facilities.
11.2 CONCRETE
Concrete is provided for:
. Paving at truck docks and dumpster locations
. Foundation for Fresh Water Make-up Tank
. Spill Containment Walls
. Foundation for Oil Supply Pipe Bridge
. Concrete Pit for Truck Scale
. Oil Storage Containment Walls
11.3 STEEL AND MISCELLANEOUS METAL
Miscellaneous steel will be provided for pipe bridge foundations and for
protective bollards.
11.4 ARCHITECTURAL
The cost estimate includes a minimal allowance for landscaping near the
main office entrance. Graded areas on the site will be seeded with grass.
There will be exterior lighting for the main entrances, parking lots and
roadways.
Exterior 100 watt HPS wall packs will be mounted near exterior doors at 12
Ft elevation.
Exterior walkways and platforms will be illuminated with 100 watt
industrial fixtures on 9 Ft stanchions.
Additional roadway lighting required will use 150 watt HPS street light
type fixtures mounted on 40 foot high wooden poles.
Lighting control for outside fixtures including the wall packs and street
lights, will use a common multi-pole lighting contractor on a common
photoelectric control circuit.
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11.5 EQUIPMENT
11.5.1 Fire Pumps
A fire pump with an electric motor will be the primary fire pump. A
diesel driven back-up pump will be provided.
11.5.2 Mobile Equipment
. Three, 10,000 lb capacity lift trucks will be provided. The
trucks will be equipped with clamp mechanisms for handling
wastepaper bales. The equipment will use bottled propane fuel
tanks.
. One, 10,000 lb capacity lift truck will be provided for moving
small rejects dumpsters within the recycled fiber plant. The
truck will be equipped with forks. The lift truck will use
bottled propane fuel tanks.
. Two, 10,000 lb capacity lift trucks will be provided for roll
shipping. The trucks will be equipped with clamp mechanisms for
handling paper rolls. The equipment will use bottled propane
fuel tanks .
. One, 10,000 lb capacity lift truck will be provided for
maintenance. The truck will be equipped with forks. The lift
truck will use bottled propane fuel tanks.
. One, 10,000 lb capacity lift truck will be provided for use as
a spare. The truck will be equipped with forks. The lift truck
will use bottled propane fuel tanks.
. One, bucket lift will be provided for moving maintenance. The
lift will use bottled propane fuel tanks.
. Three, three wheel maintenance carts will be provided. The
carts will use bottled propane fuel.
. One, storeroom truck will be provided.
A propane bottle storage and exchange area will be provided.
11.6 PIPING
11.6.1 Fire Protection Loop
A 10" diameter fire line will loop the facilities for fire
protection. Section control valves and fire hydrants will be
provided.
The source of the water will be from a municipal treatment
facility. A backup source of 400,000 gallons will be provided from
an on-site storm water retention pond. In order to prevent the pond
from being dry when needed, a separate deep water well and pump
will maintain the required water capacity.
11.6.2 Underground Utilities
Piping will be provided for:
. potable water
. sanitary sewer
. natural gas
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. process effluent
. storm drainage
11.7 ELECTRICAL
11.7.1 Equipment Feeds
Power will be provided for the fire pump electric motor.
11.7.2 Lighting and Grounding
A #4/0, bare, copper ground site grid system will be
installed for grounding and bonding the plant electrical
equipment, railroads, propane storage area and fire
protection pumps.
Power will be provided for remote operation of the two main
gates.
Power distribution for exterior lighting will be provided.
<PAGE>
EXHIBIT 2
---------
COST ESTIMATE BASIS
-------------------
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT
PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED SEPARATELY WITH
THE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "***" AT EACH PLACE IN THE EXHIBIT WHERE THE OMITTED
INFORMATION APPEARED IN THE ORIGINAL.
EXHIBIT 2 - COST ESTIMATE BASIS
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1.0 COST ESTIMATE SUMMARY
Fluor Daniel's cost estimate for the Lawton Mill project is included in
Exhibit 3. The following sections in this Exhibit describe the basis of the
cost estimate.
The total installed cost estimate for the proposed facility is $***. This
estimated cost was developed for the greenfield paperboard mill described
in Exhibit 1 - Scope Of Work.
This estimate is based on construction of the facility in Lawton,
Oklahoma.
The single largest equipment package is the Voith Sulzer recycled fiber
plant and paper machine package. This portion of the scope and estimate is
based on the Voith Sulzer final negotiated price as of February 18, 1998.
Fluor Daniel will provide engineering, procurement and construction
services.
The cost estimate can be divided into the following general areas, based on
the way compensation to Fluor Daniel will be calculated and paid.
- Fixed Price Services
- Fixed Rate Services
- Reimbursable And Agency Costs
2.0 FIXED PRICE SERVICES
Fluor Daniel will provide the services described in this section 2.0 on a
fixed price basis.
The management will be provided by a Project Director supported by a staff
in the home office and the field (project site). The management and
administration team will work closely with Republic Paperboard's team
personnel to expedite decisions, control costs, and make an effort to
improve the schedule.
The Management Team lead by the Project Director will consist of the
following: Project Director, Engineering Manager, Senior Technical Process
Engineer, Technical Process Engineer, Procurement Manager, Construction
Manager and Controls Manager.
Fluor Daniel will develop and maintain an integrated project schedule
(CPM). This schedule will be used by the design engineers, procurement
staff and construction to coordinate production of the required documents
to facilitate the bidding, purchasing, delivery, and installation of all
process equipment and the buildings with all support utilities.
2.1 ENGINEERING, PROCUREMENT AND HOME OFFICE SUPPORT
This cost category covers the home office based project services provided
by Fluor Daniel. The home office staff will be those individuals necessary
to support the process design, procurement, and construction of the process
equipment and the facility. These technical personnel will be located in
Fluor Daniel's offices in Greenville, South Carolina and will travel to
various locations based on the needs of
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the work. Fluor Daniel Technical personnel will be responsible for the
following: update balance calculations, prepare P&ID's, revise bid
specifications, negotiate with suppliers, prepare equipment lists,
determine pump sizing, determine pipeline sizing, prepare utility diagrams,
and prepare start-up, operation, and shutdown instructions. The home office
staff, under the direction of the Project Director, will provide all of the
technical needs of the project which will consist of, but not be limited
to: accounting to support home office personnel, jobsite safety, quality,
and accounting audits, engineering management to manage Marathon, HVAC
design coordination, industrial relations, scheduling,
secretarial/clerical, etc.
Project management and project controls effort were estimated by the study
management team. The cost estimate includes Fluor Daniel's fixed price for
project management services.
Procurement for engineering and construction will be performed out of
Greenville for major equipment and site bulk purchases. The Procurement
Manager will coordinate all specifications, bidding, and bid evaluations,
develop procurement schedules, analyze bid package terms and conditions,
negotiate final pricing, issue equipment purchase orders, issue bulk
material purchase orders, assist in contract preparation, report monthly
material status, expediting by telephone, and shop visits, if required. The
required effort was estimated by the study team procurement manager and
reviewed by the study management team. The cost estimate includes Fluor
Daniel's fixed price for procurement services.
Engineering costs were estimated by Marathon Engineers/Architects/Planners.
Marathon's costs are included in Reimbursable And Agency Costs. This
portion of he cost estimate includes Fluor Daniel's fixed price for
engineering services by Fluor Daniel personnel.
This category includes miscellaneous home office support provided by Fluor
Daniel including:
. Payroll Department
. Legal Department
. Quality Assurance
. Construction
. General Services
. Field Human Resources and Internal Audits
. Industrial Relations
. Safety Department
. Field Accounting
The cost estimate includes Fluor Daniel's fixed price for these
miscellaneous services.
