<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended March 31, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 1-14084
BIG FLOWER PRESS HOLDINGS, INC.
(FORMERLY KNOWN AS BFP HOLDINGS CORP.)
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-376-8322
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
3 East 54th Street
New York, New York 10022
(212) 521-1600
(Address, including zip code, and telephone number, including
area code, of Registrant's Principal Executive Offices)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: As of April 15, 1996, there
were 14,715,745 shares of the Registrant's Common Stock, par value $0.01 per
share, and 1,738,692 shares of the Registrant's Class B Common Stock, par value
$0.01 per share, outstanding.
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<PAGE>
PART I -- FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,901 $ 4,598
Accounts receivable, net 31,677 131,411
Inventories 41,630 41,797
Prepaid expenses 7,559 5,194
Income tax receivable and
deferred income taxes 30,122 22,623
-------- --------
Total current assets 114,889 205,623
PROPERTY, PLANT AND EQUIPMENT, NET 231,537 137,838
OTHER ASSETS, NET 60,547 22,147
INTANGIBLES, NET 251,283 188,480
-------- --------
TOTAL $658,256 $554,088
======== ========
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
(Continued)
2
<PAGE>
PART I -- FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ -- $ 18,119
Current portion of long-term debt 829 3,335
Accounts payable 101,191 105,915
Compensation and benefits payable 25,078 18,344
Other current liabilities 33,864 33,687
-------- --------
Total current liabilities 160,962 179,400
REVOLVING CREDIT FACILITY 185,610 144,500
LONG-TERM DEBT, Net of current portion 200,855 125,942
DEFERRED INCOME TAXES 20,205 14,934
OTHER LONG-TERM LIABILITIES 14,039 10,370
-------- --------
Total Liabilities 581,671 475,146
-------- --------
COMMON STOCK SUBJECT TO REDEMPTION 1,044 1,011
-------- --------
STOCKHOLDERS' EQUITY:
Common stock 160 157
Additional paid-in capital 105,342 100,892
Accumulated deficit (28,596) (21,680)
Subscription notes receivable (261) (263)
Unearned compensation (1,104) (1,175)
-------- --------
Total stockholders' equity 75,541 77,931
-------- --------
TOTAL $658,256 $554,088
======== ========
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
(Concluded)
3
<PAGE>
PART I -- FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 31, MARCH 31,
1996 1995
--------------- ---------------
<S> <C> <C>
NET SALES $ 221,378 $ 206,696
COSTS OF PRODUCTION 197,354 178,702
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GROSS PROFIT 24,024 27,994
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 20,197 18,106
INTEREST EXPENSE 8,180 10,492
INTEREST INCOME (79) (209)
OTHER EXPENSE, NET 5,775 442
PREFERRED DIVIDENDS OF A SUBSIDIARY 606
--------------- ---------------
LOSS BEFORE INCOME TAXES (10,049) (1,443)
(BENEFIT)/PROVISION FOR INCOME TAXES (5,025) 328
--------------- ---------------
LOSS BEFORE EXTRAORDINARY ITEM (5,024) (1,771)
EXTRAORDINARY ITEM, NET 1,892
--------------- ---------------
NET LOSS $ (6,916) $ (1,771)
=============== ===============
Loss per common and common share
equivalent before extraordinary item ($0.30) ($0.16)
Extraordinary item -- early
extinguishment of debt ($0.12)
Net loss per common and common
share equivalent ($0.42) ($0.16)
Weighted average shares outstanding 16,439,220 10,816,904
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
4
<PAGE>
PART I -- FINANCIAL INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,916) $ (1,771)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Provision for doubtful accounts -- 129
Depreciation and amortization 9,673 10,587
Amortization of deferred financing costs 710 849
Preferred dividends of a subsidiary -- 606
Loss on sale of A/R 1,301 --
(Gain)/loss on disposition of property,
plant and equipment (18) 351
Extraordinary Item 1,892 --
Changes in operating assets and liabilities:
Accounts receivable 29,895 14,774
Proceeds from sale of A/R 91,567 --
Inventories 9,763 (17,624)
Prepaid expenses (776) (1,250)
Other assets (385) (691)
Deferred income taxes and income taxes
receivable (2,143) --
Accounts payable, compensation and
benefits payable and other labilities (51,065) (1,944)
Deferred interest 38 2,034
--------- -------
Net cash provided by operating activities 83,536 6,050
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,351) (1,767)
Proceeds from sales of property, plant
and equipment 27 752
Acquisition of Webcraft net (76,710) --
Acquisition of Laser Tech (1,060) --
--------- -------
Net cash used in investing activities (87,094) (1,015)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of long-term debt (98,614) --
Payment of notes payable (16,275) (156)
Borrowing of long-term debt 75,000 --
Deferred financing costs (1,313) --
Net increase in revolving credit facility 41,110 (2,305)
Proceeds from issuance of common stock 8 150
Increase (decrease) in cash overdraft 2,945 (4,392)
--------- -------
Net cash provided by/(used in) financing
activities 2,861 (6,703)
--------- -------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (697) (1,668)
CASH AND CASH EQUIVALENTS,
BEGINNIING OF PERIOD 4,598 2,372
--------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,901 $ 704
========= =======
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
5
<PAGE>
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The unaudited interim consolidated financial statements of Big Flower Press
Holdings, Inc. (the "Company" or "Big Flower"), and its subsidiaries,
including for periods prior to November 28, 1995, Big Flower Press, Inc.
("BFP") which was merged with and into the Company on such date, Treasure
Chest Advertising Company, Inc. ("Treasure Chest"), Laser Tech Color, Inc.
("Laser Tech"), and Webcraft Technologies, Inc. ("Webcraft"), have been
prepared on the basis of generally accepted accounting principles and, in the
opinion of management, reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation for the periods
presented. The results of operations and cash flows for the interim periods
presented are not necessarily indicative of results for the full year.
2. ACQUISITIONS
The Company and BFP and its wholly owned subsidiary, TCA Merger Corp. ("Merger
Corp.") were organized to effect the acquisition of Treasure Chest (the "TCA
Acquisition"). On August 12, 1993, the Company acquired Treasure Chest. The
TCA Acquisition was effected pursuant to an Agreement and Plan of Merger dated
as of May 10, 1993, by and among certain stockholders of Treasure Chest, BFP and
Merger Corp. and a Stock Purchase Agreement, dated as of July 15, 1993, by and
among BFP, Treasure Chest and the Treasure Chest Advertising Company, Inc.
Employee Stock Ownership Trust (the "ESOT"). In connection with the TCA
Acquisition, Treasure Chest purchased certain other assets which were used by
Treasure Chest in the operation of its business, from certain former
stockholders and their affiliates and BFP entered into a non-compete agreement
(the "Non-Compete Agreement") with the founders and former principal owners of
Treasure Chest. Prior to the TCA Acquisition, the Company, BFP and Merger Corp.
did not have any significant assets or liabilities or engage in any activities
other than those incident to their formation, the TCA Acquisition and the
financing related to the TCA Acquisition.
The Company obtained funds necessary to effect the TCA Acquisition and related
transactions, to retire existing indebtedness and to pay the fees and expenses
of the TCA Acquisition from (i) borrowings under a $75.0 million revolving
credit agreement entered into by Treasure Chest and a group of banks led by BT
Commercial Corporation (the "Credit Agreement"), (ii) the proceeds of a $150.0
million aggregate principal amount of 10-3/4% Senior Subordinated Notes due 2003
(the "Subordinated Notes") offering by BFP, (iii) issuance by BFP of $15.0
million of Preferred Stock (the "Preferred Stock") to the ESOT and (iv) the
contribution by Big Flower of $32.5 million in cash which included the proceeds
from $15.0 million principal amount of 11% debentures due on August 12, 2005,
(the "11% Debentures") in exchange for all of the shares of common stock of BFP.
<PAGE>
The TCA Acquisition has been accounted for as a purchase, applying the
provisions of Accounting Principles Board Opinion No. 16. The total purchase
cost has been allocated to Treasure Chest's assets and liabilities based on
their relative fair values as of August 12, 1993, the closing date of the TCA
Acquisition, based on valuations and other studies. A portion of the excess of
the purchase cost over the historical book value of the net assets acquired was
allocated to specific identified intangibles and the remainder, representing
goodwill, is being amortized over 40 years.
On January 24, 1994 and March 16, 1994, Big Flower entered into definitive
agreements (the "Agreements") to acquire Retail Graphics Holding Company
("Retail Graphics") and KTB Associates, Inc. ("KTB"), respectively (the
"Acquisitions"). Big Flower subsequently assigned its rights to the Agreements
to Treasure Chest. Following the consummation of the Acquisitions, KTB changed
its name to Treasure Chest Advertising Company of New York, Inc. and Retail
Graphics changed its name to Treasure Chest Advertising Holding Company of
Texas, Inc.
Pursuant to the Agreements on April 27, 1994, Treasure Chest acquired (i) all of
the issued and outstanding shares of common stock of Retail Graphics for an
aggregate consideration of $39,088,000; (ii) certain printing equipment leased
by Retail Graphics from D. Enterprises, Inc. ("DE"), an affiliate of Retail
Graphics, for an aggregate consideration of approximately $32,390,000 (which
amount was used by DE to retire the indebtedness related to such equipment);
(iii) all of the issued and outstanding shares of common stock of KTB for an
aggregate consideration of $34,631,000 and (iv) certain fee interests in real
property from Tomsons Properties and TKB Properties, affiliates of KTB, for an
aggregate consideration of approximately $4,800,000.
In conjunction with the Acquisitions, the Credit Agreement was amended (the
"Amended Credit Agreement"). The Amended Credit Agreement consisted of a $50.0
million term loan and a $100.0 million revolving credit facility.
Treasure Chest obtained the funds necessary to effect the Acquisitions, to enter
into certain non-compete and other agreements, to retire certain existing
indebtedness of Retail Graphics, KTB and their affiliates and to pay related
fees and expenses from (i) borrowings under Treasure Chest's Amended Credit
Agreement, (ii) a contribution of capital by BFP of a portion of the proceeds of
an offering of $40,000,000 aggregate principal amount of its 10-3/4% Senior
Subordinated Notes due 2003 (the "BFP Notes"), and (iii) a contribution of
capital by Big Flower of a portion of the proceeds of an offering by Big Flower
of 76,543 Units consisting of an aggregate of $76,543,000 aggregate principal
amount of Big Flower 13-1/2% Senior Discount Notes due 2004 (the "13 1/2%
Notes") and 612,344 shares of Class D Common Stock of Big Flower.
The Acquisitions have been accounted for as purchases, applying the provisions
of Accounting Principles Board Opinion No. 16. The total purchase cost has been
allocated to Retail Graphics' and KTB's assets and liabilities based on their
relative fair values as of
<PAGE>
April 27, 1994, the closing date of the Acquisitions, based on valuations and
other studies. A portion of the excess of the purchase cost over the historical
book value of the net assets acquired was allocated to specific identified
intangibles and the remainder, representing goodwill, is being amortized over 40
years.
On November 27, 1995, BFP acquired Laser Tech, a pre-press company which
provides high quality electronic and conventional graphic services. The
purchase price was comprised of (i) $3.0 million paid on the closing date of
such transaction, (ii) a $13.6 million note which matured in January 1996 and
(iii) and a $4.5 million note which converted into 281,250 shares of Common
Stock in January 1996. In addition, in connection with the acquisition, the
Company paid $8.3 million to repay certain indebtedness and other obligations
of Laser Tech.
The acquisition of Laser Tech has been accounted for as a purchase, applying the
provisions of Accounting Principles Board Opinion No. 16. The total purchase
cost has been allocated to Laser Tech's assets and liabilities based on their
relative fair value as of November 27, 1995, based on preliminary valuations and
other studies. Those valuations and studies are not yet complete. The excess
of the purchase cost over the fair value of net amounts acquired, representing
goodwill, will be amortized over 40 years.
On March 19, 1996, Big Flower consummated the acquisition of Webcraft
pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated
February 1, 1996, by and among Big Flower, Webcraft and WTI Acquisition
Corp., a wholly owned subsidiary of Big Flower ("Merger Sub"), whereby Merger
Sub was merged with and into Webcraft, with Webcraft as the surviving
corporation (the "Merger"). Pursuant to the terms of the Merger Agreement,
the equity holders of Webcraft received approximately $111 million in cash,
of which (i) approximately $4.0 million represented a portion of the proceeds
received by Webcraft in connection with the settlement of a certain patent
litigation and (ii) $4.8 million was deposited in escrow to fund any claims
for indemnification by the Company.
Subsequent to the acquisition of Webcraft, the Company repurchased
substantially all of Webcraft's outstanding debt at a premium which generated
an extraordinary loss of $1.9 million, net of income tax benefit of $1.3
million.
Big Flower obtained the funds necessary to finance the Merger from (i)
borrowings under the Restated Credit Agreement, as defined in Note 6, (ii) a
securitized financing based upon the accounts receivable of Treasure Chest,
Laser Tech, and Webcraft and certain of their respective subsidiaries,
whereby certificates secured by such receivables were originally purchased by
Bankers Trust Company and Credit Suisse (the "A/R Securitization"), and (iii)
cash on hand at Webcraft.
<PAGE>
The acquisition of Webcraft has been accounted for as a purchase, applying the
provisions of Accounting Principles Board Opinion No. 16. The total purchase
cost has been allocated to Webcraft's assets and liabilities based on their
relative fair value as of March 19, 1996, based on preliminary valuations and
other studies. Those valuations and studies are not yet complete. The excess
of the purchase cost over the fair value of net amounts required, representing
goodwill, will be amortized over 40 years.
The following supplemental unaudited pro forma information has been prepared
as though the acquisition of Webcraft and related financing transactions had
occurred at January 1, 1995 (in thousands):
THREE MONTHS ENDED
MARCH 31,
--------------------------
1995 1996
-------- --------
Net sales $271,405 $285,828
Loss before extraordinary item $ (2,114) $ (2,012)
Loss per common and common share
equivalent before extraordinary item $ (0.20) $ (0.12)
3. INVENTORIES
Inventories as of March 31, 1996 and December 31, 1995 are summarized as follows
(in thousands):
MARCH 31 DECEMBER 31
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Paper $34,087 $37,878
Ink 1,952 1,468
Other 5,591 2,451
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$41,630 $41,797
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4. INITIAL PUBLIC OFFERING
On November 28, 1995, Big Flower consummated an initial public offering (the
"Offering") of 6,724,688 shares of its Common Stock, of which 5,500,000 shares
were sold by Big Flower and 1,224,688 shares were sold by selling stockholders.
The net proceeds of the Offering to Big Flower of $80.3 million were used to
redeem on a pro rata basis at a premium, a portion of the 13 1/2% Notes, and a
portion of the Subordinated Notes and the BFP Notes, (collectively the "10 3/4%
Notes"). The remainder of the net proceeds, together with borrowings under the
New Credit Agreement as defined in Note 6, were used to purchase at a premium
the remaining balance of the 13 1/2% Notes, purchase all of the Company's 11%
Debentures at 100% of principal amount, repay all amounts owed under the Amended
Credit Agreement, purchase all outstanding shares of the Preferred Stock and
terminate the Company's interest rate swap agreements. In connection with the
Offering, BFP was merged with and into the Company.
<PAGE>
5. EARNINGS PER SHARE
Per share information is computed using the weighted average number of shares of
Common Stock outstanding and dilutive common equivalent shares from stock
options using the treasury stock method. Common equivalent shares for all
common stock and options issued within one year prior to the Offering have been
calculated using the treasury stock method and have been treated as outstanding
for all periods prior to the Offering.
6. OTHER
On November 28, 1995, Treasure Chest entered into a $350 million revolving
credit facility (the "New Credit Agreement"). The New Credit Agreement was
amended and restated on March 19, 1996 (the "Restated Credit Agreement") to add
a $75 million term loan. The revolving facility will be reduced by $33.3
million on the last day of 1998, 1999 and 2000 and will mature on the last day
of 2001. Principal payments on the term loan of $0.75 million are due on the
last day of 1996 through 2001 and will mature on the last day of 2002. Interest
on revolving loans will be payable at Treasure Chest's option (a) at a base rate
plus a margin which ranges from 0.00% to 1.25% or (b) at a Eurodollar rate plus
a margin which ranges from 0.50% to 2.25%. Interest on the term loan will be
payable at Treasure Chest's option (a) at a base rate plus a margin of 1.50% or
(b) at a Eurodollar rate plus a margin of 2.50%. The Restated Credit Agreement
also contains the usual covenant requirements and certain dividend
restrictions.
<PAGE>
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The discussion below compares the consolidated financial condition and
results of operations of Big Flower for the three months ended March 31, 1996
and for the three months ended March 31, 1995.
Because the cost of paper is a principal factor in the Company's pricing to
its customers, the cost of paper significantly affects its net sales. The
Company typically is able to pass increases in the cost of paper to its
customers, while declines in paper costs result in lower prices to customers.
As a result of volatile changes in paper costs, there is significant volatility
in the Company's net sales, but when properly managed, not in volume or profits.
Capacity in the paper industry has generally remained fixed over recent
years. Prior to mid-1994, paper supply exceeded demand, creating a
significant downward pressure on paper prices. In mid-1994, higher demand
surpassed the fixed capacity in all paper grades industry-wide. This created
a global tightening of paper supply which resulted in higher paper prices.
However, in early 1996, reduced demand has made certain grades of paper more
readily available, which has resulted in paper price decreases with respect
to such grades. The Company has developed strong relationships with its
paper suppliers, which include many of the leading paper companies in North
America. Through these relationships, if the market begins to tighten again,
the Company anticipates that its paper requirements will continue to be met.
The Company anticipates that its relationships and purchasing leverage will
ensure its material costs will remain highly competitive.
The Company's results of operations for the periods presented have been
significantly impacted by the amortization of intangible assets which arose
as a result of the acquisitions of Treasure Chest, KTB and Retail Graphics.
Intangible assets of $18,500,000 related to customer backlog which arose as a
result of such acquisitions had estimated lives of 1 to 2 years. Such
intangible assets will be fully amortized in April 1996. Amortization of
customer backlog was $390,000 for the three months ended March 31, 1996, and
$2,477,000 for the three months ended March 31, 1995.
During 1989, the Company began the implementation of its Quality
Improvement Process ("QIP"), which provides for the continuous improvement of
all its processes through employee involvement and statistical process control.
The Company believes that the QIP program has led to improvements in training,
maintenance, production methods, sales and administration and, together with its
capital investment program, has led to efficiency improvements in each year
since fiscal 1989.
<PAGE>
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1996 WITH THE THREE MONTHS ENDED
MARCH 31, 1995
Net sales increased to $221.4 million for the three months ended March 31,
1996 from $206.7 million for the three months ended March 31, 1995, an increase
of $14.7 million or 7.1%. The addition of Laser Tech operations for the full
three months ended March 31, 1996 and Webcraft from mid-March favorably impacted
net sales. Impacted by a slow retail advertising market, Treasure Chest's
volume for the three months ended March 31, 1996 was below that of the
comparable prior year's period. Treasure Chest's volume (as measured by
standard hours of press activity) decreased 7.6%. Paper costs, which
significantly affect net sales, were 49.2% of net sales for the three months
ended March 31, 1996 compared to 46.8% of net sales for the three months ended
March 31, 1995.
Gross profit for the three months ended March 31, 1996 was $24.0 million
compared to $28.0 million for the three months ended March 31, 1995, a
decrease of $4.0 million or 14.2%. Gross profit as a percent of net sales
was 10.9% for the three months ended March 31, 1996 compared to 13.5% for the
three months ended March 31, 1995. The lower gross profit in the three
months ended March 31, 1996 is the net result of lower volume at Treasure
Chest somewhat offset by the favorable impact of Laser Tech and Webcraft
operations as discussed above. Depreciation was 2.5% of the cost of
production for the three months ended March 31, 1996 compared to 2.6% for the
three months ended March 31, 1995.
Selling, general and administrative expense increased to $20.2 million in
the three months ended March 31, 1996 from $18.1 million for the three months
ended March 31, 1995, an increase of $2.1 million or 11.5%. Amortization of
intangibles included in selling, general and administrative expense for the
three months ended March 31, 1996 was $4.0 million compared to $5.6 million
for the three months ended March 31, 1995. Amortization of certain
intangible assets associated with the acquisitions of Treasure Chest, KTB and
Retail Graphics was $2.1 million lower in the three months ended March 31,
1996 compared to the prior comparable period in 1995 as several of these
assets became fully amortized. Offsetting the lower amortization of
intangible assets in the three months ended March 31, 1996 was a $3.8 million
increase in selling, general and administrative expenses due to the addition
of Laser Tech and Webcraft operations and an additional $0.3 million in
higher personnel and related costs. Selling, general and administrative
expense as a percentage of sales was 9.1% for the three months ended March
31, 1996 compared to 8.8% for the prior comparable quarter in 1995.
Net interest expense for the three months ended March 31, 1996 was $8.1
million compared to $10.3 million for the three months ended March 31, 1995.
Amortization of deferred financing costs were $0.7 million for the three months
ended March 31, 1996 and $0.8 million for the three months ended March 31, 1995.
Interest expense for the three months ended March 31, 1996 included $3.4 million
in net interest on the 10 3/4% Notes and $4.0 million in net interest on other
debt, primarily the New Credit Agreement.
Other expense, net, was $5.8 million in the three months ended March 31,
1996 compared to $0.4 million in the prior comparable period in 1995. The
other expense, net, for the three months ended March 31, 1996 included $5.0
million for non recurring charges related to the acquisition of Webcraft and
related financing transactions.
<PAGE>
Loss before income taxes and extraordinary item was $10.0 million for the
three months ended March 31, 1996 compared to a loss before income taxes of $1.4
million for the prior comparable quarter due to the factors mentioned above.
The effective income tax rate for the three months ended March 31, 1996 and
1995 exceeded the federal statutory tax rate due primarily to amortization of
goodwill (which is not deductible for income tax purposes), preferred dividends
of a subsidiary (for the 1995 period), and state income taxes.
The extraordinary item, net of tax, of $1.9 million, in the three months
ended March 31, 1996 was due to the early extinguishment of certain Webcraft
debt refinanced subsequent to the Webcraft acquisition.
Excluding the effects of the non-recurring charges related to the
acquisition of Webcraft and related financing transactions, loss before
extraordinary item for the three months ended March 31, 1996 would have been
$2.5 million, or $.15 cents per share.
LIQUIDITY AND CAPITAL RESOURCES
The operations of the Company historically have been funded with internally
generated funds, term debt and borrowings under a revolving credit facility and
certain sale leaseback transactions.
Since the acquisition of Treasure Chest, Big Flower's principal use of
cash has been debt service and capital expenditures. Capital expenditures
for the three months ended March 31, 1996 totaled $9.4 million. Big Flower's
current liabilities exceeded current assets by $46.1 million at March 31,
1996 compared with working capital of $26.2 million at December 31, 1995, a
decrease of $72.3 million due to the A/R Securitization closing in March
1996. The ratio of current assets to current liabilities as of March 31,
1996 was .71 to 1 and as of December 31, 1995 was 1.15 to 1.
Net cash provided by operating activities for the three months ended
March 31, 1996 was $83.5 million, an increase of $77.5 million from the prior
comparable period. This increase was primarily due to the net impact of the
A/R Securitization and a reduction in paper inventories offset by a higher
net loss and a volume related reduction in current liabilities. Net cash
used in investing activities were financed primarily through borrowings under
the Restated Credit Agreement and the A/R Securitization.
On November 28, 1995, Big Flower consummated the Offering of 6,724,688
shares of its Common Stock, of which 5,500,000 shares were sold by Big Flower
and 1,224,688 shares were sold by selling stockholders. The net proceeds of the
Offering to Big Flower of $80.3 million were used to redeem on a pro rata basis
at a premium, a portion of the 13 1/2% Notes, and a portion of the 10 3/4%
Notes. The remainder of the net proceeds, together with borrowings under the
New Credit Agreement were used to purchase at a premium the remaining balance of
the 13 1/2% Notes, purchase all of the Company's 11% Debentures
at 100% of principal amount, repay all amounts owed under the Amended Credit
Agreement, purchase all outstanding shares of the Preferred Stock and terminate
the Company's interest rate swap agreements. In connection with the Offering,
BFP was
<PAGE>
merged with and into the Company.
On November 27, 1995, BFP acquired Laser Tech Color a pre-press company
which provides high quality electronic and conventional graphic services.
The purchase price was comprised of (i) $3.0 million paid on the closing date
of such transaction, (ii) a $13.6 million note which matured in January 1996
and (iii) a $4.5 million note which converted into 281,250 shares of Common
Stock in January 1996. In addition, in conjunction with the acquisition, the
Company paid $8.3 million to repay certain indebtedness and other obligations
of Laser Tech.
Simultaneously with the Offering, the outstanding shares of Class B Common
Stock, Class C Common Stock and Class D Common Stock (except for certain shares
of Class B Common Stock owned by BT Investment Partners, Inc. ("BTIP") were
converted into shares of Common Stock on a share-for-share basis (with any
fractional shares rounded up to one full share). Immediately prior to the
consummation of the Offering, Big Flower paid a stock dividend of one share of
Common Stock for each outstanding share of its common stock, Class B Common
Stock owned by Apollo Big Flower Partners, L.P., Class C Common Stock and Class
D Common Stock and a stock dividend of one share of Class B Common Stock for
each outstanding share of Class B Common Stock owned by BTIP due to certain
restrictions in the banking laws and regulations. In addition, the outstanding
options to purchase shares of Class C Common Stock became options to purchase
shares of Common Stock at the rate of two shares of Common Stock for each share
of Class C Common Stock underlying such options; and fractional shares remaining
were rounded up to one full share. In addition, the put rights of the holders
of Class C Common Stock expired for their vested shares.
On November 28, 1995, Treasure Chest entered into the New Credit
Agreement. The Restated Credit Agreement added a $75 million term loan. The
revolving facility will be reduced by $33.3 million on the last day of 1998,
1999 and 2000 and will mature on the last day of 2001. Principal payments on
the term loan of $0.75 million are due on the last day of 1996 through 2001
and will mature on the last day of 2002. Interest on revolving loans will be
payable at Treasure Chest's option (a) at a base rate plus a margin which
ranges from 0.00% to 1.25% or (b) at a Eurodollar rate plus a margin which
ranges from 0.50% to 2.25%. Interest on the term loan will be payable at
Treasure Chest's option (a) at a base rate plus a margin of 1.50% or (b) at a
Eurodollar rate plus a margin of 2.50%. The Restated Credit Agreement also
contains the usual covenant requirements and certain dividend restrictions.
On March 19, 1996, Big Flower consummated the acquisition of Webcraft
pursuant to the Merger Agreement
<PAGE>
whereby Merger Sub was merged with and into Webcraft, with Webcraft as the
surviving corporation. Pursuant to the terms of the Merger
Agreement, the equity holders of Webcraft received approximately $111 million in
cash, of which (i) approximately $4.0 million represented a portion of the
proceeds received by Webcraft in connection with the settlement of a certain
patent litigation and (ii) $4.8 million was deposited in escrow to fund any
claims for indemnification by the Company.
Big Flower obtained the funds necessary to finance the Merger from (i)
borrowings under the Restated Credit Agreement, (ii) the A/R Securitization,
and (iii) cash on hand at Webcraft.
The Company believes that internally-generated funds from operations and
from the Restated Credit Agreement will be sufficient to meet its operating
requirements for at least the next twelve months.
Capital expenditures of $9.4 million and $1.8 million for the three months
ended March 31, 1996 and 1995, respectively, were financed by cash from
operations and by borrowings under Treasure Chest's revolving credit facility.
In addition, the Company has entered into operating leases with equivalent
equipment purchase value of $1.2 million and $0.3 million for the three
months ended March 31, 1996 and 1995, respectively.
The Company anticipates total acquisitions of capital equipment, whether
funded by capital expenditures or operating leases, with an equivalent value
of approximately $45 million in the twelve months ended December 31, 1996.
<PAGE>
PART II - OTHER INFORMATION
BIG FLOWER PRESS HOLDINGS, INC.
AND SUBSIDIARIES
Item 1. LEGAL PROCEEDINGS -
No reportable developments occurred in Legal Proceedings during
the quarter ended March 31, 1996.
Item 2. CHANGES IN SECURITIES -
None
Item 3. DEFAULTS UPON SENIOR SECURITIES -
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
None
Item 5. OTHER INFORMATION -
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
10.1 Restated Credit Agreement, dated March 19, 1996, among Treasure
Chest Advertising Company, Inc., the financial institutions named
therein, Credit Suisse, as Documentation Agent, and Bankers Trust
Company, as Administrative Agent.
10.2 Certificate Purchase Agreement (Series 1996-1), dated as of March
19, 1996, by BFP Receivables Corporation, Big Flower Press
Holdings, Inc., the Purchasers described therein, Credit Suisse,
as Co-Agent, and Bankers Trust Company, as Agent.
<PAGE>
10.3 Employment Agreement, effective as of March 21, 1996, by and
between Mark A. Angelson, Big Flower Press Holdings, Inc., and
Treasure Chest Advertising Company, Inc.
10.4 Employment Agreement, effective as of March 29, 1996, by and
between Edward T. Reilly, Big Flower Press Holdings, Inc., and
Treasure Chest Advertising Company, Inc.
(b) Form of Reports on Form 8-K
A Current Report on Form 8-K filed (i) on February 8, 1996 concerning
the Registrant entering an agreement to acquire Webcraft Technologies,
Inc., and (ii) on April 2, 1996 concerning the merger of WTI
Acquisition, Corp., a wholly owned subsidiary of the Registrant, with
and into Webcraft Technologies, Inc., including the Consolidated
Financial Statements of Webcraft Technologies, Inc.
Current Report on Form 8-K/A was filed on April 24, 1996 amending
the Form 8-K which was filed on April 2, 1996, to include certain
pro forma financial data.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG FLOWER PRESS HOLDINGS, INC.
/s/Theodore Ammon
-------------------------------------
Theodore Ammon
Chairman of the Board
Principal Financial Officer and
Principal Accounting Officer
DATE: May 14, 1996
<PAGE>
BIG FLOWER PRESS HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1996
EXHIBIT INDEX
EXHIBIT NO.
10.1 Restated Credit Agreement, dated March 19, 1996, among
Treasure Chest Advertising Company, Inc., the financial
institutions names therein, Credit Suisse, as Documentation
Agent, and Bankers Trust Company, as Administrative Agent.
10.2 Certificate Purchase Agreement (Series 1996-1), dated as
of March 19, 1996, by BFP Receivables Corporation, Big
Flower Press Holdings, Inc., the Purchasers described
therein, Credit Suisse, as Co-Agent, and Bankers Trust
Company, as Agent.
10.3 Employment Agreement, effective as of March 21, 1996, by
and between Mark A. Angelson, Big Flower Press Holdings,
Inc., and Treasure Chest Advertising Company, Inc.
10.4 Employment Agreement, effective as of March 29, 1996, by
and between Edward T. Reilly, Big Flower Press Holdings,
Inc., and Treasure Chest Advertising Company, Inc.
<PAGE>
[INTERIM COPY)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
BIG FLOWER PRESS HOLDINGS, INC.,
TREASURE CHEST ADVERTISING COMPANY, INC.,
VARIOUS BANKS,
BANK OF AMERICA NT & SA,
THE INDUSTRIAL BANK
OF JAPAN, LIMITED AND
NATIONSBANK, N.A.,
as CO-AGENTS,
CREDIT SUISSE,
as DOCUMENTATION AGENT,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
-------------------------------------------------
Dated as of November 28, 1995
and
Amended and Restated as of March 19, 1996
-------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit. . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing. . . . . . . . . . . . . . . 4
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . 4
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . 5
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . 8
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . 9
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . 10
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 13
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . 13
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . 13
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 15
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 15
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . 18
2.03 Letter of Credit Requests . . . . . . . . . . . . . . . . . . 18
2.04 Letter of Credit Participations . . . . . . . . . . . . . . . 18
2.05 Agreement to Repay Letter of Credit Drawings. . . . . . . . . 21
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3. Commitment Commission; Fees; Reductions of Commitment . . . 23
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.02 Voluntary Termination of Unutilized Commitments . . . . . . . 24
3.03 Mandatory Reduction of Commitments. . . . . . . . . . . . . . 25
SECTION 4. Prepayments; Payments; Taxes. . . . . . . . . . . . . . . . 26
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . 26
4.02 Mandatory Repayments, Commitment Reductions and Cash
Collateralizations . . . . . . . . . . . . . . . . . . . . . 28
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . 34
4.04 Net Payments; Taxes . . . . . . . . . . . . . . . . . . . . . 34
(i)
<PAGE>
Page
----
SECTION 5. Certain Conditions Precedent to Restatement Effective Date. 36
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . 37
5.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 37
5.03 Fees, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.04 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 37
5.05 Corporate and Partnership Documents; Proceedings; etc.. . . . 37
5.06 Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Employment Agreements; Collective Bargaining
Agreements; Debt Agreements; Material Contracts. . . . . . . 38
5.07 Solvency Certificate; Insurance Certificates. . . . . . . . . 40
5.08 Consummation of the Transaction . . . . . . . . . . . . . . . 40
5.09 Receivables Facility. . . . . . . . . . . . . . . . . . . . . 44
5.10 Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . 44
5.11 Pledge and Security Agreement . . . . . . . . . . . . . . . . 44
5.12 Adverse Change; Governmental Approvals; etc.. . . . . . . . . 45
5.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.14 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . 47
5.15 Pro Forma Balance Sheet; Financial Statements; Projections. . 47
5.16 Amended Tax Sharing Agreement . . . . . . . . . . . . . . . . 48
5.17 Management Services Agreement . . . . . . . . . . . . . . . . 48
SECTION 6. Conditions Precedent to All Credit Events . . . . . . . . . 48
6.01 No Default; Representations and Warranties. . . . . . . . . . 48
6.02 Adverse Change, etc.. . . . . . . . . . . . . . . . . . . . . 49
6.03 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.04 Notice of Borrowing; Letter of Credit Request . . . . . . . . 49
6.05 Compliance with Indentures. . . . . . . . . . . . . . . . . . 49
SECTION 7. Representations and Warranties. . . . . . . . . . . . . . . 50
7.01 Corporate or Partnership Status . . . . . . . . . . . . . . . 51
7.02 Power and Authority . . . . . . . . . . . . . . . . . . . . . 51
7.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . 51
7.04 Governmental Approvals. . . . . . . . . . . . . . . . . . . . 52
7.05 Financial Statements: Financial Condition; Undisclosed
Liabilities; Projections; etc. . . . . . . . . . . . . . . . 52
7.06 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.07 True and Complete Disclosure. . . . . . . . . . . . . . . . . 54
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . 54
7.09 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . 55
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . 55
(ii)
<PAGE>
Page
----
7.11 Pledge and Security Agreement . . . . . . . . . . . . . . . . 56
7.12 Representations and Warranties in Documents . . . . . . . . . 56
7.13 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 57
7.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 58
7.16 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . 58
7.17 Investment Company Act. . . . . . . . . . . . . . . . . . . . 59
7.18 Public Utility Holding Company Act. . . . . . . . . . . . . . 59
7.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . 59
7.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . 60
7.21 Patents, Licenses, Franchises and Formulas. . . . . . . . . . 60
7.22 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 60
7.23 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.25 Treatment of Certain Extensions of Credit Under Indentures. . 61
7.26 Special Purpose Corporation . . . . . . . . . . . . . . . . . 61
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . . . . . . . 62
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . 62
8.02 Books, Records and Inspections. . . . . . . . . . . . . . . . 67
8.03 Maintenance of Property; Insurance. . . . . . . . . . . . . . 67
8.04 Corporate Franchises. . . . . . . . . . . . . . . . . . . . . 68
8.05 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . 68
8.06 Compliance with Environmental Laws. . . . . . . . . . . . . . 69
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.08 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . 71
8.09 Performance of Obligations. . . . . . . . . . . . . . . . . . 71
8.10 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . 71
8.11 Additional Security; Further Assurances . . . . . . . . . . . 71
8.12 Working Capital Facility. . . . . . . . . . . . . . . . . . . 72
8.13 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . 72
8.14 Permitted Transactions. . . . . . . . . . . . . . . . . . . . 73
8.15 Maintenance of Corporate Separateness . . . . . . . . . . . . 75
8.16 Foreign Subsidiaries Security . . . . . . . . . . . . . . . . 75
8.17 Completion of Refinancing Transactions. . . . . . . . . . . . 76
8.18 Payments with respect to Non-Cash Pay Permitted Unsecured
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 77
8.19 Certain Provisions with respect to Receivables Facility . . . 77
SECTION 9. Negative Covenants. . . . . . . . . . . . . . . . . . . . . 78
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(iii)
<PAGE>
Page
----
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . 81
9.03 Restricted Payments . . . . . . . . . . . . . . . . . . . . . 83
9.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 87
9.05 Investments; etc. . . . . . . . . . . . . . . . . . . . . . . 90
9.06 Transactions with Affiliates and Unrestricted Subsidiaries. . 94
9.07 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . 95
9.08 Consolidated Net Interest Coverage Ratio. . . . . . . . . . . 96
9.09 Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . 96
9.10 Limitation on Modifications of and Payments on Indebtedness and
Preferred Stock; Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements . . . . . . . . . . . . 96
9.11 Limitation on Creation or Acquisition of Subsidiaries and
Unrestricted Subsidiaries. . . . . . . . . . . . . . . . . . 98
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . 99
9.13 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 100
9.14 Limitation on Certain Restrictions on Subsidiaries. . . . . . 101
9.15 Limitation on Receivables Subsidiary and Receivables Facility 101
SECTION 10. Events of Default. . . . . . . . . . . . . . . . . . . . . 102
10.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . 102
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.04 Default Under Other Agreements. . . . . . . . . . . . . . . . 102
10.05 Bankruptcy, etc . . . . . . . . . . . . . . . . . . . . . . . 103
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.07 Security Documents. . . . . . . . . . . . . . . . . . . . . . 104
10.08 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . 104
10.11 Receivables Facility. . . . . . . . . . . . . . . . . . . . . 104
SECTION 11. Definitions and Accounting Terms . . . . . . . . . . . . . 105
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 12. The Agents . . . . . . . . . . . . . . . . . . . . . . . . 154
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 154
12.02 Nature of Duties. . . . . . . . . . . . . . . . . . . . . . . 155
12.03 Lack of Reliance on the Agent, the Documentation Agent and the
Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . . . 155
12.04 Certain Rights of the Agent, the Documentation Agent and the
Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . . . 155
(iv)
<PAGE>
Page
----
12.05 Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . 156
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 156
12.07 The Agent, Documentation Agent and the Co-Agents in their
Individual Capacities. . . . . . . . . . . . . . . . . . . . 156
12.08 Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
12.09 Resignation by the Agent. . . . . . . . . . . . . . . . . . . 157
SECTION 13. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 158
13.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . 158
13.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . 159
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
13.04 Benefit of Agreement. . . . . . . . . . . . . . . . . . . . . 160
13.05 No Waiver; Remedies Cumulative. . . . . . . . . . . . . . . . 161
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . 162
13.07 Calculations; Computations. . . . . . . . . . . . . . . . . . 162
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . 163
13.09 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 165
13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . 165
13.11 Headings Descriptive. . . . . . . . . . . . . . . . . . . . . 165
13.12 Amendment or Waiver; etc. . . . . . . . . . . . . . . . . . . 165
13.13 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 167
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . 167
13.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 167
13.16 Register. . . . . . . . . . . . . . . . . . . . . . . . . . . 168
13.17 Compliance With Certain Existing Indebtedness . . . . . . . . 168
13.18 Limitation on Additional Amounts, etc.. . . . . . . . . . . . 169
13.19 Addition of New Banks; Obligation to Pay Certain Amounts
Owing Pursuant to Original Credit Agreement. . . . . . . . . 170
13.20 Certain Agreement for the Mutual Benefit of the Banks . . . . 170
SECTION 14. Parent Guaranty. . . . . . . . . . . . . . . . . . . . . . 171
14.01 The Parent Guaranty . . . . . . . . . . . . . . . . . . . . . 171
14.02 Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . 171
14.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . 172
14.04 Independent Obligation. . . . . . . . . . . . . . . . . . . . 172
14.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 172
14.06 Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . 172
14.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . 173
14.08 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
14.09 Maximum Liability . . . . . . . . . . . . . . . . . . . . . . 175
(v)
<PAGE>
Page
----
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Existing Letters of Credit
SCHEDULE IV Projections
SCHEDULE V Subsidiaries
SCHEDULE VI Scheduled Existing Indebtedness
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Existing Investments
SCHEDULE X Existing Transactions
SCHEDULE XI Certain Restrictions on Subsidiaries
SCHEDULE XII Litigation
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Term Note
EXHIBIT B-2 Form of Revolving Note
EXHIBIT B-3 Form of Swingline Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-I Form of Opinion of Skadden, Arps, Slate, Meagher & Flom, Special
Counsel to Credit Parties
EXHIBIT E-2 Form of Opinion of Lowenstein, Sandier, Kohl, Fisher & Boylan,
Special Counsel to WTI and its Subsidiaries
EXHIBIT F Form of Officers' Certificate
EXHIBIT G Form of Solvency Certificate
EXHIBIT H Form of Amended and Restated Subsidiaries Guaranty
EXHIBIT I Form of Amended and Restated Pledge and Security Agreement
EXHIBIT J Form of Assignment and Assumption Agreement
EXHIBIT K Form of Subordinated Intercompany Note
EXHIBIT L-1 Form of WTI Working Capital Note
EXHIBIT L-2 Form of WTI Swingline Note
EXHIBIT M-1 Form of WTI Intercompany Note
EXHIBIT M-2 Form of Laser Tech - WTI Intercompany Note
EXHIBIT N Form of Holdings Intercompany Note
EXHIBIT O Form of Permitted Acquisition Note
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of November 28, 1995, and amended and
restated as of March 19, 1996, among BIG FLOWER PRESS HOLDINGS, INC., a Delaware
corporation ("Holdings"), TREASURE CHEST ADVERTISING COMPANY, INC., a Delaware
corporation (the "Borrower"), the Banks from time to time party hereto, BANK OF
AMERICA NT & SA, THE INDUSTRIAL BANK OF JAPAN, LIMITED AND NATIONSBANK, N.A, as
Co-Agents (collectively, the "Co-Agents," and each, a "Co-Agent"), CREDIT
SUISSE, as Documentation Agent, and BANKERS TRUST COMPANY, as Administrative
Agent (all capitalized terms used herein and defined in Section 11 are used
herein as therein defined).
WITNESSETH:
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WHEREAS, the Borrower, Holdings, the Original Banks, the Co-Agents,
the Documentation Agent and the Administrative Agent are party to a Credit
Agreement, dated as of November 28, 1995 (as in effect immediately prior to the
Restatement Effective Date, the "Original Credit Agreement");
WHEREAS, as part of the Acquisition, Holdings is acquiring Webcraft
Technologies, Inc. ("WTI") and its Subsidiaries pursuant to the Merger
Agreement;
WHEREAS, the Borrower, Holdings, the Banks, the Co-Agents, the
Documentation Agent and the Administrative Agent desire to amend and restate the
Original Credit Agreement in the form of this Agreement to, INTER ALIA, permit
the Acquisition and the financing therefor on the terms and subject to the
conditions provided herein and make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows:
SECTION l. AMOUNT AND TERMS OF CREDIT.
1.01 THE COMMITMENTS. (a) Subject to and upon the terms and conditions
set forth herein, each Bank with a Revolving Loan Commitment severally agrees,
at any time and from time to time on and after the Initial Borrowing Date and
prior to the Final Maturity Date, to make a revolving loan or revolving loans
(each, a "Revolving Loan" and collectively, the "Revolving Loans") to the
Borrower, which Revolving Loans(i) shall, at the option of the Borrower, be
Base Rate Loans or Eurodollar Loans, PROVIDED that, except as otherwise
specifically provided in Section 1.10(b), all Revolving Loans comprising the
same Borrowing shall at all times be of the same Type, (ii) may be repaid and
reborrowed
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in accordance with the provisions hereof, (iii) shall not exceed for any Bank at
any time outstanding that aggregate principal amount which, when added to the
product of (x) such Bank's Adjusted Percentage and (y) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of such Bank at such time, and
(iv) shall not exceed for all Banks at any time outstanding that aggregate
principal amount which, when added to (x) the aggregate amount of all Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time and (y) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) then outstanding, equals the Total Available
Revolving Loan Commitment at such time.
(b) Subject to and upon the terms and conditions herein set forth,
BTCo agrees to make at any time and from time to time on and after the Initial
Borrowing Date and prior to the Swingline Expiry Date, a revolving loan or
revolving loans (each, a "Swingline Loan" and, collectively, the "Swingline
Loans") to the Borrower, which Swingline Loans (i) shall be made and maintained
as Base Rate Loans, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed in aggregate principal amount at any
time outstanding, when combined with the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks then outstanding and the Letter of
Credit Outstandings at such time, an amount equal to the Adjusted Total
Available Revolving Loan Commitment at such time (after giving effect to any
reductions to the Adjusted Total Available Revolving Loan Commitment on such
date), and (iv) shall not exceed at any time outstanding the Maximum Swingline
Amount.
(c) On any Business Day, BTCo may, in its sole discretion, give notice
to the Banks that its outstanding Swingline Loans shall be funded with a
Borrowing of Revolving Loans (PROVIDED that such notice shall be deemed to have
been automatically given upon the occurrence of a Default or an Event of Default
under Section 10.05 or upon the exercise of any of the remedies provided in the
last paragraph of Section 10), in which case a Borrowing of Revolving Loans
constituting Base Rate Loans (each such Borrowing, a "Mandatory Borrowing")
shall be made on the immediately succeeding Business Day by all Banks with a
Revolving Loan Commitment (without giving effect to any reductions thereto
pursuant to the last paragraph of Section 10) PRO RATA based on each Bank's
Adjusted Percentage (determined before giving effect to any termination of the
Revolving Loan Commitments pursuant to the last paragraph of Section 10) and the
proceeds thereof shall be applied directly to BTCo to repay BTCo for such
outstanding Swingline Loans. Each such Bank hereby irrevocably agrees to make
Revolving Loans upon one Business Day's
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notice pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified in writing by BTCo
notwithstanding (i) that the amount of the Mandatory Borrowing may not comply
with the minimum amount for Borrowings otherwise required hereunder, (ii)
whether any conditions specified in Section 6 are then satisfied, (iii) whether
a Default or an Event of Default then exists, (iv) the date of such Mandatory
Borrowing and (v) the amount of the Total Revolving Loan Commitment, the Total
Available Revolving Loan Commitment, the Adjusted Total Revolving Loan
Commitment or the Adjusted Total Available Revolving Loan Commitment at such
time. In the event that any Mandatory Borrowing cannot for any reason be made
on the date otherwise required above (including, without limitation, as a result
of the commencement of a proceeding under the Bankruptcy Code with respect to
the Borrower), then each such Bank hereby agrees that it shall forthwith
purchase (as of the date the Mandatory Borrowing would otherwise have occurred,
but adjusted for any payments received from the Borrower on or after such date
and prior to such purchase) from BTCo such participations in the outstanding
Swingline Loans as shall be necessary to cause such Banks to share in such
Swingline Loans ratably based upon their respective Adjusted Percentages
(determined before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 10), PROVIDED that (x) all
interest payable on the Swingline Loans shall be for the account of BTCo until
the date as of which the respective participation is required to be purchased
and, to the extent attributable to the purchased participation, shall be payable
to the participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing Bank
shall be required to pay BTCo interest on the principal amount of participation
purchased for each day from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding the date of payment for
such participation, at the overnight Federal Funds Rate for the first three days
and at the rate otherwise applicable to Revolving Loans maintained as Base Rate
Loans hereunder for each day thereafter.
(d) Subject to and upon the terms and conditions set forth herein,
each Bank with a Term Loan Commitment severally agrees to make a term loan or
term loans (each, a "Term Loan" and, collectively, the "Term Loans") to the
Borrower, which Term Loans:
(i) shall be incurred pursuant to a single drawing on the
Restatement Effective Date (such date of drawing of Term Loans, the
"Term Loan Borrowing Date");
(ii) shall, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar
Loans, PROVIDED that (A) except as otherwise specifically provided in
Section 1.100), all Term Loans comprising the same Borrowing shall at
all times be of the same Type and (B) unless the Term Loan Syndication
Date has theretofore occurred, no more than
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two Borrowings of Term Loans to be maintained as Eurodollar Loans may
be incurred prior to the 60th day after the Restatement Effective Date
or, if later, the last day of the Interest Period applicable to any
Borrowing of Term Loans which began before, but expires after, said
60th day (which Borrowings of Eurodollar Loans may only have an
Interest Period of one month, and the first of which Borrowings may
only be made on, or within 3 Business Days after, the Restatement
Effective Date and the second of which Borrowings may only be made on
the last day of the Interest Period of the first such Borrowing); and
(iii) shall equal for each Bank, in initial principal amount for
the Term Loans being made by such Bank on the Term Loan Borrowing
Date, that amount which equals the Term Loan Commitment of such Bank
as in effect on the Term Loan Borrowing Date (before giving effect to
any reductions thereto on such date pursuant to Section 3.03(b)(i) but
after giving effect to any reductions thereto prior to such date
pursuant to Section 3.03(b)(ii).
Once repaid, Term Loans incurred hereunder may not be reborrowed.
1.02 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal
amount of each Borrowing shall not be less than $1,000,000; PROVIDED that
Mandatory Borrowings shall be made in the amounts required by Section 1.01(c).
The aggregate principal amount of each Borrowing of Swingline Loans shall not be
less than $500,000. More than one Borrowing may occur on the same date, but at
no time shall there be outstanding more than twelve Borrowings of Eurodollar
Loans.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to make a
Borrowing hereunder (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), an Authorized Representative of the Borrower shall give the
Administrative Agent at its Notice Office at least one Business Day's prior
written (or telephonic notice promptly confirmed in writing) notice of each Base
Rate Loan and at least three Business Days' prior written (or telephonic notice
promptly confirmed in writing) notice of each Eurodollar Loan to be made
hereunder, PROVIDED that any such notice shall be deemed to have been given on a
certain day only if given before 1:00 P.M.(New York time) on such day. Each
such written notice or written confirmation of telephonic notice (each, a
"Notice of Borrowing"), except as otherwise expressly provided in Section 1.10,
shall be irrevocable and shall be given by the Borrower in the form of Exhibit
A, appropriately completed to specify the aggregate principal amount of the
Loans to be made pursuant to such Borrowing, the date of such Borrowing (which
shall be a Business Day), whether the Loans being made pursuant to such
Borrowing shall constitute Term Loans or Revolving Loans and whether the Loans
being made pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly give
each Bank which is required to make Loans of the Tranche specified in the
respective Notice of Borrowing, notice of
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such proposed Borrowing, of such Bank's proportionate share thereof and of the
other matters required by the immediately preceding sentence to be specified in
the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to make a Borrowing of Swingline
Loans hereunder, an Authorized Representative of the Borrower shall give BTCo
not later than 2:00 P.M. (New York time) on the date that a Swingline Loan is
to be made, written notice or telephonic notice promptly confirmed in writing of
each Swingline Loan to be made hereunder. Each such notice shall be irrevocable
and specify in each case (A) the date of Borrowing (which shall be a Business
Day) and (B) the aggregate principal amount of the Swingline Loans to be made
pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(c).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing of Loans, the
Administrative Agent may act without liability upon the basis of telephonic
notice of such Borrowing, believed by the Administrative Agent in good faith to
be from an Authorized Representative of the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right to
dispute the Administrative Agent's record of the terms of such telephonic notice
of such Borrowing of Loans.
1.04 DISBURSEMENT OF FUNDS. Not later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not
later than 12:00 Noon (New York time) on the date specified in Section 1.01(c)),
each Bank with a Commitment of the respective Tranche will make available its
PRO RATA portion (determined in accordance with Section 1.07) of each such
Borrowing requested to be made on such date (or in the case of Swingline Loans,
BTCo shall make available the full amount thereof). All such amounts shall be
made available in Dollars and in immediately available funds at the Payment
Office of the Administrative Agent, and the Administrative Agent will make
available to the Borrower at the Payment Office the aggregate of the amounts so
made available by the Banks (prior to 1:00 P.M. (New York time)) on such day, to
the extent of funds actually received by the Administrative Agent prior to 12:00
Noon (New York time) on such day. Unless the Administrative Agent shall have
been notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that such
Bank has made such amount available to the Administrative Agent on such date of
Borrowing and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. If such corre-
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sponding amount is not in fact made available to the Administrative Agent by
such Bank, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the Borrower to immediately pay
such corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover on demand from such Bank or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Administrative
Agent to the Borrower until the date such corresponding amount is recovered by
the Administrative Agent, at a rate per annum equal to (i) if recovered from
such Bank, the overnight Federal Funds Rate and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make Revolving Loans hereunder
or to prejudice any rights which the Borrower may have against any Bank as a
result of any failure by such Bank to make Revolving Loans hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loans made by each Bank shall be evidenced (i) if Term Loans,
by a promissory note duly executed and delivered by the Borrower substantially
in the form of Exhibit B-l, with blanks appropriately completed in conformity
herewith (each, a "Term Note" and, collectively, the "Term Notes"), (ii) if
Revolving Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-2, with blanks appropriately
completed in conformity herewith (each, a "Revolving Note" and, collectively,
the "Revolving Notes") and (iii) if Swingline Loans, by a promissory note duly
executed and delivered by the Borrower substantially in the form of Exhibit B-3,
with blanks appropriately completed in conformity herewith (the "Swingline
Note").
(b) The Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank or its registered assigns
and be dated the date of the issuance thereof, (iii) be in a stated principal
amount equal to the principal amount of outstanding Term Loans of such Bank on
the date of the issuance of such Term Note and be payable in the principal
amount of Term Loans evidenced thereby, (iv) mature on the Term Loan Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary repayment as provided in Section
4.01 and mandatory repayment as provided in Section 4.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(c) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the date of the issuance thereof, (iii) be in a stated
principal amount equal to the Revolving Loan Commitment of such Bank and be
payable in the principal amount of the Revolving Loans evidenced thereby, (iv)
mature on the Final Maturity Date, (v) bear interest as
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provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to voluntary repayment as provided in Section 4.01 and mandatory
repayment as provided in Section 4.02 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(d) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo or its registered assigns and be
dated the date of the issuance thereof, (iii) be in a stated principal amount
equal to the Maximum Swingline Amount and be payable in the principal amount of
the outstanding Swingline Loans evidenced thereby from time to time, (iv) mature
on the Swingline Expiry Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans evidenced thereby and
(vi) be entitled to the benefits of this Agreement and the other Credit
Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation or endorsement shall not affect the Borrower's
obligations in respect of such Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert, on
any Business Day occurring after the Initial Borrowing Date, all or a portion
equal to at least $1,000,000 of the outstanding principal amount of Loans made
to the Borrower pursuant to one or more Borrowings under a single Tranche into a
Borrowing or Borrowings of another Type of Loan under such Tranche, PROVIDED
that (i) except as otherwise provided in Section 1.10(b), Eurodollar Loans may
be converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Loans being converted and no such partial conversion of
Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than $1,000,000,
(ii) unless the Required Banks otherwise specifically agree in writing, Base
Rate Loans may only be converted into Eurodollar Loans if no Specified Default
and no Event of Default is in existence on the date of the conversion, (iii)
prior to the earlier to occur of (x) the Term Loan Syndication Date and (y) the
60th day after the Restatement Effective Date or, if later, the last day of the
Interest Period applicable to any Borrowing of Term Loans which began before,
but expires after, said 60th day, conversions of Term Loans of any Type into
Eurodollar Loans may only be made if such conversion is effected on the first
day of the first or second Interest Period referred to in clause (B) of Section
1.01(d)(ii) and so long as such conversion does not result in a greater number
of Borrowings of Eurodollar Loans than are permitted under Section 1.01(d)(ii),
(iv) no conversion pursuant to this Section 1.06 shall result in a greater
number of Borrowings of Eurodollar Loans than is permitted under Section 1.02
and (v) Swingline Loans may not be converted pursuant to this Section 1.06.
Each such conversion shall be effected by the Borrower by giving the
Administrative Agent at its Notice Office prior to 1:00 P.M. (New York time) at
least three Business
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Days' prior notice (each, a "Notice of Conversion") specifying the Loans to be
so converted, the Borrowing or Borrowings pursuant to which such Loans were made
and, if to be converted into Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed con- version affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All Borrowings of Term Loans and Revolving
Loans under this Agreement shall be incurred from the Banks PRO RATA on the
basis of their Term Loan Commitments or Revolving Loan Commitments, as the case
may be; PROVIDED that all Borrowings of Revolving Loans made pursuant to a
Mandatory Borrowing shall be incurred from the Banks PRO RATA on the basis of
their Adjusted Percentages. It is understood that no Bank shall be responsible
for any default by any other Bank of its obligation to make Loans hereunder and
that each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to make its Loans
hereunder.
1.08 INTEREST. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Base Rate Loan and (ii) the
conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.06,
at a rate per annum which shall be equal to the sum of the Base Rate in effect
from time to time plus the relevant Applicable Margin.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the earlier of (i) the maturity (whether by
acceleration or otherwise) of such Eurodollar Loan and (ii) the conversion of
such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10,
as applicable, at a rate per annum which shall, during each Interest Period
applicable thereto, be equal to the sum of the Eurodollar Rate for such Interest
Period plus the relevant Applicable Margin.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (y) the rate which is 2% in excess of the rate then borne
by such Loans, in each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each
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Loan. on any repayment or prepayment (on the amount repaid or prepaid), and in
respect of each Loan, at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for the respective Interest Period or
Interest Periods and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 INTEREST PERIODS. At the time the Borrower gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by having an
Authorized Representative of the Borrower give the Administrative Agent notice
thereof, the interest period (each, an "Interest Period") applicable to such
Eurodollar Loan, which Interest Period shall, at the option of the Borrower, be
a one, two, three or six-month period or, to the extent approved by all Banks
with a Commitment or outstanding Loans, as the case may be, of the respective
Tranche, a nine or twelve-month period; PROVIDED that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, HOWEVER, that if any Interest Period for
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
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(v) unless the Required Banks otherwise specifically agree in writing,
no Interest Period may be selected at any time when a Specified Default or
any Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any Tranche
shall be selected which extends beyond the respective Maturity Date for
such Tranche of Loans;
(vii) no Interest Period in respect of any Borrowing of Revolving
Loans shall be selected which extends beyond any date upon which a
Scheduled Commitment Reduction will be required to be made under Section
3.03(c) if the aggregate principal amount of such Revolving Loans which
have Interest Periods which will expire after such date, when added to the
Stated Amount of all Letters of Credit which by their terms expire after
such date, will be in excess of the Total Revolving Loan Commitment as same
will be in effect after giving effect to the respective Scheduled
Commitment Reduction; and
(viii) no Interest Period in respect of any Borrowing of Term Loans
shall be selected which extends beyond any date upon which a mandatory
repayment of such Term Loans will be required to be made under Section
4.02(c) if the aggregate principal amount of such Term Loans which have
Interest Periods which will expire after such date will be in excess of the
aggregate principal amount of such Term Loans then outstanding less the
aggregate amount of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any changes
arising after the date of this Agreement affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable
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law or governmental rule, regulation, order, guideline or request (whether
or not having the force of law) or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any Bank of
the principal of or interest on such Eurodollar Loan or any other amounts
payable hereunder (except for changes in the rate of tax on, or determined
by reference to, the net income or net profits of such Bank, or any
franchise tax based on the net income or net profits of such Bank, in
either case pursuant to the laws of the United States of America, the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or
therein), but without duplication of any amounts payable in respect of
Taxes pursuant to Section 4.04(a), or (B) a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Eurodollar
Rate and/or (y) other circumstances since the date of this Agreement
affecting such Bank or the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks), Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower agrees to pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to the Borrower
by such Bank in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto, although the failure to give any such
notice shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this Section 1.10(a) upon the
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subsequent receipt of such notice) and (z) in the case of clause (iii) above,
the Borrower shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
Each of the Administrative Agent and each Bank agrees that if it gives notice to
the Borrower of any of the events described in clause (i) or (iii) above, it
shall promptly notify the Borrower and, in the case of any such Bank, the
Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations of
such Bank to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank or
the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan, PROVIDED that, (i) any unaffected
Bank shall continue to be obligated to extend its portion of the respective
Borrowing as Eurodollar Loans (unless the respective Borrowing is canceled or
the Borrower elects to convert same into Base Rate Loans) and (ii) if more than
one Bank is affected at any time, then all affected Banks must be treated the
same pursuant to this Section 1.10(b).
(c) If at any time after the date of this Agreement any Bank
determines that the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Commitment or
Commitments hereunder or its obligations hereunder, then the Borrower agrees to
pay to such Bank, upon its written demand therefor, such additional amounts as
shall be required to compensate such Bank or such other corporation for the
increased cost to such Bank or such other corporation or the reduction in the
rate of return to such Bank or such other corporation as a result of such
increase of capital. In determining such additional amounts, each Bank will act
reasonably and in good faith and will use averaging and attribution methods
which are reasonable, PROVIDED that such Bank's reasonable good faith
determination of compensation owing under this Section 1.10(c) shall, absent
manifest error, be final and conclusive and binding on all the parties hereto.
Each Bank, upon determining that any additional amounts will be payable pursuant
to this Section 1.10(c), will give written notice thereof to the Borrower (a
copy of which shall be sent by such Bank to the Administrative Agent), which
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notice shall show the basis for calculation of such additional amounts, although
the failure to give any such notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
1.11 COMPENSATION. The Borrower agrees, subject to the provisions of
Section 13.18. to compensate each Bank, upon its written request (which request
shall set forth the basis for requesting such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Bank to fund its Eurodollar Loans but
excluding any loss of anticipated profit) which such Bank may sustain: (i) if
for any reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
Section 1.10(a)); (ii) if any repayment (including any repayment made pursuant
to Section 4.02 or as a result of an acceleration of the Loans pursuant to
Section 10 or as a result of the replacement of a Bank pursuant to Section 1.13,
4.01 or 13.12(b)) or conversion of any of its Eurodollar Loans occurs on a date
which is not the last day of an Interest Period with respect thereto; (iii) if
any prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by the Borrower; or (iv) as a consequence of
(x)any other default by the Borrower to repay its Loans when required by the
terms of this Agreement or any Note held by such Bank or (y) any election made
pursuant to Section 1.10(b). A Bank's basis for requesting compensation
pursuant to this Section 1.11 and a Bank's calculation of the amount thereof,
shall, absent manifest error, be final and conclusive and binding on all parties
hereto.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, PROVIDED that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the rights of any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 REPLACEMENT OF BANKS. If any Bank (x) becomes a Defaulting
Bank, (y) refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 4.01 or 13.12(b), or (z) is owed increased
costs under any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04
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in a material amount in excess of those being generally charged by the other
Banks, the Borrower shall have the right, in accordance with the requirements of
Section 13.04(b), if no Default or Event of Default will exist immediately after
giving effect to the respective replacement, to replace such Bank (the "Replaced
Bank") with one or more Eligible Transferee or Eligible Transferees
(collectively, the "Replacement Bank"), none of whom shall constitute a
Defaulting Bank at the time of such replacement and each of whom shall be
reasonably acceptable to the Administrative Agent or, at the option of the
Borrower, to replace only (a) the Revolving Loan Commitment (and outstandings
pursuant thereto) of the Replaced Bank with an identical Revolving Loan
Commitment provided by the Replacement Bank or (b) in the case of a replacement
as provided in Sections 4.01 and/or 13.12(b) where the consent of the respective
Bank is required with respect to less than all Tranches of its Loans or
Commitments, the Commitments and/or outstanding Loans of such Bank in respect of
each Tranche where the consent of such Bank would otherwise be individually
required, within identical Commitments and/or Loans of the respective Tranche
provided by the Replacement Bank; PROVIDED that:
(i) at the time of any replacement pursuant to this Section 1.13, the
Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 13.04(b) (and with all fees payable pursuant
to said Section 13.04(b) to be paid by the Replacement Bank) pursuant to
which the Replacement Bank shall acquire all of the Commitments and all
outstanding Loans of, and participations in Letters of Credit by (or, in
the case of the replacement of only (a) the Revolving Loan Commitment, the
Revolving Loan Commitment and outstanding Revolving Loans and
participations in Letter of Credit Outstandings or (b) the Term Loans, the
outstanding Term Loans), the Replaced Bank and, in connection therewith,
shall pay to (x) the Replaced Bank in respect thereof an amount equal to
the sum of (A) an amount equal to the principal of, and all accrued
interest on, all outstanding Loans (or, in the case of the replacement of
only (I) the Revolving Loan Commitment, the outstanding Revolving Loans or
(II) the Term Loans, the outstanding Term Loans) of the Replaced Bank, (B)
except in the case of the replacement of only the outstanding Term Loans of
a Replaced Bank, an amount equal to all Unpaid Drawings (unless there are
no Unpaid Drawings) that have been funded by (and not reimbursed to) such
Replaced Bank, together with all then unpaid interest with respect thereto
at such time and (C) an amount equal to all accrued, but theretofore
unpaid, Fees owing to the Replaced Bank (but only with respect to the
relevant Tranche, in the case of the replacement of less than all Tranches
of Loans then held by the respective Replaced Bank) pursuant to Section
3.01, (y) except in the case of replacement of only the outstanding Term
Loans of a Replaced Bank, the respective Issuing Bank an amount equal to
such Replaced Bank's Adjusted Percentage (in each case for this purpose,
determined as if the adjustment described in clause (y) of the immediately
succeeding sentence had been made with respect to such Replaced Bank) of
any Unpaid Drawing (which at such time remains an Unpaid Drawing) with
respect to Letters of Credit issued by such
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Issuing Bank to the extent such amount was not theretofore funded by such
Replaced Bank and (z) in the case of any replacement of Revolving Loan
Commitments, BTCo an amount equal to such Replaced Bank's Adjusted
Percentage (in each case for this purpose, determined as if the adjustment
described in clause (y) of the immediately succeeding sentence had been
made with respect to such Replacement Bank) of any Mandatory Borrowing to
the extent such amount was not theretofore funded by such Replaced Bank;
and
(ii) all obligations of the Borrower owing to the Replaced Bank
(other than those (a) specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concurrently being,
paid or (b) relating to any Tranche of Loans and/or Commitments of the
respective Replaced Bank which will remain outstanding after giving effect
to the respective replacement) shall be paid in full to such Replaced Bank
concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreement,
the payment of amounts referred to in clauses (i) and (ii) above, recordation
of the assignment on the Register by the Administrative Agent pursuant to
Section 13.16 and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note or Notes executed by the Borrower,
(x) the Replacement Bank shall become a Bank hereunder and, unless the
respective Replaced Bank continues to have outstanding Term Loans or a
Revolving Loan Commitment hereunder, the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections
1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to such
Replaced Bank and (y) except in the case of the replacement of only
outstanding Term Loans, in the case of a replacement of a Defaulting Bank
with a Non-Defaulting Bank, the Adjusted Percentages of the Banks shall be
automatically adjusted at such time to give effect to such replacement (and
to give effect to the replacement of a Defaulting Bank with one or more
Non-Defaulting Banks).
SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and conditions
herein set forth, the Borrower may request an Issuing Bank, at any time and from
time to time on and after the Initial Borrowing Date and prior to the tenth
Business Day (or the 30th day in the case of Trade Letters of Credit) preceding
the Final Maturity Date to issue, (x) for the account of the Borrower and for
the benefit of any holder (or any trustee, agent or other similar representative
for any such holders) of L/C Supportable Indebtedness, irrevocable standby
letters of credit in a form customarily used by such Issuing Bank or in such
other form as has been approved by such Issuing Bank (each such standby letter
of credit, a "Standby Letter of Credit") in support of such L/C Supportable
Indebtedness and (y) for the account of the Borrower and for the benefit of
sellers of goods to the Borrower, any Subsidiary Guarantor or, at any time prior
to the WTI Subsidiaries Guaranty Date,
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WTI or any of its Wholly-Owned Subsidiaries in the ordinary course of business,
irrevocable sight trade letters of credit in a form customarily used by such
Issuing Bank or in such other form as has been approved by such Issuing Bank
(each such trade letter of credit, a "Trade Letter of Credit", and each such
Standby Letter of Credit and Trade Letter of Credit, a "Letter of Credit" and
collectively, the "Letters of Credit"). All Letters of Credit shall be
denominated in Dollars.
(b) Subject to and upon the terms and conditions set forth herein,
each Issuing Bank hereby agrees that it will, at any time and from time to time
on and after the Initial Borrowing Date and prior to the tenth Business Day (or
the 30th day in the case of Trade Letters of Credit) preceding the Final
Maturity Date, following its receipt of the respective Letter of Credit Request,
issue for the account of the Borrower one or more Letters of Credit, (x) in the
case of Trade Letters of Credit, in support of trade obligations of the
Borrower, any Subsidiary Guarantor or, at any time prior to the WTI Subsidiaries
Guaranty Date, WTI or any of its Wholly-Owned Subsidiaries, that arise in the
ordinary course of business or (y) in the case of Standby Letters of Credit, in
support of such L/C Supportable Indebtedness as is permitted to remain
outstanding without giving rise to a Default or Event of Default hereunder;
provided that the respective Issuing Bank shall be under no obligation to issue
any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital requirement
(for which such Issuing Bank is not otherwise compensated) not in effect on
the date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date hereof
and which such Issuing Bank in good faith deems material to it;
(ii) such Issuing Bank shall have received written notice from the
Required Banks prior to the issuance of such Letter of Credit of the type
described in the last sentence of Section 2.03(b); or
(iii) a Bank Default exists, unless such Issuing Bank has entered into
arrangements satisfactory to it and the Borrower to eliminate such Issuing
Bank's risk with respect to the Bank which is the subject of the Bank
Default, including by cash collateralizing such Bank's Percentage of the
Letter of Credit Outstandings.