Fluor Daniel's home office expenses and supplies such as normal telephone,
fax, photocopying, postage, courier service, computer services, (hardware
and software), document reproduction, prints, storage of documents as
required by law and other normal office expenses are included in the fixed
price.
Services not included consist of permits, other than those typically
required for design and construction, siting, legal costs and estimating.
2.2 TEMPORARY CONSTRUCTION FACILITIES, EQUIPMENT AND SERVICES
The cost estimate includes allowances for the following construction
facilities:
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. OFFICE TRAILERS
. FIRST AID TRAILER
. TOILET TRAILER
. INTERCONNECTING DECK AND ROOFS
. BRASS GATE HOUSE
. STORAGE TRAILERS
. ELECTRICAL HOOK- UP AT PLOT LIMITS
. POWER DISTRIBUTION
. TEMPORARY TRANSFORMER
. 14 PANELBOARDS - 400 AMP
. TEMPORARY LIGHTING - INTERIOR
. CONCRETE PAD/FENCING
. DISTRIBUTION ABOVE GROUND
. SEWER HOOK- UP AND TANK
. TELEPHONE HOOK- UP FOR CONSTRUCTION
. CELLULAR PHONES
. UTILITY BILLS - ELECTRICITY
. UTILITY BILLS - WATER
. CONSTRUCTION PARKING
. LAYDOWN YARD
. CONSTRUCTION ROADS
. MAINTAIN ROADS, LOTS, LAYDOWN
. 3,000 LINEAL FEET OF FENCING
. STORM DRAINAGE
. PROJECT SIGNS, SOFTWARE AND COMPUTERS
. BADGE MACHINE
. COPY MACHINE
. BLUE PRINT MACHINE
. CALCULATORS
. FACSIMILE MACHINE
. OFFICE FURNITURE
The construction facilities cost is included in Fluor Daniel's fixed price,
based on a 17 month construction schedule.
The cost estimate includes the following construction services:
. GENERAL CLEANING SERVICE
. FIELD SANITATION
. TRASH DUMPSTERS
. PROGRESS PHOTOS
. WELDER CERTIFICATION (MATERIAL ONLY)
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. SUBSTANCE ABUSE TESTING
. MEDICAL AND SERVICES SUPPLIES
. THIRD PARTY INSPECTIONS
. MONUMENT AND BENCHMARK RECORD
. SECURITY GUARDS
. CHECK PROCESSING
. CONSTRUCTION MANUALS
. TELEPHONE BILLS
. POSTAGE
. COURIER SERVICE
. FINAL RECORDS SHIPPING
The construction services estimate is based on a Lawton, Oklahoma project
site. The cost for these construction services is included in Fluor
Daniel's fixed price.
2.3 FIELD STAFF SALARY, BENEFITS AND BURDENS
This category includes field salaried staff costs for base salary, overtime
pay, company paid benefits and government mandated employee costs. Craft
labor through the general foreman level is included in the direct cost
estimate.
The field staff will be managed by a Construction Manager, reporting to the
Project Director, and his staff. The Construction Manager and his staff
will have overall responsibility for the safety, quality, cost, and
schedule of the construction activities. The Field Staff will have the
responsibility for participating in review of specifications, bidding and
bid evaluation and all contracts with construction services, assist in the
development of the construction schedule, coordinate, monitor and maintain
schedule, control the construction budget, coordinate all site activities,
implement and monitor safety and quality programs, oversee permitting,
participate in the value awareness program, develop a start-up plan and
schedule, manage start-up to substantial completion, and assist Republic
Paperboard in determining tax structure and coding commitments and
expenditures per the tax incentives.
Key positions on the construction team will be staffed by Fluor Daniel
permanent employees. The cost estimate was based on using Fluor Daniel
personnel for the following positions:
. CONSTRUCTION MANAGER
. ENGINEERING MANAGER
. CIVIL ENGINEER
. ELECTRICAL ENGINEER
. MECHANICAL ENGINEER NO. 1
. MECHANICAL ENGINEER NO. 2
. ELECTRICAL/INSTRUMENT ENGINEER
. DOCUMENT CONTROL CLERK
. SAFETY MANAGER
. SAFETY INSPECTOR
. WAREHOUSE MANAGER
. PAYMASTER
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. ACCOUNTING MANAGER (HOME OFFICE)
. ACCOUNTANT (HOME OFFICE)
. COST ENGINEER
. PROCUREMENT MANAGER
. NURSE
. CONTROLS MANAGER
. HUMAN RESOURCE MANAGER
. PLANNER/ SCHEDULER
. C/S/A SUPERINTENDENT
. FIELD ENGINEER
. PIPE SUPERINTENDENT
. PERFORMANCE ENGINEER
. QUALITY MANAGER
. QUALITY INSPECTOR
. MILLWRIGHT SUPERINTENDENT
. ELECTRICAL/INSTRUMENT SUPERINTENDENT
Some positions on the construction team will be staffed by temporary, local
hires. The cost estimate was based on using local hire personnel for the
following positions.
. ENGINEER/CONSTRUCTION SECRETARY
. PROJECT MANAGEMENT/SERVICES SECRETARY
. HUMAN RESOURCES AND PAYROLL CLERK
. PROCUREMENT CLERK
. ACCOUNTING TECHNICIAN
. WAREHOUSE CLERK
. CONTROLS START- UP CLERK
Costs for all field staff are calculated from base compensation plus
burdens and benefits. The burden and benefit rate used for the cost
estimate was ***% for Fluor Daniel staff and ***% for local hire staff.
Some field positions will be classified as non-exempt. The cost estimate
includes premium pay for non-exempt personnel overtime. Craft overtime
allowances are built into the craft labor rate.
All personnel related costs described in this section 2.3 are part of Fluor
Daniel's fixed price, except for travel costs.
2.4 INSURANCE, BONDS, PERMITS AND LICENSES
The cost estimate includes the following items:
. Builder's risk insurance supplied by Fluor Daniel covering up to $***
MM of equipment, materials and labor. The coverage would extend from
the start of construction through the initial water runs and start-up.
. An incremental cost for sub-contractor bonds. Direct cost estimates did
not include
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performance bonds.
. An allowance was included for building permits based on percent of the
project value.
. Fluor Daniel does not expect this project to require new business or
other licenses. Fluor Daniel's fixed price includes welder
certification material and administrative services for obtaining craft
worker licenses. Craft wages for certification testing will be treated
as a reimbursable and agency cost. Fluor Daniel's fixed prices includes
all business licenses or taxes required for Fluor Daniel to operate in
Lawton, Oklahoma.
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The cost of Builder's Risk insurance is included in Fluor Daniel's fixed
price but any deductible will be a reimbursable cost. The deductible for
all perils except floods, and testing is $25,000 per occurrence. Flood
deductible is $50,000 per occurrence. Testing deductible is $100,000 per
occurrence.
The cost estimate does not include state or local sales taxes. It was
assumed that sales tax exemption would be part of the site incentives
program.
Costs for environmental permit applications were not included in Fluor
Daniel's fixed price. The estimate assumed that permits would be applied
for in Republic Paperboard's name and paid for by Republic Paperboard Inc.
2.5 REWORK AND WARRANTY
Fluor Daniel will provide required rework and warranty repairs as described
in and subject to the conditions and limitations of Article 8 of the
Agreement.
3.0 FIXED RATE SERVICES
The services described in this section 3.0 will be provided based on the
unit rates described below. Final costs will depend on the number of craft
labor hours actually required to complete the Work.