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(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $35,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans of Non-Defaulting Banks and all Swingline Loans
then outstanding, an amount equal to the Adjusted Total Available Revolving Loan
Commitment then in effect, (ii) no Letter of Credit shall be issued (including
for this purpose all Existing Letters of Credit which also constitute WTI
Letters of Credit as provided in clause (d)(ii) below) for the benefit of WTI
and/or its Subsidiaries the Stated Amount of which, when added to the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the date
of, and prior to the issuance of, the respective Letter of Credit) in respect of
WTI Letters of Credit at such time, would exceed 520,000,000 (iii) (x) each
Standby Letter of Credit shall by its terms terminate on or before the date
which occurs 12 months after the date of the issuance thereof (although any such
Standby Letter of Credit may be extendable for successive periods of up to 12
months, but not beyond the tenth Business Day preceding the Final Maturity Date,
on terms acceptable to the respective Issuing Bank) and (y) each Trade Letter of
Credit shall by its terms terminate on or before the date occurring not later
than 360 days after such Trade Letter of Credit's date of issuance and (iv) (x)
no Standby Letter of Credit shall have an expiry date occurring later than the
tenth Business Day preceding the Final Maturity Date and (y) no Trade Letter of
Credit shall have an expiry date occurring later than 30 days prior to the Final
Maturity Date.
(d) Schedule III hereto contains a description of all letters of
credit issued pursuant to the Existing Credit Agreement or the WTI Credit
Agreement and outstanding on the Effective Date. Each such letter of credit,
including any extension or renewal thereof (each, as amended from time to time
in accordance with the terms thereof and hereof, an "Existing Letter of Credit")
shall constitute a "Letter of Credit" for all purposes of this Agreement,
issued, for purposes of Section 2.04(a), on (x) in the case of such letters of
credit issued pursuant to the Existing Credit Agreement, the Initial Borrowing
Date and (y) in the case of such letters of credit issued pursuant to the WTI
Credit Agreement, the Restatement Effective Date. For purposes of this
Agreement, (i) each Existing Letter of Credit shall be treated as if issued by
BTCo, notwithstanding the fact that the issuer thereof is BT Commercial
Corporation (with BTCo and BT Commercial Corporation to agree amongst themselves
as to the distribution of payments made pursuant to this Agreement with respect
to the Existing Letters of Credit) and (ii) each Existing Letter of Credit
issued pursuant to the WTI Credit Agreement shall also constitute a "WTI Letter
of Credit" for all purposes of this Agreement. With respect to each Existing
Letter of Credit which constitutes a WTI Letter of Credit, the Borrower shall be
fully obligated as the account party with respect to each such Letter of Credit
as provided in this Section 2, without releasing any of the obligations of WTI
as the original account party with respect to such letter of credit.
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2.02 MINIMUM STATED AMOUNT. The Stated Amount of each Letter of
Credit upon issuance shall be not less than $50,000 or such lesser amount as is
acceptable to the respective Issuing Bank.
2.03 LETTER OF CREDIT REQUESTS. (a) Whenever the Borrower desires
that a Letter of Credit be issued for its account, the Borrower shall give the
Administrative Agent and the respective Issuing Bank at least 5 days' (or such
shorter period as is acceptable to such Issuing Bank in any given case) written
notice prior to the proposed date of issuance (which shall be a Business Day).
Each notice shall be in the form of Exhibit C (each, a "Letter of Credit
Request") and, if given on or after the Restatement Effective Date, shall
specify whether or not the respective Letter of Credit will constitute a TC
Letter of Credit or a WTI Letter of Credit.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.01(c). Unless the respective Issuing Bank has received notice from the
Required Banks before it issues a Letter of Credit that one or more of the
applicable conditions specified in Section 5 or 6, as the case may be, are not
then satisfied, or that the issuance of such Letter of Credit would violate
Section 2.01(c), then such Issuing Bank may issue the requested Letter of Credit
for the account of the Borrower in accordance with such Issuing Bank's usual and
customary practices.
2.04 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall be
deemed to have sold and transferred to each Bank with a Revolving Loan
Commitment, other than such Issuing Bank (each such Bank, in its capacity under
this Section 2.04, a "Participant"), and each such Participant shall be deemed
irrevocably and unconditionally to have purchased and received from such Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Participant's Adjusted Percentage, in such Letter of Credit,
each substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Loan Commitments or Adjusted Percentages of the Banks pursuant to
Section 1.13 or 13.04, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this Section 2.04 to reflect the new Adjusted
Percentages of the assignor and assignee Bank or of all Banks with Revolving
Loan Commitments, as the case may be.
(b) In determining whether to pay under any Letter of Credit, such
Issuing Bank shall have no obligation relative to the other Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to substantially comply on
their face with the requirements of
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such Letter of Credit. Any action taken or omitted to be taken by any Issuing
Bank under or in connection with any Letter of Credit issued by it if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for such Issuing Bank any resulting liability to the Borrower or any
Bank.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit issued by it and the Borrower shall not have reimbursed such
amount in full to such Issuing Bank pursuant to Section 2.05(a), such Issuing
Bank shall promptly notify the Administrative Agent, which shall promptly notify
each Participant of such failure, and each Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Issuing
Bank the amount of such Participant's Adjusted Percentage of such unreimbursed
payment in Dollars and in same day funds. If the Administrative Agent so
notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to the Administrative Agent at the Payment
Office of the Administrative Agent for the account of the respective Issuing
Bank in Dollars such Participant's Adjusted Percentage of the amount of such
payment on such Business Day in same day funds. If and to the extent such
Participant shall not have so made its Adjusted Percentage of the amount of such
payment available to the Administrative Agent for the account of the respective
Issuing Bank, such Participant agrees to pay to the Administrative Agent for the
account of such Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent for the account of such Issuing Bank at the
overnight Federal Funds Rate. The failure of any Participant to make available
to the Administrative Agent for the account of the respective Issuing Bank its
Adjusted Percentage of any payment under any Letter of Credit issued by it shall
not relieve any other Participant of its obligation hereunder to make available
to the Administrative Agent for the account of such Issuing Bank its Adjusted
Percentage of any such Letter of Credit on the date required, as specified
above, but no Participant shall be responsible for the failure of any other
Participant to make available to the Administrative Agent for the account of
such Issuing Bank such other Participant's Adjusted Percentage of any such
payment.
(d) Whenever any Issuing Bank receives a payment of a reimbursement
obligation as to which the Administrative Agent has received for the account of
such Issuing Bank any payments from the Participants pursuant to clause (c)
above, such Issuing Bank shall pay to the Administrative Agent and the
Administrative Agent shall promptly pay each Participant which has paid its
Adjusted Percentage thereof, in Dollars and in same day funds an amount equal to
such Participant's share (based on the proportionate aggregate amount funded by
such Participant to the aggregate amount funded by all Participants) of the
principal amount of such reimbursement obligation and interest thereon accruing
after the purchase of the respective participations.
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(e) Immediately after the issuance of, or amendment to, a Standby
Letter of Credit, each Issuing Bank shall immediately notify the Administrative
Agent of such issuance or amendment, as the case may be, and such notice shall
be accompanied by a copy of the issued Letter of Credit or amendment, as the
case may be.
(f) Each Issuing Bank (other than BTCo) shall deliver to the
Administrative Agent, promptly on the first Business Day of each week, by
facsimile transmission, the aggregate daily Stated Amount available to be drawn
under the outstanding Trade Letters of Credit issued by such Issuing Bank for
the previous week. The Administrative Agent shall, within 10 days after the
last Business Day of each calendar month, deliver to each Participant a report
setting forth for such period the aggregate daily Stated Amount available to be
drawn under all outstanding Trade Letters of Credit during the preceding
calendar month.
(g) The obligations of the Participants to make payments to the
Administrative Agent for the account of the respective Issuing Bank with respect
to Letters of Credit issued by it shall be irrevocable and not subject to any
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the Credit Documents;
(ii) the existence of any claim, setoff, defense or other right which
any Credit Party or any of its Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, any Bank, any Issuing Bank, any Participant, or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between any Credit Party or any of
its Subsidiaries and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default;
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PROVIDED, that the Participants shall not be obligated to reimburse such Issuing
Bank for any wrongful payment made by such Issuing Bank under a Letter of Credit
issued by it as a result of acts or omissions constituting willful misconduct or
gross negligence on the part of such Issuing Bank. Any action taken or omitted
to be taken by any Issuing Bank under or in connection with any Letter of Credit
if taken or omitted in the absence of gross negligence or willful misconduct
shall not create for such Issuing Bank any resulting liability to the
Participant.
2.05 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse the respective Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office (or by
making the payment directly to such Issuing Bank at such location as may
otherwise have been agreed upon by the Borrower and such Issuing Bank), for any
payment or disbursement made by such Issuing Bank under any Letter of Credit
issued by it (each such amount so paid until reimbursed, an "Unpaid Drawing"),
not later than the third Business Day after the Administrative Agent or the
Issuing Bank notifies the Borrower of such payment or disbursement, with
interest on the amount so paid or disbursed by such Issuing Bank, to the extent
not reimbursed prior to 1:00 P.M. (New York time) on the date of such payment
or disbursement, from and including the date paid or disbursed to but excluding
the date such Issuing Bank is reimbursed by the Borrower therefor at a rate per
annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Revolving Loans maintained as Base Rate Loans; PROVIDED,
HOWEVER, to the extent such amounts are not reimbursed prior to 1:00P.M. (New
York time) on the third Business Day following notice to the Borrower by the
Administrative Agent or the respective Issuing Bank of such payment or
disbursement, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Bank (and until reimbursed by the Borrower) at a
rate per annum which shall be the Base Rate in effect from time to time plus
the Applicable Margin for Revolving Loans maintained as Base Rate Loans plus
2%,in each such case, with interest to be payable on demand; PROVIDED
FURTHER, that it is understood and agreed, however, that the notices referred
to above in this clause (a) and in the immediately preceding proviso shall
not be required to be given if a Default or an Event of Default under Section
10.05 shall have occurred and be continuing (in which case the Unpaid
Drawings shall be due and payable immediately without presentment, demand,
protest or notice of any kind (all of which are hereby waived by each Credit
Party) and shall bear interest at the rate provided in the foregoing
provision and after the third Business Day following the respective Drawing).
The respective Issuing Bank shall give the Borrower prompt notice of each
Drawing under any Letter of Credit, PROVIDED that the failure to give any
such notice shall in no way affect, impair or diminish the Borrower's
obligations hereunder.
(b) The obligation of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any set off, counterclaim or
defense to payment which any Credit Party may
- 21 -
<PAGE>
have or have had against any Bank (including in its capacity as Issuing Bank or
as Participant), including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit (each, a "Drawing") to conform
to the terms of such Letter of Credit or any nonapplication or misapplication by
the beneficiary of the proceeds of such Drawing; the respective Issuing Bank's
only obligation to the Borrower being to confirm that any documents required to
be delivered under such Letter of Credit appear to have been delivered and that
they appear to substantially comply on their face with requirements of such
Letter of Credit; PROVIDED, HOWEVER, that the Borrower shall not be obligated to
reimburse such Issuing Bank for any wrongful payment made by such Issuing Bank
under a Letter of Credit issued by it as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Issuing
Bank. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct shall not create for such Issuing Bank any
resulting liability to the Borrower.
2.06 INCREASED COSTS. If at any time after the date of this Agreement any
Issuing Bank or any Participant determines that the introduction of or any
change in any applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Issuing Bank or any Participant with any request or directive by any such
authority (whether or not having the force of law) shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against Letters of Credit issued by any Issuing Bank or participated
in by any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement or any
Letter of Credit, and the result of any of the foregoing is to increase the cost
to any Issuing Bank or any Participant of issuing, maintaining or participating
in any Letter of Credit, or reduce the amount of any sum received or receivable
by any Issuing Bank or any Participant hereunder or reduce the rate of return on
its capital with respect to Letters of Credit, then, upon demand to the Borrower
by any Issuing Bank or any Participant (a copy of which demand shall be sent by
such Issuing Bank or such Participant to the Administrative Agent), the Borrower
shall pay to such Issuing Bank or such Participant such additional amount or
amounts as will compensate such Bank for such increased cost or reduction in the
amount receivable or reduction on the rate of return on its capital. Any
Issuing Bank or any Participant, upon determining that any additional amounts
will be payable pursuant to this Section 2.06, will give prompt written notice
thereof to the Borrower, which notice shall include a certificate submitted to
the Borrower by such Issuing Bank or such Participant (a copy of which
certificate shall be sent by such Issuing Bank or such Participant to the
Administrative Agent), setting forth the basis for the calculation of such
additional amount or amounts necessary to compensate such Issuing Bank or such
Participant, although failure to give any such notice shall not release or
diminish the Borrower's obligations to pay additional amounts pursuant to this
Section 2.06. The certificate required to be delivered
- 22 -
<PAGE>
pursuant to this Section 2.06 shall, absent manifest error, be final, conclusive
and binding on the Borrower.
SECTION 3. COMMITMENT COMMISSION; FEES; REDUCTIONS OF COMMITMENT.
3.01 FEES. (a) The Borrower agrees to pay to the Administrative
Agent for distribution to each Non-Defaulting Bank with a Revolving Loan
Commitment a commitment commission (the "RL Commitment Commission") for the
period from the Effective Date to but excluding the Final Maturity Date (or such
earlier date as the Total Revolving Loan Commitment shall have been terminated),
computed at a rate for each day equal to the Applicable RL Margin on the daily
average Unutilized Revolving Loan Commitment of such Non-Defaulting Bank as in
effect from time to time. Accrued RL Commitment Commission shall be due and
payable quarterly in arrears on each Quarterly Payment Date and on the Final
Maturity Date or such earlier date upon which the Total Revolving Loan
Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for pro
rata distribution to each Non-Defaulting Bank with a Revolving Loan Commitment
(based on their respective Adjusted Percentages) a fee in respect of each Letter
of Credit issued hereunder (the "Letter of Credit Fee"), for the period from and
including the date of issuance of such Letter of Credit through the termination
of such Letter of Credit, computed at a rate per annum equal to the Applicable
RL Margin for Eurodollar Loans, as in effect from time to time, on the daily
Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees shall be
due and payable quarterly in arrears on each Quarterly Payment Date and upon the
first day on or after the termination of the Total Revolving Loan Commitment
upon which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, a facing fee in respect of each Letter of Credit issued for its
own account hereunder (the "Facing Fee") as may be agreed upon by the Borrower
and the respective Issuing Bank. Facing Fees shall be payable at the times
agreed upon between the Borrower and the respective Issuing Bank.
(d) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, upon each payment under, issuance of, or amendment to, any
Letter of Credit, such amount as shall at the time of such event be the
administrative charge (including reasonable expenses) which such Issuing Bank is
generally imposing in connection with such occurrence with respect to letters of
credit.
(e) The Borrower agrees to pay to each Agent, for its own account,
such other fees as have been agreed to in writing by the Borrower and the
Agents.
- 23 -
<PAGE>
3.02 VOLUNTARY TERMINATION OF UNUTILIZED COMMITMENTS. (a) Upon at
least three Business Days' prior notice from an Authorized Representative of the
Borrower to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), the Borrower
shall have the right, at any time or from time to time, without premium or
penalty, to terminate the Total Unutilized Revolving Loan Commitment, in whole
or in part, in integral multiples of $1,000,000 in the case of partial
reductions, PROVIDED that (i) each such reduction shall apply proportionately to
permanently reduce the Revolving Loan Commitment of each Bank with such a
Commitment, (ii) any reduction to the Total Unutilized Revolving Loan
Commitment shall in no case be in an amount which would cause the Revolving Loan
Commitment of any Bank to be reduced (as required by preceding clause (i)) by an
amount which exceeds the remainder of (x) the Unutilized Revolving Loan
Commitment of such Bank as in effect immediately before giving effect to such
reduction minus (y) such Bank's Adjusted Percentage of the aggregate principal
amount of Swingline Loans then outstanding and (iii) any partial reduction to
the Total Revolving Loan Commitment pursuant to this Section 3.02(a) shall apply
to reduce the remaining Scheduled Commitment Reductions on a PRO RATA basis
(based upon the then remaining amount of each such Scheduled Commitment
Reduction).
(b) In the event of certain refusals by a Bank as provided in Section
4.01 or 13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower may, subject to the applicable requirements of said
Sections 4.01 and/or 13.12(b) (and with the specific consent of the Required
Banks (determined before giving effect to the proposed action) unless all
Commitments being terminated as described in this Section 3.02(b) are
immediately replaced pursuant to Section 1.13), upon five Business Days' written
notice to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks) terminate all
of the Revolving Loan Commitment of such Bank, so long as all Loans, together
with accrued and unpaid interest, Fees and all other amounts, owing to such Bank
(other than amounts owing in respect of Term Loans maintained by such Bank, if
such Term Loans are not being repaid as provided in Section 4.01) are repaid
concurrently with the effectiveness of such termination (at which time Schedule
I shall be deemed modified to reflect such changed amounts), and at such time,
unless the respective Bank continues to have outstanding Term Loans hereunder,
such Bank shall no longer constitute a "Bank" for purposes of this Agreement,
except with respect to indemnifications under this Agreement (including, with-
out limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall
survive as to such repaid Bank: Unless otherwise specifically agreed in writing
by the Required Banks, any reduction to the Total Revolving Loan Commitment
pursuant to this Section 3.02(b) shall apply to reduce the remaining Scheduled
Commitment Reductions on a PRO RATA basis (based upon the then remaining amount
of each such Scheduled Commitment Reduction after giving effect to all prior
reductions thereto).
- 24 -
<PAGE>
3.03 MANDATORY REDUCTION OF COMMITMENTS. (a) The Total Commitment
(and the Term Loan Commitment and the Revolving Loan Commitment of each Bank)
shall terminate in its entirety on June 3, 1996 unless the Restatement Effective
Date shall have occurred on or prior to such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Term Loan Commitment (and the Term Loan
Commitment of each Bank) shall (i) terminate in its entirety on the Term Loan
Borrowing Date (after giving effect to the incurrence of Term Loans on such
date) and (ii) prior to the termination of the Total Term Loan Commitment as
provided in clause (i) above, be reduced from time to time to the extent
required by Section 4.02.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the Final
Maturity Date.
(4) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date set forth below (each, a "Scheduled
Commitment Reduction Date"), the Total Revolving Loan Commitment shall be
reduced by the amount set forth opposite such Scheduled Commitment Reduction
Date below (each such reduction, as the same may be reduced as provided in
Sections 3.02, 3.03(f) and 4.02(i), a "Scheduled Commitment Reduction"):
<TABLE>
<CAPTION>
Scheduled Commitment
Reduction Date Amount
-------------------- ------
<S> <C>
December 31, 1998 $ 33,333,333
December 31, 1999 $ 33,333,333
December 31, 2000 $ 33,333,333
Final Maturity Date $250,000,001
</TABLE>
(e) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment shall be reduced from
time to time to the extent required by Section 4.02.
(f) Any amount required to be applied to reduce the Total Revolving
Loan Commitment pursuant to this Section 3.03 (or pursuant to Section 4.02)
shall be applied to reduce the then remaining Scheduled Commitment Reductions
PRO RATA based upon the then remaining amount of such Scheduled Commitment
Reductions after giving effect to all prior reductions thereto.
(g) Each reduction to the Total Term Loan Commitment or Total
Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant to Section
4.02) shall be
-25-
<PAGE>
applied proportionately to reduce the Term Loan Commitment or the Revolving Loan
Commitment, as the case may be, of each Bank with such a Commitment
SECTION 4. PREPAYMENTS; PAYMENTS; TAXES.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay the Loans, and the right to allocate such prepayments to Revolving Loans
and/or Term Loans as the Borrower elects, without premium or penalty, in whole
or in part at any time and from time to time on the following terms and
conditions:
(i) an Authorized Representative of the Borrower shall give the
Administrative Agent prior to 1:00 P.M. (New York time) at its Notice
Office (x) at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of the Borrower's intent to prepay
Base Rate Loans (or same day notice in the case of Swingline Loans provided
such notice is given prior to 12:00 Noon (New York time)) and (y) at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Eurodollar Loans, whether
Term Loans, Revolving Loans or Swingline Loans shall be prepaid, the amount
of such prepayment and the Types of Loans to be prepaid and, in the case of
Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which
made, which notice the Administrative Agent shall promptly transmit to each
of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of at
least $1,000,000 (or $500,000 in the case of Swingline Loans), PROVIDED that
if any partial prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than $1,000,000, then such Borrowing may
not be continued as a Borrowing of Eurodollar Loans and any election of an
Interest Period with respect thereto given by the Borrower shall have no
force or effect;
(iii) at the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of the Interest
Period applicable thereto, the Borrower shall pay the amounts required
pursuant to Section 1.11;
(iv) each prepayment in respect of any Loans made pursuant to a
Borrowing shall, except as provided in clauses (v), (vi) and (vii) below,
be applied PRO RATA among such Loans;
(v) in the event of certain refusals by a Bank as provided in
Section 13.12(b) to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks, the Borrower may, upon five Business Days'
written notice by an
-26-
<PAGE>
Authorized Representative of the Borrower to the Administrative Agent at
its Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks) repay all Revolving Loans, together with
accrued and unpaid interest, Fees, and other amounts owing to such Bank in
accordance with, and subject to the requirements of, said Section 13.12(b)
so long as (A) the Revolving Loan Commitment of such Bank is terminated
concurrently with such repayment (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments) and (B) the
consents required by Section 13.12(b) in connection with the repayment
pursuant to this clause (v) have been obtained;
(vi) in the event of certain refusals by a Bank as provided below in
this Section 4.01 to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks, the Borrower may, upon five Business Days'
written notice by an Authorized Representative of the Borrower to the
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks) repay all Term Loans,
together with accrued and unpaid interest, Fees, and other amounts owing to
such Bank in accordance with, and subject to the requirements of, this
Section 4.01 so long as the consents required by this Section 4.01 in
connection with the repayment pursuant to this clause (vi) have been
obtained;
(vii) at the Borrower's election in connection with any prepayment of
Revolving Loans pursuant to this Section 4.01, such prepayment shall not be
applied to the prepayment of Revolving Loans of a Defaulting Bank; and
(viii) each prepayment of principal of Term Loans pursuant to this
Section 4.01 shall be applied to reduce the then remaining Term Loan
Scheduled Repayments on a PRO RATA basis (based upon the then remaining
principal amount of Term Loan Scheduled Repayments after giving effect to
all prior reductions thereto).
In connection with Section 1.13 and the foregoing clause (vi), the Banks and the
Borrower acknowledge and agree that if, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (vii), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose individual consent is required is not
obtained, then the Borrower shall have the right, so long as all non-consenting
Banks whose individual consent is required are treated as described in either
clause (A) or (B) below, to either (A) replace each such non-consenting Bank or
Banks with one or more Replacement Banks pursuant to Section 1.13 so long as at
the time of such replacement, each such Replacement Bank consents to the
proposed change, waiver, discharge or termination or (B) repay in full such non-
consenting Bank's outstanding Term
-27-
<PAGE>
Loans (if such Bank's consent is required as a result of its Term Loans) and
terminate its outstanding Term Loan Commitment, if any, at such time, PROVIDED
that, unless the Term Loan Commitments terminated, and Term Loans repaid,
pursuant to preceding clause (B) are immediately replaced in full at such time
through the addition of new Banks or the increase of the Term Loan Commitments
and/or outstanding Term Loans of existing Banks (who in each case must
specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined before giving effect to the
proposed action) shall specifically consent thereto, provided further, that in
any event the Borrower shall not have the right to replace a Bank, terminate its
Term Loan Commitment or repay its Term Loans solely as a result of the exercise
of such Bank's rights (and the withholding of any required consent by such Bank)
pursuant to the second proviso to Section 13.12(a).
4.02 MANDATORY REPAYMENTS, COMMITMENT REDUCTIONS AND CASH
COLLATERALIZATIONS. (a) (i) On any day on which the sum of the aggregate
outstanding principal amount of the Revolving Loans made by Non-Defaulting
Banks, Swingline Loans and the Letter of Credit Outstandings exceeds the
Adjusted Total Available Revolving Loan Commitment as then in effect, the
Borrower agrees to pay principal of Swingline Loans and, after the Swingline
Loans have been repaid in full, Revolving Loans of Non-Defaulting Banks in an
amount equal to such excess. If, after giving effect to the prepayment of all
outstanding Swingline Loans and Revolving Loans of Non-Defaulting Banks, the
aggregate amount of the Letter of Credit Outstandings exceeds the Adjusted Total
Available Revolving Loan Commitment as then in effect, the Borrower agrees to
pay to the Administrative Agent at the Payment Office on such date an amount of
cash or Cash Equivalents equal to the amount of such excess (up to a maximum
amount equal to the Letter of Credit Outstandings at such time), such cash or
Cash Equivalents to be held as security for all obligations of the Borrower
to Non-Defaulting Banks hereunder in a cash collateral account to be
established by the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal amount
of the Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Borrower shall prepay principal of
Revolving Loans of such Defaulting Bank in an amount equal to such excess.
(b) On any date, beginning 11 months after the Initial Borrowing
Date, if a Clean-Down Period shall not have occurred during the immediately
preceding eleven months, the Borrower shall repay outstanding Swingline Loans
and/or Revolving Loans (which repayments shall be made in accordance with
preceding Section 4.02(a)(i)) in an amount necessary to cause the Total
Unutilized Revolving Loan Commitment to be equal to or greater than $40,000,000
for an entire Clean-Down Period which shall begin (or continue in existence, as
the case may be) on or from such date and shall continue until a Clean-Down
Period has occurred.
-28-
<PAGE>
(c) (i) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Borrower shall be required to repay that principal amount of Term Loans, to the
extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 3.02(b), 4.01 and
4.02(i), a "Term Loan Scheduled Repayment"):
<TABLE>
<CAPTION>
Term Loan Scheduled
Repayment Date Amount
- -------------------- ------
<S> <C>
last Business Day in $750,000
December 1996
last Business Day in $750,000
December 1997
last Business Day in $750,000
December 1998
last Business Day in $750,000
December 1999
last Business Day in $750,000
December 2000
last Business Day in $750,000(1)
December 2001
last Business Day in $70,500,000(2)
December 2002 -----------
-----------
</TABLE>
(ii) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, if the aggregate principal amount of
WTI Senior Subordinated Notes outstanding on the Term Loan Contingent Repayment
Date exceeds $15,000,000, the Borrower shall be required to repay on such date
that principal amount of Term Loans as is equal to the remainder of (x) the
aggregate principal amount of WTI Senior Subordinated Notes outstanding on such
date less (y) $15,000,000. The amount of any mandatory repayment pursuant to
this clause (ii) shall apply to reduce the then remaining Term Loan Scheduled
Repayments pro rata based upon the then remaining Term Loan Scheduled Repayments
after giving effect to all prior reductions thereto.
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Restatement
Effective Date upon which Holdings or any of its Subsidiaries (including,
without limitation, the Borrower, WTI
- ---------------------
(1) If the Term Loan Maturity Date is the last Business Day of December, 2001,
the payment due on such date shall instead be $71,250,000.
(2) If the Term Loan Maturity Date is the last Business Day of December, 2001,
the payment due on the last Business Day of December, 2002 shall instead be $0.
-29-
<PAGE>
and Laser Tech) receives any proceeds from any sale or issuance of its equity
(excluding (v) Receivables Facility Assets and promissory notes received by the
Receivables Subsidiary from Holdings or any of its Subsidiaries to the extent
same constitute contributions to the capital of the Receivables Subsidiary, in
each case to the extent such contributions are permitted pursuant to Section
9.05, (w) proceeds of issuances of Holdings Common Stock or Holdings Class B
Common Stock (including as a result of the exercise of any options with regard
thereto) to employees, officers and directors of Holdings and its Subsidiaries
to the extent such proceeds do not exceed 52,500,000 in any calendar year, (x)
any equity of Holdings directly issued by it as consideration in connection with
a Permitted Transaction, where no cash proceeds are received by Holdings or any
of its Subsidiaries from such equity issuance, (y) proceeds received by any
Subsidiary of Holdings to the extent such proceeds were received from the
issuance of equity to Holdings or a Wholly-Owned Subsidiary of Holdings and (z)
proceeds from any issuance of Preferred Stock), an amount equal to 50% of the
Net Cash Proceeds of the respective sale or issuance shall be applied as a
mandatory repayment (and/or commitment reduction, as the case may be) of the
outstanding Term Loans and the Total Revolving Loan Commitment in accordance
with the requirements of Sections 4.02(i) and (j).
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Restatement
Effective Date upon which Holdings or any of its Subsidiaries receives any
proceeds from any incurrence by Holdings or any of its Subsidiaries of
Indebtedness for borrowed money (including Attributed Receivables Facility
Indebtedness incurred at any time pursuant to the Receivables Facility which in
aggregate principal amount exceeds the Receivables Facility Threshold Amount as
then in effect, but excluding other Attributed Receivables Facility Indebtedness
and Indebtedness for borrowed money permitted to be incurred pursuant to Section
9.04 (i) through (x), inclusive, as such Section is in effect on the Restatement
Effective Date) or from any issuance by Holdings or any of its Subsidiaries of
any Preferred Stock (other than (x) WTI Intercompany Preferred Stock to the
extent issued and (y) Qualified Preferred Stock to the extent the Net Cash
Proceeds received from the issuance thereof are used to refinance Existing
10-3/4% Senior Subordinated Notes), an amount equal to 100% of the Net Cash
Proceeds of the respective incurrence of Indebtedness or issuance of Preferred
Stock shall be applied as a mandatory repayment (and/or commitment reduction, as
the case may be) of the outstanding Term Loans and the Total Revolving Loan
Commitment in accordance with the requirements of Sections 4.02(i) and (j);
PROVIDED that so long as no Default or Event of Default then exists, Net Cash
Proceeds of Indebtedness incurred pursuant to Section 9.04(xi) or (xiii) and/or
Qualified Preferred Stock issued pursuant to Section 9.12 in an aggregate amount
for all Net Cash Proceeds excluded pursuant to this proviso not to exceed the
remainder of (x) $100 million minus (y) the greater of the aggregate liquidation
preference and the fair market value (at the time of issuance) of all Qualified
Preferred Stock directly issued as a component of the consideration in Permitted
Transactions (to the extent Net Cash Proceeds have not been received in respect
thereof), shall not be required to be so applied on the date of receipt
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<PAGE>
thereof to the extent that Holdings has delivered a certificate to the
Administrative Agent on or prior to such date stating that such Net Cash
Proceeds are intended ultimately to be used to effect Permitted Transactions, in
each case in accordance with the relevant requirements of this Agreement;
PROVIDED FURTHER, that in no event shall there be a mandatory repayment and/or
commitment reduction pursuant to this Section 4.02(e) to the extent such
reduction would cause the sum of the Total Revolving Loan Commitment at such
time, plus the then aggregate principal amount of outstanding Term Loans, to be
less than $200,000,000 at such time.
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Restatement
Effective Date upon which Holdings or any of its Subsidiaries (other than the
Receivables Subsidiary) receives proceeds from any sale or other disposition of
assets (including capital stock and securities held thereby, but excluding (i)
sales or transfers of inventory in the ordinary course of business, (ii) sales,
contributions and other transfers of Receivables Facility Assets in accordance
with the provisions of Section 9.02(x), (iii) the sale or transfer of all of the
assets of Levelco to Holdings, the Borrower and/or one or more Wholly-Owned
Subsidiaries of the Borrower in connection with the Levelco Dissolution and (iv)
so long as no Default or Event of Default is in existence at the time of the
respective sale or disposition and so long as no proceeds of the respective sale
or disposition are used to make a Net Proceeds Offer under, and as defined in,
the Existing 10-3/4% Senior Subordinated Note Indentures or to repay (or make
any offer to repay, repurchase or redeem) any then outstanding Permitted Debt or
Qualified Preferred Stock, the first $13,000,000 of Net Sale Proceeds generated
from sales of assets in any calendar year which would otherwise be subject to
the provisions of this Section 4.02(f)), an amount equal to 100% of the Net Sale
Proceeds therefrom shall be applied as a mandatory repayment (and/or commitment
reduction, as the case may be) of outstanding Term Loans and the Total Revolving
Loan Commitment in accordance with the requirements of Sections 4.02(i) and (j).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, if on any Excess Cash Flow Payment
Date, the Leverage Ratio as determined on the last day of the respective Excess
Cash Flow Payment Period exceeds 3.50:1, an amount equal to 25% of the Excess
Cash Flow for the relevant Excess Cash Flow Payment Period shall be applied as a
mandatory repayment (and/or commitment reduction, as the case may be) of
outstanding Term Loans and the Total Revolving Loan Commitment in accordance
with the requirements of Sections 4.02(i) and (j); PROVIDED that in no event
shall there be a mandatory repayment and/or commitment reduction pursuant to
this Section 4.02(g) to the extent such reduction would cause the sum of the
Total Revolving Loan Commitment at such time, plus the then aggregate principal
amount of outstanding Term Loans, to be less than $200,000,000 at such time.
(h) In addition to any other mandatory repayments or commitment reductions
pursuant to this Section 4.02, within 10 days following each date on which
Holdings
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or any of its Subsidiaries receives any proceeds from any Recovery Event (other
than proceeds from Recovery Events in an amount less than (A) $100,000 per each
Recovery Event and (B) with respect to any Recovery Event with proceeds in
excess of the amount referred to in clause (A) above, $1,000,000 in the
aggregate for all such Recovery Events in any calendar year), an amount equal to
100% of the proceeds of such Recovery Event (net of reasonable costs including,
without limitation, legal costs and expenses, and taxes incurred in connection
with such Recovery Event) shall be applied as a mandatory repayment (and/or
commitment reduction, as the case may be) of outstanding Term Loans and the
Total Revolving Loan Commitment in accordance with the requirements of
Sections 4.02(i) and (j); PROVIDED that (x) so long as no Default or Event of
Default then exists and such proceeds do not exceed $10,000,000, such
proceeds shall not be required to be so applied on such date to the extent
that an Authorized Representative of the Borrower has delivered a certificate
to the Administrative Agent on or prior to such date stating that such
proceeds shall be used or shall be committed to be used to replace or restore
any properties or assets in respect of which such proceeds were paid within
one year following the date of such Recovery Event (which certificate shall
set forth the estimates of the proceeds to be so expended) and (y) so long as
no Default or Event of Default then exists and to the extent that (a) the
amount of such proceeds exceeds $10,000,000, (b) the amount of such proceeds,
together with other cash available to the Borrower, WTI or Laser Tech, as the
case may be, and their respective Subsidiaries and permitted to be spent by
them on Capital Expenditures during the relevant period pursuant to Section
9.07, equals at least 100% of the cost of replacement or restoration of the
properties or assets in respect of which such proceeds were paid as
determined by the Borrower, WTI or Laser Tech, as the case may be, and as
supported by such estimates or bids from contractors or subcontractors or
such other supporting information as the Administrative Agent may reasonably
request, (c) an Authorized Representative of the Borrower has delivered to
the Administrative Agent a certificate on or prior to the date the
application would otherwise be required pursuant to this Section 4.02(h) in
the form described in clause (x) above and also certifying its determination
as required by preceding clause (b) and certifying the sufficiency of
business interruption insurance as required by succeeding clause (4), and (d)
an Authorized Representative of the Borrower has delivered to the
Administrative Agent such evidence as the Administrative Agent may reasonably
request in form and substance reasonably satisfactory to the Administrative
Agent establishing that the Borrower, WTI or Laser Tech, as the case may be,
has sufficient business interruption insurance and that the Borrower, WTI or
Laser Tech, as the case may be, will receive payment thereunder in such
amounts and at such times as are necessary to satisfy all obligations and
expenses of the Borrower, WTI and Laser Tech (including, without limitation,
all debt service requirements, including pursuant to this Agreement), without
any delay or extension thereof, for the period from the date of the
respective casualty, condemnation or other event giving rise to the Recovery
Event and continuing through the completion of the replacement or restoration
of respective properties or assets, then the entire amount of the proceeds of
such Recovery Event and not just the portion in excess of $10,000,000 shall
be deposited with the Administrative Agent pursuant to a cash collateral
arrangement reasonably satisfactory to the Administrative
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Agent whereby such proceeds shall be disbursed to the Borrower, WTI or Laser
Tech, as the case may be, from time to time as needed to pay actual costs
incurred by them in connection with the replacement or restoration of the
respective properties or assets (pursuant to such certification requirements
as may be established by the Administrative Agent), PROVIDED FURTHER, that at
any time while an Event of Default has occurred and is continuing, the
Required Banks may direct the Administrative Agent (in which case the
Administrative Agent shall, and is hereby authorized by the Borrower, WTI and
Laser Tech to, follow said directions) to apply any or all proceeds then on
deposit in such collateral account to the repayment of Obligations hereunder,
and provided further, that if all or any portion of such proceeds not
required to be applied to the repayment of Term Loans and/or reduction of the
Total Revolving Loan Commitment pursuant to the second preceding proviso
(whether pursuant to clause (x) or (y) thereof) are either (A) not so used or
committed to be so used within one year after the date of the respective
Recovery Event or (B) if committed to be used within one year after the date
of receipt of such Net Sale Proceeds and not so used within 18 months after
the date of respective Recovery Event then, in either such case, such
remaining portion not used or committed to be used in the case of preceding
clause (A) and not used in the case of preceding clause (B) shall be applied
on the date which is the first anniversary of the date of the respective
Recovery Event in the case of clause (A) above or the date occurring 18
months after the date of the respective Recovery Event in the case of clause
(B) above as a mandatory repayment (and/or commitment reduction, as the case
may be) of outstanding Term Loans and the Total Revolving Loan Commitment in
accordance with the requirements of Sections 4.02 (i) and (j).
(i) Each amount required to be applied by Sections 4.02(4), (e),
(f), (g) and (h) in accordance with this Section 4.02(i) shall be applied as
follows: (i) the Term Loan Sharing Percentage of such amount shall be applied
to the repayment of principal of any outstanding Term Loans and (ii) the
Revolving Loan Sharing Percentage of such amount shall be applied to reduce
the Total Revolving Loan Commitment (it being understood and agreed that (i)
the amount of any reduction to the Total Revolving Loan Commitment as
provided above in this Section 4.02(i) shall be deemed to be an application
of proceeds for purposes of this Section 4.02(i) even though cash is not
actually applied and (ii) any cash received by Holdings or such Subsidiary
will be retained by such Person except to the extent that such cash is
otherwise required to be applied as provided in Section 4.02(a) as a result
of any reduction to the Total Revolving Loan Commitment). All repayments (or
commitment reductions, as the case may be) of (x) Term Loans, on the one
hand, and (y) Revolving Loan Commitments, on the other hand, pursuant to
Sections 4.02(d), (e), (f), (g) or (h) shall be applied to reduce the then
remaining Term Loan Scheduled Repayments (in the case of preceding clause
(x)) or Scheduled Commitment Reductions (in the case of preceding clause (y))
pro rata based upon the then remaining Term Loan Scheduled Repayments or
Scheduled Commitment Reductions, as the case may be, after giving effect to
all prior reductions thereto.
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(j) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which made,
PROVIDED that: (i) repayments of Eurodollar Loans pursuant to this Section 4.02
may only be made on the last day of an Interest Period applicable thereto unless
all Eurodollar Loans of the respective Tranche with Interest Periods ending on
such date of required repayment and all Base Rate Loans of the respective
Tranche have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $1,000,000, such
Borrowing shall be converted at the end of the then current Interest Period into
a Borrowing of Base Rate Loans; and (iii) each repayment of any Tranche of Loans
made pursuant to a Borrowing shall, except as set forth in Section 4.02(a), be
applied PRO RATA among such Tranche of Loans. In the absence of a designation
by the Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole discretion.
(k) Notwithstanding anything to the contrary contained elsewhere in
Agreement, (i) all then outstanding Swingline Loans shall be repaid in full on
the Swingline Expiry Date and (ii) all other Loans then outstanding shall be
repaid in full on the applicable Maturity Date.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later this than 1:00 P.M. (New York time) on the date when due and shall be
made in Dollars in immediately available funds at the Payment Office of the
Administrative Agent. Any payments received by the Administrative Agent after
such time shall be deemed to have been received on the next Business Day.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.
4.04 NET PAYMENTS; TAXES. (a) All payments made by any Credit Party
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or net profits of a Bank pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Bank is located
or any subdivision
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thereof or therein) and all interest, penalties or similar liabilities with
respect to such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges (all such non-excluded taxes, levies, imports, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If any
Taxes are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or net profits of such Bank pursuant to the laws
of the jurisdiction in which such bank is organized or in which the principal
office or applicable lending office of such Bank is located or under the laws of
any political subdivision or taxing authority of any such jurisdiction in which
such bank is organized or in which the principal office or applicable lending
office of such Bank is located and for any withholding of income or similar
taxes as such Bank shall determine are payable by, or withheld from, such Bank
in respect of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Bank pursuant to this sentence. The Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower agrees to indemnify and hold harmless each Bank, and
reimburse such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal Income Tax
purposes agrees to deliver to the Borrower and the Administrative Agent on or
prior to the Restatement Effective Date, or in the case of a Bank that is an
assignee or transferee of an interest under this Agreement pursuant to Section
1.13 or 13.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Restatement Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect,
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it will deliver to the Borrower and the Administrative Agent two new accurate
and complete original signed copies of Internal Revenue Service Form 4224 or
1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may be,
and such other forms as may be required in order to confirm or establish the
entitlement of such Bank to a continued exemption from or reduction in United
States withholding tax with respect to payments under this Agreement and any
Note, or it shall immediately notify the Borrower and the Administrative Agent
of its inability to deliver any such Form or Certificate, in which case such
Bank shall not be required to deliver any such Form or Certificate pursuant to
this Section 4.04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 13.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, Fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent
that such Bank has not provided to the Borrower U.S. Internal Revenue Service
Forms that establish a complete exemption from such deduction or withholding and
(y) the Borrower shall not be obligated pursuant to Section 4.04(a) to gross-up
payments to be made to a Bank in respect of income or similar taxes imposed by
the United States (I) if such Bank has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower pursuant to this
Section 4.04(b) or (II) in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Section
4.04 and except as set forth in Section 13.04(b), the Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
4.04(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any Taxes deducted or withheld by it as
described in the immediately preceding sentence as a result of any changes after
the Restatement Effective Date (or, if later, the date such Bank became party to
this Agreement) in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of such Taxes.
(c) If the Borrower pays any additional amount under this Section
4.04 to a Bank and such Bank determines in its sole discretion that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the
taxable year in which the additional amount is paid, such Bank shall pay to the
Borrower an amount that the Bank shall, in its sole discretion, determine is
equal to the net benefit, after tax, which was obtained by the Bank in such year
as a consequence of such refund, reduction or credit.
SECTION 5. CERTAIN CONDITIONS PRECEDENT TO RESTATEMENT EFFECTIVE
DATE. The obligation of each Bank to make Loans, and the obligation of each
Issuing Bank to issue Letters of Credit, on the Restatement Effective Date, is
subject at the time of the
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making of such Loans or the issuance of such Letters of Credit to the
satisfaction of the following conditions:
5.01 EXECUTION OF AGREEMENT; NOTES. On or prior to the Restatement
Effective Date (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the
Administrative Agent for the account of each of the Banks with a Term Loan
Commitment the appropriate Term Note executed by the Borrower, and to BTCo the
Swingline Note executed by the Borrower, in each case in the amount, maturity
and as otherwise provided herein.
5.02 OFFICER'S CERTIFICATE. On the Restatement Effective date, the
Administrative Agent shall have received a certificate, dated the Restatement
Effective Date and signed on behalf of the Borrower by the President or any Vice
President of the Borrower, stating all of the conditions in Sections 5.05, 5.08,
5.09, 5.12, 5.13, 5.14, 6.01, 6.02 and 6.03 have been satisfied on such date.
5.03 FEES; ETC. On the Restatement Effective Date, the Borrower
shall have paid to the Administrative Agent, the Documentation Agent and the
Banks all costs, fees and expenses (including, without limitation, legal fees
and expenses) payable to the Administrative Agent, the Documentation Agent and
the Banks to the extent then due.
5.04 OPINIONS OF COUNSEL. On the Restatement Effective Date, the
Administrative Agent shall have received from (i) Skadden, Arps, Slate, Meagher
& Flom, special counsel to the Credit Parties, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Restatement Effective
Date in the form of Exhibit E-1 and (ii) Lowenstein, Sandier, Kohl, Fisher &
Boylan, special counsel to WTI and its Subsidiaries, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Restatement Effective
Date in the form of Exhibit E-2.
5.05 CORPORATE AND PARTNERSHIP DOCUMENTS; PROCEEDINGS; ETC. (a) On
the Restatement Effective Date, the Administrative Agent shall have received a
certificate, dated the Restatement Effective Date, signed by the Chairman or an
Authorized Representative of WTI and each Subsidiary of WTI, and attested to by
the Secretary or any Assistant Secretary of WTI or the respective such
Subsidiary, or, in the case of any such Subsidiary that is a partnership, signed
by the general partner of such Subsidiary, in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of incorporation
and by-laws, the partnership agreement and the certificate of limited
partnership of WTI or the respective such Subsidiary, and the resolutions, or
such other administrative approval, of WTI or the respective such Subsidiary,
referred to in such certificate, and the foregoing shall be reasonably
acceptable to the Agents and the Required Banks.
(b) On the Restatement Effective Date, the Administrative Agent shall
have received bring-down certificates of all Credit Parties (other than WTI and
its Subsidiaries)
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(x) certifying that there were no changes, or providing the text of any changes,
to the certificate of incorporation and by-laws or certificate of limited
partnership and partnership agreement of such Credit Parties as delivered
pursuant to Section 5.05 of the Original Credit Agreement, (y) to the effect
that each such Credit Party is in good standing in its respective state of
incorporation and in those states where each such Credit Party conducts business
and (z) providing the resolutions adopted by such Credit Party with respect to
the actions contemplated in this Agreement (including without limitation with
respect to the Acquisition and the amendment and restatement of this Agreement,
and the obligations of such Credit Party with respect to the increased
extensions of credit pursuant hereto).
(c) All corporate, partnership and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
this Agreement and the other Documents shall be reasonably satisfactory in form
and substance to the Agents and the Required Banks, and the Administrative Agent
shall have received all information and copies of all documents and papers,
including records of corporate and partnership proceedings, governmental
approvals, good standing certificates and bring down telegrams or facsimiles, if
any, which either Agent reasonably may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate,
partnership or governmental authorities.
(d) On the Restatement Effective Date and after giving effect to the
Transaction, the capital structure (including, without limitation, the terms of
any capital stock, options, warrants or other securities issued by Holdings or
any of its Subsidiaries) and management of Holdings and its Subsidiaries shall
be in form and substance satisfactory to the Agents and the Required Banks.
5.06 EMPLOYEE BENEFIT PLANS; SHAREHOLDERS' AGREEMENTS; MANAGEMENT
AGREEMENTS; EMPLOYMENT AGREEMENTS; COLLECTIVE BARGAINING AGREEMENTS;
DEBT AGREEMENTS; MATERIAL CONTRACTS. (a) On or prior to the Restatement
Effective Date, there shall have been delivered to the Administrative Agent
true and correct copies, certified as true and complete by an appropriate
officer of the Borrower of:
(i) all "employee benefit plans" as defined in Section 3(3) of ERISA,
any profit sharing plans and deferred compensation plans, and any other
material plans or arrangements for the benefit of employees of WTI or any
of its Subsidiaries (collectively, together with any agreements referred to
in Section 5.06(i) of the Original Credit Agreement, and any amendments
thereto referred in succeeding Section 5.06 (b), the "Employee Benefit
Plans");
(ii) all agreements (including, without limitation, shareholders'
agreements, subscription agreements and registration rights agreements)
entered into by WTI or any of its Subsidiaries governing the terms and
relative rights of its capital stock and any agreements entered into by
shareholders relating to any such entity with
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respect to its capital stock (collectively, together with any agreements
referred to in Section 5.06(ii) of the Original Credit Agreement, and any
amendments thereto referred in succeeding Section 5.06(b), the
"Shareholders' Agreements");
(iii) all material agreements with members of, or with respect to, the
management of WTI or any of its Subsidiaries (collectively, together with
any agreements referred to in Section 5.06(iii) of the Original Credit
Agreement, and any amendments thereto referred in succeeding Section
5.06(b), the "Management Agreements");
(iv) any material employment agreements entered into by WTI or any of
its Subsidiaries (collectively, together with any agreements referred to in
Section 5.06(iv) of the Original Credit Agreement, and any amendments
thereto referred in succeeding Section 5.06(b), the "Employment
Agreements");
(v) all collective bargaining agreements applying or relating to any
employee of WTI or any of its Subsidiaries (collectively, together with any
agreements referred to in Section 5.06(v) of the Original Credit Agreement,
and any amendments thereto referred in succeeding Section 5.06(b), the
"Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to Indebtedness of WTI or
any of its Subsidiaries which is to remain outstanding after giving effect
to the incurrence of Loans on the Restatement Effective Date (collectively,
together with any agreements referred to in Section 5.06(vi) of the
Original Credit Agreement, and any amendments thereto referred in
succeeding Section 5.06(b), the "Debt Agreements"); and
(vii) all other material contracts and licenses of WTI and any of its
Subsidiaries (collectively, together with any agreements referred to in
Section 5.06(vii) of the Original Credit Agreement, and any amendments
thereto referred in succeeding Section 5.06(b), the "Material Contracts");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Debt
Agreements, and Material Contracts shall, except to the extent such agreements
are of no force or effect on the Restatement Effective Date, be in form and
substance satisfactory to the Agents and the Required Banks; PROVIDED, that if
Holdings or any of its Subsidiaries inadvertently fails to provide the
Administrative Agent any immaterial agreement described in clauses (i)
through (vii) above, such failure shall not constitute a violation of this
Section 5.06.
(b) On or prior to the Restatement Effective Date, the Administrative
Agents all have received (i) a certification from an Authorized Representative
of the Borrower
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that all agreements and plans referenced in Section 5.06 of the Original Credit
Agreement, previously delivered to the Administrative Agent by each Credit Party
(other than WTI and its Subsidiaries), remain in full force and effect (or
specifying which of such agreements and plans do not remain in full force and
effect) and (ii) any amendments thereto or additional such agreements.
5.07 SOLVENCY CERTIFICATE; INSURANCE CERTIFICATES. On or before the
Restatement Effective Date, the Borrower shall cause to be delivered to the
Administrative Agent:
(i) a solvency certificate addressed to the Agents and each of the
Banks and dated the Restatement Effective Date from the Chief Financial
Officer of the Borrower, which solvency certificate shall be in the form of
Exhibit G (appropriately completed) expressing opinions of value and other
appropriate factual information regarding the solvency of Holdings and its
Subsidiaries, and the Borrower and its Subsidiaries (each on a consolidated
basis), after giving effect to the Transaction and the incurrence of all
financings contemplated herein; and
(ii) evidence of insurance complying with the requirements of Section
8.03 for the business and properties of Holdings and its Subsidiaries
(including, without limitation, the Acquired Business), in scope, form and
substance reasonably satisfactory to the Agents and the Required Banks and
stating that such insurance shall not be canceled or revised without 30
days prior written notice by the insurer to the Administrative Agent.
5.08 CONSUMMATION OF THE TRANSACTION. (a) On or prior to the
Restatement Effective Date, (i) there shall have been delivered to the Agents
and the Banks true and correct copies of all Acquisition Documents, certified as
such by an officer of Holdings, and all terms and conditions of the Acquisition
Documents shall be in form and substance satisfactory to the Agents and the
Required Banks, (ii) the Acquisition, including all of the terms and conditions
thereof, shall have been duly approved by the board of directors and (if
required by applicable law) the shareholders of Holdings, the Borrower,
Acquisition Corp. and WTI, and all Acquisition Documents shall have been duly
executed and delivered by the parties thereto and shall be in full force and
effect, (iii) the representations and warranties set forth in the Acquisition
Documents shall be true and correct in all material respects as if made on and
as of the Restatement Effective Date, (iv) each of the conditions precedent to
Holdings' and Acquisition Corp.'s obligations to consummate the Acquisition as
set forth in the Acquisition Documents shall have been satisfied to the
satisfaction of the Agents and the Required Banks or waived with the consent of
the Agents and the Required Banks, and (v) the Acquisition shall have been
consummated in accordance with all applicable laws and the Acquisition
Documents.
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(b) On the Restatement Effective Date and concurrently with the
Credit Events then occurring, (i) the total commitments under the WTI Credit
Agreement shall have been terminated, and all loans thereunder shall have been
repaid in full, together with interest thereon, (ii) all other amounts owing
pursuant to the WTI Credit Agreement shall have been repaid in full, (iii) the
WTI Credit Agreement shall have been terminated and (iv) the Administrative
Agent shall have received evidence in form, scope and substance satisfactory to
it, the Documentation Agent and the Required Banks that the matters set forth in
this Section 5.08(b) have been satisfied on such date. On the Restatement
Effective Date and concurrently with the Credit Events then occurring, the
creditors under the WTI Credit Agreement shall have terminated and released all
security interests and Liens on the capital stock of WTI or any of its
Subsidiaries, or any other assets owned by WTI or any of its Subsidiaries
granted in connection with the WTI Credit Agreement. The Administrative Agent
shall have received such releases of security interests in and Liens on the
capital stock of WTI or any of its Subsidiaries, or any other assets owned by
WTI and its Subsidiaries, as may have been requested by the Administrative
Agent, the Documentation Agent or the Required Banks, which releases shall be in
form and substance satisfactory to the Agents and the Required Banks. Without
limiting the foregoing, there shall have been delivered (w) proper termination
statements (Form UCC-3 or the appropriate equivalent) for filing under the UCC
of each jurisdiction where a financing statement (Form UCC-1 or the appropriate
equivalent) was filed with respect to WTI or any of its Subsidiaries in
connection with the security interests created with respect to the WTI Credit
Agreement and the documentation related thereto, (x) termination or reassignment
of any security interest in, or Lien on, any patents, trademarks, copyrights, or
similar interests of WTI or any of its Subsidiaries on which filings have been
made, (y) terminations of all mortgages, leasehold mortgages and deeds of trust
created with respect to property of WTI or any of its Subsidiaries, in each
case, to secure the obligations under the WTI Credit Agreement, all of which
shall be in form and substance satisfactory to the Agents and the Required
Banks, and (z) all collateral owned by WTI or any of its Subsidiaries in the
possession of BTCC, in its capacity as agent under the WTI Credit Agreement or
collateral agent under any related security document or any other agent,
collateral agent or trustee for the creditors under the WTI Credit Agreement.
(c) On the Restatement Effective Date and concurrently with the
Credit Events then occurring, the Borrower, as lender, shall have established a
working capital facility (the "Replacement Working Capital Facility") for the
benefit of WTI, as borrower. which Replacement Working Capital Facility shall
(i) provide for the making of intercompany loans to WTI for the general
corporate and working capital purposes of WTI and its Subsidiaries in an
aggregate principal amount at any time outstanding not to exceed the remainder
of (v) $45 million less (y) the sum of the Letter of Credit Outstandings at such
time in respect of WTI Letters of Credit, (ii) require that the proceeds of
loans made pursuant thereto on the Restatement Effective Date be used to
refinance the WTI Credit Agreement and (iii) provide that each intercompany loan
made pursuant thereto be evidenced by a WTI Working Capital Note and/or a WTI
Swingline Note, in each case
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pledged pursuant to the Pledge and Security Agreement. All terms and conditions
of the Replacement Working Capital Facility, and all documentation entered into
connection therewith, shall be satisfactory to the Agents.
(d) On or prior to the Restatement Effective Date and prior to the
Credit Events then occurring, WTI shall have commenced a tender offer/consent
solicitation with respect to the outstanding WTI Senior Subordinated Notes (the
"WTI Tender Offer/Consent Solicitation"), pursuant to which (i) WTI shall offer,
subject to the terms and conditions contained in the WTI Tender Offer/Consent
Solicitation, to purchase all of the outstanding WTI Senior Subordinated Notes
at a cash price equal to $1,030 per $1,000 principal amount, plus accrued and
unpaid interest thereon and (ii) consents shall be solicited to a proposed
amendment (the "WTI Senior Subordinated Notes Indenture Amendment") to the WTI
Senior Subordinated Notes Indenture, on terms and conditions satisfactory to the
Agents, which amendment shall provide for the substantial elimination of the
covenants contained in the WTI Senior Subordinated Notes Indenture (including,
without limitation, limitations on restricted payments, transactions with
affiliates, indebtedness and guarantees by subsidiaries). All terms and
conditions of the WTI Tender Offer/Consent Solicitation shall be satisfactory to
the Agents, and the period for tendering WTI Senior Subordinated Notes pursuant
thereto shall terminate on or prior to the Restatement Effective Date. If
holders ("WTI Noteholders") of a majority of the outstanding WTI Senior
Subordinated Notes provide their "Consent" pursuant to, and in accordance with
the requirements of, the WTI Tender Offer/Consent Solicitation (with the
"Consent" of such WTI Noteholders being herein called the "Requisite Consents"),
then (i) on or prior to the Restatement Effective Date, (x) WTI shall have
received sufficient consents to the WTI Senior Subordinated Notes Indenture
Amendment to authorize the execution and delivery of the WTI Senior Subordinated
Notes Indenture Supplement and (y) WTI and the trustee under the WTI Senior
Subordinated Notes Indenture shall have duly executed and delivered the WTI
Senior Subordinated Notes Indenture Supplement and (ii) on the Restatement
Effective Date and concurrently with the Credit Events then occurring, WTI shall
have repurchased the WTI Senior Subordinated Notes tendered, and not theretofore
withdrawn, pursuant to the WTI Tender Offer/Consent Solicitation (the "WTI
Tender Offer Repurchases") with funds made available to WTI by the Borrower by
means of WTI Intercompany Loans (with the taking of the actions specified in
preceding clause (i)(y) and clause (ii) on or prior to the Restatement Effective
Date being herein called the "WTI Tender Offer/Consent Solicitation
Consummation"). If less than a majority of the outstanding principal amount of
WTI Senior Subordinated Notes are tendered pursuant to the WTI Tender
Offer/Consent Solicitation, then the satisfaction of clauses (i) and (ii) in the
immediately preceding sentence shall not be a condition precedent to the
occurrence of the Term Loan Borrowing Date, although WTI Tender Offer
Repurchases of the WTI Senior Subordinated Notes actually tendered may, but
shall not be required to, be made on the Restatement Effective Date as provided
in clause (ii) of the immediately preceding sentence.
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(e) On the Restatement Effective Date and concurrently with the
Credit Events then occurring, (i) in the event that WTI Tender Offer/Consent
Solicitation Consummation has not occurred for the reasons specified in the last
sentence of Section 5.08(d), then (x) Holdings shall have contributed $20
million of cash to the capital of Acquisition Corp. as a common equity
contribution in exchange for 100 shares, $.01 par value per share, of common
stock of Acquisition Corp. and (y) Holdings shall have contributed $30 million
of cash to the capital of Acquisition Corp. in exchange for shares of WTI
Intercompany Preferred Stock with a like aggregate liquidation preference and
(ii) in the event that WTI Tender Offer/Consent Solicitation Consummation has
occurred or will occur on the Restatement Effective Date (x) Holdings shall have
contributed $20 million of cash to the capital of Acquisition Corp. as a common
equity contribution in exchange for 100 shares, $.01 par value per share, of
common stock of Acquisition Corp. and (y) Laser Tech (with the amount to be
loaned by Laser Tech to equal the Laser Tech Initial Receivables Facility Amount
less the amount of Holdings Intercompany Loan to be made by it on the
Restatement Effective Date in accordance with the last sentence of this Section
5.08(e)) and the Borrower (with the amount to be loaned by the Borrower to equal
the amount provided below less the amount to be loaned by Laser Tech as provided
in the immediately preceding parenthetical) shall have loaned to Acquisition
Corp. an additional $134,241,176.59, which loan shall be evidenced by a like
principal amount of Laser Tech - WTI Intercompany Loans (to the extent loaned by
Laser Tech) and/or WTI Intercompany Loans (to the extent loaned by the
Borrower). All proceeds loaned or contributed to Acquisition Corp. as
described in preceding clause (i) or (ii), as the case may be, shall have been
used to pay the Merger Consideration in connection with the consummation of the
Acquisition in accordance with the provisions of Section 5.08(a). All amounts
to be invested by Holdings as equity contributions to Acquisition Corp.
pursuant to preceding Section 5.08(e)(i)(x) or (ii)(x), as the case may be,
shall be paid to Holdings by the Borrower as a Dividend on the Restatement
Effective Date, and all amounts to be invested by Holdings as equity
contributions to Acquisition Corp. pursuant to preceding Section 5.08(e)(i)(y)
shall be loaned to Holdings by Laser Tech (to the extent the amount to be so
invested by Holdings does not exceed the Laser Tech Initial Receivables Facility
Amount) and, to the extent the amount to be so invested by Holdings exceeds the
Laser Tech Initial Receivables Facility Amount, the Borrower, in each case
pursuant to Holdings Intercompany Loans; provided that to the extent that the
respective investment to be made in accordance with Section 5.08(e)(i)(y),
exceeds $20 million, such excess may instead be paid to Holdings as a Dividend
on the Restatement Effective Date (with the amount to be paid as a Dividend to
be allocated first to the amount being advanced to Holdings by Laser Tech and,
to the extent in excess thereof, to the amount to be advanced to Holdings by the
Borrower).
(f) On the Restatement Effective Date and concurrently with the
Credit Events then occurring, in the event that the WTI Tender Offer/Consent
Solicitation Consummation has not occurred for the reason specified in the last
sentence of Section
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5.08(d), then WTI may, but shall not be obligated to, effect Optional WTI Note
Repurchases in accordance with the definition thereof contained in this
Agreement.
(g) All obligations of Holdings and its Subsidiaries with respect to
the Indebtedness being repaid or satisfied in the Refinancing Transactions on
the Restatement Effective Date shall be terminated to the satisfaction of the
Agents. All terms and conditions of the Refinancing Transactions and the
documentation in connection therewith, and the amount and type of consideration
payable in connection therewith, shall be required to be satisfactory to the
Agents.
5.09 RECEIVABLES FACILITY. On or prior to the Restatement Effective
Date, (i) the initial sale of receivables (including receivables originated by
WTI and its Subsidiaries if, but only if, WTI Tender Offer/Consent Solicitation
Consummation has occurred in accordance with the provisions of Section 5.08(d))
shall have been effected pursuant to the Receivables Facility, (ii) such sale
shall have generated net cash proceeds to the Borrower and Laser Tech of at
least $62 million and, only if WTI Tender Offer/Consent Solicitation
Consummation has occurred, to the Borrower, Laser Tech and WTI and its
Subsidiaries of at least $95 million, and (iii) there shall have been delivered
to the Agents true and correct copies of all Receivables Documents, which shall
be in full force and effect and shall be in form and substance satisfactory to
the Agents, and all conditions set forth in the Receivables Documents shall have
been satisfied and not waived (unless waived with the consent of the Agents).
5.10 SUBSIDIARIES GUARANTY. On the Restatement Effective Date, each
Wholly-Owned Domestic Subsidiary of Holdings (other than the Borrower, the
Receivables Subsidiary, RGP, Treasure Chest of Nevada and, unless the WTI Tender
Offer/Consent Solicitation Consummation has occurred, WTI and its Wholly-Owned
Subsidiaries) shall have duly authorized, executed and delivered the Amended and
Restated Subsidiaries Guaranty in the form of Exhibit H hereto (as modified,
supplemented or amended from time to time, the "Subsidiaries Guaranty"), and the
Subsidiaries Guaranty shall be in full force and effect.
5.11 PLEDGE AND SECURITY AGREEMENT. On the Restatement Effective
Date, each of Holdings, the Borrower and each Subsidiary Guarantor shall have
duly authorized, executed and delivered an Amended and Restated Pledge and
Security Agreement in the form of Exhibit I (as modified, supplemented or
amended from time to time, the "Pledge and Security Agreement") and the Pledge
and Security Agreement and the following other documents shall be delivered to
the Collateral Agent, as Pledgee and be in full force and effect:
(i) all the Pledged Securities referred to in the Pledge and Security
Agreement then owned by such Credit Party, (x) endorsed in blank in the case of
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promissory notes constituting Pledged Securities and (y) together with executed
and undated stock powers, in the case of capital stock constituting Pledged
Securities;
(ii) proper Financing Statements (Form UCC-1) fully executed for
filing under the UCC or other appropriate filing offices of each jurisdiction as
may be necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests purported to be created by the Pledge and
Security Agreement;
(iii) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, listing all effective financing statements that name
each Credit Party as debtor and that are filed in the jurisdictions referred to
in clause (ii) above, together with copies of such financing statements (none of
which shall cover the Collateral except to the extent evidencing Permitted Liens
or in respect of which the Collateral Agent shall have received termination
statements (Form UCC-3) or such other termination statements as shall be
required by local law);
(iv) evidence of the completion of all other recordings and filings
of, or with respect to, the Pledge and Security Agreement as may be necessary
or, in the opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by the Pledge and Security Agreement;
(v) executed copies of the Partnership Notice delivered to the
Pledged Partnership and executed copies of the Partnership Acknowledgment
executed by the Pledged Partnership, together with evidence that such other
actions have been taken as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by
the Pledge and Security Agreement (including, without limitation, evidence that
the Pledged Partnership has duly recorded the security interest created by the
Pledge and Security Agreement on the partnership books and records of the
Pledged Partnership); and
(vi) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Pledge and Security Agreement have been
taken.
5.12 ADVERSE CHANGE; GOVERNMENTAL APPROVALS; ETC. (a) Since January
31, 1996, nothing shall have occurred (and the Banks shall have become aware of
no facts, conditions or other information not previously known) which either
Agent or the Required Banks shall reasonably determine could have a material
adverse effect on (i) the Refinancing Transactions, (ii) the Transaction, (iii)
the rights or remedies of the Agents or the Banks, or the ability of the Credit
Parties to perform their respective obligations to the Agents and the Banks or
(iv) the performance, business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Acquired Business, the
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Borrower, the Borrower and its Subsidiaries taken as a whole or Holdings and its
Subsidiaries taken as a whole.
(b) On the Restatement Effective Date, there shall not have occurred
and be continuing any material adverse change to the syndication market for
credit facilities similar in nature to this Agreement and there shall not have
occurred and be continuing a material disruption of or a material adverse change
in financial, banking or capital markets that would have a material adverse
effect on the syndication, in each case as determined by either Agent in its
sole discretion.
(c) On or prior to the Restatement Effective Date, (i) all necessary
governmental (domestic and foreign), regulatory and third party approvals in
connection with the Credit Documents and otherwise referred to herein or therein
shall have been obtained and remain in full force and effect and evidence
thereof shall have been provided to the Administrative Agent, (ii) all necessary
material governmental (domestic and foreign) and third party approvals in
connection with any Existing Indebtedness which is to remain outstanding after
the Restatement Effective Date, the Transaction, the transactions contemplated
by the Documents (other than the Credit Documents) and otherwise referred to
therein shall have been obtained and remain in full force and effect and
evidence thereof shall have been provided to the Administrative Agent, and (iii)
all applicable waiting periods shall have expired without any action being taken
by any competent authority which restrains, prevents or imposes materially
adverse conditions upon the consummation of the Refinancing Transactions or the
Transaction, the making of the Loans, the issuance of Letters of Credit and the
transactions contemplated by the Documents or otherwise referred to herein or
therein. Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon, or materially delaying, or making economically unfeasible, the
consummation of the Refinancing Transactions or the Transaction or the making of
the Loans, the issuance of Letters of Credit or the transactions contemplated by
the Documents.
5.13 LITIGATION. Except as disclosed on Schedule XII, on the
Restatement Effective Date, no litigation by any entity (private or
governmental) shall be pending or threatened in writing with respect to (i) the
Transaction or any documentation executed in connection therewith (including any
Credit Document) or the transactions contemplated thereby or with respect to any
Existing Indebtedness or (ii) which either Agent or the Required Banks shall
reasonably determine could have a materially adverse effect on (x) the
Transaction or on the rights or remedies of the Administrative Agent, the
Documentation Agent or the Banks, or on the ability of the Credit Parties to
perform their respective obligations to the Administrative Agent, the
Documentation Agent and the Banks or (y) the performance, business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Acquired Business, the Borrower, the Borrower and its Subsidiaries taken
as a whole or Holdings and its Subsidiaries taken as a whole.
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5.14 EXISTING INDEBTEDNESS. On the Restatement Effective Date and
after giving effect to the Loans incurred on the Restatement Effective Date,
neither Holdings nor any of its Subsidiaries shall have any Preferred Stock or
Indebtedness outstanding except for (i) the Loans, (ii) Indebtedness of Holdings
in an aggregate principal amount not to exceed $126,700,000 represented by the
Existing 10-3/4% Senior Subordinated Notes, (iii) Indebtedness of WTI in an
aggregate principal amount not to exceed 590,000,000 represented by the WTI
Senior Subordinated Notes, (iv) the intercompany Indebtedness incurred by WTI
from the Borrower as required pursuant to Section 5.08, (v) WTI Intercompany
Preferred Stock issued by WTI to Holdings in accordance with the provisions of
Section 5.08, (vi) Indebtedness outstanding pursuant to the Receivables Facility
and (vii) certain other intercompany indebtedness and other indebtedness as is
listed on Schedule VI (with the Indebtedness described in this clause (vii)
being herein called "Scheduled Existing Indebtedness" and, together with the
Indebtedness described in clauses (ii) and (iii) above being herein called the
"Existing Indebtedness"). On and as of the Restatement Effective Date, all of
the Existing Indebtedness (except to the extent refinanced as part of the
Refinancing Transactions or as otherwise permitted hereunder) shall remain
outstanding after giving effect to the Transaction and the other transactions
contemplated hereby without any default or event of default existing thereunder
or arising as a result of the Transaction and the other transactions
contemplated hereby (except to the extent amended or waived by the parties
thereto on terms and conditions satisfactory to the Agents and the Required
Banks), and there shall not be any amendments or modifications to the Debt
Agreements other than as requested or approved by the Agents or the Required
Banks. On and as of the Restatement Effective Date, the Agents and the Required
Banks shall be satisfied with the amount of and the terms and conditions of all
Existing Indebtedness.
5.15 PRO FORMA BALANCE SHEET; FINANCIAL STATEMENTS; PROJECTIONS. (a)
On or prior to the Restatement Effective Date, there shall have been delivered
to the Administrative Agent an unaudited PRO FORMA consolidated balance sheet of
Holdings and its Subsidiaries as of December 31, 1995 and after giving effect to
the Transaction and prepared in accordance with GAAP, together with (w) pro
forma financial statements for Holdings and its Subsidiaries for the one year
period ended on the last day of the fiscal quarter of the Borrower last ended,
assuming the Transaction was effected on the first day of such one year period,
(x) historical consolidated financial statements of Holdings and its
Subsidiaries for the last fiscal quarter ending before the Restatement Effective
Date, (y) historical consolidated financial statements of Holdings and its
Subsidiaries for the two fiscal years preceding such fiscal quarter referred to
in the foregoing clause (x), which historical statements shall be audited and
(z) historical consolidated financial statements of WTI and its Subsidiaries for
the fiscal years ended December 31, 1993, December 31, 1994 and December 31,
1995 and the consolidated balance sheets of WTI and its Subsidiaries as of
December 31, 1994 and December 31, 1995.