3.1 TEMPORARY CONSTRUCTION EQUIPMENT
The cost estimate includes allowances for the following construction
equipment items:
. SMALL TOOLS
. EXPENDABLES AND CONSUMABLES
. SCAFFOLDING
The cost estimate for construction equipment was based on a fixed rate
proposal from American Equipment, a Fluor Daniel subsidiary. The actual
cost will be a fixed rate multiplied by the number of self perform craft
labor hours. Cost associated with cranes larger than fifty tons have been
included as a separate line item and are not included in the American
Equipment multiplier. The estimate is based on a Lawton, Oklahoma project
site.
The tools provided will be in good repair and suitable for the specified
use. The inventory of tools, expendables and consumables available at the
site will be reasonable in relation to the number of craft workers
employed. Tools, expendables and consumables will be managed so that craft
labor productivity is not impacted by availability or quality of the items
supplied.
3.2 CRAFT BURDENS AND BENEFITS
The base labor rates described in section 4.5.1 of this Exhibit were
adjusted to account for statutory burdens, insurance and benefits. There is
a shortage of skilled and semi-skilled craft workers in the Oklahoma area.
A competitive compensation package will be required to attract the
estimated 400 craft workers needed for construction of the Lawton Mill.
Rates for statutory burdens were based on a project in Oklahoma.
The items included were:
. FICA
. FUI
. SUI
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. Worker's Compensation Insurance
. Comprehensive General Liability Insurance
. Benefits
. Craft Training
The total adjustment varied slightly for the different crafts. The average
burden and benefit rate was 36.53% of base compensation.
4.0 REIMBURSABLE AND AGENCY COST
4.1 CRAWLER CRANES
Site cranes for unloading equipment, erecting steel and other general tasks
will be provided. This category includes cranes with up to 50 tons or
lifting capacity. Crane rental, transportation, insurance, fuel, setup,
routine maintenance, lubrication and operator costs are included in this
item.
4.2 FLUOR DANIEL TRAVEL COSTS
An allowance was included in the cost estimate for project related travel
by the field and office staff. This includes:
. Expediting and inspection travel
. Relocation and home visit travel
. Per diem expenses
. Miscellaneous travel or entertainment expenses
4.3 TRAINING AND SIMULATION
This line item includes:
. consulting support with employee selection
. consulting support with operator and maintenance training
. process simulation to enhance the operator training program
The cost of providing the training program is a reimbursable cost. The site
incentives program includes rebates for new employee training. These
incentives are not part of the project target cost and will not be used to
calculate total installed cost.
Separate costs for vendor and craft support have not been included in this
indirect cost line item. The estimate assumes that vendor checkout and
start-up support will be included in the equipment purchase contract
without additional cost. Craft labor during commissioning and start-up is
included in the direct cost portion of the cost estimate.
4.4 SUBCONTRACTED ENGINEERING AND DESIGN SERVICES
The detailed design engineering will be performed in Appleton, Wisconsin by
Marathon Engineers/Architects/Planners with a supervisor and client liaison
from the Fluor Daniel management staff. The Fluor Daniel Engineering
Manager will coordinate drawings with the construction team, coordinate
design information among the vendors and monitor and manage the design.
Fluor Daniel will involve the Construction Manager in the early stages of
design to determine the deliverables to the field and give constructability
input.
This category does not include the process design provided by Fluor Daniel
personnel. Engineering
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services provided by Fluor Daniel are included in the fixed price.
4.5 DIRECT COSTS
Direct cost estimates were based on the equipment and facilities described
in Exhibit 1 - Scope Of Work. The project will be completed by Fluor Daniel
on an EPC basis. The construction estimate is based on a self perform,
merit shop labor posture.
The direct cost estimate was developed separately for the following project
areas:
. 01 Raw Material Receiving and Storage
. 02 Recycled Fiber Plant
. 03 Paper Machine and Roll Handling
. 04 Roll Storage and Shipping
. 05 Boiler and Utilities
. 06 Effluent Treatment/Water Recycle
. 07 Power Distribution
. 08 Shops, Storeroom and Offices
. 09 Site General
Within each of the project areas, the cost estimate is broken down into the
following craft disciplines:
. 00 Site Preparation
. 20 Steel and Miscellaneous Metals
. 10 Concrete
. 30 Architectural
. 40 Equipment - Process and Mechanical
. 50 Piping and Insulation
. 60 Electrical
. 70 Process Control
. 90 Heating, Ventilation and Air Conditioning
4.5.1 Labor Cost
The labor cost for each discipline was developed, based on an
Oklahoma project location.
An average base labor rate was developed for several crews
representing the different crafts. The crew mixes used for the
estimate were:
. Pipefitter Crew 1 Foreman
4 Pipefitters
5 Pipefitter Welders
4 Pipefitter Helpers
. Iron Worker Crew 1 Foreman
4 Iron Workers
2 Iron Worker Welders
4 Iron Worker Helpers
. Civil and Concrete Crew 1 Foreman
1 Rodman
2 Carpenters
6 Helpers
1 Cement Finisher
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. Millwright Crew 1 Foreman
4 Millwrights
6 Millwright Helpers
. Electrician Crew 1 Foreman
3 Electricians
4 Electrician Helpers
. Wire Pull Crew 1 Foreman
2 Electricians
12 Helpers
. Instrumentation Crew 1 Foreman
4 Instrument Technician
1 Instrument Welder
5 Instrument Helpers
The weighted average base compensation for each crew was based on
current information from contractors working in the region and on
Fluor Daniel experience in Oklahoma. All estimates were based on
an open shop labor posture.
Some craft overtime will be required to complete the project in
the most expedient manner. Generally, smaller focused crews
working a controlled amount of overtime provide the highest
productivity. The crew mix rates were adjusted to reflect typical
overtime experience on greenfield projects. The assumption was
that craft workers would generally be scheduled to work five days
per week and 10 hours per day. Additional spot overtime would be
worked in critical schedule areas. There will generally be one
shift although craft workers might be scheduled on a second shift
to avoid congestion.
The projected labor rates, including burdens, benefits and
overtime, were:
. Pipefitters $***/hr
. Iron Workers $***/hr
. Civil and Concrete $***/hr
. Millwrights $***/hr
. Electricians $***/hr
. Wire Pull Crews $***/hr
. Instrumentation $***/hr
4.5.2 Site Preparation
Excavation, backfill and other quantities were estimated by the
study design team using the information included in Exhibit 1 -
Scope Of Work. Unit material costs were estimated by the study
team based on Fluor Daniel's and Marathon's recent experience.
Unit labor quantities were estimated by the study team based on
Fluor Daniel's recent project experience. The civil and concrete
labor rate was used for site preparation work.
Subcontract pricing was used for cost estimates in the site
preparation area.
4.5.3 Steel And Miscellaneous Metals
The study team used the information included in Exhibit 1 - Scope
Of Work to estimate quantities of:
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. structural steel for custom designed buildings
. stairs, platforms and ladders
. siding
. floor trench grating
. other miscellaneous metals
Unit prices for steel and miscellaneous metals material were based
on recent Fluor Daniel and Marathon's experience.
Unit labor quantities for steel and miscellaneous metals were
estimated by the study team based on recent Fluor Daniel experience.
The iron worker labor rate was used for steel and miscellaneous
metal work.
Subcontract prices were used for the pre-engineered building shells
including structural steel, siding and roofing. This included the:
. Raw Material Warehouse
. Roll Storage Warehouse
. Boiler and Utility Building
. Shops and Storeroom Building
. Office Building
. Recycle Fiber Building
The subcontract prices were based on a proposal using Varco-Pruden
buildings
4.5.4 Architectural
Quantities for architectural items were estimated by the study
design team based on the information included in Exhibit 1 - Scope
Of Work. Unit prices for architectural materials were based on
recent Fluor Daniel and Marathon project experience.
Unit labor quantities for architectural items were estimated by the
study team based on recent Fluor Daniel experience. The civil and
concrete labor rate was used for architectural items.
Subcontract prices were estimated for several architectural items
including:
. fire sprinkler systems
. built-up roofing and insulation
. finished areas in labs and offices
. laboratory equipment
. office and conference room furnishings
. shop tools
. lockers
Prices for subcontracted items were based on study team quantity
estimates and Fluor Daniel's recent subcontract cost experience on
similar projects.
4.5.5 Process And Mechanical
Equipment installation material quantities were estimated by the
study team based on the project equipment list and equipment vendor
proposals. Installation material unit costs were based on recent
Fluor Daniel experience with similar projects.
Unit labor hours for each piece of equipment was estimated
separately by the project team. The millwright labor rate was used
for all equipment installation labor.
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Subcontract costs were used for the tanks that will be field
erected. The costs were based on a proposal from Brown-Minneapolis
Tank.
The purchase cost for most of the main process and control equipment
was based on the proposals listed in the following table.
<TABLE>
<CAPTION>
RFQ Name Vendor Quote Date
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
50001 Paper Machine & Auxiliary Equipment Voith Sulzer 0199 23-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50002 Recycled Fiber Plant Voith Sulzer 0199 23-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50003 Boiler Nebreaska Boiler 11514-H 20-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50004 Shower Water Screens Ahlstrom 97P6032A 18-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50005 Paper Machine Vacuum System Nash Engineering CJ-97LD0267,R1 03-Oct-97
- --------------------------------------------------------------------------------------------------------------------------
50006 Roll Handling Line ViaTech PL97-035 17-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50007 Metal Building Systems Blaine Const. / Varco-Pruden 2839 25-Jul-97
- --------------------------------------------------------------------------------------------------------------------------
Effluent Treatment System Eimco fax ME 13-Mar-98
- --------------------------------------------------------------------------------------------------------------------------
50009 Disc Filter & Thickener Alfa laval Celleco BL107-0320 14-Jul-97
- --------------------------------------------------------------------------------------------------------------------------
50010 Gravity Decker Broke Thickener Alfa laval Celleco BL107-0325 11-Jul-97
- --------------------------------------------------------------------------------------------------------------------------
50012 AC Sectional Drive GE Drive Systems G0600020 06-Aug-97
- --------------------------------------------------------------------------------------------------------------------------
50013 Disc Refiner & Broke Deflaker Voith Sulzer 0199 23-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50014 Switchgear, Substations & MCC's Square D 10748893 23-Jul-97
- --------------------------------------------------------------------------------------------------------------------------
50015 Agitators Chemineer / Hydrocorp 195R-CAR-98 25-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50016 Shop Fabricated Tanks Reco Industries fax MS 23-Jul-97
- --------------------------------------------------------------------------------------------------------------------------
50017 Large Storage Tanks Brown-Minneapolis Tank fax SW 20-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50018 Master Control System ABB 7072901-0 29-Jul-97
- --------------------------------------------------------------------------------------------------------------------------
50019 Gauges ABB 1190 18-Aug-97
- --------------------------------------------------------------------------------------------------------------------------
50020 Pumps Ahlstrom AL97-059 19-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50021 Cranes Konecranes KCLT-1185&6 04-Aug-97
- --------------------------------------------------------------------------------------------------------------------------
50001 Machine Pulpers Voith Sulzer 0199 23-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
50001 Approach Flow System Voith Sulzer 0199 23-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
Paper Machine Room Ventialtion Valmet VN17PE0672 11-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
Chiller Trane fax CB 16-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
Water Softener ITS fax WT.DOC 20-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
Continuous Emission Monitoring Control Elements, Inc
- --------------------------------------------------------------------------------------------------------------------------
Air Compressors Centrac
- --------------------------------------------------------------------------------------------------------------------------
Deaerator Stearing Deaerator
- --------------------------------------------------------------------------------------------------------------------------
Motors Rockwell / Reliance Electric fax 23-Feb-98
- --------------------------------------------------------------------------------------------------------------------------
Design Engineering Marathon E/A/P 71-0586,R2 2-Mar-98
- --------------------------------------------------------------------------------------------------------------------------
Training General Physics 08-Aug-97
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The purchase cost for the remaining process and mechanical equipment
was estimated by the project team using design criteria information
and recent Fluor Daniel and Marathon experience on similar projects.
Examples of equipment estimated in this manner are:
. Lift Station Pumps
. Process Pumps (not included in request for proposal)
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. Chemical Pumps
. Cooling Tower
. Air Dryers
. FRP Tanks
4.5.6 Piping And Insulation
Piping quantities were estimated by the study design team using the
process flow diagrams, and general arrangement drawings included in
Exhibit 1 - Scope Of Work. Allowances for small bore piping and
tubing were added based on Fluor Daniel's experience with similar
projects and the number of connection points expected.
Piping materials for various services are described in the Marathon
project piping specifications. Process piping is generally 316L
material. Service piping is generally 304L material. Steam and
condensate piping is carbon steel. Unit material costs for each type
of material were estimated by the study team based on Fluor Daniel's
and Marathon's recent project experience. Material costs include
pipe, fittings, manual valves and hangers.
Most steam and condensate piping will be insulated to conserve
energy and personal protection. Insulation quantities were based on
rigid insulation with an aluminum cover for steam and condensate
piping and on flexible foam insulation for chilled water lines.
Unit labor quantities for piping and insulation were estimated by
the study team based on Fluor Daniel's and Marathon's recent project
experience. The pipefitter labor rate was used for piping and
insulation work.
Subcontract pricing was not used for piping or insulation cost
estimates.
4.5.6 Electrical
Electrical quantities were estimated by the study design team using
the process flow diagrams, general arrangement drawings and motor
list included in Exhibit 1 - Scope Of Work.
Electrical commodity materials such as cable tray and cable are
described in Exhibit 1 - Scope Of Work. Items such as lighting
panels and instrument power supply panels are included as electrical
material. Unit material costs were estimated by the study team based
on Fluor Daniel's and Marathon's recent project experience.
Unit labor quantities for electrical installation were estimated by
the study team based on Fluor Daniel's recent project experience.
The electrician labor rate was used for terminations and general
installation work. The wire pull crew rate was used for cable and
wire installation.
Subcontract pricing was used for lighting cost estimates. The
subcontract prices were estimated by Fluor Daniel's study team based
on the lighting levels described in Exhibit 1 - Scope Of Work and
the square feet to be lit in each project area.
The costs for some major electrical items are included as equipment.
This includes:
. Paper machine variable speed drive system
. Uninterruptible power system for master control system
. Transformers
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. Switchgear
. Motor control centers
The costs were based on vendor proposals, except for the
uninterruptible power system. Proposals from the selected vendors
are included in Section 4 of this volume. The UPS costs was based on
recent Fluor Daniel and Marathon experience on similar projects.
4.5.7 Process Control
Process control quantities were estimated by the study design team
using the process flow diagrams and general arrangement drawings
included in Exhibit 1 - Scope Of Work.
Process control commodity materials such as conduit, cables and
pneumatic tubing are described in Exhibit 1 - Scope Of Work. Field
instruments and control valves are included as process control
material. Unit material costs were estimated by the study team based
on Fluor Daniel's and Marathon's recent project experience. Vendor
budget prices were solicited for most control valves and in-line
instruments. The vendor prices and recent purchase costs were used
to develop a composite unit price estimate.
Unit labor quantities for process control installation were
estimated by the study team based on Fluor Daniel's and Marathon's
recent project experience. The instrumentation labor rate was used
for process control installation.
Subcontract pricing was used for:
. Bar code labeling system
. Two way radio system
. Communication system including telephone, paging and alarms
The subcontract prices were estimated by Fluor Daniel's and
Marathon's study team based on the scope described in Exhibit 1 -
Scope Of Work and recent Fluor Daniel project experience.