(b) On or prior to the Restatement Effective Date there shall have
been delivered to the Administrative Agent detailed projected consolidated
financial statements
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of Holdings and its Subsidiaries, which include the projected results of the
Acquired Business, certified by the chief financial officer or treasurer of the
Borrower for the period from December 31, 1995 to June 30, 2000 (the
"Projections"), which Projections (x) shall reflect the forecasted consolidated
financial conditions and income and expenses of Holdings and its Subsidiaries
after giving affect to the Transaction and the related financing thereof and the
other transactions contemplated hereby and (y) shall be satisfactory inform and
substance to the Agents.
(c) The Administrative Agent and the Banks shall have received such
other accountants' certificates, calculations and PRO FORMA financial data as
shall be reasonably required by the Agents in order for them to determine
compliance with any applicable covenants contained in the Existing 10-3/4%
Senior Subordinated Note Indentures, the WTI Senior Subordinated Notes Indenture
(but only if the WTI Tender Offer/Consent Solicitation Consummation does not
occur on or prior to the Restatement Effective Date) and the other outstanding
issues of Existing Indebtedness, all of which shall be in form and substance
satisfactory to the Agents and the Required Banks.
5.16 AMENDED TAX SHARING AGREEMENT. On or prior to the Restatement
Effective Date, Holdings, the Borrower, WTI and Laser Tech shall have duly
authorized, executed and delivered an amended tax sharing agreement in form and
substance satisfactory to the Agents and the Required Banks (the "Amended Tax
Sharing Agreement"), which shall supersede any existing tax sharing or similar
agreements theretofore in effect.
5.17 MANAGEMENT SERVICES AGREEMENT. On or prior to the Restatement
Effective Date, the Agents and the Banks shall have received true and correct
copies of the Management Services Agreement (if same is to be entered into),
certified as such by an officer of Holdings, which Management Services Agreement
shall have been duly authorized, executed and delivered and shall be in full
force and effect and in form and substance satisfactory (including all terms and
conditions thereof) to the Agents and the Required Banks.
SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligation
of each Bank to make Loans (including Loans made on the Restatement Effective
Date but excluding Mandatory Borrowings made thereafter, which shall be made as
provided in Section 1.01(c)), and the obligation of an Issuing Bank to issue any
Letter of Credit is subject, at the time of each such Credit Event (except as
hereinafter indicated), to the satisfaction of the following conditions:
6.01 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in any other Credit Document shall be true and correct in
all material respects with the same effect as though
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such representations and warranties had been made on the date of the making of
such Credit Event (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
6.02 ADVERSE CHANGE; ETC. At the time of each such Credit Event and
also after giving effect thereto, nothing shall have occurred (and the Banks
shall have become aware of no facts or conditions not previously known) which
the Administrative Agent or the Required Banks shall determine (i) has, or could
reasonably be expected to have, a material adverse effect on the rights or
remedies of the Banks, the Documentation Agent or the Administrative Agent, or
on the ability of the Borrower or any other Credit Party to perform its
obligations to the Administrative Agent, the Documentation Agent or the Banks
under this Agreement or any other Credit Document or (ii) has, or could
reasonably be expected to have, a material adverse effect on the performance,
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower, the Borrower and its Subsidiaries taken
as a whole or Holdings and its Subsidiaries taken as a whole.
6.03 LITIGATION. At the time of each such Credit Event and also
after giving effect thereto, no litigation by any entity (private or
governmental) shall be pending or threatened in writing with respect to this
Agreement, any other Document or any documentation executed in connection
herewith or the transactions contemplated hereby or thereby, or which the
Administrative Agent or the Required Banks shall determine could reasonably be
expected to have a material adverse effect on the performance, business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a whole or
Holdings and its Subsidiaries taken as a whole.
6.04 NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior to the
making of each Loan (excluding Swingline Loans and Mandatory Borrowings), the
Administrative Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.03(a). Prior to the making of any Swingline Loan,
BTCo shall. have received the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03(a).
6.05 COMPLIANCE WITH INDENTURES. If at any time after the
Restatement Effective Date and prior to the repayment in full of the Existing
10-3/4% Senior Subordinated Notes, the Total Revolving Outstandings are, or are
reduced to an amount which is less than, $275,000,000, then as a condition to
any Credit Event which would cause the Total Outstandings to exceed the Lowest
Outstanding Amount then in effect by
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more than the Threshold Amount, the Banks shall have received the certificate
last required to be delivered pursuant to Section 8.01(m), and such certificate
shall establish that such Credit Event may be incurred without violating the
terms of the Existing 10-3/4% Senior Subordinated Notes Indentures. So long as
any Existing 10-3/4% Senior Subordinated Note remains outstanding, each Credit
Event shall comply with the requirements of Section 4.9 of the Existing 10-3/4%
Senior Subordinated Note Indentures and, if requested by any Agent or the
Required Banks (which request shall only be made by the respective Agent or the
Required Banks if such Person or Persons has or have reasonable doubts as to
whether the respective Credit Event would conform with the applicable
requirements of the Indentures as described below), the Banks shall have
received at the time of any Credit Event such updated information with respect
to the certificate last required to be delivered pursuant to Section 8.01(m) as
may have been reasonably requested, and any opinion of counsel (which opinion of
counsel required to be reasonably satisfactory to the respective Agent or
Required Banks requesting same) as may have been reasonably requested to assure
the Banks that the requirements of this Section 6.05 and Section 4.9 of the
Existing 10-3/4% Senior Subordinated Note Indentures (so long as any Existing
10-3/4% Senior Subordinated Notes remain outstanding) are satisfied and that the
Indebtedness incurred pursuant to such Credit Event constitutes "Senior
Indebtedness" and"Designated Senior Indebtedness" thereunder.
The occurrence of the Restatement Effective Date and the acceptance of
the benefits or proceeds of each Credit Event shall constitute a representation
and warranty by the Borrower to the Administrative Agent, the Documentation
Agent and each of the Banks that all the conditions specified in Section 5 and
in this Section 6 and applicable to such Credit Event exist as of that time.
All of the Notes, certificates, legal opinions and other documents and papers
referred to in Section 5 and in this Section 6, unless otherwise specified.
shall be delivered to the Administrative Agent at the Notice Office for the
account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
reasonably satisfactory to the Banks.
SECTION 7. REPRESENTATIONS AND WARRANTIES. In order to induce the
Banks to enter into this Agreement and to make the Loans, and issue (or
participate in) the Letters of Credit as provided herein, each of Holdings and
the Borrower makes the following representations, warranties and agreements, in
each case after giving effect to the Transaction (but, in the case of the
Refinancing Transactions, giving effect to the components thereof which are
effected on the date any representation or warranty is made pursuant to this
Section 7 or any time prior thereto), all of which shall survive the execution
and delivery of this Agreement and the Notes and the making of the Loans and
issuance of the Letters of Credit, with the occurrence of the Restatement
Effective Date and each Credit Event on or after the Restatement Effective Date
being deemed to constitute a representation and warranty that the matters
specified in this Section 7 are true and correct on and as of the Restatement
Effective Date and on the date of each such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as
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of a specified date shall be required to be true and correct in all material
respects only of such specified date).
7.01 CORPORATE OR PARTNERSHIP STATUS. Holdings and each of its
Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate or partnership power
and authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly
qualified and is authorized to do business and is in good standing in each
jurisdiction where the conduct of its business requires such qualifications
except for failures to be so qualified which, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on the performance, business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower, the Borrower
and its Subsidiaries taken as a whole or Holdings and its Subsidiaries taken
as a whole.
7.02 POWER AND AUTHORITY. Each Credit Party has the power and
authority to execute, deliver and perform the terms and provisions of each of
the Documents to which it is a party and has taken all necessary partnership
or corporate action to authorize the execution, delivery and performance by
it of each of such Documents. Each Credit Party has duly executed and
delivered each of the Documents to which it is a party, and each of such
Documents constitutes the legal, valid and binding obligation of such Credit
Party enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles (regardless
of whether enforcement is sought in equity or at law).
7.03 NO VIOLATION. Neither the execution, delivery or performance
by any Credit Party of the Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, nor consummation of the
transactions contemplated therein (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict or be inconsistent with or result in any breach of any of the terms,
covenants, con-ditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or
impose) any Lien (except pursuant to the Credit Documents) upon any of the
material properties or assets of Holdings or any of its Subsidiaries pursuant
to the terms of any indenture, mortgage, deed of trust, credit agreement or
loan agreement, or any other material agreement, contract or instrument, to
which Holdings or any of its Subsidiaries is a party or by which it or any of
its property or assets is bound or to which it may be subject (including,
without limitation, the Existing Indebtedness) or (iii) will violate any
provision of the certificate of incorporation, by-laws, certificate of
limited partnership or limited partnership agreement of Holdings or any of
its Subsidiaries.
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7.04 GOVERNMENTAL APPROVALS. (a) No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to the date when required
and which remain in full force and effect), or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any such Credit Document.
(b) No material order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have been
obtained or made prior to the date when required and which remain in full
force and effect), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the Transaction, (ii) the execution,
delivery and performance of any Document (other than any Credit Document) or
(iii) the legality, validity, binding effect or enforceability of any such
Document (other than any Credit Document).
7.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; PROJECTIONS; ETC. (a) (i) The consolidated statements of
financial condition of Holdings and its Subsidiaries, in each case at June
30, 1995 and December 31, 1995 and the related consolidated statements of
income and cash flow and changes in shareholders' equity of Holdings and its
Subsidiaries, in each case for the fiscal year ended June 30, 1995 and
six-month period ended December 31, 1995, as the case may be, and furnished
to the Banks prior to the Restatement Effective Date, (ii) the consolidated
balance sheet of Holdings and its Subsidiaries as of the end of each calendar
month of Holdings ended after December 31, 1995 and the related consolidated
statement of income and statement of cashflows of Holdings and its
Subsidiaries for each such month, and furnished to the Banks prior to the
Restatement Effective Date and (iii) the consolidated balance sheet of
Holdings and its Subsidiaries as of the end of each fiscal quarter of
Holdings ended after June 30, 1995, and the related consolidated statements
of earnings, shareholder's equity and cashflows of Holdings and its
Subsidiaries for such quarterly periods, and furnished to the Banks prior to
the Restatement Effective Date, in each case, present fairly the financial
condition of Holdings and its Subsidiaries at the date of such statements of
financial condition and the results of the operations of Holdings and its
Subsidiaries for the respective fiscal year, six-month period, fiscal quarter
or calendar month, as the case may be (subject, in the case of unaudited
financial statements, to normal year-end adjustments). All such financial
statements have been prepared in accordance with GAAP and practices
consistently applied, except, in the case of six-month, quarterly and monthly
statements, for the omission of footnotes, and certain reclassifications and
ordinary end of period adjustments and accruals (all of which are of a
recurring nature and none of which individually, or in the aggregate, would
be material). After giving effect to the Transaction, since December 31,
1995, there has been no material adverse change in the performance, business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower, the
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Borrower and its Subsidiaries taken as a whole or Holdings and its
Subsidiaries taken as a whole.
(b) Each of (x) the audited statements of income and cash flow of
WTI and its Subsidiaries for the years ended December 31, 1993, December 31,
1994 and December 31, 1995, and (y) the audited consolidated balance sheets
of WTI and its Subsidiaries as of December 31, 1994, and December 31, 1995,
together with the notes thereto and the reports thereon of Ernst & Young,
LLP, presents fairly the financial position of, and the results of operations
for, the entities reported on and is consistent with the books and records of
WTI and its Subsidiaries and has been prepared in accordance with GAAP and
practices consistently applied. The books and records upon which the
foregoing financial statements are based are true and complete, to the best
knowledge of the Borrower.
(c) After giving effect to the Transaction and all other
transactions contemplated by the Documents and to all Indebtedness (including
the Loans) being incurred or assumed, and Liens created by each Credit Party
in connection therewith, with respect to Holdings, individually, the
Borrower, individually, the Borrower and its Subsidiaries and Holdings and
its Subsidiaries, (x) the sum of the assets, at a fair valuation, of
Holdings, individually, the Borrower, individually, the Borrower and its
Subsidiaries and Holdings and its Subsidiaries will exceed its or their
debts; (y) it has not incurred and does not intend to incur, nor believes
that it will incur, debts beyond its ability to pay such debts as such debts
mature; and (2) it will have sufficient capital with which to conduct its
business. For purposes of this Section 7.05(c), "debt" means any liability
on a claim, and "claim" means (i) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured or (ii) right to an equitable remedy for breach of perfor-mance if
such breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
(d) As of the Restatement Effective Date, none of the Credit
Parties knows of any basis for the assertion against it of any liability or
obligation of any nature that is not fully disclosed in the financial
statements delivered pursuant to Section 7.05(a) which, either individually
or in the aggregate, is reasonably likely to be material to the Borrower, to
the Borrower and its Subsidiaries taken as a whole or to Holdings and its
Subsidiaries taken as a whole.
(e) On and as of the Restatement Effective Date, the Projections set
forth on Schedule IV hereto, which include the projected results of the Acquired
Business and which have been delivered to the Agents and the Banks on or prior
to the Restatement Effective Date, have been prepared on a basis consistent with
the financial statements referred to in Sections 7.05(a) and (b), and are based
on good faith estimates and
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assumptions made by management of Holdings and the Borrower and there are no
statements or conclusions in any of the Projections which are based upon or
include information known to Holdings or any of its Subsidiaries to be
misleading or which fail to take into account material information regarding the
matters reported therein. On the Restatement Effective Date, each of Holdings
and the Borrower believes that the Projections were reasonable and attainable.
7.06 LITIGATION. There are no actions, suits or proceedings pending or
threatened in writing (excluding actions, suits or proceedings under
Environmental Laws, which matters are covered in Section 7.19)(i) with respect
to any Credit Document or (ii) that could reasonably be expected to materially
and adversely affect the performance, business, operations, property, assets,
nature of the assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a whole or
Holdings and its Subsidiaries taken as a whole.
7.07 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) furnished by or on behalf of Holdings or any of its Subsidiaries in
writing to the Agents or any Bank (including, without limitation, all
information contained in the Documents) for purposes of or in connection with
this Agreement, the other Documents or any transaction contemplated herein or
therein is, and all other such information (taken as a whole) hereafter
furnished by or on behalf of any such person in writing to the Agents or any
Bank will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided.
7.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds of the
Term Loans shall be used by the Borrower solely (x) to make WTI Intercompany
Loans in accordance with the requirements of, and for the purposes provided in,
Section 5.08(d), (e) and (f) and clauses (iii) and (iv) of Section 8.17, (y) to
make Holdings Intercompany Loans (and/or to pay Dividends to Holdings) in
accordance with the requirements of, and for the purposes provided in, Section
5.08(e) and (z) to make any loans to be made on the Restatement Effective Date
pursuant to the Replacement Working Capital Facility.
(b) Proceeds of Revolving Loans shall be used (x) for the same
purposes as Term Loans may be used pursuant to Section 7.08(a) and (y) to pay
fees and expenses in connection with the Transaction. All other proceeds of
Loans made pursuant to this Agreement shall be utilized for Permitted
Transactions (made in accordance with Section 8.14) and general corporate and
working capital purposes of the Borrower and its Subsidiaries and, to the extent
otherwise permitted by this Agreement, Laser Tech and WTI and their respective
Subsidiaries; PROVIDED that $40,000,000 of the revolving credit facility made
available pursuant to this Agreement shall at all times be utilized only for
working capital purposes, it being understood and agreed that, at any time, the
sum of (x) the Total
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Unutilized Revolving Loan Commitment and (y) the amount of outstanding Revolving
Loans incurred for working capital purposes, shall equal or exceed $40,000,000.
(c) No part of any Credit Event (or the proceeds thereof) will be used
to purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof nor the occurrence of any other Credit Event will
violate or be inconsistent with the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
7.09 TAX RETURNS AND PAYMENTS. All Federal, state and other material
returns, statements, forms and reports for taxes (the "Returns") required to be
filed by or with respect to the income, properties or operations of Holdings
and/or any of its Subsidiaries have been timely filed with the appropriate
taxing authority. The Returns accurately reflect all liability for taxes of
Holdings and its Subsidiaries, as the case may be, for the periods covered
thereby. Each of Holdings and its Subsidiaries have paid all material taxes
payable by them other than taxes which are not yet due and payable, and other
than those contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with generally accepted
accounting principles. There is no material action, suit, proceeding,
investigation, audit, or claim now pending or threatened by any authority
regarding any taxes relating to Holdings or any of its Subsidiaries. As of the
Restatement Effective Date, neither Holdings nor any of its Subsidiaries has
entered into an agreement or waiver or been requested to enter into an agreement
or waiver extending any statute of limitations relating to the payment or
collection of taxes of Holdings or its Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of
Holdings or any of its Subsidiaries not to be subject to the normally applicable
statute of limitations. None of Holdings or any of its Subsidiaries has
provided, with respect to themselves or property held by them, any consent under
Section 341 of the Code.
7.10 COMPLIANCE WITH ERISA. (a) Each Plan is insubstantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency or has applied for an extension of any amortization period within the
meaning of Section 412 of the Code; all contributions required to be made with
respect to each Plan and each Foreign Pension Plan have been timely made;
neither Holdings nor any of its Subsidiaries nor any ERISA Affiliate has
incurred any material liability to or on account of any Plan pursuant to Section
409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or reasonably expects to
incur any material liability (including any indirect, contingent, or secondary
liability) under any of the foregoing Sections with respect to any Plan; no
proceedings have been instituted to terminate or appoint a trustee to administer
any Plan; no condition exists which presents a material risk
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to Holdings or any of its Subsidiaries or any ERISA Affiliate of incurring a
material liability to or on account of any Plan pursuant to the foregoing
provisions of ERISA and the Code; no lien imposed under the Code or ERISA on the
assets of Holdings or any of its Subsidiaries or any ERISA Affiliate exists or
is reasonably likely to arise on account of any Plan; and Holdings and its
Subsidiaries may cease contributions to or terminate any employee benefit plan
maintained by any of them without incurring any material liability.
(b) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither
Holdings nor any of its Subsidiaries has incurred any obligation in connection
with the termination of or withdrawal from any Foreign Pension Plan that has not
been accrued or otherwise properly reserved on Holdings' or such Subsidiary's
balance sheet in accordance with GAAP. With respect to each Foreign Pension
Plan that is required to be funded through a separate funding vehicle, the
present value of the accrued benefit liabilities (whether or not vested) under
each such Foreign Pension Plan, determined as of the latest valuation date for
such Foreign Pension Plan on the basis of actuarial assumptions, each of which
is reasonable, did not exceed the current value of the assets of such Foreign
Pension Plan allocable to such benefit liabilities.
7.11 PLEDGE AND SECURITY AGREEMENT. The security interests created in
favor of the Collateral Agent, as Pledgee, for the benefit of the Secured
Creditors under the Pledge and Security Agreement constitute first priority
perfected security interests in the Pledged Securities described in the Pledge
and Security Agreement, subject to no security interests of any other Person.
No filings or recordings (other than the filing of Form UCC-1 financing
statements or the appropriate equivalent, which filing, if this representation
is being made more than 10 days after the Restatement Effective Date, has been
made) are required in order to perfect (or maintain the perfection or priority
of) the security interests created in the Pledged Securities thereof or the
proceeds thereof under the Pledge and Security Agreement.
7.12 REPRESENTATIONS AND WARRANTIES IN DOCUMENTS. All representations
and warranties by Holdings, the Borrower and their respective Subsidiaries set
forth in the other Documents were true and correct in all material respects at
the time as of which such representations and warranties were made (or deemed
made) and shall be true and correct in all material respects as of the
Restatement Effective Date as if such representations or warranties were made on
and as of such date, unless stated to relate to a specific earlier date, in
which case such representations or warranties shall be true and correct in all
material respects as of such earlier date.
7.13 PROPERTIES. Holdings and each of its Subsidiaries have good and
marketable title to, or a validly subsisting leasehold interest in, all material
properties owned or leased by them, including all property reflected in the
balance sheets referred to
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in Sections 7.05(a) and (b) and in the pro forma balance sheet referred to in
Section 5.15 (except as sold or otherwise disposed of since the date of such
balance sheets in the ordinary course of business), free and clear of all Liens,
other than (i) as referred to in the balance sheets or in the notes thereto or
(ii) Permitted Liens.
7.14 CAPITALIZATION. (a) On the Restatement Effective Date and after
giving effect to the Transaction and the other transactions contemplated
hereby, the authorized capital stock of Holdings shall consist of (i) 50,000,000
shares of common stock, $.01 par value per share (such authorized shares of
common stock, together with any subsequently authorized shares of common stock
of Holdings,the "Holdings Common Stock"), of which 14,715,745 shares are issued
and outstanding, (ii) 2,500,000 shares of Class B Stock, $.01 par value per
share (such authorized Shares of Class B Stock the "Holdings Class B Stock"), of
which 1,738,692 shares are issued and outstanding and (iii) 10,000,000 shares of
preferred stock (250,000 shares of which are designated Series A Junior
Preferred Stock), none of which will be issued and outstanding (such authorized
shares of preferred stock the "Holdings Preferred Stock"). All such outstanding
shares have been duly and validly issued, are fully paid and nonassessable and
free of preemptive rights. As of the Restatement Effective Date, Holdings does
not have outstanding any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock, other than as described in the
Registration Statement in (x) the second paragraph of the section entitled
"Shares Eligible For Future Sale" and (y) the section entitled "Description of
Capital Stock" under the caption "Rights Plan."
(b) On the Restatement Effective Date and after giving effect to the
Transaction, the authorized capital stock of the Borrower shall consist of 1,000
shares of common stock, $.01 par value per share (such authorized shares of
common stock, together with any subsequently authorized shares of common stock
of the Borrower, the "Borrower Common Stock"), of which 1 share shall be issued
and outstanding and delivered for pledge pursuant to the Pledge and Security
Agreement. All such outstanding shares of common stock have been duly and
validly issued, are fully paid and nonassessable and free of preemptive rights.
The Borrower does not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock.
(c) On the Restatement Effective Date and after giving effect to the
Transaction and the other transactions contemplated hereby, the authorized
capital stock of WTI shall consist of (i) 1,000 shares of common stock, $.01 par
value per share, of which 100 shares shall be issued and outstanding and owned
by Holdings and (ii) 1,000 shares of preferred stock (x) none of which shall be
issued or outstanding if WTI Tender
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Offer/Consent Solicitation Consummation occurs on the Restatement Effective
Date and (y) if the WTI Tender Offer/Consent Solicitation Consummation does not
occur on the Restatement Effective Date, shares of such preferred stock
constituting WTI Intercompany Preferred Stock as required to be issued pursuant
to Section 5.08(e)(i) shall be issued an4 outstanding and owned by Holdings. All
such outstanding shares have been duly and validly issued, and are fully paid
and nonassessable. WTI does not have outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
7.15 SUBSIDIARIES. (a) Prior to the consummation of the Transaction,
(i) Holdings has no Subsidiaries other than Acquisition Corp., Laser Tech, the
Borrower and the Subsidiaries of the Borrower, (ii) the Borrower has no
Subsidiaries other than those Subsidiaries listed on Schedule V and (iii)
Acquisition Corp. and Laser Tech have no Subsidiaries.
(b) On and as of the Restatement Effective Date and after giving
effect to the consummation of the Transaction, Holdings has no Subsidiaries
other than WTI, Laser Tech, the Borrower and their respective Subsidiaries, and
the Receivables Subsidiary, the Borrower has no Subsidiaries other than those
Subsidiaries listed on Schedule V, WTI has no Subsidiaries other than those
Subsidiaries listed on Schedule V and Laser Tech has no Subsidiaries. Schedule
V correctly sets forth, as of the Restatement Effective Date and after giving
effect to the Transaction, the percentage ownership (direct and indirect) of
Holdings, WTI and the Borrower in each class of capital stock of each of their
respective Subsidiaries and also identifies the direct owner thereof. All
outstanding shares of capital stock of each Subsidiary of Holdings, WTI and the
Borrower have been duly and validly issued, are fully paid and nonassessable and
have been issued free of preemptive rights. No Subsidiary of Holdings, WTI or
the Borrower has outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any right to subscribe for or to purchase, or
any options or warrants for the purchase of, or any agreement providing for the
issuance (contingent or otherwise) of or any calls, commitments or claims of any
character relating to, its capital stock or any stock appreciation or similar
rights.
7.16 COMPLIANCE WITH STATUTES; ETC. Holdings and each of its
Subsidiaries are in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (excluding applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls, which matters are
covered under Section 7.19), except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, operations, property, assets,
liabilities, condition (financial
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or otherwise) or prospects of the Borrower, the Borrower and its Subsidiaries
taken as a whole or Holdings and its Subsidiaries taken as a whole.
7.17 INVESTMENT COMPANY ACT. Neither Holdings nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company, "within the meaning of the Investment Company Act of 1940,
as amended.
7.18 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Holdings nor any
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
7.19 ENVIRONMENTAL MATTERS. Notwithstanding anything to the contrary
in this Section 7.19, the representations made in this Section 7.19 shall only
be untrue if the aggregate effect of all failures and noncompliance of the types
described herein could reasonably be expected to have a material adverse effect
on the performance, business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower, the Borrower
and its Subsidiaries taken as a whole, or Holdings and its Subsidiaries taken as
a whole:
(a) each of Holdings and its Subsidiaries is in compliance with all
applicable Environmental Laws and neither Holdings nor any of its
Subsidiaries is liable for any material penalties, fines, or forfeitures for
failure to comply with any of the foregoing, and the requirements of any
permits issued under such Environmental Laws. There are no pending or, to
the best knowledge of Holdings, threatened Environmental Claims against
Holdings or any of its Subsidiaries or any Real Property owned or operated
by Holdings or any of its Subsidiaries. There are no facts, circumstances,
conditions or occurrences on any Real Property at any time owned or
operated by Holdings or any of its Subsidiaries or, to the knowledge of
Holdings, on any property adjoining or in the vicinity of any such Real
Property that could reasonably be expected (i) to form the basis of an
Environmental Claim against Holdings or any of its Subsidiaries or any Real
Property currently owned or operated by Holdings or any of its Subsidiaries,
or (ii) to cause any such currently owned Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such
Real Property by Holdings or any of its Subsidiaries under any applicable
Environmental Law; and
(b) Holdings and its Subsidiaries have not at any time generated,
used, treated or stored Hazardous Materials on, or transported Hazardous
Materials to or from, or Released Hazardous Materials on or from any Real
Property owned or operated by Holdings or any of its Subsidiaries except in
compliance with all applicable Environmental Laws and as reasonably
required in connection with the
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operation, use and maintenance of any such Real Property by Holdings' or
such Subsidiary's business.
7.20 LABOR RELATIONS. Neither Holdings nor any of its subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have a
material adverse effect on the performance, business, operations, property,
assets,liabilities, condition (financial or otherwise) or prospects of the
Borrower, the Borrower and its Subsidiaries taken as a whole or Holdings and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice complaint
pending or threatened against Holdings or any of its Subsidiaries before the
National Labor Relations Board and no material grievance or material arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending or threatened against Holdings or any of its Subsidiaries, (ii) no
strike, labor dispute, slowdown or stoppage is pending or threatened against
Holdings or any of its Subsidiaries and (iii) no union representation question
exists with respect to the employees of Holdings or any of its Subsidiaries,
except (with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate) such as could not reasonably be
expected to have a material adverse effect on the performance, business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a whole or
Holdings and its Subsidiaries taken as a whole.
7.21 PATENTS, LICENSES, FRANCHISES AND FORMULAS. Each of holdings
and its subsidiaries owns all patents, trademarks, permits, service marks, trade
names, copyrights, licenses, franchises and formulas, or rights with respect to
the foregoing, and has obtained assignments of all leases and other rights of
whatever nature, reasonably necessary for the present conduct of its business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, would result in a material adverse effect on
the performance, business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower, the Borrower and its
Subsidiaries taken as a whole or Holdings and its Subsidiaries taken as a whole.
7.22 INDEBTEDNESS. Schedule VI sets forth a true and complete list of
all Indebtedness (exclusive of Indebtedness pursuant to this Agreement or
represented by the Existing 10-3/4% Senior Subordinated Notes, the WTI Senior
Subordinated Notes, the Replacement Working Capital Facility, the WTI
Intercompany Loans or the Holdings Intercompany Loans) of Holdings and its
Subsidiaries as of the Restatement Effective Date and which is to remain
outstanding after giving effect to the Transaction and the incurrence of Loans
on such date, in each case showing the aggregate principal amount thereof (and
the aggregate amount of any undrawn commitments with respect thereto) and the
name of the respective borrower and any other entity which directly or
indirectly guaranteed such debt.
7.23 TRANSACTION. At the time of consummation thereof, each element
of the Transaction shall have been consummated in accordance with the terms of
the Doc-
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uments and all applicable laws. At the time of consummation thereof, all
consents and approvals of, and filings and registrations with, and all other
actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Transaction in
accordance with the terms of the Documents and all applicable laws have been
obtained, given, filed or taken and are or will be in full force and effect (or
effective judicial relief with respect thereto has been obtained). All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority, which restrains, prevents, or imposes material
adverse conditions upon the consummation of any element of the Transaction.
Additionally, there does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the consummation of any element of
the Transaction, the occurrence of any Credit Event, or the performance by any
Credit Party of their respective obligations under the Documents and all
applicable laws.
7.24 INSURANCE. Set forth on Schedule VII hereto is a true, correct
and complete summary of all insurance carried by each Credit Party on and as of
the Restatement Effective Date, with the amounts insured set forth therein.
7.25 TREATMENT OF CERTAIN EXTENSIONS OF CREDIT UNDER INDENTURES. (a)
From and after the Initial Borrowing Date, this Agreement (as same may be
amended, modified or supplemented from time to time) constitutes the "New Credit
Agreement" under, and as defined in, the Existing 10-3/4% Senior Subordinated
Note Indenture, dated as of August 1, 1993, and the "Credit Agreement" under,
and as defined in, the Existing 10-3/4% Senior Subordinated Note Indenture,
dated as of April 15, 1994. All Obligations pursuant to this Agreement
constitute "Senior Indebtedness" and "Designated Senior Indebtedness" under, and
as defined in, the Existing 10-3/4% Senior Subordinated Note Indentures and are
entitled to the benefits of the subordination provisions contained in Article 10
of the Existing 10-3/4% Senior Subordinated Note Indentures.
(b) All extensions of credit pursuant to the Replacement Working
Capital Facility and pursuant to any WTI Intercompany Loans shall constitute
"Senior Debt" under, and as defined in, the WTI Senior Subordinated Notes
Indenture.
7.26 SPECIAL PURPOSE CORPORATION. (a) Acquisition Corp. was formed to
effect the Acquisition. Prior to the consummation of the Transaction,
Acquisition Corp. had no significant assets or liabilities (other than those
liabilities under the Acquisition Documents).
(b) The Receivables Subsidiary was formed for the purpose of
purchasing, and receiving contributions of, receivables from the Borrower and
any Subsidiary Guarantor and selling such receivables to, or obtaining secured
loans from, the Receivables Purchasers (or to the Master Trust created pursuant
to the Receivables Facility), pursuant to the Receivables Facility and except in
connection with the foregoing (and activities rea-
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sonably incidental thereto), the Receivables Subsidiary engages in no
business activities and has no significant assets or liabilities and shall in no
event purchase receivables from any Unrestricted Subsidiary.
SECTION 8. AFFIRMATIVE COVENANTS. Each of Holdings and the Borrower
hereby covenants and agrees that on and after the Restatement Effective Date and
until the Total Commitment and all Letters of Credit have terminated and the
Loans, Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
8.01 INFORMATION COVENANTS. The Borrower will furnish to the
Administrative Agent (with sufficient copies for all the Banks), and the
Administrative Agent will promptly forward to each Bank:
(a) MONTHLY REPORTS. Within 35 days after the end of each calendar
month of Holdings (or within 45 days after the end of the last month of
each fiscal year), (i) the combined balance sheets of Holdings and its
Subsidiaries (except that combined financial statements shall not be
required at any time when Holdings has no Unrestricted Subsidiaries) and
(ii) the consolidated and consolidating balance sheets of Holdings and its
Subsidiaries, in each case, as at the end of such month and the related
combined, consolidated and consolidating statements of income and retained
earnings and statement of cash flows for such month and for the elapsed
portion of the calendar year ended with the last day of such month, in each
case setting forth comparative figures for the corresponding month in the
prior calendar year and the budgeted figures for such month as set forth in
the respective budget delivered pursuant to Section 8.01(e), all of which
shall be certified by an Authorized Representative of Holdings, subject to
normal year-end audit adjustments and the absence of footnotes.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 50 days after the close of each of the first three quarterly
accounting periods in each fiscal year, (i) the combined balance sheets of
Holdings and its Subsidiaries (except that combined financial statements
shall not be required at any time when Holdings has no Unrestricted
Subsidiaries) and (ii) the consolidated and consolidating balance sheets of
Holdings and its Subsidiaries, in each case, as at the end of such
quarterly period and the related combined, consolidated and consolidating
statements of income and retained earnings and cash flows for such
quarterly period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period and setting forth comparative figures
for the related periods in the prior fiscal year and the budgeted figures
for such quarterly period as set forth in the respective budget delivered
pursuant to Section 8.01(e) and (iii) management's discussion and analysis
of the important operational and financial developments during such
quarterly period; PROVIDED that for any quarterly accounting period during
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which Holdings is a Reporting Company under the Exchange Act, the
furnishing of (w) Holdings' Form 10-Q Report filed with the SEC for such
quarterly accounting period, (x) the combined financial statements required
above (to the extent same are required for such quarterly accounting
period), (y) the consolidating financial statements required above and (z)
a comparison of actual results to budgeted figures as required above, shall
satisfy the requirements of this Section 8.01(b) for the respective fiscal
quarter, all of which shall be certified by an Authorized Representative of
Holdings, subject to normal year-end audit adjustments and the absence of
footnotes.
(c) ANNUAL FINANCIAL STATEMENTS. Within 95 days (or by May 15, 1996
in the case of the fiscal year ended on December 31, 1995) after the close
of each fiscal year (including the fiscal year ended December 31, 1995),
(i) the combined balance sheets of Holdings and its Subsidiaries (except
that combined financial statements shall not be required at any time when
Holdings has no Unrestricted Subsidiaries) and (ii) the consolidated and
consolidating balance sheets of Holdings and its Subsidiaries, in each
case, as at the end of such fiscal year and the related combined,
consolidated and consolidating statements of income and retained earnings
and of cash flows for such fiscal year setting forth comparative figures
for the preceding fiscal year (or, in the case of the fiscal year ended
December 31, 1995, for the preceding calendar year ended December 31, 1994)
and (A) certified, in the case of such consolidated financial statements
and (B) confirmed by a letter, in the case of the combined and
consolidating statements, delivered in substantially the form of the
auditor's letter delivered to Holdings on June 30, 1995, in each case by
Deloitte & Touche or such other independent certified public accountants of
recognized national standing reasonably acceptable to the Administrative
Agent, together with a report of such accounting firm stating that in the
course of its regular audit of the financial statements of Holdings and its
Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge of
any Default or Event of Default which has occurred and is continuing or, if
in the opinion of such accounting firm such a Default or Event of Default
with respect to the covenants set forth in Sections 9.02 through 9.15,
inclusive, has occurred and is continuing, a statement as to the nature
thereof and (iii) management's discussion and analysis of the important
operational and financial developments during such fiscal year; provided
that for any fiscal year for which Holdings is a Reporting Company under
the Exchange Act, the furnishing of (x) Holdings' Form 10-K Report filed
with the SEC for such annual accounting period, (y) the combined financial
statements required above (to the extent same are required for such
quarterly accounting period) and (z) the consolidating financial statements
required above, shall satisfy the requirements of this Section 8.01(c)
for the respective fiscal year.
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(d) MANAGEMENT LETTERS. Promptly after the receipt thereof by
Holdings or any of its Subsidiaries, a copy of any "management letter"
received by such Person from their certified public accountants and the
management's non-privileged responses thereto.
(e) BUDGETS. No later than 90 days (or earlier, if available)
following the commencement of the first day of each fiscal year, a budget in
form satisfactory to the Administrative Agent (including budgeted statements
of income and sources and uses of cash and balance sheets) prepared by
Holdings for (x) each of the twelve months of such fiscal year prepared in
detail and (y) each of the four fiscal years immediately following such
fiscal year prepared in summary form, in each case, on a consolidated and
consolidating basis, for Holdings and its Subsidiaries.
(f) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 8.01(a), (b) and (c), a
certificate of an Authorized Representative of Holdings or the Borrower to
the effect that, to the best of such Authorized Representative's knowledge,
no Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate shall, in the case of any
such financial statements delivered in respect of a period ending on the
last day of a fiscal quarter or year of Holdings, (x) set forth the
calculations required to establish whether the Credit Parties were in
compliance with the provisions of Sections 3.03, 4.02 (excluding Section
4.02(g)), 9.02, 9.03, 9.04, 9.05 and 9.07 through 9.09, inclusive, at the
end of such fiscal quarter or year, as the case may be, and (y) if
delivered with the financial statements required by Section 8.01(c)(other
than those provided for the fiscal year ended December 31, 1995 or December
31, 1996), set forth the amount of Excess Cash Flow for the respective
Excess Cash Flow Payment Period.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after an officer of Holdings or any of its
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default, (ii) any
litigation or governmental investigation or proceeding pending or
threatened in writing (x) against Holdings or any of its Subsidiaries which
could reasonably be expected to materially and adversely affect the
performance, business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower, the Borrower and its
Subsidiaries taken as a whole or Holdings and its Subsidiaries taken as a
whole, (y) with respect to any material Indebtedness of Holdings or any of
its Subsidiaries taken as a whole or (z) with respect to any Document and
(iii) any other event which could reasonably be expected to materially and
adversely affect the performance, operations, property, business assets,
liabilities, condition (financial
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or otherwise) or prospects of Borrower, the Borrower and its Subsidiaries
taken as a whole or Holdings and its Subsidiaries taken as a whole.
(h) OTHER REPORTS AND FILINGS. Promptly, copies of all financial
information, proxy materials and other information and reports, if any,
which Holdings or any of its Subsidiaries shall file with the Securities
and Exchange Commission or any successor thereto (the "SEC") and copies of
all notices and reports which Holdings or any of its Subsidiaries shall
deliver to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(i) ENVIRONMENTAL MATTERS. Promptly, and in any event within 15
Business Days after an officer of Holdings or the Borrower obtains
knowledge thereof, notice of any of the following environmental matters,
unless the respective matter relates to WTI and is specifically described
in the Bank Book or unless such environmental matters could not,
individually or when aggregated with all other such environmental matters,
be reasonably expected to (x) materially and adversely affect the
performance, business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower, the Borrower and its
Subsidiaries taken as a whole or Holdings and its Subsidiaries taken as a
whole (including all reasonably related claims or liabilities) or (y)
result in a remedial cost to Holdings or any of its Subsidiaries in excess
of $2,000,000:
(i) any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by Holdings or any of its Subsidiaries that
(a) results in noncompliance by Holdings or any of its Subsidiaries
with any applicable Environmental Law or (b) could reasonably be
expected to form the basis of an Environmental Claim against Holdings
or any of its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by Holdings or any of its Subsidiaries that could reasonably
be expected to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability by
Holdings or any of its subsidiaries of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Property
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owned or operated by Holdings or any of its Subsidiaries as required
by any Environmental Law or any governmental or other administrative
agency.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action,
and Holdings' or such Subsidiary's response or proposed response thereto.
In addition, Holdings will provide the Administrative Agent with copies of
all communications regarding matters reasonably likely to result in
environmental liabilities in excess of $2,000,000 between Holdings or any
of its Subsidiaries and any government or governmental agency relating to
Environmental Laws, all communications regarding matters reasonably likely
to result in environmental liabilities in excess of $2,000,000 between
Holdings or any of its Subsidiaries and any Person (other than its
attorneys) relating to Environmental Claims, and such non-privileged
detailed reports of any Environmental Claim as may be requested by the
Administrative Agent or the Required Banks.
(j) ANNUAL MEETINGS WITH BANKS. At the request of the Administrative
Agent, the Borrower shall within 120 days after the close of each fiscal
year of Holdings (beginning with its fiscal year ended December 31, 1996)
hold a meeting (at a mutually agreeable location and time) with all of the
Banks at which meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of Holdings and its
Subsidiaries and the budgets presented for the current fiscal year of the
Borrower and its Subsidiaries.
(k) NOTICE OF COMMITMENT REDUCTIONS AND MANDATORY REPAYMENTS. On or
prior to the date of any reduction to the Total Commitment or any mandatory
repayment of outstanding Term Loans pursuant to any of Sections 4.02(c)(ii)
and 4.02(d) through (j), inclusive, the Borrower shall provide written
notice of the amount of the respective reduction or repayment, as the case
may be, to each of the Total Revolving Credit Commitment or the outstanding
Term Loans, as applicable, and the calculations thereof (in reasonable
detail).
(l) CERTAIN WTI SENIOR SUBORDINATED NOTE REPURCHASES. Promptly, and
in any event within 10 Business Days, after any Optional WTI Note
Repurchase or any WTI Change of Control Offer Repurchase are effected after
the Restatement Effective Date, the Borrower shall provide the
Administrative Agent written notice thereof.
(m) INDENTURE CALCULATIONS. As long as any Existing 10-3/4% Senior
Subordinated Notes are outstanding and after the occurrence of the first
Credit Event which would cause the Total Revolving Outstandings to exceed
the Lowest Outstanding Amount then in effect by more than the Threshold
Amount, then, at the time of (i) the delivery of the financial statements
provided for in Section
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8.01(b) or (c), (ii) the consummation of any Permitted Transaction, (iii)
the incurrence of any Permitted Debt and (iv) the issuance of any Qualified
Preferred Stock, a certificate of the chief financial officer or treasurer
of the Borrower containing calculations required to establish the Fixed
Charge Coverage Ratio (as such term is defined in the Existing 10-3/4%
Senior Subordinated Note Indentures) and showing the maximum amount of Loans
which may be incurred by the Borrower under this Agreement during the
following fiscal quarter while remaining in compliance with the first
paragraph of Section 4.9 of the Existing 10-3/4% Senior Subordinated Note
Indentures, in each case as determined on the last day of the immediately
preceding fiscal quarter (and on a PRO FORMA BASIS, in accordance with the
relevant requirements of the Existing 10-3/4% Senior Subordinated Note
Indentures).
(n) OTHER INFORMATION. From time to time, such other information or
documents (financial or otherwise) with respect to Holdings or its
Subsidiaries as the Administrative Agent or any Bank (through the
Administrative Agent) may reasonably request.
Notwithstanding anything to the contrary contained in Sections 8.01(a) and
(b), the Borrower shall not be required to furnish to the Administrative
Agent the consolidating balance sheets and financial statements referred to
in this Section 8.01 for any monthly or quarterly period ending prior to
August 1, 1996.
8.02 BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all requirements of
law shall be made of all dealings and transactions in relation to its business
and activities. Holdings will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Administrative Agent or
any Bank to visit and inspect, at the Administrative Agent's or such other
Bank's own expense, as the case may be (or, if a Default or Event of Default is
in existence, at the Borrower's expense), during regular business hours, upon
reasonable advance notice and under guidance of officers of Holdings or such
Subsidiary, any of the properties of Holdings and any of its Subsidiaries, and
to examine the books of account of Holdings and any of its Subsidiaries and
discuss the affairs, finances and accounts of Holdings and any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants, all at such reasonable times and intervals and to any
reasonable extent as the Administrative Agent or any Bank may reasonably
request.
8.03 MAINTENANCE OF PROPERTY; INSURANCE. (a) Schedule VII sets forth a
true and complete listing of all insurance maintained by Holdings, the Borrower
and their respective Subsidiaries as of the Restatement Effective Date.
Holdings will, and will cause each of its Subsidiaries to (i) keep all property
necessary in its business in good working order and condition (ordinary wear and
tear excepted), (ii) maintain, with financially sound
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and reputable insurance companies, insurance on all its property in at least
such amounts and against at least such risks as is consistent and in accordance
with industry practice and (iii) furnish to the Administrative Agent and each
Bank, upon written request, full information as to the insurance carried. In
addition to the requirements of the immediately preceding sentence, Holdings
will at all times cause insurance of the types described in Schedule VII to be
maintained (with the same scope of coverage as that described in Schedule VII)
at levels which are at least as great as the respective amount described
opposite the respective type of insurance on Schedule VII under the column
headed "Minimum Amount Required to be Maintained." Such insurance shall include
physical damage insurance on all real and personal property (whether now owned
or hereafter acquired) on an all risk basis, covering the full repair and
replacement costs of all such property and business interruption insurance for
the actual loss sustained.
(b) Holdings will, and will cause each of its Subsidiaries to, at all
times keep the respective property insured, and all policies or certificates
with respect to such insurance (and any other insurance maintained by, or on
behalf of, Holdings or any of its Subsidiaries) shall state that such insurance
policies shall not be cancelled or materially changed without at least 30 days'
prior written notice thereof by the respective insurer to the Administrative
Agent.
(c) If Holdings or any of its Subsidiaries shall fail to maintain all
insurance in accordance with this Section 8.03, the Administrative Agent shall
have the right (but shall be under no obligation) after giving notice to
Holdings (but not requiring any consent from Holdings) to procure such insurance
and the Credit Parties agree to jointly and severally reimburse the
Administrative Agent for all costs and expenses of procuring such insurance.
8.04 CORPORATE FRANCHISES. Holdings will, and will cause each of its
Subsidiaries to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights,
franchises, licenses and patents; PROVIDED, HOWEVER, that nothing in this
Section 8.04 shall prevent (i) transactions permitted in accordance with the
applicable requirements of Section 9.02 or (ii) the withdrawal by Holdings or
any of its Subsidiaries of its qualification as a foreign corporation in any
jurisdiction where such withdrawal could not reasonably be expected to have a
material adverse effect on the performance, business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower, the Borrower and its Subsidiaries taken as a whole or Holdings and its
Subsidiaries taken as a whole.
8.05 COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except such noncompliances as could not, individually
or in the aggregate, reasonably be expected to have a
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material adverse effect on the performance, business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower, the Borrower and its Subsidiaries taken as a whole, Holdings or of
Holdings and its Subsidiaries taken as a whole or a material adverse effect on
the ability of any Credit Party to perform its obligations under any Credit
Document to which it is a party.
8.06 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) Holdings will comply,
and will cause each of its Subsidiaries to comply, in all material respects with
all Environmental Laws applicable to the ownership or use of its Real Property
now or hereafter owned or operated by Holdings or any of its Subsidiaries, will
promptly pay or cause to be paid all costs and expenses incurred in connection
with such compliance, and will keep or cause to be kept all such Real Property
free and clear of any Liens imposed pursuant to such Environmental Laws.
Neither Holdings nor any of its Subsidiaries will generate, use, treat, store,
Release or dispose of, or permit the generation, use, treatment, storage,
Release or disposal of Hazardous Materials on any Real Property now or hereafter
owned or operated by Holdings or any of its subsidiaries, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property
except for Hazardous Materials used or stored at any such Real Properties in
compliance (excluding non-compliance which, individually and in the aggregate,
could not reasonably be expected to have a material adverse effect on the
performance, business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower, the Borrower and its
Subsidiaries taken as a whole or Holdings and its Subsidiaries taken as a whole)
with all applicable Environmental Laws and reasonably required in connection
with the operation, use and maintenance of any such Real Property.
(b) At the written request of the Administrative Agent or the Required
Banks, which request shall specify in reasonable detail the basis therefor, at
any time and from time to time, Holdings will provide, where reasonably
available, any non-privileged environmental site assessment reports concerning
any Real Property now or hereafter owned or operated by Holdings or any of its
Subsidiaries, prepared by an environmental consulting firm reasonably acceptable
to the Administrative Agent or, if no such reports are available, environmental
assessment reports prepared at Holdings' sole cost and expense by an
environmental consulting firm reasonably approved by the Administrative Agent,
addressing the matters in clause (i), (ii) or (iii) below which gives rise to
such request (or, in the case of a request pursuant to following clause (i),
addressing such matter as may be requested by the Administrative Agent or the
Required Banks) and estimating the range of the potential costs of any removal,
remedial or other corrective action in connection with any such matter, provided
that in no event shall such request be made unless (i) an Event of Default has
occurred and is continuing, (ii) the Banks receive notice under Section 8.01(i)
for any event for which notice is required to be delivered for any such Real
Property or (iii) the Administrative Agent or the Required Banks reasonably
believe that there was a breach of any representation, warranty, or covenant
contained in Section 7.19 or 8.06(a). If Holdings fails to provide the same
within a reasonable time after such request was made.
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the Administrative Agent may order the same, and Holdings shall grant and hereby
grant to the Administrative Agent and the Banks and their agents reasonable
access to such Real Property for the purpose of conducting any such assessments.
8.07 ERISA. As soon as possible and, in any event, within 10 days
after Holdings, any Subsidiary of Holdings or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, Holdings will deliver
to each of the Banks a certificate of the chief financial officer or treasurer
of the Borrower setting forth details as to such occurrence and the action, if
any, that Holdings, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by Holdings, such Subsidiary, such ERISA Affiliate, the PBGC, a
Plan participant or the Plan administrator with respect thereto: that a
Reportable Event has occurred; that an accumulated funding deficiency has been
incurred or an application may be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to a Plan; that a contribution
required to be made to a Plan or Foreign Pension Plan has not been timely made;
that a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current Liability
giving rise to a lien under ERISA or the Code; that proceedings may be or have
been instituted to terminate or appoint a trustee to administer a Plan; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that Holdings, any Subsidiary of Holdings or
any ERISA Affiliate will or may reasonably be expected to incur any material
liability (including any indirect, contingent, or secondary liability) to or on
account of the termination of or withdrawal from a Plan or otherwise under
Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a
Plan or otherwise under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(l) of ERISA; or that Holdings or any Subsidiary of
Holdings may reasonably be expected to incur any material liability pursuant to
any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or pursuant to any employee pension benefit
plan (as defined in Section 3(2) of ERISA) in addition to any liability existing
on the Restatement Effective Date pursuant to any such welfare or pension plan
or plans. Holdings will deliver to each of the Banks a complete copy of the
annual report (Form 5500) of each Plan (including, to the extent required, the
related financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information) required to be filed with
the Internal Revenue Service. In addition to any certificates or notices
delivered to the Banks pursuant to the first sentence hereof, copies of annual
reports and any material notices received by Holdings, any Subsidiary of
Holdings or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan
shall be delivered to the Banks no later than 10 days after the date such report
has been filed with the Internal Revenue Service or such notice has been
received by Holdings, such Subsidiary or such ERISA Affiliate, as applicable.
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8.08 END OF FISCAL YEARS; FISCAL QUARTERS. Holdings shall cause (i)
each of its, and each of its Subsidiaries', fiscal years (for accounting and SEC
disclosure purposes) to end on December 31, and (ii) itself, and each of its
Subsidiaries, to maintain fiscal quarters consistent therewith. Notwithstanding
anything to the contrary contained in the Original Credit Agreement, Holdings
shall, not later than May 15, 1996, change its, and its Subsidiaries', fiscal
years to December 31, from its fiscal year as previously ended on June 30, with
the period from July 1, 1995 to December 31, 1995 constituting a short fiscal
year for purposes of making such transition.
8.09 PERFORMANCE OF OBLIGATIONS. Holdings will, and will cause each
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, deed of trust, indenture, loan agreement or credit agreement and each
other material agreement, contract or instrument, by which it is bound, except
such non-performances as could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the performance, business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a whole or
Holdings and its Subsidiaries taken as a whole.
8.10 PAYMENT OF TAXES. Each of Holdings and the Borrower will pay and
discharge or cause to be paid and discharged, and Holdings will cause each of
its Subsidiaries to pay and discharge, all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, in each case on a timely basis, and all lawful
claims for sums that have become due and payable which, if unpaid, might become
a lien or charge upon any properties of Holdings, the Borrower or any of their
respective Subsidiaries; PROVIDED that none of Holdings, the Borrower or any of
their respective Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it maintains adequate reserves with respect thereto in accordance
with GAAP.
8.11 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) Holdings agrees to
cause each Wholly-Owned Domestic Subsidiary established or created in accordance
with Section 9.11 and, on the WTI Subsidiaries Guaranty Date, WTI and each
Wholly-Owned Domestic Subsidiary of WTI which has not theretofore become a
Subsidiary Guarantor, to execute and deliver a guaranty of all Obligations and
all obligations under Interest Rate Protection Agreements in substantially the
form of the Subsidiaries Guaranty, or by becoming a party to the Subsidiaries
Guaranty. Notwithstanding anything to the contrary contained above or elsewhere
in this Agreement, the Receivables Subsidiary shall not be required to become a
Subsidiary Guarantor, although 100% of the capital stock of the Receivables
Subsidiary shall be pledged pursuant to the Pledge and Security Agreement.
(b) Holdings and the Borrower agree to pledge, and to cause each
Subsidiary Guarantor to pledge, (i) the capital stock of each new Subsidiary and
Unrestricted Subsidiary (except to the extent the capital stock of any such
Subsidiary or
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Unrestricted Subsidiary is not owned by a Credit Party) established or created
in accordance with Section 9.11 and (ii) on and after the WTI Subsidiaries
Guaranty Date, any theretofore unpledged capital stock owned by WTI or any of
its Wholly-Owned Domestic Subsidiaries, in each case to the Collateral Agent for
the benefit of the Secured Creditors pursuant to the Pledge and Security
Agreement.
(c) Holdings will, and will cause each of its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, schedules,
confirmatory assignments, conveyances, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral covered by the Pledge and Security
Agreement as the Collateral Agent may reasonably require pursuant to this
Section 8.11. Furthermore, Holdings shall cause to be delivered to the
Collateral Agent such opinions of counsel and other related documents as may be
reasonably requested by the Collateral Agent to assure itself that this Section
8.11 has been complied with.
(d) Each of the Credit Parties agrees that each action required above
by Section 8.11(a) or (b) shall be completed contemporaneously with the creation
of the respective new Subsidiary or Unrestricted Subsidiary or the WTI
Subsidiaries Guaranty Date, as applicable; PROVIDED that if the respective
Subsidiary or Unrestricted Subsidiary whose capital stock is required to be
pledged is a Foreign Subsidiary or Foreign Unrestricted Subsidiary, the
perfection of the pledge of stock of such Subsidiary or Unrestricted Subsidiary
shall not be required to be completed until 30 days after the creation or
acquisition of such Foreign Subsidiary or Foreign Unrestricted Subsidiary or the
WTI Subsidiaries Guaranty Date, as applicable. Furthermore, each of the Credit
Parties further agrees that each action required by Section 8.11(c) shall be
completed as soon as possible, but in no event later than 30 days after such
action is requested to be taken by the Administrative Agent or the Required
Banks.
8.12 WORKING CAPITAL FACILITY. The Borrower shall at all times comply
with the second sentence of Section 7.08(b).
8.13 OWNERSHIP OF SUBSIDIARIES. Holdings shall at all times directly
own 100% of the outstanding capital stock of the Borrower, WTI and Laser Tech.
The Borrower shall at all times directly own 100% of the outstanding capital
stock of the Receivables Subsidiary. Except to the extent otherwise expressly
consented in writing by the Required Banks and except as set forth in Schedule
V, the Credit Parties (and WTI and its Wholly-Owned Subsidiaries) shall directly
or indirectly own 100% of the capital stock or partnership interests of each of
their Subsidiaries (other than as permitted pursuant to the definition of
Permitted Acquisition).
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8.14 PERMITTED TRANSACTIONS. (a) Subject to the provisions of this
Section 8.14 and the requirements contained in the definition of Permitted
Acquisition or Permitted Unrestricted Subsidiary Investment, as the case may be,
each of the Borrower, Laser Tech and WTI (but, in the case of WTI, only if the
WTI Subsidiaries Guaranty date has theretofore occurred) may from time to time
after the Restatement Effective Date effect Permitted Acquisitions and Holdings
may from time to time after the Restatement Effective Date effect Permitted
Unrestricted Subsidiary Investments, so long as: (i) no Default or Event of
Default shall be in existence at the time of the consummation of the proposed
Permitted Transaction or immediately after giving effect thereto; (ii) the
Borrower shall have given the Administrative Agent and the Banks at least 10
Business Days' prior written notice of any Permitted Transaction; (iii)
calculations are made by the Borrower of compliance with the covenants contained
in Sections 9.08 and 9.09 for the period of four consecutive fiscal quarters
(taken as one accounting period) most recently ended prior to the date of such
Permitted Transaction (each, a "Calculation Period"), on a PRO FORMA Basis as if
the respective Permitted Transaction (as well as all other Permitted
Transactions theretofore consummated after the first day of such Calculation
Period) had occurred on the first day of such Calculation Period, and such
recalculations shall show that such financial covenants would have been complied
with if the Permitted Transaction had occurred on the first day of such
Calculation Period (for this purpose, if the first day of the respective
Calculation Period occurs prior to the Restatement Effective Date, calculated as
if the covenants contained in said Sections 9.08 and 9.09 had been applicable
from the first day of the Calculation Period); (iv) based on good faith
projections prepared by the Borrower for the period from the date of the
consummation of the Permitted Transaction to the date which is one year
thereafter, the level of financial performance measured by the covenants set
forth in Sections 9.08 and 9.09 shall be better than or equal to such level as
would be required to provide that no Default or Event of Default would exist
under the financial covenants contained in Sections 9.08 and 9.09 of this
Agreement as compliance with such covenants would be required through the date
which is one year from the date of the consummation of the respective Permitted
Transaction; (v) the Administrative Agent shall have been satisfied in its
reasonable discretion that the proposed Permitted Transaction could not
reasonably be expected to result in materially increased tax, ERISA,
environmental or other contingent liabilities with respect to Holdings or any of
its Subsidiaries; (vi) all representations and warranties contained herein and
in the other Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of such Permitted Transaction (both before and after
giving effect thereto), unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date; (vii) Holdings provides to the
Administrative Agent and the Banks as soon as available but not later than 5
Business Days after the execution thereof, a copy of any executed purchase
agreement or similar agreement with respect to such Permitted Transaction;
(viii) in the case of Permitted Unrestricted Subsidiary Investments only, the
aggregate amount invested (including, without limitation, the amount of all cash
investments, the greater of the aggregate liquidation preference and the fair
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market value (at the time of issuance) of all Preferred Stock directly issued as
a component of the consideration, and the fair market value of any other
consideration paid or invested in connection with any such Permitted
Unrestricted Subsidiary Investment, but excluding any Holdings Common Stock
directly issued as the consideration in connection with any Permitted
Unrestricted Subsidiary Investment, so long as no Net Cash Proceeds are received
by Holdings or any of its Subsidiaries in connection therewith) in all such
Permitted Unrestricted Subsidiary Investments occurring on or after the
Restatement Effective Date shall not exceed the Permitted Unrestricted
Subsidiary Amount as in effect on the date of the making of the respective
Permitted Unrestricted Subsidiary Investment; (ix) so long as any Existing
10-3/4% Senior Subordinated Notes remain outstanding, Holdings would, on a PRO
FORMA basis calculated in a manner provided in the Existing 10-3/4% Senior
Subordinated Note Indentures, remain in compliance with the requirements of
Section 4.9 of the Existing 10-3/4% Senior Subordinated Note Indentures, and
shall have furnished the certificate required to be delivered at the time of the
consummation of the respective Permitted Transaction pursuant to Section
8.01(m); (x) in the case of any Permitted Acquisition to be effected by WTI, the
WTI Subsidiaries Guaranty Date shall theretofore have occurred and the Borrower
shall have certified to the Agents, and the Agents in their reasonable
discretion shall agree with such certification, that the business, division or
product line being acquired pursuant to the respective Permitted Acquisition
more closely relates to the business then being conducted by WTI than the
business then being conducted by the Borrower; (xi) in the case of any Permitted
Acquisition to be effected by Laser Tech, (I) the Borrower shall have certified
to the Agents, and the Agents in their reasonable discretion shall agree with
such certification, that the business, division or product line being acquired
pursuant to the respective Permitted Acquisition more closely relates to the
business then being conducted by Laser Tech than the business then being
conducted by the Borrower and (II) the sum of (x) the aggregate consideration
(including the aggregate principal amount of any Permitted Acquired Debt assumed
in connection therewith) for any such Permitted Acquisition plus (y) the
aggregate consideration for all such other Permitted Acquisitions previously
effected by Laser Tech shall not exceed $20,000,000 and (xii) the Borrower shall
have delivered to the Administrative Agent an officer's certificate executed by
an Authorized Representative of the Borrower, certifying to the best of his
knowledge, compliance with the requirements of preceding clauses (i) through
(iv), inclusive, (vi), (ix) and (in the case of a Permitted Unrestricted
Subsidiary Investment) (viii) and (in the case of a Permitted Acquisition
effected by Laser Tech) (xi)(II) and containing the calculations required by the
preceding clauses (iii), (iv) and (ix) and (in the case of a Permitted
Unrestricted Subsidiary Investment) showing the calculation of the Permitted
Unrestricted Subsidiary Amount at such time.
(b) At the time of each Permitted Transaction involving the creation
or acquisition of a Subsidiary or Unrestricted Subsidiary, or the acquisition of
capital stock or other equity interest of any Person, all capital stock or other
equity interests thereof created or acquired in connection with such Permitted
Transaction (except capital stock of an
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Unrestricted Subsidiary owned by another Unrestricted Subsidiary) shall be
pledged for the benefit of the Secured Creditors pursuant to the Pledge and
Security Agreement.
(c) Holdings shall cause each Subsidiary which is formed to effect, or
is acquired pursuant to, a Permitted Transaction to comply with, and to execute
and deliver, all of the documentation required by, Sections 8.11 and 9.11, to
the satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Transaction shall be deemed to
be a representation and warranty by Holdings and the Borrower that the
certifications by the Borrower (or by one or more of its Authorized
Representatives) pursuant to Section 8.14(a) are true and correct and that all
conditions thereto have been satisfied and that same is permitted in accordance
with the terms of this Agreement, which representation and warranty shall be
deemed to be a representation and warranty for all purposes hereunder,
including, without limitation, Sections 6 and 10.
8.15 MAINTENANCE OF CORPORATE SEPARATENESS. Holdings will, and will
cause each of its Subsidiaries and Unrestricted Subsidiaries to, satisfy
customary corporate formalities, including the holding of regular board of
directors' and shareholders' meetings or action by directors or shareholders
without a meeting and the maintenance of corporate offices and records.
Neither Holdings nor any of its Subsidiaries shall make any payment to a
creditor of any Unrestricted Subsidiaries in respect of any liability of any
Unrestricted Subsidiaries, and no bank account of any Unrestricted Subsidiary
shall be commingled with any bank account of Holdings or any of its
Subsidiaries. Any financial statements distributed to any creditors of any
Unrestricted Subsidiaries shall clearly establish or indicate the corporate
separateness of such Unrestricted Subsidiary from Holdings and its
Subsidiaries. Finally, neither Holdings nor any of its Subsidiaries shall
take any action, or conduct its affairs in a manner, which is likely to
result in the corporate existence of Holdings or any of its Subsidiaries or
Unrestricted Subsidiaries being ignored, or in the assets and liabilities of
Holdings or any of its Subsidiaries being substantively consolidated with
those of any other such Person or any Unrestricted Subsidiary in a
bankruptcy, reorganization or other insolvency proceeding. Notwithstanding
anything to the contrary contained elsewhere in the Agreement, until such
time as the WTI Senior Subordinated Notes Indenture Supplement has become
effective, WTI and its Subsidiaries shall be deemed to be Unrestricted
Subsidiaries of Holdings for purposes, and only for purposes, of the
foregoing provisions of this Section 8.15.
8.16 FOREIGN SUBSIDIARIES SECURITY. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower acceptable to the Administrative Agent and the Required Banks does not
within 30 days after a request from the Administrative Agent or the Required
Banks deliver evidence, in form and substance satisfactory to the Administrative
Agent and the Required Banks, with respect to any
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Foreign Subsidiary (for purposes of this Section 8.16, the term "Foreign
Subsidiary" shall include any Foreign Unrestricted Subsidiary) which has not
already had all of its stock pledged pursuant to the Pledge and Security
Agreement that a pledge (x) of 66-2/3% or more of the total combined voting
power of all classes of capital stock of such Foreign Subsidiary entitled to
vote, or (y) of any promissory note issued by such Foreign Subsidiary to
Holdings or any of its Domestic Subsidiaries, in any such case would cause the
undistributed earnings of such Foreign Subsidiary as determined for Federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, then in the
case of a failure to deliver the evidence described in clause (i) above, that
portion of such Foreign Subsidiary's outstanding capital stock or any promissory
notes so issued by such Foreign Subsidiary, in each case to the extent owned by
a Credit Party and not theretofore pledged pursuant to the Pledge and Security
Agreement, shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge and Security Agreement (or another
pledge agreement in substantially similar form, if needed), to the extent that
the entering into such Pledge and Security Agreement is permitted by the laws of
the respective foreign jurisdiction and with all documents delivered pursuant to
this Section 8.16 to be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks.
8.17 COMPLETION OF REFINANCING TRANSACTIONS. Holdings and the
Borrower shall take all actions as may be required so that (i) the Refinancing
Transaction described in clause (i) of the definition thereof contained in this
Agreement shall be completed on the Restatement Effective Date, (ii) the
Refinancing Transaction described in clause (ii) of the definition thereof
contained in this Agreement shall be completed, but only if the Requisite
Consents have been obtained, on or prior to the Restatement Effective Date,
(iii) if any Refinancing Transactions as described in clause (iii) of the
definition thereof contained in this Agreement are effected, same shall be
completed on or prior to Term Loan Contingent Repayment Date in accordance with
the definition of Optional WTI Note Repurchase contained herein and (iv) only if
the WTI Senior Subordinated Notes Indenture Supplement is not executed and
delivered because the Requisite Consents were not obtained, or if the WTI Senior
Subordinated Notes Indenture Supplement has been executed and delivered but
Holdings and WTI nonetheless determine to make the Change of Control Offer to
Purchase described below, then in either such case on or prior to the Term Loan
Contingent Repayment Date, WTI shall make and consummate an offer to purchase
the WTI Senior Subordinated Notes which remain outstanding, as a result of the
"Change of Control" occurring with respect thereto as a result of the
consummation of the Acquisition, at 101% of the principal amount thereof in
accordance with the terms of the WTI Senior Subordinated Notes Indenture (with
the foregoing called the "Change of Control Offer to Purchase" and any purchases
pursuant thereto, "WTI Change of Control Offer Repurchases"). In the case of the
Refinancing Transaction described in the preceding clause (iv), (x) WTI shall
consummate the Change of Control Offer to Purchase in accordance with all
applicable law, the WTI Senior Subordinated Notes Indenture and the WTI Change
of Control Offer Documents, (y) WTI shall purchase the WTI Senior
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Subordinated Notes tendered pursuant to the Change of Control Offer to Purchase
with funds made available to WTI by the Borrower by means of WTI Intercompany
Loans (which WTI Intercompany Loans may be made with proceeds of Loans borrowed
hereunder) and (z) at the time of the consummation thereof, WTI will deliver to
the Administrative Agent evidence in form, scope and substance satisfactory to
the Administrative Agent that the matters set forth in this sentence and the
preceding clause (iv) have been satisfied at such time. All Indebtedness repaid,
repurchased or redeemed pursuant to any Refinancing Transaction shall be
permanently retired (and shall not thereafter be reissued).
8.18 PAYMENTS WITH RESPECT TO NON-CASH PAY PERMITTED UNSECURED
INDEBTEDNESS. Holdings shall take all action which is necessary so that no cash
payments are owing in respect of any issue of Non-Cash Pay Permitted Unsecured
Indebtedness at any time while this covenant remains in effect in accordance
with the introductory language of this Section 8.
8.19 CERTAIN PROVISIONS WITH RESPECT TO RECEIVABLES FACILITY. The
Borrower and the other Receivables Sellers shall be permitted to transfer
Receivable Facility Assets to the Receivables Subsidiary from time to time in
accordance with the requirements of Section 9.02(x), and in connection therewith
may make the Investments as contemplated by Section 9.05(xvii). In connection
therewith, it is acknowledged and agreed that, at any time when additional
capital contributions are required to be made to the Receivables Subsidiary,
such contributions may be made through the transfer by the Borrower of
additional Receivables Facility Assets to the Receivables Subsidiary, through
the contribution of promissory notes in accordance with Section 9.05(xx) or
through a reduction in the principal amount of any intercompany note then
payable to the Borrower by the Receivables Subsidiary. In addition,
intercompany loans may be made by the Borrower and the other Receivables Sellers
as a result of the transfer of their Receivables Facility Assets to the
Receivables Subsidiary, in accordance with the provisions of Section 9.05(xvii).
In connection with the financing being obtained pursuant to the Receivables
Facility, Holdings and the Borrower agree that, on at least a monthly basis,
there shall be calculated the amount of Receivables Facility Assets at such time
which are outstanding and have been transferred to the Receivables Subsidiary by
the various Receivables Sellers, and there shall also be a calculation of the
payments received by the various Receivables Sellers in connection with the
transferred Receivable Facility Assets. To the extent that the Borrower and its
Subsidiaries which are Receivables Sellers have received disproportionately less
cash from such transfers of Receivables Facility Assets than the other
Receivable Sellers, then (at the time of each such calculation), intercompany
loans (which shall be subordinated to the Obligations hereunder on a basis
satisfactory to the Agents) of cash shall be made to the Borrower by the
Receivables Sellers which are not Subsidiaries of the Sellers in such amounts as
shall be necessary so that the cash received by the Borrower and its
Subsidiaries which are Receivables Sellers is proportionate (relative to the
amount of Receivables Facility Assets transferred by them) to the amount of cash
received by the other Receivables
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Sellers (relative to the amount of Receivables Facility Assets transferred by
them). After the initial such intercompany loan is made, on an ongoing basis as
the monthly calculations are made as required as above, adjustments shall be
made to the amount of such intercompany loans (with repayments to be made by the
Borrower or additional loans to be made by the Receivables Sellers which are not
Subsidiaries of the Borrower) at times and in amounts as is necessary to cause
the various Receivables Sellers to realize a like percentage of cash on the
Receivables Facility Assets transferred by them. All intercompany loans made as
described above in this Section 8.19 shall be evidenced by promissory notes
(which may be global notes) in form and substance satisfactory to the Agents,
which notes shall be pledged pursuant to the Pledge and Security Agreement.