The costs for some major item are included as equipment. This
includes:
. Master control system
. On-line gauging system
The equipment costs were based on vendor proposals.
4.5.8 Heating, Ventilation And Air Conditioning
HVAC quantities were estimated by the study design team preliminary
general arrangement drawings.
HVAC materials is primarily duct and insulation. Unit material costs
were estimated by the study team based on Fluor Daniel's recent
project experience.
Unit labor quantities for HVAC installation were estimated by the
study team based on Fluor Daniel's and Marathon's recent project
experience. The millwright labor rate was used for HVAC
installation.
Subcontract pricing was not used for HVAC work.
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The costs for major item are included as equipment. This includes:
. Unit heater
. Make-up air units
. Air conditioning equipment
. Humidity control systems
The equipment costs were based on vendor proposals.
4.5.10 Escalation
An escalation allowance is included in the cost estimate as an
indirect cost. Equipment costs were not escalated based on an
assumption that purchase negotiations would offset any escalation
increases. Materials were escalated at 3.5% per year. Labor and
indirect costs were escalated at 4.0% per year. These escalation
rates were applied to a typical purchase time curve. The resulting
escalation allowance was:
. Equipment $ ***
. Material $ ***
. Craft Labor $ ***
. Indirect Costs $ ***
---------
. Total Escalation $ ***
This allowance will not be maintained as a separate line item in the
control budget. Fluor Daniel will apportion the escalation allowance
to appropriate direct cost line items. The adjusted budget items
will be the project control budget. The project control budget total
is equal to the initial target price for the project.
4.6 CONTINGENCY
The total contingency allowance was $***. This contingency allowance does
not include reserves for warranty repairs or rework during construction
5.0 FLUOR DANIEL FEE
Fluor Daniel will receive a fee as described in Article 6 of the Agreement
and Exhibit 5 to the Agreement. This fee was included as an indirect cost
in Exhibit 3. This fee is included in the initial total install project
cost estimate.
- --------------------------------------------------------------------------------
Page 15
<PAGE>
EXHIBIT 3
---------
DETAIL COST ESTIMATE REPORT
---------------------------
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT
PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED SEPARATELY WITH
THE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "***" AT EACH PLACE IN THE EXHIBIT WHERE THE OMITTED
INFORMATION APPEARED IN THE ORIGINAL. A TOTAL OF
137 PAGES OF INFORMATION HAVE BEEN OMITTED.
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:49:48 PM Page: 1
98-4572 CONFIDENTIAL PROJECT
01 RAW MATERIAL Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 RAW MATERIAL RECEIVING AND STORAGE
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------Totals-----------------------
01 RAW MATERIAL
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 RAW MATERIAL RECEIVING AND STORAGE
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
98
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:49:51 PM Page: 11
98-4572 CONFIDENTIAL PROJECT
02 RECYCLED FIBER PLANT Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 RECYCLED FIBER PLANT
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------Totals-----------------------
02 RECYCLED FIBER PLANT
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- -------------------------------------------------------------------------------------------------------------
1 RECYCLED FIBER PLANT
***
- -------------------------------------------------------------------------------------------------------------
Job Totals:
- -------------------------------------------------------------------------------------------------------------
Discipline Totals:
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:03 PM Page: 38
98-4572 CONFIDENTIAL PROJECT
03 PAPER MACHINE AND ROLL HANDLING Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 PAPER MACHINE AND ROLL HANDLING
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
03 PAPER MACHINE AND ROLL HANDLING
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------
1 PAPER MACHINE AND ROLL HANDLING
***
- ----------------------------------------------------------------------------------------------------------------------
Job Totals:
- ----------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:23 PM Page: 80
98-4572 CONFIDENTIAL PROJECT
04 ROLL STORAGE AND SHIPPING Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 ROLL STORAGE AND SHIPPING
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
04 ROLL STORAGE AND SHIPPING
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
1 ROLL STORAGE AND SHIPPING
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:26 PM Page: 90
98-4572 CONFIDENTIAL PROJECT
05 BOILER AND UTILITIES Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 BOILER AND UTILITIES
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
05 BOILER AND UTILITIES
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
1 BOILER AND UTILITIES
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:33 PM Page: 110
98-4572 CONFIDENTIAL PROJECT
06 WATER RECYCLE/EFFLUENT TREATMENT Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 EFFLUENT TREATMENT/WATER RECYCLE
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
06 WATER RECYCLE/EFFLUENT TREATMENT
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
1 EFFLUENT TREATMENT/WATER RECYCLE
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:34 PM Page: 114
98-4572 CONFIDENTIAL PROJECT
07 POWER DISTRIBUTION Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 POWER DISTRIBUTION
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
07 POWER DISTRIBUTION
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
1 POWER DISTRIBUTION
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:35 PM Page: 118
98-4572 CONFIDENTIAL PROJECT
08 STOREROOM, SHOPS AND OFFICES Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 STOREROOM, SHOPS AND OFFICES
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
08 STOREROOM, SHOPS AND OFFICES
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
1 STOREROOM, SHOPS AND OFFICES
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:38 PM Page: 128
98-4572 CONFIDENTIAL PROJECT
09 SITE GENERAL Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
1 SITE GENERAL
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
09 SITE GENERAL
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
1 SITE GENERAL
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRIPLE PLAY - DETAIL COST ESTIMATE REPORT
Run Date: 6/29/98 3:50:41 PM Page: 136
98-4572 CONFIDENTIAL PROJECT
99 INDIRECTS Unit Unit Unit Unit Total
Equipment Effort Material Sub Labor Effort
Unit Qty Cost Hours Costs Costs Rates Hours
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
***
- ----------------------------------------------------------------------------------------------------------------------------------
Job Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
Discipline Totals: ***
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------Totals-----------------------
99 INDIRECTS
Labor Material Equipment Subcont TOTAL
Cost Cost Cost Cost COST
<S> <C> <C> <C> <C> <C>
DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------
***
- ------------------------------------------------------------------------------------------------------------------------
Job Totals:
- ------------------------------------------------------------------------------------------------------------------------
Discipline Totals:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 4
---------
DRAWINGS
--------
<PAGE>
Certain confidential information has been omitted from this Exhibit pursuant
to a confidential treatment request filed separately with the Commission.
Each of the drawings listed in the following list of drawings under the
headings, "1.0 Marathon Drawings" and "2.0 Fluor Daniel Drawings"
following which the symbol "***" appears has been omitted.