SECTION 9. NEGATIVE COVENANTS. Holdings and the Borrower hereby
covenant and agree that on and after the Restatement Effective Date and until
the Total Commitment and all Letters of Credit have terminated and the Loans,
Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
9.01 LIENS. Holdings and the Borrower will not, and will not permit
any of their respective Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets (real or personal,
tangible or intangible) of Holdings or any of its Subsidiaries, whether now
owned or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to Holdings or
any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute; PROVIDED, that the
provisions of this Section 9.01 shall not prevent the creation, incurrence,
filing, assumption or existence of the following (Liens described below are
herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP;
(ii) Liens in respect of property or assets of Holdings or any of its
Subsidiaries imposed by law, which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of Holdings' or such
Subsidiary's property or assets or materially impair the use thereof in the
operation of the business of Holdings or such Subsidiary or (y) which are
being contested in good faith by appropriate pro-
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ceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property or assets subject to any such Lien;
(iii) Liens in existence on the Restatement Effective Date which are
listed, and the property subject thereto described, in Schedule VIII, but
only to the respective date, if any, set forth in such Schedule VIII for
the removal and termination of any such Liens, plus renewals and extensions
of such Liens, PROVIDED that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal or extension and (y) any
such renewal or extension does not encumber any additional assets or
properties of Holdings or any of its Subsidiaries;
(iv) Liens created pursuant to the Security Documents;
(v) licenses, leases or subleases granted to other Persons in the
ordinary course of business not materially interfering with the conduct of
the business of Holdings and its Subsidiaries taken as a whole;
(vi) Liens upon assets subject to Capitalized Lease Obligations of
Holdings and its Subsidiaries to the extent permitted by Section 9.04(vii),
PROVIDED that (x) such Liens only serve to secure the payment of
Indebtedness arising under such Capitalized Lease Obligation and (y) the
Lien encumbering the asset giving rise to the Capitalized Lease Obligation
does not encumber any other asset of Holdings or any Subsidiary of
Holdings;
(vii) Liens placed upon assets used in the ordinary course of business
of Holdings or any of its Subsidiaries at the time of acquisition thereof
by Holdings or any such Subsidiary or within 180 days thereafter to secure
Indebtedness incurred to pay all or a portion of the purchase price
thereof, or Liens securing Permitted Acquired Debt, PROVIDED that (x) the
aggregate outstanding principal amount of all Indebtedness secured by Liens
permitted by this clause (vii) shall not at any time exceed the amount
permitted by Section 9.04(vii) and (y) in all events, the Lien encumbering
the assets so acquired does not encumber any other asset of Holdings or
such Subsidiary;
(viii) easements, rights-of-way, restrictions (including zoning
restrictions), encroachments, protrusions and other similar charges or
encumbrances, and minor title deficiencies, in each case whether now or
hereafter in existence, not securing Indebtedness and not materially
interfering with the conduct of the business of Holdings or any of its
Subsidiaries;
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(ix) Liens arising from precautionary UCC financing statement filings
regarding operating leases entered into by Holdings or any of its
Subsidiaries in the ordinary course of business;
(x) Liens arising out of the existence of judgments or awards not
constituting an Event of Default under Section 10.09, PROVIDED that no cash
or property is deposited or delivered to secure the respective judgment or
award (or any appeal bond in respect thereof, except as permitted by
following clause (xii));
(xi) statutory and contractual landlords' liens under leases to which
Holdings or any of its Subsidiaries are a party;
(xii) Liens (other than any Lien imposed by ERISA) (x) incurred or
deposits made in the ordinary course of business of Holdings and its
Subsidiaries in connection with workers' compensation, unemployment
insurance and other types of social security, (y) to secure the performance
by Holdings and its Subsidiaries of tenders, statutory obligations (other
than excise taxes), surety, stay, customs and appeal bonds, statutory
bonds, bids, leases, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money) or (z) to secure the
performance by Holdings and its Subsidiaries of leases of Real Property, to
the extent incurred or made in the ordinary course of business consistent
with past practices, PROVIDED that the aggregate amount of deposits at any
time pursuant to sub-clause (y) and sub-clause (z) shall not exceed
$6,500,000 in the aggregate;
(xiii) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this Agreement;
(xiv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure the payment of customs duties in connection with the
importation of goods and deposits made to secure statutory obligations in
the form of excise taxes;
(xv) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
Holdings or any of its Subsidiaries in the ordinary course of business in
accordance with the past practices of Holdings and its Subsidiaries prior
to the Effective Date;
(xvi) additional Liens (which in no event shall be permitted to apply
to any Collateral) created, incurred, assumed or suffered to exist by
Holdings and its Subsidiaries so long as (i) neither the fair market value
of the assets subject to such Liens at any time, nor the aggregate amount
of Indebtedness and other obligations secured thereby, shall exceed
$50,000,000 in the aggregate at any time and (ii)
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Liens permitted pursuant to this clause (xvi) shall be permitted to be
incurred and remain in existence only so long as Holdings at such time has
long-term senior unsecured debt outstanding which, at such time, has a
rating which constitutes a Required Investment Grade Rating; and
(xvii) Liens on Receivables Facility Assets transferred (A) by the
Receivables Sellers to the Receivables Subsidiary or (B) by the Receivables
Subsidiary to the Receivables Purchasers (or to the Master Trust created
pursuant to the Receivables Facility), and the filing of financing
statements in connection therewith, created by, and as set forth in, the
Receivables Documents.
9.02 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC. Holdings
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any part of its property or assets (other
than the liquidation of Cash Equivalents in the ordinary course of business), or
enter into any sale-leaseback transactions, or purchase or otherwise acquire (in
one or a series of related transactions) any part of the property or assets
(other than purchases or other acquisitions of inventory, materials, equipment,
furniture, fixtures, and intangible assets in the ordinary course of business)
of any Person, except that:
(i) Capital Expenditures by Holdings and its Subsidiaries shall be
permitted to the extent not in violation of Section 9.07;
(ii) each of Holdings and its Subsidiaries may (x) in the ordinary
course of business, sell, lease or otherwise dispose of any assets which,
in the reasonable judgment of such Person, are obsolete, worn out or
otherwise no longer useful in the conduct of such Person's business, (y)
sell, lease or otherwise dispose of any other assets (excluding, for
purposes of the following provisos, assets sold, transferred or disposed of
pursuant to the Receivables Facility or the Levelco Dissolution), PROVIDED
that each such sale, lease or disposition shall be for fair market value
(other than with respect to sales, leases or dispositions in an aggregate
amount not to exceed $100,000 per calendar year) and at least 85% of the
consideration therefor shall be in the form of cash, and PROVIDED FURTHER,
that the aggregate Net Sale Proceeds of all assets subject to sales or
other dispositions pursuant to clauses (x) and (y) shall not exceed
$20,000,000 in the aggregate in any calendar year and (z) enter into
transactions permitted under Section 9.01(v);
(iii) Investments may be made to the extent permitted by Section 9.05;
(iv) each of the Borrower, Laser Tech, WTI and their respective
Subsidiaries may lease (as lessee) real or personal property (so long as
any such lease does
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not create a Capitalized Lease Obligation except to the extent permitted by
Section 9.04);
(v) each of the Borrower, Laser Tech, WTI and their respective
Subsidiaries may make sales or transfers of inventory in the ordinary
course of business;
(vi) the Borrower, Laser Tech and WTI shall be permitted to make
Permitted Acquisitions so long as (i) such Permitted Acquisitions are
effected in accordance with the requirements of Section 8.14 and (ii) with
respect to each Permitted Acquisition, no Default or Event of Default is in
existence at the time of the consummation of such Permitted Acquisition or
would exist after giving effect thereto;
(vii) Holdings shall be permitted to make Permitted Unrestricted
Subsidiary Investments so long as (i) such Permitted Unrestricted
Subsidiary Investments are effected in accordance with the requirements of
Section 8.14 and (ii) with respect to each Permitted Unrestricted
Subsidiary Investment, no Default or Event of Default is in existence at
the time of the consummation thereof or would exist after giving effect
thereto;
(viii) Holdings and its Subsidiaries may sell or otherwise dispose of
any shares of capital stock of any Unrestricted Subsidiaries owned by them;
(ix) so long as no Default or Event of Default then exists or would
result therefrom, (x) WTI (but only after the WTI Subsidiaries Guaranty
Date has occurred), Laser Tech or any Wholly-Owned Subsidiary of the
Borrower may be merged into the Borrower (so long as the Borrower is the
surviving corporation of such merger) or any other Wholly-Owned Subsidiary
of the Borrower (so long as, in the case of a merger involving WTI or Laser
Tech with or into any such Wholly-Owned Subsidiary, the surviving
corporation is a Wholly-Owned Subsidiary of the Borrower after giving
effect to such merger) and (y) any Wholly-Owned Subsidiary of WTI may be
merged into WTI (so long as WTI is the surviving corporation of such
merger);
(x) sales, contributions and other transfers by the Receivables
Sellers of Receivables Facility Assets to the Receivables Subsidiary and
sales and other transfers of Receivables Facility Assets by the Receivables
Subsidiary to the Receivables Purchasers (or to the Master Trust created
pursuant to the Receivables Facility), and purchases and acquisitions of
Receivables Facility Assets by the Receivables Subsidiary, in each case
pursuant to the Receivables Facility shall be permitted;
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(xi) the Acquisition shall be permitted in accordance with the
requirements of Section 5.08 and the component definitions contained
therein;
(xii) Levelco may sell, transfer or otherwise dispose of all of its
assets to Holdings, the Borrower and/or one or more Wholly-Owned
Subsidiaries of the Borrower and dissolve its affairs (the "Levelco
Dissolution"), and Holdings, the Borrower and/or one or more of its Wholly-
Owned Subsidiaries may purchase or otherwise acquire any or all of the
assets disposed of in connection with the Levelco Dissolution; provided
that any assets acquired by Holdings pursuant to the Levelco Dissolution
shall be immediately contributed by Holdings to the capital of the
Borrower;
(xiii) WTI may purchase 30% of the capital stock of Suncraft pursuant
to, and in accordance with the terms of, the option exercised by WTI prior
to the Restatement Effective Date (with the acquisition described in this
clause (xiii) being herein called the "Suncraft Option Exercise"), so long
as the aggregate consideration paid to effect same (I) consists solely of
cash and (II) does not exceed $2,000,000;
(xiv) so long as no Default or Event of Default then exists or would
result therefrom, at any time after the consummation of the Suncraft Option
Exercise in accordance with preceding clause (xiii), WTI may effect the
Suncraft Acquisition so long as either (A) (x) the aggregate consideration
for such acquisition consists solely of (I) cash in an amount not to exceed
$5,000,000 and (II) the assumption of Permitted Acquired Debt to the extent
permitted by Section 9.04(vii) and (y) all actions required to be taken
pursuant to Section 9.11 have been taken in connection therewith or (B) the
Suncraft Acquisition is made as a Permitted Acquisition in accordance with
preceding clause (vi); and
(xv) (x) the Borrower and Treasure Chest Advertising Company of Texas,
Inc. may transfer electronic pre-press equipment to Holdings, so long as
(I) Holdings promptly contributes such equipment to Laser Tech and (II) the
aggregate fair market value of all such equipment does not exceed
$5,000,000 and (y) Holdings may contribute to Laser Tech the equipment
transferred to it pursuant to the preceding clause (x).
9.03 RESTRICTED PAYMENTS. Holdings shall not, and shall not permit
any of its Subsidiaries to, authorize, declare or pay any Dividends with respect
to Holdings or any of its Subsidiaries or make any other Restricted Payment,
except that the following shall be permitted (subject to adjustment as provided
in Section 9.05):
(i) any Subsidiary of the Borrower may make Restricted Payments to the
Borrower or any Wholly-Owned Subsidiary of the Borrower, and any Subsidiary
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of WTI may make Restricted Payments to WTI or any Wholly-Owned
Subsidiary of WTI:
(ii) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment
thereof) WTI, Laser Tech or the Borrower may pay cash Dividends to
Holdings, so long as the proceeds thereof are promptly used by
Holdings to pay operating expenses in the ordinary course of
business and other similar corporate overhead costs and expenses,
PROVIDED that the aggregate amount of cash Dividends paid pursuant
to this clause (ii) shall in no event exceed (x) in calendar year
1996, $5,000,000 or (y) in any calendar year thereafter, the amount
permitted to be paid pursuant to this proviso for the immediately
preceding calendar year, increased by 10% of the amount permitted
for such immediately preceding calendar year, PROVIDED FURTHER,
that Holdings may at any time maintain cash and Cash Equivalents
not to exceed $3,000,000 at any time, although any amounts paid to
Holdings after the Restatement Effective Date to replenish such
balances by any of its Subsidiaries shall be deemed to constitute
Restricted Payments pursuant to this clause (ii) and shall only be
made if there exists no Default or Event of Default (both before
and after giving effect to the payment thereof);
(iii) WTI, Laser Tech or the Borrower may make cash
Restricted Payments to Holdings which in turn shall utilize the
full amount of such cash Restricted Payments for the purpose of
paying interest, and so long as Holdings promptly, and in any event
by the immediately succeeding Business Day, utilizes the full
amount of such cash Restricted Payments to pay interest as and when
due with respect to the Existing 10-3/4% Senior Subordinated Notes
then outstanding or any Subordinated Permitted Unsecured
Indebtedness then outstanding, to the extent required to be made in
accordance with the terms of the Existing 10-3/4% Senior
Subordinated Note Indenture or the documentation governing the
respective Subordinated Permitted Unsecured Indebtedness, PROVIDED
that (x) the amount of such cash Restricted Payments shall not
exceed the amount necessary to make such required interest payment
in accordance with the terms of the Existing 10-3/4% Senior
Subordinated Note Indenture or the documentation governing the
respective issue of Subordinated Permitted Unsecured Indebtedness,
as the case may be, (y) no such payment shall be made at any time
when the payment of cash interest on the respective issue of
Indebtedness is not permitted to be made pursuant to the
subordination provisions applicable thereto and (z) no such
payments may be made at any time following the occurrence and
during the continuance of any Event of Default under Section 10.01,
10.03 (due to a breach of Section 9.03, 9.08, 9.09 or 9.10),
10.04, 10.05, or 10.10 hereof;
(iv) WTI may make Restricted Payments to Holdings, so long
as Holdings immediately uses all proceeds thereof to (x) make
payments owing by it in respect
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of Holdings Intercompany Loans or (y) otherwise contribute the
amount thereof to the capital of the Borrower;
(v) additional Restricted Payments may be made at any
time, PROVIDED that the amount of any such Restricted Payment, when
added to the aggregate amount of all Restricted Payments
theretofore made pursuant to this clause (v) after the Restatement
Effective Date, shall not exceed 25% of Cumulative Consolidated Net
Income determined at the time of the making thereof (it being
understood that, in determining the amount of Restricted Payments
paid pursuant to this clause (v), amounts paid as a Restricted
Payment by WTI, Laser Tech or the Borrower or their respective
Subsidiaries to Holdings, and which are then utilized by such
Person to make Restricted Payments shall be counted as a single
Restricted Payment, but if Holdings utilizes the Restricted Payment
made by WTI, Laser Tech or the Borrower or their respective
Subsidiaries for other purposes, Holdings shall not thereafter be
permitted to use the amount received by it as a further Restricted
Payment); PROVIDED that no Default or Event of Default shall exist
at the time of the making of any Restricted Payment pursuant to
this clause (v) or immediately after giving effect thereto;
(vi) at any time when Holdings is permitted to make a
Permitted Unrestricted Subsidiary Investment in accordance with the
relevant provisions of Section 8.14 (except that, to the extent the
amount to be invested is based on a utilization of the amount
described in clause (ii) of the definition of Permitted
Unrestricted Subsidiary Amount contained herein, such amount shall
be paid to Holdings pursuant to preceding clause (v) and may not be
paid pursuant to this clause (vi)), WTI, Laser Tech or the Borrower
shall be permitted to make a Restricted Payment to Holdings in the
amount to be expended by Holdings pursuant to such Permitted
Unrestricted Subsidiary Investment (other than any amount permitted
to be expended pursuant to clause (ii) of the definition of
Permitted Unrestricted Subsidiary Amount, which amount shall only
be paid pursuant to the preceding clause (v)), PROVIDED that no
Default or Event of Default shall exist at the time of the making
of any Restricted Payment pursuant to this clause (vi) and Holdings
shall utilize any payment received by it pursuant to this clause
(vi) to make the respective Permitted Unrestricted Subsidiary
Investment within one Business Day after receiving such funds;
(vii) so long as WTI, Laser Tech or the Borrower, as the
case may be, is a member of the same consolidated group as Holdings
for federal income tax purposes, payments required by such Person
pursuant to the Amended Tax Sharing Agreement as in effect on the
Restatement Effective Date and delivered to the Administrative
Agent pursuant to Section 5.16 and as entered into by each newly
acquired or created Unrestricted Subsidiary in accordance with the
requirements of Section 9.11 shall be permitted;
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(viii) WTI, Laser Tech or the Borrower may make, and WTI,
Laser Tech or the Borrower may pay cash Dividends to Holdings to
enable Holdings to make, payments to repurchase Holdings Common
Stock and/or options to purchase Holdings Common Stock held by
directors, executive officers, members of management or employees
of Holdings or any of its Affiliates upon the death, disability,
retirement or termination of such director, executive officers,
member of management or employee, so long as (x) no Default or
Event of Default then exists or would exist after giving effect
thereto and (y) the aggregate amount of cash expended by the
Borrower and Holdings pursuant to this clause (viii) in any
calendar year shall not exceed $4,000,000; PROVIDED that, in
addition to amounts available pursuant to preceding clause (y) (but
subject to the requirements of preceding clause (x)), WTI, Laser
Tech, the Borrower or Holdings may make additional cash purchases
in respect of Holdings Common Stock and/or options to purchase
Holdings Common Stock previously held by any Person listed above,
after the death of such Person, with proceeds of key-man life
insurance maintained by WTI, Laser Tech, the Borrower or Holdings,
as the case may be, on such Person;
(ix) WTI, Laser Tech or the Borrower may make cash
Restricted Payments to Holdings, which in turn shall (within one
Business Day thereafter) utilize the full amount of such cash
Restricted Payments to pay regularly accruing cash dividends as and
when due with respect to any Qualified Preferred Stock then
outstanding, PROVIDED that (x) no Default or Event of Default then
exists or would exist immediately after the making of any such
payments and (y) the amount of such cash Restricted Payments shall
not exceed the amount necessary to make such required Qualified
Preferred Stock dividend payments in accordance with the terms of
the documentation governing the respective issue of Qualified
Preferred Stock;
(x) Holdings may make Dividends in the form of the
issuance of additional capital stock to effectuate the Rights Plan
to the extent permitted by Section 9.12(a);
(xi) during the 90-day period following the Restatement
Effective Date, the Borrower may make cash Dividends to Holdings,
which in turn shall (within one Business Day thereafter) utilize
the full amount of such cash Dividends to pay fees and expenses in
connection with the Transaction so long as no Default or Event of
Default then exists or would exist after giving effect thereto; and
(xii) if same is entered into on or prior to the
Restatement Effective Date, payments may thereafter be made by WTI
to Holdings pursuant to the Management Services Agreement;
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(xiii) Restricted Payments to the extent expressly
provided to be made on the Restatement Effective Date in accordance
with the provisions of Section 5.08 may be made in accordance with
the requirements thereof;
(xiv) the Borrower and Treasure Chest Advertising Company
of Texas, Inc. may make Dividends to Holdings in the form of
electronic pre-press equipment, so long as (x) Holdings promptly
contributes such equipment to Laser Tech in accordance with the
provisions of Section 9.02(xv) and (y) the aggregate fair market
value of all such equipment does not exceed $5,000,000; and
(xv) so long as no Default or Event of Default exists at
the time of payment thereof or would exist immediately after giving
effect thereto, the Borrower may pay cash Dividends to Holdings for
the purpose of paying, so long as the proceeds thereof are promptly
used by Holdings to pay, principal and interest as and when due
with respect to any promissory note contributed by Holdings in
accordance with Section 9.05(xx).
9.04 INDEBTEDNESS. Holdings will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or
suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
(ii) unsecured Indebtedness of (x) Holdings pursuant to the
Existing 10-3/4% Senior Subordinated Notes, so long as the
aggregate principal amount thereof at any time outstanding does not
exceed $126,700,000 less the amount of any repayments of principal
thereof after the Restatement Effective Date and (y) WTI pursuant
to the WTI Senior Subordinated Notes, so long as the aggregate
principal amount thereof at any time outstanding does not exceed
$90,000,000 less the amount of any repayments of principal thereof
on or after the Restatement Effective Date;
(iii) at any time after the Restatement Effective Date,
Holdings may refinance any then outstanding Existing 10-3/4% Senior
Subordinated Notes through the incurrence of Subordinated Permitted
Unsecured Indebtedness, so long as (a) the requirements contained in
the definition thereof (and in the definition of Permitted
Unsecured Indebtedness) are satisfied, (b) the amount of
refinancing Indebtedness incurred pursuant to this clause (iii)
does not exceed the aggregate principal amount of Existing 10-3/4%
Senior Subordinated Notes being refinanced plus premiums actually
paid thereon in an amount not to exceed 5% of the aggregate
principal amount of such Existing 10-3/4% Senior Subordinated Notes
and reasonable fees and expenses reasonably incurred in connection
with such
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refinancing and (c) no Default or Event of Default shall exist at
the time of any such refinancing or immediately after giving effect
thereto;
(iv) Scheduled Existing Indebtedness shall be permitted to
the extent the same is listed on Schedule VI, but no refinancings
or renewals thereof, except as expressly permitted on such Schedule
VI;
(v) accrued expenses and current trade accounts payable
incurred in the ordinary course of business;
(vi) Indebtedness under Interest Rate Protection Agreements
reasonably related to outstanding floating rate debt permitted
under this Agreement;
(vii) Indebtedness of the Borrower, WTI, Laser Tech and
their respective Subsidiaries evidenced by Capitalized Lease
Obligations to the extent permitted pursuant to Section 9.01(vi),
Indebtedness secured by Liens permitted under Section 9.01(vii) and
Indebtedness constituting unsecured Permitted Acquired Debt,
PROVIDED that in no event shall the aggregate principal amount of
Capitalized Lease Obligations and Indebtedness permitted by this
clause (vii) exceed $40,000,000; PROVIDED FURTHER, that in no event
shall the aggregate principal amount of Capitalized Lease
Obligations and Indebtedness secured by Liens permitted under
Section 9.01(vii) exceed $33,000,000;
(viii) Contingent Obligations of(x) the Borrower or any of
its Subsidiaries as a guarantor of the lessee under any lease
pursuant to which the Borrower or any of its Subsidiaries is the
lessee so long as such lease is otherwise permitted hereunder,(y)
WTI or any of its Subsidiaries as the guarantor of the lessee under
any lease pursuant to which WTI or any of its Subsidiaries is the
lessee so long as such lease is otherwise permitted hereunder and
(z) Laser Tech or any of its Subsidiaries as a guarantor of the
lessee under any lease pursuant to which Laser Tech or any of its
Subsidiaries is the lessee so long as such lease is otherwise
permitted hereunder;
(ix) Contingent Obligations of Holdings pursuant to the
Amended Tax Sharing Agreement;
(x) Indebtedness among (v) the Borrower and the other
Receivables Sellers to the extent resulting from intercompany loans
made in accordance with the requirements of Section 8.19, (w) the
Borrower and its Wholly-Owned Subsidiaries to the extent permitted
pursuant to Section 9.05(v), (x) WTI and its Wholly-Owned
Subsidiaries to the extent permitted pursuant to Section 9.05(xvi),
(y) Laser Tech and its Wholly-Owned Subsidiaries to the extent
permitted pursuant to Section 9.05(xvi) and (z) the Borrower and
Holdings, WTI or Laser Tech, as the case may be, to the extent
permitted pursuant to Section 9.05(xiii), (xiv) or (xv);
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(xi) in addition to the foregoing Indebtedness, Holdings
shall be permitted to incur additional Permitted Unsecured
Indebtedness for borrowed money so long as (x) such Indebtedness is
not directly or indirectly guaranteed by, and does not constitute
Indebtedness of, any of its Subsidiaries or Unrestricted
Subsidiaries, (y) the proceeds of such Indebtedness are not used to
refinance Existing Indebtedness and (z) all net cash proceeds of
such Indebtedness, to the extent not immediately used by Holdings
to effect Permitted Unrestricted Subsidiary Investments in
accordance with the covenants contained in this Agreement, shall be
contributed to the capital of the Borrower;
(xii) Indebtedness which may be deemed to exist pursuant to
the Receivables Facility so long as, if the Attributed Receivables
Facility Indebtedness ever exceeds the Receivables Facility
Threshold Amount as then in effect, any repayments and commitment
reductions required as a result thereof pursuant to Section 4.02(e)
shall have been made in accordance with the terms thereof;
(xiii) in addition to the foregoing Indebtedness, the
Borrower and its Subsidiaries shall be permitted to incur (and
thereafter suffer to exist) Permitted Secured Indebtedness for
borrowed money so long as (x) the proceeds of such Indebtedness are
not used to refinance Existing Indebtedness, (y) the aggregate
principal amount of Permitted Secured Indebtedness incurred after
the Effective Date pursuant to this clause (xiii) shall in no event
exceed $50,000,000 and (z) Permitted Secured Indebtedness shall be
permitted to be incurred and remain in existence only so long as
Holdings at such time has long-term senior unsecured debt
outstanding which, at such time, has a rating which constitutes a
Required Investment Grade Rating;
(xiv) Indebtedness arising from transactions as
contemplated in Sections 9.05(xvii), (xviii), (xix) and (xx), so
long as such Indebtedness does not exceed the respective amounts,
if any, as provided in the respective such Sections;
(xv) Contingent Obligations of the Subsidiaries of WTI
pursuant to the WTI Senior Subordinated Notes Indenture;
(xvi) WTI and its Subsidiaries may provide indemnifications
pursuant to lottery contracts entered into by WTI and its
Subsidiaries in the ordinary course of business and consistent with
past practices prior to the Restatement Effective Date; and
(xvii) obligations of any Subsidiary of Holdings incurred
with respect to performance bonds and/or fidelity bonds required to
be furnished by such Subsidiary in connection with contracts
entered into by such Subsidiary in the
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ordinary course of its business, so long as the aggregate amount of
outstanding obligations at any time pursuant to this clause (xvi)
does not exceed $25,000,000.
In furtherance of the foregoing and in no way in
limitation thereof, Holdings shall not permit any Unrestricted
Subsidiary to incur any Indebtedness or any other obligation having
any element of recourse to Holdings or any of its Subsidiaries or
to any of its assets or property.
9.05 INVESTMENTS: ETC. Holdings will not, and will not
permit any of its Subsidiaries to, directly or indirectly, lend
money or credit or make advances to any Person, or purchase or
acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person,
or purchase or own a futures contract or otherwise become liable
for the purchase or sale of currency or other commodities at a
future date in the nature of a futures contract, or hold any cash
or Cash Equivalents(any of the foregoing, an "Investment"), except
that the following shall be permitted:
(i) each of the Borrower and its Subsidiaries, WTI and
its Subsidiaries, and Laser Tech and its Subsidiaries may acquire
and hold accounts receivables owing to any of them, if created or
acquired in the ordinary course of business and payable or
dischargeable in accordance with customary terms;
(ii) Holdings and its Subsidiaries may acquire and hold
cash and Cash Equivalents; provided that during any time that
Revolving Loans of Non-Defaulting Banks or Swingline Loans are
outstanding, the aggregate amount of cash and Cash Equivalents
permitted to be held by (x) Holdings shall not exceed $3,000,000 at
anytime or (y) Subsidiaries of Holdings (including, without
limitation, the Borrower and its Subsidiaries, but excluding the
Receivables Subsidiary and, until the occurrence of the WTI
Subsidiaries Guaranty Date, excluding WTI and its Subsidiaries)
shall not exceed $27,000,000 for any period of five consecutive
days;
(iii) Holdings and its Subsidiaries may make loans and
advances to their respective employees, officers and directors in
connection with relocations, purchases by such persons of the
capital stock of Holdings or warrants, options or similar rights to
purchase the capital stock of Holdings and other ordinary course of
business purposes, so long as the aggregate principal amount
thereof at any time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances) shall not
exceed $4,000,000;
(iv) the Borrower may enter into Interest Rate
Protection Agreements to the extent permitted in Section 9.04(vi);
(v) the Borrower and its Wholly-Owned Domestic
Subsidiaries may make intercompany loans to each other, so long as
each such intercompany loan is
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evidenced by a promissory note pledged pursuant to the Pledge and
Security Agreement;
(vi) Holdings may (x) establish Subsidiaries in
compliance with Section 9.11 and (y) make Investments therein as
otherwise provided in this Section 9.05;
(vii) Holdings may make Permitted Unrestricted Subsidiary
Investments in accordance with the requirements of Section 8.14 and
the relevant definitions as used therein;
(viii) the Borrower, Laser Tech and WTI may make Permitted
Acquisitions in accordance with the relevant requirements of
Section 8.14 and the component definitions as used therein;
(ix) Holdings and its Subsidiaries may retain cash
consideration plus purchase money notes derived from asset sales
permitted pursuant to Section 9.02(ii);
(x) existing Investments by Holdings and its
Subsidiaries shall be permitted to the extent listed on Schedule IX;
(xi) to the extent the Borrower is permitted to make
Restricted Payments at any time pursuant to Section 9.03(vi), the
Borrower may instead, at its option, loan or advance the relevant
amount permitted to be paid as a Restricted Payment to Holdings;
provided that any amount loaned or advanced pursuant to this clause
(xi) shall (a) be evidenced by a promissory note delivered for
pledge pursuant to the Pledge and Security Agreement and (b) reduce
the amount permitted to be paid as a Restricted Payment pursuant to
Section 9.03(vi);
(xii) Holdings and each of its Subsidiaries may acquire
and own Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary
course of business;
(xiii) (A) the Borrower may make intercompany loans and
advances to Laser Tech for general corporate and working capital
purposes, so long as (x) the aggregate principal amount thereof at
any time outstanding (determined without regard to any write-downs
or write-offs of such loans and advances) shall not exceed
$15,000,000 and (y) each such loan is evidenced by an
unsubordinated promissory note pledged by the Borrower pursuant to
the Pledge and Security Agreement, (B) the Borrower may make
intercompany loans to WTI for general corporate and working capital
purposes pursuant to the Replacement Working Capital Facility, so
long as (x) the aggregate principal amount thereof at any time
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outstanding (determined without regard to any write-downs or
write-offs of such loans and advances) shall not exceed the
remainder of (I) $45,000,000 less (II) the sum of the Letter of
Credit Outstandings at such time in respect of WTI Letters of
Credit, and (y) each such loan is evidenced by a WTI Working
Capital Note and/or a WTI Swingline Note, in each case pledged by
the Borrower pursuant to the Pledge and Security Agreement and (C)
Laser Tech may make intercompany loans to the Borrower so long as
each such loan is evidenced by a subordinated promissory note in
the form of Exhibit K, which is delivered by Laser Tech to the
Collateral Agent for pledge pursuant to the Pledge and Security
Agreement;
(xiv) on the Restatement Effective Date, Holdings
Intercompany Loans, WTI Intercompany Loans and/or Laser Tech - WTI
Intercompany Loans shall be made in accordance with the
requirements of Section 5.08, and all promissory notes issued in
connection therewith shall be pledged pursuant to the Pledge and
Security Agreement;
(xv) the Borrower (x) may make WTI Intercompany Loans as
contemplated by Section 8.17(iii), so long as the aggregate
principal amount so loaned shall not exceed the amount to be used
by WTI to effect WTI Change of Control Offer Repurchases and all
promissory notes issued in connection therewith are pledged by the
Borrower pursuant to the Pledge and Security Agreement and (y) may
make WTI Intercompany Loans to enable WTI to effect Optional WTI
Note Repurchases, so long as the aggregate principal amount so
loaned shall not exceed the amount to be used by WTI to effect
Optional WTI Note Repurchases and all promissory notes issued in
connection therewith shall be pledged by the Borrower pursuant to
the Pledge and Security Agreement;
(xvi) WTI and its Wholly-Owned Domestic Subsidiaries may
make intercompany loans and advances to each other, and Laser Tech
and its Wholly-Owned Domestic Subsidiaries may make intercompany
loans and advances to each other, in each case so long as any such
intercompany loan or advance is evidenced by a promissory note
pledged pursuant to the Pledge and Security Agreement;
(xvii) as a result of sales, contributions and other
transfers of Receivable Facility Assets to the Receivables
Subsidiary in accordance with Section 9.02(x), Investments may
exist from time to time consisting of (x) contributions by the
Borrower to the capital of the Receivables Subsidiary and (y)
intercompany loans being made (or deemed made) by the Receivables
Sellers as a result of the transfer of such Receivables Facility
Assets, in each case so long as all capital stock of the
Receivables Subsidiary is pledged pursuant to the Pledge and
Security Agreement and all such intercompany loans are evidenced by
one or more promissory notes which are pledged pursuant to the
Pledge and Security Agreement;
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(xviii) Holdings may guarantee obligations of its
Subsidiaries as sellers pursuant to the Receivables Documents, so
long as no such guaranty shall give rise to recourse liability
(other than in connection with Standard Securitization
Undertakings) for the payment of any Receivables Facility Assets or
the principal of, or interest on, any Purchased Interest or
Investor Certificate;
(xix) the Borrower and the other Receivables Sellers may
make intercompany loans in accordance with the requirements of
Section 8.19;
(xx) to the extent necessary to maintain the net worth
of the Receivables Subsidiary in accordance with the requirements
of the Receivables Facility, Holdings may at any time contribute
one or more promissory notes to the capital of the Borrower, which
shall in turn contribute such promissory notes to the capital of
the Receivables Subsidiary; provided that (x) at no time shall the
aggregate principal amount of such outstanding promissory notes
exceed the remainder of (A)$5 million less (B) the sum of (I) the
amount of all write-downs and write-offs of such principal amount
plus (II) the aggregate amount of all principal payments in respect
of such promissory notes made after the Restatement Effective Date
and (y) the interest rate payable pursuant to such promissory notes
shall not be greater than the short-term "Applicable Federal Rate"
(as such term is defined in Section 1274(d) of the Code);
(xxi) Holdings and its Subsidiaries may make capital
contributions to any of their respective Subsidiaries (excluding
the Receivables Subsidiary and, prior to the occurrence of the WTI
Subsidiaries Guaranty Date, excluding WTI and its Subsidiaries)
which is a Credit Party;
(xxii) so long as no Default or Event of Default then
exists or would exist after giving effect thereto, the Borrower may
make Permitted Acquisition Loans at the time of, and to enable
Laser Tech or WTI, as the case may be, to effect, any Permitted
Acquisition, so long as (w) such Permitted Acquisition is effected
in accordance with the requirements of Section 8.14 and the
definition thereof contained herein, (x) Laser Tech or WTI, as the
case may be, shall use the proceeds of such Permitted Acquisition
Loans to effect the respective Permitted Acquisition, (y) the
aggregate principal amount so loaned shall not exceed the amount to
be used by Laser Tech or WTI, as the case may be, to effect the
respective Permitted Acquisition and (z) all promissory notes
issued in connection therewith shall be pledged by the Borrower
pursuant to the Pledge and Security Agreement;
(xxiii) WTI may (x) consummate the Suncraft Option Exercise
in accordance with the requirements of Section 9.02(xiii) and (y)
after the consummation of the
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Suncraft Option Exercise, effect the Suncraft Acquisition in
accordance with the relevant requirements of Section 9.02(xiv); and
(xxiv) Investments made in accordance with the relevant
requirements of Section 9.02 (xv).