EXHIBIT 4 DRAWINGS
- --------------------------------------------------------------------------------
1.0 MARATHON DRAWINGS
. Marathon C-1001 Base Estimate Site Plan Dated 3-20-98 ***
. Marathon L202996 Recycled Fiber Building Mezzanine General Arrangement
Dated 3-21-98 ***
. Marathon L202997 Recycled Fiber Building Ground Floor General
Arrangement Dated 3-21-98 ***
. Marathon L302970 Paper Machine Building Ground Floor General Arrangement
Dated 3-21-98 ***
. Marathon L302971 Paper Machine Building Ground Floor General Arrangement
Dated 3-21-98 ***
. Marathon L302972 Paper Machine Building Ground Floor General Arrangement
Dated 3-21-98 ***
. Marathon L302973 Paper Machine Operating Floor General Arrangement Dated
3-21-98 ***
. Marathon L302974 Paper Machine Operating Floor General Arrangement Dated
3-21-98 ***
. Marathon L302975 Paper Machine Operating Floor General Arrangement Dated
3-21-98 ***
. Marathon L302976 Paper Machine Mezzanine General Arrangement Dated 3-21-
98 ***
. Marathon L302977 Paper Machine Mezzanine General Arrangement Dated 3-21-
98 ***
. Marathon L302978 Paper Machine Mezzanine General Arrangement Dated 3-21-
98 ***
. Marathon L302979 Paper Machine Building Sections Dated 3-21-98 ***
. Marathon L302980 Paper Machine Building Elevation Dated 3-21-98 ***
. Marathon L302981 Paper Machine Building Elevation Dated 3-21-98 ***
. Marathon L302982 Paper Machine Building Elevation Dated 3-21-98 ***
. Marathon L202993 Outside Tanks Dated 3-21-98 ***
. Marathon L202994 Outside Tanks Dated 3-21-98 ***
. Marathon L202995 Recycle Fiber Building. Looking West at Pulpers Dated
3-21-98 ***
. Marathon L202996 Recycle Fiber Building Mezzanine General Arrangement
Dated 3-21-98t ***
. Marathon L202997 Recycle Fiber Bldg. Ground Floor General Arrangement
Dated 3-21-98 ***
. Marathon El6197-05 Single Line Main Incoming Dated 3-19-98 ***
. Marathon El6197-06 Single Line Diagram.. FSG-01 Dated 3-19-98 ***
. Marathon EL6197-07 Single Line Diagram FSG-02 Dated 3-19-98 ***
- --------------------------------------------------------------------------------
Page 1
<PAGE>
2.0 FLUOR DANIEL DRAWINGS
. Fluor Daniel F1001 Top Liner Plant Balance Dated 3-26-98 ***
. Fluor Daniel F1002 Filler Plant Mass Balance Dated 3-26-98 ***
. Fluor Daniel F1003 Paper Machine Balance Dated 3-26-98 ***
. Fluor Daniel F1004 Paper Machine Balance Dated 3-26-98 ***
3.0 OTHER DRAWINGS
. Army Corp of Engineers File 36 FEC.31,T.2 N., R. 12 W. Dated April 2,
1985 Topographical
- --------------------------------------------------------------------------------
Page 2
<PAGE>
EXHIBIT 5
---------
COMMERCIAL TERMS
----------------
<PAGE>
Certain confidential information has been omitted from this Exhibit pursuant to
a confidential treatment request filed separately with the Commission. The
omitted information is indicated by the symbol "***" at each place in the
Exhibit where the omitted information appeared in the original.
EXHIBIT 5 - COMMERCIAL TERMS
1.0 FIXED PRICE EPC SERVICES
Fluor Daniel will provide the following services on a fixed price basis.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Fixed Cost
------------------------------------------------------------------------
<S> <C>
Engineering, Procurement and Home Office Support as described
in Exhibit 2, Section 2.1, excluding third party engineering $ ***
------------------------------------------------------------------------
Temporary Construction Facilities, Equipment and Services as
described in Exhibit 2, Section 2.2 $ ***
------------------------------------------------------------------------
Field Staff Salary Benefits and Overtime as described in
Exhibit 2, Section 2.3, except direct travel costs $ ***
------------------------------------------------------------------------
Insurance, Bonds, Permits and Licenses as described in
Exhibit 2, Section 2.4 $ ***
------------------------------------------------------------------------
Rework and Warranty Cost as described in Section 2.5 of
Exhibit 2 $ ***
------------------------------------------------------------------------
TOTAL FIXED PRICE $ ***
------------------------------------------------------------------------
</TABLE>
Payment for fixed price EPC services will be made in accordance with the
schedule shown in Section 6 of this Exhibit.
2.0 FIXED RATE SERVICES
Fluor Daniel will provide the following services on a fixed rate basis.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Estimated Cost
----------------------------------------------------------------------------
<S> <C>
Temporary Construction Equipment $*** per direct hire craft hour worked
as described in Exhibit 2, ($*** estimated cost)
Section 3.1
----------------------------------------------------------------------------
Burden & Benefit Craft Fixed Rate ***% of craft payroll rate
as described in Exhibit 2, ($*** estimated cost)
Section 3.2
-----------------------------------------------------------------------------------
</TABLE>
Payment for fixed rate EPC services will be based on the actual number of
craft hours worked during an invoice period times the fixed rate. The
schedule shown in Section 6 is an estimate.
3.0 FLUOR DANIEL REIMBURSABLE AND AGENCY COSTS
Fluor Daniel will provide the following goods and services on a
reimbursable cost basis or in the case of an Equipment Vendor, shall as
agent for Owner, procure the same for Owner.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Estimated Cost
------------------------------------------------------------------------
<S> <C>
Crawler Cranes as required as described in Exhibit 2,
Section 4.1 $ ***
------------------------------------------------------------------------
Fluor Daniel Travel Costs as described in Exhibit 2,
Section 4.2 $ ***
------------------------------------------------------------------------
Training and Simulation as described in Exhibit 2,
Section 4.3 $ ***
------------------------------------------------------------------------
Subcontracted Eng. and Design Services (Exhibit 2,
Section 4.4) $ ***
------------------------------------------------------------------------
Direct Costs as described in Exhibit 2, Section 4.5 $ ***
------------------------------------------------------------------------
Contingency as described in Exhibit 2, Section 4.7 $ ***
------------------------------------------------------------------------
TOTAL REIMBURSABLE COSTS $ ***
------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 5 - COMMERCIAL TERMS
Payment for reimbursable costs will be based on the actual amount
expended during an invoice period. The schedule shown in Section 6 is an
estimate of reimbursable costs.
All estimates of project cost and all schedule estimates shall be made
in good faith by Fluor Daniel and based on the best and latest
information available to Fluor Daniel.
4.0 TARGET PRICE
"Total installed project cost" is equal to the sum of:
(i) $*** (representing the fixed price EPC services under
Section 1.0 of this Exhibit including the Rework and
Warranty Cost);
(ii) The amount of the Fixed Rate Services under Section 2.0
of this Exhibit.
(iii) Reimbursable and Agency Costs under Section 3.0 of this
Exhibit and
(iv) Fixed Fee under Article 6.
The Target Price for purposes of Section 4.0 and Section 6.4 was
determined based on the following assumptions:
-------------------------------------------
Fixed Price EPC Services $***
-------------------------------------------
Fixed Rate EPC Services $***
-------------------------------------------
Reimbursable Costs $***
-------------------------------------------
Fixed Fee $***
-------------------------------------------
Target Price $***
-------------------------------------------
The Target Price is subject to change for Scope Change Orders only.
<PAGE>
EXHIBIT 5 - COMMERCIAL TERMS
5.0 ILLUSTRATION OF INCENTIVE FEE CALCULATION (FOR EXAMPLE AND ILLUSTRATION
PURPOSES ONLY)
EXAMPLE
COST INCENTIVE CALCULATION
Target Price $***
Net Changes to Target Price ***
Less -- Value Awareness ($***)
Cost Incentive Target Price $***
Less -- To Date Expended ($***)
(at final completion) and including
costs of incentive program for craft
labor
Actual Cost Savings $***
Actual Cost Savings Incentive Payment $***
(cost savings x ***)
Value Awareness Payment $***
(value awareness x ***)
REPUBLIC FINAL COST $***
<PAGE>
EXHIBIT 5 -- COMMERICAL TERMS
6.0 PAYMENT SCHEDULE (FIXED COST ELEMENTS)
--------------------------------------------------
Fixed Price Fixed Fee
Month Payments per Payments per
Section 6.2 Section 6.3
--------------------------------------------------
Feb-98 $*** $***
--------------------------------------------------
Mar-98 $*** $***
--------------------------------------------------
Apr-98 $*** $***
--------------------------------------------------
May-98 $*** $***
--------------------------------------------------
Jun-98 $*** $***
--------------------------------------------------
Jul-98 $*** $***
--------------------------------------------------
Aug-98 $*** $***
--------------------------------------------------
Sep-98 $*** $***
--------------------------------------------------
Oct-98 $*** $***
--------------------------------------------------
Nov-98 $*** $***
--------------------------------------------------
Dec-98 $*** $***
--------------------------------------------------
Jan-99 $*** $***
--------------------------------------------------
Feb-99 $*** $***
--------------------------------------------------
Mar-99 $*** $***
--------------------------------------------------
Apr-99 $*** $***
--------------------------------------------------
May-99 $*** $***
--------------------------------------------------
Jun-99 $*** $***
--------------------------------------------------
Jul-99 $*** $***
--------------------------------------------------
Aug-99 $*** $***
--------------------------------------------------
Sep-99 $*** $***
--------------------------------------------------
Oct-99 $*** $***
--------------------------------------------------
Nov-99 $*** $***
--------------------------------------------------
Dec-99 $*** $***
--------------------------------------------------
Jan-00 $*** $***
--------------------------------------------------
TOTAL $*** $***
4
<PAGE>
EXHIBIT 6
---------
SCHEDULE
--------
<PAGE>
<TABLE>
<CAPTION>
Certain confidential information has been omitted from this Exhibit pursuant to a
confidential treatment request filed separately with the Commission. The omitted
information is indicated by the symbol "***" at each place in the Exhibit where the
omitted information appeared in the original.
-----------------------------------------------------------------------------------------
Activity Early Early 1998 1999 2000
Description Start Finish -----------------------------------------------------------------------------------------
F M A M J J A S O N D J F M A M J J A S O N D J F M
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALL AREAS
========================================
Milestones
- ----------------------------------------
Project Award *** ***
- ----------------------------------------
Order Paper Machine - Client *** ***
- ----------------------------------------
Paper Machine Building Dry-in *** ***
- ----------------------------------------
Waste Treatment Plant Available *** ***
- ----------------------------------------
Mechanical Completion *** ***
- ----------------------------------------
Target Substantial Completion Date *** *** ***
- ----------------------------------------
+ Engineering - Marathon
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Engineering - Fluor Daniel
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Client - Republic
- ----------------------------------------
*** *** ***
- ----------------------------------------
09 - GENERAL SITE
========================================
+ Engineering - Marathon
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Engineering - Fluor Daniel
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Client - Republic
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Procurement
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Construction
- ----------------------------------------
*** *** ***
- ----------------------------------------
01 - RAW MATERIAL REC'G & STORAGE
========================================
+ Engineering - Marathon
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Engineering - Fluor Daniel
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Client - Republic
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Procurement
- ----------------------------------------
*** *** ***
- ----------------------------------------
+ Construction
- ----------------------------------------
*** *** ***
- ----------------------------------------
Sheet 1 of 3 June 11, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Project Start *** *** Early Bar Republic Paper Date Revision Checked Approved
Project Finish *** *** Progress Bar Exhibit 6 Schedule
Data Date 01JUN98 *** Critical Activity (Target Completion Date)
Run Date 11JUN98
/c/ Primavera Systems, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Activity Early Early 1998 1999 2000
Description Start Finish F M A M J J A S O N D J F M A M J J A S O N D J F M
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
02 - RECYCLED FIBER PLANT
=====================================================
+ Engineering - Marathon
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Client - Republic
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Procurement
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Construction
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
03 - PAPER MACHINE & ROLL HANDLING
=====================================================
+ Engineering - Marathon
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Engineering - Fluor Daniel
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Client - Republic
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Procurement
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Construction
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
04 - ROLL STORAGE & SHIPPING
=====================================================
+ Engineering - Marathon
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Engineering - Fluor Daniel
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Procurement
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Construction
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
05 - BOILER & UTILITIES
=====================================================
+ Engineering - Marathon
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Engineering - Fluor Daniel
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Client - Republic
- -----------------------------------------------------
*** *** ***
- -----------------------------------------------------
+ Procurement
- -----------------------------------------------------
*** *** ***
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sheet 2 of 3
<PAGE>
<TABLE>
<CAPTION>
Activity Early Early 1998 1999 2000
Description Start Finish F M A M J J A S O N D J F M A M J J A S O N D J F M
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
+ Construction
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
06 - WATER RECYCLE/EFFLUENT TREATMENT
========================================================
+ Engineering - Marathon
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Procurement
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Construction
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
07 - POWER DISTRIBUTION
========================================================
+ Engineering - Marathon
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Construction
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
08 - OFFICE & SHOP/STOREROOM
========================================================
+ Engineering - Marathon
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Engineering - Fluor Daniel
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Procurement
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Construction - Office
- --------------------------------------------------------
*** *** ***
- --------------------------------------------------------
+ Construction - Shop/Showroom
- --------------------------------------------------------
*** *** ***
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sheet 3 of 3
<PAGE>
EXHIBIT 7
---------
VOITH SULZER PAPER TECHNOLOGY "AS PURCHASED"
--------------------------------------------
TECHNICAL SPECIFICATIONS DATED 26 MARCH 1998
--------------------------------------------
<PAGE>
EXHIBIT 7
VOITH SULZER PAPER TECHNOLOGY "AS PURCHASED" TECHNICAL SPECIFICATION
DATED 26 MARCH 1998
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Page 1
<PAGE>
[LETTERHEAD OF VOITH SULZER APPEARS HERE]
26 March 1998
Ms. Jane Hughes C302C
Fluor Daniel, Inc.
100 Fluor Daniel Drive
Greenville, SC 29607-2762
Subject: New Gypsum Board Machine
VSPT Contract No. 0199
Project Codeword: TRIPLE PLAY
Dear Ms. Hughes,
Enclosed are the Voith Sulzer "As Purchased" technical specifications for the
Triple Play project.
Included are detailed specifications for the Recycle Fiber Plant & PM
Peripherals and the Gypsum Board Machine.
We thank you for the opportunity to work with you on this project. Should you
have any questions or need any information, please contact our Project Manager,
Rudy Moergeli.
Very truly yours,
VOITH SULZER PAPER TECHNOLOGY
/s/ GARY P. MINK
Gary P. Mink
Sr. Sales Correspondent
Capital Equipment Sales
encl.: as noted above
c: Mr. Jim Nelson / Republic Paperboard Company
Mr. David Verbrick / Marathon Engineers
Mr. Rudy Moergeli, VSMI / Project Manager
Mrs. Linda Knapp, VSMI / Contracts Administrator
Mr. Erwin Holzinger, VSMI / Applications Engineer
<PAGE>
[LETTERHEAD OF VOITH SULZER, APPEARS HERE]
|
|
| "AS PURCHASED"
|
|
|
|
|
| TECHNICAL SPECIFICATIONS
|
| FOR
|
| RECYCLE FIBER PLANT
|
| &
|
| PAPER MACHINE PERIPHERALS
|
|
|
| Project Codeword:
|
| TRIPLE PLAY
|
|
| Voith Sulzer Contract No.:
|
| 0199
|
|
|
| 24 MARCH 1998
|
|
|
<PAGE>
[LETTERHEAD OF VOITH SULZER, APPEARS HERE]
|
|
| "AS PURCHASED"
|
|
|
|
|
| TECHNICAL SPECIFICATIONS
|
| FOR
|
| NEW GYPSUM BOARD MACHINE
|
|
|
|
|
|
|
| Project Codeword:
|
| TRIPLE PLAY
|
|
| Voith Sulzer Contract No.:
|
| 0199
|
|
|
| 24 MARCH 1998
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<PAGE>
[LETTERHEAD OF VOITH SULZER, APPEARS HERE]
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| "AS PURCHASED"
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| WARRANTIES
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| FOR
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| STOCK PREPARATION SYSTEM
| &
| GYPSUM BOARD MACHINE
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| Project Codeword:
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| TRIPLE PLAY
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| Voith Sulzer Contract No.:
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| 0199
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| 24 MARCH 1998
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<PAGE>
EXHIBIT 8
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ENVIRONMENTAL DOCUMENTS
-----------------------
<PAGE>
EXHIBIT 8 - ENVIRONMENTAL DOCUMENTS
- -------------------------------------------------------------------------------
QST Environmental
Phase I Environmental Assessment
QST Project No. 539-8075
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Page 1
<PAGE>
[LOGO OF QST ENVIRONMENTAL
APPEARS HERE]
March 30, 1998
Mr. Tom Jagiella
Republic Group Incorporated
P.O. Box 1307
Hutchinson, Kansas 67501
RE: Phase I Environmental Assessment
Vacant Parcel
Lee Boulevard & Ard Street, Lawton, Oklahoma
QST Project No. 539-8075
Dear Mr. Jagiella:
Enclosed please find one copy of the Final Phase I Environmental Assessment for
the above referenced property.
QST Environmental Inc. appreciates this opportunity to be of service to Republic
Group Inc. Please call our office if you have any questions.
Sincerely,
QST ENVIRONMENTAL INC.
/s/ CRAIG T. CABRERA /s/ TERESA A. KEE, CHMM
Craig T. Cabrera Teresa A. Kee, CHMM
Senior Staff Scientist Senior Project Scientist
<PAGE>
- --------------------------------------------------------------------------------
Privileged and Confidential
Phase I Environmental Assessment
Lee Boulevard & Ard Street
Lawton, Oklahoma
Prepared for:
Fluor Daniel Forest Products
100 Fluor Daniel Dr.
Greenville, South Carolina
29607-2767
Prepared by:
QST Environmental Inc.
5440 N. Cumberland, Suite 111
Chicago, Illinois 60656
March 30, 1998
QST Project No. 539-8075
- --------------------------------------------------------------------------------
<PAGE>
Phase I Environmental Assessment
Privileged and Confidential Lawton, Oklahoma
- --------------------------------------------------------------------------------
9.0 Signatures of Environmental Professionals
This report pertains to the property at the northeast corner Lee Boulevard and
Ard Street, Lawton, Oklahoma. Our professional services have been performed
using the degree of care and skill ordinarily exercised under similar
circumstances by other environmental professionals practicing in this field.
The representations made in this report are accurate and true to the best
knowledge of the undersigned.
REPORT PREPARED BY:
/s/ CRAIG T. CABRERA 3/31/98
- --------------------------------- ------------
Craig T. Cabrera Date
Senior Staff Scientist
UNDER REVIEW BY:
/s/ Michael J. Hoffman 3/31/98
- --------------------------------- ------------
Michael J. Hoffman, P.E. Date
Senior Project Engineer
- --------------------------------------------------------------------------------
21
<PAGE>
EXHIBIT 99(e)
AMENDED AND RESTATED
PARENT COMPANY GUARANTEE
Dear Sirs:
For and in consideration of and as an inducement to Fluor Daniel, Inc.
("Fluor Daniel") entering into an Amended and Restated Agreement for
Engineering, Procurement and Construction executed on July 21, 1998 but
effective for all purposes as of June 26, 1998 (the "Agreement") with Republic
Paperboard Company ("Company"), Republic Group Incorporated, as the ultimate
parent company guarantor ("Guarantor") of Company, guarantees unconditionally
and irrevocably that Company shall ensure the due and punctual payment of all
obligations contained in, and in accordance with, the Agreement.
1. Guarantor hereby irrevocably and unconditionally guaranties, as
primary obligor and not merely as surety, the due and punctual payment in full
of all Guarantied Obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. section 362(a)). The
term "Guarantied Obligations" is used herein in its most comprehensive sense and
includes:
(a) All sums which may become payable to Fluor Daniel pursuant to the
Agreement.
(b) Any and all obligations of Company, in each case now or hereafter
made, incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, and however arising under or in
connection with the Agreement including all variations, alterations or
extensions of the Agreement.
2. Notwithstanding any term hereof to the contrary, Guarantor's
obligations under this Guarantee, including, without limitation, the Guarantied
Obligations, shall be subject to all defenses, counterclaims, offsets and other
rights available to the Company under the Agreement. Guarantor agrees that its
undertakings hereunder are not contingent upon Fluor Daniel bringing any action
against Company and hereby expressly waives any claim that its undertakings
hereunder are so contingent.
3. The obligations of Guarantor will not be discharged for any reason
including but not limited to:
(a) any extension or renewal with respect to any obligation of Company
under the Agreement;
(b) any modification or termination of, or amendment or supplement to,
the Agreement;
<PAGE>
(c) any exercise or non-exercise of any right, remedy or power with
respect to Company or any change in the structure of Company; or
(d) any insolvency, bankruptcy, reorganization, arrangement,
liquidation, dissolution or similar proceedings with respect to Company.
4. Guarantor's obligations under this Guarantee are continuing and shall
remain in full force and effect until performance in full of all obligations of
Company under the Agreement and payment in full of all sums payable by Company
under the Agreement and by Guarantor hereunder. This Guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time performance or
payment of any Guaranteed Obligations is rescinded or must otherwise be returned
by Fluor Daniel upon the bankruptcy, insolvency or reorganization of Company or
otherwise, all as though such performance or payment had not occurred.
5. Guarantor will not exercise any rights which it may acquire by way of
subrogation under this Guaranty until all Guaranteed Obligations have been
performed, paid or otherwise fully discharged.
6. This Guarantee shall be binding upon Guarantor, its successors and
assigns and shall inure to the benefit of, and be enforceable by, Fluor Daniel
and its successors and assigns.
7. As soon as Guarantor obtains knowledge thereof, Guarantor shall give
Fluor Daniel written notice of any condition or event which has resulted in a
material breach of or noncompliance with any term, condition or covenant
contained herein or in the Agreement, or any other document delivered pursuant
hereto or thereto. Guarantor will provide Fluor Daniel with copies of (i) all
press releases and all filings made by it with the Securities and Exchange
Commission ("SEC") as soon as practicable after the release or filing thereof
and (ii) all notices given by it under the Guarantor's bank credit facility of
any default under such credit facility. Any information delivered to Fluor
Daniel pursuant to this paragraph (other than press releases and SEC filings)
shall be subject to the existing confidentiality agreements referred to in
Section 15.2 of the Agreement.
8. If any term or provision of this Guarantee is or shall become illegal,
invalid or unenforceable in any jurisdiction, all other terms and provisions of
this Guarantee shall remain legal, valid and enforceable in such jurisdiction
and such illegal, invalid or unenforceable provision shall be legal, valid and
enforceable in all other jurisdictions.
9. All notices pertaining to this Guarantee shall be in writing and, if
to Fluor Daniel, shall be sufficient when sent registered or certified mail to
Fluor Daniel at the following address:
Fluor Daniel, Inc.
100 Fluor Daniel Drive
Greenville, South Carolina 29607-2762
Attention: Carl Fisher
2
<PAGE>
All notices to Guarantor shall be sufficient when sent registered or
certified mail to the following address:
Republic Group Incorporated
811 East 30th Avenue
Hutchinson, Kansas 67504-1307
Attention: Todd T. Brown
10. This Guarantee shall be governed and construed in accordance with the
internal laws of Oklahoma.
11. This Guarantee amends, restates and supersedes the Parent Company
Guarantee by Guarantor to Fluor Daniel, Inc. dated June 26, 1998.
This Guarantee has been signed by a duly authorized officer of the company
mentioned above on July 21, 1998 but effective for all purposes as of June 26,
1998, and all required corporate or other formalities have been complied with.
REPUBLIC GROUP INCORPORATED
By:_______________________________
Title:____________________________
3