9.06 TRANSACTIONS WITH AFFILIATES AND UNRESTRICTED
SUBSIDIARIES. Holdings will not, and will not permit any of its
Subsidiaries to, enter into any transaction or series of related
transactions with any Affiliate of Holdings or any of its
Subsidiaries or any of its Unrestricted Subsidiaries, other than in
the ordinary course of business and on terms and conditions
substantially as favorable to Holdings or such Subsidiary as would
reasonably be obtained by Holdings or such Subsidiary at that time
in a comparable arm's-length transaction with a Person other than
an Affiliate, except that:
(i) Dividends may be paid to the extent provided in
Section 9.03;
(ii) Investments may be made to the extent permitted by
Section 9.05;
(iii) the transactions entered into between Holdings and
its Subsidiaries, or between such Subsidiaries, shall be permitted
to the extent expressly permitted by Section 9.02;
(iv) customary fees may be paid to non-officer directors of
Holdings and its Subsidiaries;
(v) Holdings and its Subsidiaries may enter into employment
arrangements with respect to the procurement of services with their
respective officers and employees in the ordinary course of
business;
(vi) Holdings and its Subsidiaries may enter into the
transactions contemplated by the Receivables Documents;
(vii) existing transactions between Holdings and its
Subsidiaries and their Affiliates shall be permitted to the extent
listed on Schedule X;
(viii) Holdings may sell or issue Holdings Common Stock to
its Affiliates (other than its Subsidiaries);
(ix) WTI, Laser Tech, the Borrower and their respective
Subsidiaries may make payments owing by them in accordance with the
provisions of the Amended Tax Sharing Agreement, so long as all
payments required to be made by WTI, Laser Tech, the Borrower and
their respective Subsidiaries to Holdings are made when required
pursuant to the terms of such Amended Tax Sharing Agreement;
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(x) the Acquisition shall be permitted in accordance with
the requirements of Section 5.08 and the component definitions as
used therein;
(xi) if the Management Services Agreement is entered into
on or prior to the Restatement Effective Date, WTI may pay
consulting and management fees in the amounts required pursuant to
the terms of the Management Services Agreement to Holdings when and
as due; and
(xii) so long as no Default and no Event of Default exists
at the time of payment thereof or would exist immediately after
giving effect thereto, the Borrower may pay consulting and
management fees to WTI, so long as the aggregate amount of fees
paid by the Borrower pursuant to this clause (xii) does not exceed
$2,000,000 in any calendar year.
Without limiting the foregoing provisions of this Section 9.06, in no event
shall any management or similar fees be paid or payable by Holdings or any of
its Subsidiaries to any Affiliate (other than the Borrower) except as
specifically provided in Section 9.06(xi).
Notwithstanding anything contained in the foregoing to the contrary,
any transactions between and among Holdings and/or its Subsidiaries on the one
hand and any of their respective Affiliates (excluding Holdings and its
Subsidiaries) and/or Unrestricted Subsidiaries on the other hand, shall be arm's
length transactions and on terms and conditions at least as favorable to
Holdings and/or such Subsidiaries as the terms and conditions which would apply
to a similar transaction on an arm's length basis with a Person that is not an
Affiliate, PROVIDED that, any transaction (other than as described in clauses
(i), (ii), (iii) and (vi) above and except in the case of transactions with
Portfolio Companies in the ordinary course of business) between and among the
aforementioned parties with a value in excess of (A) $1,000,000 shall only be
permitted if a majority of the disinterested directors of Holdings approve the
transaction and(B) $10,000,000 shall only be permitted if the parties thereto
provide a fairness opinion from a Person, and in form and substance,
satisfactory to the Administrative Agent.
9.07 Capital Expenditures. (a) Holdings will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
during any calendar year(beginning with calendar year 1996), Holdings, the
Borrower, WTI, Laser Tech and their respective Subsidiaries may make Capital
Expenditures so long as the aggregate amount of such Capital Expenditures by
all such Persons does not exceed $65,000,000; PROVIDED that all Capital
Expenditures made by Holdings shall relate to improvements and renovations to
its office space.
(b) To the extent that the amount of Capital Expenditures made by the
Borrower. WTI, Laser Tech and their Subsidiaries during any calendar year is
less than $65,000,000 plus any increase in such amount for such calendar year as
provided below
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in this clause (b), the lesser of (x) such unused amount and (y) $32,500,000
(such lesser amount, the "Rollover Amount") may be carried forward and
utilized by the Borrower, WTI, Laser Tech and their Subsidiaries to make
additional Capital Expenditures in the immediately succeeding calendar year;
PROVIDED, that the maximum amount carried forward into any calendar year
pursuant to this clause (b) shall be $32,500,000.
(c) In addition to the Capital Expenditures permitted pursuant to
preceding clauses (a) and (b), the following additional Capital Expenditures
shall be permitted: the reinvestment of proceeds of Recovery Events not required
to be applied to reduce Commitments or repay Loans pursuant to Section 4.02(h).
9.08 CONSOLIDATED NET INTEREST COVERAGE RATIO. Holdings will not
permit the Consolidated Net Interest Coverage Ratio for any Test Period ended
after the Restatement Effective Date to be less than 2.25:1.0.
9.09 LEVERAGE RATIO. Holdings will not permit the Leverage Ratio at
any time after the Restatement Effective Date to be greater than 4.25 to 1.0
through and including March 31, 1997 and 4.00 to 1.0 thereafter; PROVIDED, that
in no event shall the Leverage Ratio be greater than 4.00 to 1.00 upon the
consummation of, and after giving effect on a Pro Forma Basis to, any Permitted
Transaction effected after the Restatement Effective Date.
9.10 LIMITATION ON MODIFICATIONS OF AND PAYMENTS ON INDEBTEDNESS AND
PREFERRED STOCK; MODIFICATIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND
CERTAIN OTHER AGREEMENTS. (a) Holdings will not, and will not permit any of its
Subsidiaries to, (i) amend or modify, or permit the amendment or modification
of, any provision of the Existing Indebtedness or, after the incurrence or
issuance thereof, any Permitted Debt, WTI Intercompany Notes. Laser Tech-WTI
Intercompany Notes, Permitted Acquisition Notes, WTI Intercompany Preferred
Stock, WTI Working Capital Notes, WTI Swingline Note, Holdings Intercompany
Notes or Qualified Preferred Stock, or of any agreement (including, without
limitation, any purchase agreement, indenture, loan agreement, or security
agreement or certificate of designation) relating thereto, other than any
amendments or modifications to the Existing Indebtedness, any Permitted Debt,
WTI Intercompany Notes. Laser Tech - WTI Intercompany Notes, Permitted
Acquisition Notes, WTI Intercompany Preferred Stock, WTI Working Capital Notes,
WTI Swingline Note, Holdings Intercompany Notes or Qualified Preferred Stock
which (A) do not make any term or condition thereof more restrictive than the
previously existing terms and conditions with respect thereto, (B) do not in any
way adversely affect the interests of the Banks, (C) do not increase (or change
in any respect in the case of the WTI Intercompany Notes, Laser Tech - WTI
Intercompany Notes, Permitted Acquisition Notes, WTI Intercompany Preferred
Stock, WTI Working Capital Notes, WTI Swingline Note or Holdings Intercompany
Notes) the interest or dividend rates applicable thereunder, reduce (or change
in any respect in the case of the WTI Intercompany Notes, Laser Tech - WTI
Intercompany
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Notes, Permitted Acquisition Notes, WTI Intercompany Preferred Stock, WTI
Working Capital Notes, WTI Swingline Note or Holdings Intercompany Notes)the
maturity date thereunder or change any pay-in-kind mechanics or requirements
or any subordination provision thereof from those in effect on the
Restatement Effective Date or, in the case of and after the incurrence of any
Permitted Debt, WTI Intercompany Notes, Laser Tech - WTI Intercompany Notes,
WTI Intercompany Preferred Stock, WTI Working Capital Notes, WTI Swingline
Note, Holdings Intercompany Notes or Qualified Preferred Stock, the date on
which such debt was incurred or equity issued, (ii) except as provided in
following clause (b), make (or give any notice in respect of) any voluntary
or optional payment or prepayment on or redemption, repurchase or acquisition
for value of any of the Existing Indebtedness or, after the incurrence
thereof, any Permitted Debt or Qualified Preferred Stock, (iii) after the
entering into of a Receivables Facility in accordance with the requirements
of this Agreement, amend or modify, or permit the amendment or modification
of, any provision (including without limitation for purposes of this clause
(iii) as a modification, any reduction to the amount available pursuant to
the Receivables Maximum Funding Amount) of the documentation with respect
thereto, except for amendments and modifications where the Receivables
Amendment Conditions are satisfied, (iv) enter into any new Management
Agreement (other than a Management Agreement to be entered into by the
Borrower and WTI, so long as all payments required to be made pursuant
thereto are consistent with the requirements of Section 9.06(xii)) or amend,
modify or change any existing Management Agreement or the Management Services
Agreement, except amendments, modifications or changes to any such agreement
which are not adverse to any Bank, do not violate or breach, and are not
inconsistent with, any of the terms of this Agreement and which do not, and
will not, result in Holdings or any of its Subsidiaries incurring then or any
time in the future any liability or monetary obligation which could give rise
to a violation of this Agreement or (v) amend, modify or change its
certificate of incorporation (including, without limitation, by the filing or
modification of any certificate of designation other than any certificate of
designation relating to Qualified Preferred Stock), by-laws, partnership
agreement or certificate of limited partnership, as the case may be, or any
agreement entered into by it, with respect to its capital stock (including any
Shareholders' Agreement), or enter into any new agreement with respect to its
capital stock, other than any amendments, modifications or changes pursuant
to this clause (v) and any such new agreements pursuant to this clause (v)
which do not in any way adversely affect the interests of the Banks. The
amendments to Holdings' certificate of incorporation and by-laws as described
in the Registration Statement as described in (x) the second sentence of the
section entitled "Recapitalization" and (y) the section entitled "Description
of Capital Stock." and the filing of a Certificate of Designation,
Preferences and Rights of Series A Junior Preferred Stock shall in any event
be permitted.
(b) Notwithstanding anything to the contrary contained in clause (a)
above, (x) the Refinancing Transactions shall be permitted to be effected in
accordance with the relevant provisions of Sections 5.08 and 8.17 and the
component definitions as used therein and (y) the Existing 10-3/4% Senior
Subordinated Notes may be refinanced with
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Subordinated Permitted Unsecured Indebtedness in accordance with the
requirements of Section 9.04(iii) or Qualified Preferred Stock in accordance
with the requirements of Section 9.12(c).
(c) Holdings will not, and will not permit any of its Subsidiaries
to, amend, modify or change any provision of the Amended Tax Sharing
Agreement other than any amendment, modification or change deemed immaterial
by the Administrative Agent or as otherwise consented to by the Required
Banks.
9.11 LIMITATION ON CREATION OR ACQUISITION OF SUBSIDIARIES AND
UNRESTRICTED SUBSIDIARIES. Holdings will not, and will not permit any of its
Subsidiaries to, establish, create or acquire after the Restatement Effective
Date any Subsidiary or Unrestricted Subsidiary, unless (x) in the case of
an Unrestricted Subsidiary (i) it is established, created or acquired by
Holdings or another Unrestricted Subsidiary, (ii) if a Domestic Unrestricted
Subsidiary of Holdings, all of the capital stock of such new Domestic
Unrestricted Subsidiary owned by Holdings shall be pledged pursuant to the
Pledge and Security Agreement and the certificates representing such stock,
together with stock powers duly executed in blank, shall be delivered to the
Collateral Agent, (iii) if a Foreign Unrestricted Subsidiary of Holdings, all
of the capital stock of such new Foreign Unrestricted Subsidiary owned by
Holdings (except that not more than 65% of the outstanding voting stock of
any Foreign Unrestricted Subsidiary need be so pledged, except in the
circumstances contemplated by Section 8.16) shall be pledged pursuant to the
Pledge and Security Agreement and the certificates representing such stock,
together with stock powers duly executed in blank, shall be delivered to the
Collateral Agent, and (iv) such Unrestricted Subsidiary shall, at the request
of the Administrative Agent, become a party to the Amended Tax Sharing
Agreement, or (y) in the case of a Subsidiary, it shall be a Wholly-Owned
Subsidiary of the Borrower (except that (I) the Acquisition shall be
permitted in accordance with the requirements of Section 5.08(a) and the
component definitions as used therein, (II) in the case of a Permitted
Acquisition effected by WTI or the Suncraft Acquisition, such Subsidiary
shall be a Wholly-Owned Subsidiary of WTI and (III) in the case of a
Permitted Acquisition effected by LaserTech, such Subsidiary shall be a
Wholly-Owned Subsidiary of Laser Tech) and (i) at least 10 Business Days'
prior written notice thereof is given to the Administrative Agent and the
Banks, (ii) if a Domestic Subsidiary (excluding the Domestic Subsidiary
acquired as a result of the Suncraft Acquisition, unless the WTI Subsidiaries
Guaranty Date has theretofore occurred), 100% of the capital stock of such
new Domestic Subsidiary is pledged pursuant to the Pledge and Security
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent, (iii)
if a Foreign Subsidiary, all of the capital stock of such new Foreign
Subsidiary (except that not more than 65% of the outstanding voting stock of
any Foreign Subsidiary need be so pledged, except in the circumstances
contemplated by Section 8.16) is pledged pursuant to the Pledge and Security
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent and (iv)
any new Domestic Subsidiary (excluding the Domestic
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Subsidiary acquired as a result of the Suncraft Acquisition, unless the WTI
Subsidiaries Guaranty Date has theretofore occurred) executes a counterpart
of the Subsidiaries Guaranty and the Pledge and Security Agreement. In
addition, each new Wholly-Owned Domestic Subsidiary (excluding the Domestic
Subsidiary acquired as a result of the Suncraft Acquisition, unless the WTI
Subsidiaries Guaranty Date has theretofore occurred) created or acquired
after the Restatement Effective Date shall execute and deliver, or cause to
be executed and delivered, all other relevant documentation of the type
described in Section 5 as such new Wholly-Owned Domestic Subsidiary would
have had to deliver if such new Wholly-Owned Domestic Subsidiary were a
Subsidiary Guarantor on the Restatement Effective Date. Notwithstanding
anything to the contrary contained in this Section 9.11 or elsewhere in this
Agreement, the Master Trust may, at any time or from time to time, in
accordance with the operation of the provisions of the Receivables Facility,
be or become (or thereafter cease to be) a Subsidiary of the Receivables
Subsidiary (and,therefore, of Holdings and the Borrower), and any such
occurrence shall not constitute a violation of any covenant contained in this
Agreement (including, without limitation,this Section 9.11) and in no event
shall the Master Trust be required to become a Subsidiary Guarantor or a
Credit Party. If, as contemplated by the immediately preceding sentence, the
Master Trust is at any time a Subsidiary of the Receivables Subsidiary, the
actions taken by the Master Trust in accordance with the requirements of the
Receivables Facility shall likewise not constitute a violation of any
covenant contained in this Agreement.
9.12 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) Holdings shall
not issue (i) any Preferred Stock, other than Qualified Preferred Stock
issued pursuant to clause (c) below and any Preferred Stock issued pursuant
to the Rights Plan or (ii) any redeemable common stock unless, in either
case, all terms thereof are satisfactory to the Required Banks in their sole
discretion.
(b) No Subsidiary of Holdings shall issue, or permit any of their
Subsidiaries to issue, any capital stock (including by way of sales of
treasury stock) or any options or warrants to purchase, or securities
convertible into, capital stock, except (i) for transfers and replacements of
then outstanding shares of capital stock, (ii) for stock splits, stock
dividends and additional issuances which do not decrease the percentage
ownership of Holdings or any of its Subsidiaries in any class of the capital
stock of such Subsidiaries, (iii) to qualify directors to the extent required
by applicable law, (iv) Subsidiaries formed after the Restatement Effective
Date pursuant to Section 9.11 may issue capital stock to the Borrower, Laser
Tech, WTI or such Subsidiary of the Borrower, Laser Tech or WTI which is to
own such stock in accordance with the requirements of Section 9.11, (v) for
WTI Intercompany Preferred Stock issued by Acquisition Corp. (which will
become preferred stock of WTI upon the consummation of the Acquisition) in
accordance with the requirements of Section 5.08(e) and (vi) for common stock
of Acquisition Corp. or WTI issued to Holdings in accordance with the
requirements of Section 5.08(e). All capital stock issued in accordance with
this Section 9.12(b) shall, to the extent required by the
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Pledge and Security Agreement, be delivered to the Collateral Agent for
pledge pursuant to the Pledge and Security Agreement.
(c) Holdings may issue Qualified Preferred Stock so long as (w) no
Default or Event of Default shall exist at the time of any such issuance or
immediately after giving effect thereto, (x) the proceeds of such Qualified
Preferred Stock are not used to refinance Existing Indebtedness (except as
provided in the second succeeding proviso below), (y) all Net Cash Proceeds
of such Qualified Preferred Stock, to the extent not immediately used by
Holdings to effect Permitted Unrestricted Subsidiary Investments (or, as
permitted below, to refinance Existing 10-3/4% Senior Subordinated Notes),
shall be contributed to the capital of the Borrower and (z) with respect to
each issue of Qualified Preferred Stock, the gross cash proceeds therefrom
shall be at least equal to the liquidation preference thereof at the time of
issuance or, if greater, the fair market value thereof; PROVIDED that
Qualified Preferred Stock may be issued directly as consideration in
connection with a Permitted Transaction (in which case cash proceeds shall
not be received by Holdings in respect thereof) so long as the greater of the
aggregate liquidation preference and fair market value (at the time of
issuance) of all Qualified Preferred Stock so issued, when added to the
aggregate amount of all Net Cash Proceeds excluded from the requirements of
Section 4.02(e) by virtue of the first proviso thereto, do not exceed $100
million; and NOTWITHSTANDING the immediately preceding clause (x), Qualified
Preferred Stock may be issued to refinance any then outstanding Existing
10-3/4% Senior Subordinated Notes, so long as (i) the requirements contained
in the definition of Qualified Preferred Stock are satisfied and (ii) the
amount of Qualified Preferred Stock issued for the purpose of refinancing
Existing 10-3/4% Senior Subordinated Notes does not exceed the aggregate
principal amount of Existing 10-3/4% Senior Subordinated Notes being
refinanced plus premiums actually paid thereon in an amount not to exceed 5%
of the aggregate principal amount of such Existing 10-3/4% Senior
Subordinated Notes and reasonable fees and expenses incurred in connection
with such refinancing.
9.13 BUSINESS. (a) The Borrower, WTI, and Laser Tech will not,and
will not permit any of their respective Subsidiaries (other than the
Receivables Subsidiary) to, engage (directly or indirectly) in any
business other than the Printing Business. No Unrestricted Subsidiary shall
engage (directly or indirectly) in any business other than the Media Business.
(b) Holdings shall not engage in any business other than its
ownership of the capital stock of the Borrower, WTI, Laser Tech and any
Unrestricted Subsidiaries established or acquired by it after the Restatement
Effective Date. Holdings shall have no significant assets other than its
ownership interests as described in the immediately preceding sentence and
shall act as a holding company which shall not directly engage in any
business.
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(c) Holdings and the Borrower shall cause each of Treasure Chest of
Nevada and RGP to engage in no significant business and at no time to have
assets with an aggregate value in excess of $50,000.
(d) Holdings and the Borrower shall cause the Receivables Subsidiary
to comply with the requirements of Section 9.15(a).
9.14 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. (a)
Holdings will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become
effective, except as set forth on Schedule XI, any encumbrance or
restriction on the ability of any such Subsidiary to (x) pay dividends or
make any other distributions on its capital stock or any other interest or
participation in its profits owned by Holdings or any Subsidiary of Holdings,
or pay any Indebtedness owed to Holdings or a Subsidiary of Holdings, (y)
make loans or advances to Holdings or any of Holdings' Subsidiaries or (z)
transfer any of its properties or assets to Holdings or any of Holdings'
Subsidiaries, except for such encumbrances or restrictions existing under or
by reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) the provisions contained in the Existing Indebtedness, (iv)
restrictions permitted to exist under Permitted Debt hereafter incurred or
issued in accordance with the relevant definitions contained herein, (v)
customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of Holdings or a Subsidiary of Holdings,
(vi)customary provisions restricting assignment of any licensing agreement
entered in to by Holdings or any Subsidiary of Holdings in the ordinary
course of business, (vii) any holder of a Permitted Lien may restrict the
transferability of any asset subject to such Permitted Lien and (viii)
restrictions on the Receivables Subsidiary, and with respect to the
Receivables Facility Assets, set forth in the Receivables Documents.
(b) Holdings will not permit any of its Unrestricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any restriction whatsoever on the operations of Holdings
and/or its Subsidiaries.
9.15 LIMITATION ON RECEIVABLES SUBSIDIARY AND RECEIVABLES FACILITY.
(a) The Receivables Subsidiary shall engage in no business activities other
than the purchase, acquisition, sale and pledge of receivables (or interests
therein) pursuant to the Receivables Facility and borrowings thereunder and any
business activities reasonably incidental thereto, all in accordance with the
Receivables Facility, and shall have no assets or liabilities, other than
promissory notes contributed by the Borrower in accordance with Section
9.05(xx) and receivables purchased from or contributed by the Receivables
Sellers, cash collections therefrom, any investments of such cash collections
and other assets and liabilities reasonably incidental to the foregoing
activities, and shall in no event purchase any receivables from an
Unrestricted Subsidiary or, prior to the WTI Subsidiaries Guaranty Date, WTI
or any of its Subsidiaries.
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(b) Holdings and its Subsidiaries shall not cause, permit, or suffer
to exist (including as a result of actions taken by the Receivables
Purchasers) any termination of the Receivables Facility on any date prior to
the date which is five and one-half years after the Restatement Effective
Date except, in the event the Receivables Facility is repaid, refinanced or
otherwise replaced in accordance with the terms hereof by a replacement
Receivable Facility.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each, an "Event of Default"):
10.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of any Loan or any Note, (ii) default in the payment of
any Unpaid Drawing for three or more Business Days after the date the
respective Drawing was made or, if no Default or Event of Default exists
pursuant to Section 10.05, for three or more Business Days after the receipt
by the Borrower of notice of the respective Drawing by the Administrative
Agent or the Issuing Bank or (iii) default, and such default shall continue
unremedied for three or more Business Days, in the payment when due of any
interest on any Loan or Note or Unpaid Drawing, or any Fees or any other
amounts owing hereunder or under any other Credit Document; or
10.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or
in any certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made; or
10.03 COVENANTS. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained
in Section 8.01(g)(i), 8.08. 8.13. 8.14, 8.17 or Section 9 or (ii) default
in the due performance or observance by it of any other term, covenant or
agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrower by
the Administrative Agent or any Bank; or
10.04 DEFAULT UNDER OTHER AGREEMENTS. (i) Holdings or any of its
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y)
default in the observance or performance of any agreement or condition
relating to any Indebtedness (other than the Obligations) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause (determined without regard to whether any notice is required), any
such Indebtedness to become due prior to its stated maturity, or (ii) any
Indebtedness (other than the Obligations) of Holdings or any of its
Subsidiaries shall
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be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity
thereof, PROVIDED that it shall not be a Default or Event of Default under
this Section 10.04 unless the aggregate principal amount of all Indebtedness
as described in preceding clauses (i) and (ii) is at least $1,000.000; or
10.05 BANKRUPTCY, ETC. Holdings or any of its Subsidiaries
(excluding Insignificant Subsidiaries) shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code") or shall consent to the filing of any petition against it
under any such law; or an involuntary case is commenced against Holdings or
any of its Subsidiaries (excluding Insignificant Subsidiaries) and the
petition is not controverted within 10 days, or is not dismissed within 60
days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially
all of the property of Holdings or any of its Subsidiaries (excluding
Insignificant Subsidiaries), or Holdings or any of its Subsidiaries
(excluding Insignificant Subsidiaries) commences any otherproceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Holdings or any of its
Subsidiaries (excluding Insignificant Subsidiaries), or there is commenced
against Holdings or any of its Subsidiaries (excluding Insignificant
Subsidiaries) any such proceeding which remains undismissed for a period of 60
days, or Holdings or any of its Subsidiaries (excluding Insignificant
Subsidiaries) is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or Holdings or
any of its Subsidiaries (excluding Insignificant Subsidiaries) suffers any
appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
Holdings or any of its Subsidiaries (excluding Insignificant Subsidiaries)
makes a general assignment for the benefit of creditors; or any corporate
action is taken by Holdings or any of its Subsidiaries (excluding
Insignificant Subsidiaries) for the purpose of effecting any of the
foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had or is likely to have a
trustee appointed to administer such Plan, any Plan is, shall have been or is
likely to be terminated or to be the subject of termination proceedings under
ERISA, any Plan shall have an Unfunded Current Liability, a contribution
required to be made to a Plan or a Foreign Pension Plan has not been timely
made, Holdings or any Subsidiary of Holdings or any ERISA Affiliate has
incurred or is likely to incur a liability to or on account of a Plan under
Section 409, 502(i), 502(l). 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212
of ERISA or Section 401(a)(29), 4971.4975 or 4980 of the Code, or Holdings or
any Subsidiary of Holdings has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Sec-
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tion 3(1) of ERISA) that provide benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or pursuant to any
employee pension benefit plan (as defined in Section 3(2) of ERISA) or Foreign
Pension Plan; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) which lien, security interest or
liability, individually, and/or in the aggregate, in the reasonable opinion of
the Required Banks, will have a material adverse effect upon the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of Holdings or any Subsidiary of Holdings; or
10.07 SECURITY DOCUMENTS. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral), in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except as permitted by
Section 9.01), and subject to no other Liens (except as permitted by Section
9.01), or any Credit Party shall default in the due performance or observance of
any term, covenant or agreement on its part to be performed or observed pursuant
to any of the Security Documents and such default shall continue beyond any
grace period specifically applicable thereto pursuant to the terms of such
Security Document; or
10.08 GUARANTIES. Any Guaranty or any provision thereof shall cease
to be in full force or effect as to the relevant Guarantor, or any Guarantor or
Person acting by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under the relevant Guaranty, or any Guarantor shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to the relevant Guaranty; or
10.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings or any of its Subsidiaries involving in the aggregate for
Holdings and its Subsidiaries a liability (not paid or to the extent not covered
by a reputable and solvent insurance company or not paid) and such judgments and
decrees either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 60 consecutive
days, and the aggregate amount of all such judgments exceeds $1,000,000; or
10.10 CHANGE OF CONTROL. A Change of Control shall occur; or
10.11 RECEIVABLES FACILITY. Any early amortization event or any event
permitting any Receivables Purchaser or Receivables Purchasers to effect an
early termination of the Receivables Facility (or a portion thereof) shall have
occurred and be
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continuing (after giving effect to any legally valid written waivers of such
events adopted by the relevant Receivables Purchasers); or
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the written
request of the Required Banks, shall by written notice to the Borrower, take any
or all of the following actions, without prejudice to the rights of the
Administrative Agent, any Bank or the holder of any Note to enforce its claims
against any Credit Party (PROVIDED that, if an Event of Default specified in
Section 10.05 shall occur with respect to the Borrower, the result of which
would occur upon the giving of written notice by the Administrative Agent to the
Borrower as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitment
terminated, whereupon the Commitment of each Bank shall forthwith terminate
immediately and any RL Commitment Commission and other Fees shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans and the Notes and
all Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party; (iii)
terminate any Letter of Credit, which may be terminated, in accordance with its
terms; (iv) direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the occurrence of an Event of Default specified
in Section 10.05 with respect to the Borrower, it will pay) to the
Administrative Agent at the Payment Office such additional amount of cash, to be
held as security by the Administrative Agent, as is equal to the aggregate
Stated Amount of all Letters of Credit issued for the account of the Borrower
and then outstanding; (v) enforce, as Collateral Agent, all of the Liens and
security interests created pursuant to the Security Documents; and (vi) apply
any cash collateral as provided in Section 4.02.
SECTION 11. DEFINITIONS AND ACCOUNTING TERMS.
11.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquired Business" shall mean the businesses to be acquired by
Holdings pursuant to the Acquisition Documents, including all of the businesses
of WTI and its Subsidiaries.
"Acquisition" shall mean the acquisition of 100% of the capital stock
of WTI by way of a one-step merger of Acquisition Corp. with and into WTI, with
WTI surviving said merger and existing as a Wholly-Owned Subsidiary of Holdings
in accordance with the Merger Agreement.
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"Acquisition Corp." shall mean WTI Acquisition Corp., a Delaware
corporation and Wholly-Owned Subsidiary of Holdings.
"Acquisition Documents" shall mean the Merger Agreement, the
certificate of merger and all other agreements, instruments and documents, if
any, entered into in connection with the Acquisition and Merger.
"Additional Collateral" shall mean any property or assets, other than
Pledge and Security Agreement Collateral, which at any time serve as security
pursuant to any Additional Security Document.
"Additional Security Documents" shall mean any security documents,
other than the Pledge and Security Agreement, at any time entered into pursuant
to this Agreement or the other Credit Documents.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense and non-cash interest expense,
but excluding any net non-cash charges reflected in Adjusted Consolidated
Working Capital) and net non-cash losses which were included in arriving at
Consolidated Net Income for such period less the sum of the amount of all net
non-cash income or gains (including, without limitation, deferred tax expense
and other non-cash income, but exclusive of items reflected in Adjusted
Consolidated Working Capital) included in arriving at Consolidated Net Income
for such period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Loan Commitment at such time by the Adjusted Total
Revolving Loan Commitment at such time, it being understood that all references
herein to Revolving Loan Commitments and the Adjusted Total Revolving Loan
Commitment at a time when the Total Revolving Loan Commitment or Adjusted Total
Revolving Loan Commitment, as the case may be, has been terminated shall be
references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
PROVIDED that (A) no Bank's Adjusted Percentage shall change upon the occurrence
of a Bank Default from that in effect immediately prior to such Bank Default, to
the extent such change after giving effect to such Bank Default, and any
repayment of Revolving Loans and Swingline Loans at such time pursuant to
Section 4.02(a) or otherwise, would cause the sum of (i) the
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aggregate outstanding principal amount of Revolving Loans of all Non-Defaulting
Banks plus (ii) the aggregate outstanding principal amount of Swingline Loans
plus (iii) the Letter of Credit Outstandings, to exceed the Adjusted Total
Revolving Loan Commitment; (B) any changes to the Adjusted Percentage that would
have become effective upon the occurrence of a Bank Default but that did not
become effective as a result of the preceding clause (A) shall become effective
on the first date after the occurrence of the relevant Bank Default on which the
sum of (i) the aggregate outstanding principal amount of the Revolving Loans of
all Non-Defaulting Banks plus (ii) the aggregate outstanding principal amount of
Swingline Loans plus (iii) the Letter of Credit Outstandings is equal to or less
than the Adjusted Total Revolving Loan Commitment; and (C) if (i) a Non-
Defaulting Bank's Adjusted Percentage is changed pursuant to the preceding
clause (B) and (ii) any repayment of such Bank's Revolving Loans, or of Unpaid
Drawings with respect to Letters of Credit or of Swingline Loans, that were made
during the period commencing after the date of the relevant Bank Default and
ending on the date of such change to its Adjusted Percentage must be returned to
the Borrower as a preferential or similar payment in any bankruptcy or similar
proceeding of the Borrower, then the change to such Non-Defaulting Bank's
Adjusted Percentage effected pursuant to said clause (B) shall be reduced to
that positive change, if any, as would have been made to its Adjusted Percentage
if (x) such repayments had not been made and (y) the maximum change to its
Adjusted Percentage would have resulted in the sum of the outstanding principal
of Revolving Loans made by such Bank plus such Bank's new Adjusted Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equalling such Bank's Revolving Loan Commitment at such time.
"Adjusted Total Available Revolving Loan Commitment" shall mean at any
time the Adjusted Total Revolving Loan Commitment; PROVIDED that on any date
(beginning 11 months after the Initial Borrowing Date) when a Clean-Down Period
is required to be in existence in accordance with Section 4.02(b), the Adjusted
Total Available Revolving Loan Commitment as otherwise calculated above shall be
reduced by an amount equal to $40,000,000, which reduction shall remain in
existence until the Clean-Down Period referenced in Section 4.02(b) has
concluded.
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include any
successor to the Administrative Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other Person
(including, for purposes of Section 9.06 only, all directors, officers and
partners of such Person) directly or indirectly controlling, controlled by, or
under direct or indirect common
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control with, such Person; PROVIDED, HOWEVER, that for purposes of Section
9.06, an Affiliate of Holdings shall include any Person that directly or
indirectly owns more than 5% of any class of the capital stock of Holdings and
any officer or director of Holdings or any such Person. A Person shall be
deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall mean, except as otherwise provided in Section 12, either
or both of the Administrative Agent and Documentation Agent.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.
"Amended Tax Sharing Agreement" shall have the meaning provided in
Section 5.16.
"Ammon Permitted Holders" shall mean and include R. Theodore Ammon,
his estate, spouse, heirs, ancestors, lineal descendants, legatees, legal
representatives, or the trustee of any bona fide trust of which one or more of
the foregoing are the sole beneficiaries or grantors thereof.
"Applicable Margin" shall mean the Applicable RL Margin or the
Applicable TL Margin, as the case may be.
"Applicable RL Margin" initially shall mean (subject to any
qualification for different rates pursuant to the immediately succeeding
sentence on the Initial Borrowing Date) a percentage equal to (i) in the case of
Base Rate Loans, 1.00% and (ii) in the case of Eurodollar Loans, 2.00% and
(iii) in the case of the RL Commitment Commission, .5%. From and after each day
of delivery (including the Initial Borrowing Date) of any certificate delivered
in accordance with the following sentence indicating an entitlement to a
different margin than that described in the immediately preceding sentence
(each, a "Start Date") to and including the applicable End Date described below,
the Applicable RL Margin shall be that set forth below opposite the Leverage
Ratio indicated to have been achieved in any certificate delivered in accordance
with the following sentence:
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<TABLE>
<CAPTION>
Leverage Eurodollar Base Rate Commitment
Ratio Loan Margin Loan Margin Commission Fee
-------- ----------- ----------- --------------
<S> <C> <C> <C>
Greater than 4.0:1 2.250% 1.250% 0.500%
Equal to or
greater than 3.5:1 2.000% 1.000% 0.500%
but less than
or equal to 4.0:1
Equal to or
greater than 3.0:1 1.625% 0.625% 0.400%
but less than
3.5:1
Equal to or
greater than 2.5:1 1.250% 0.250% 0.350%
but less than
3.0:1
Greater than
2.00:1 but less 0.875% 0.000% 0.300%
than 2.5:1
Less than or equal 0.500% 0.000% 0.250%
to 2.0:1
</TABLE>
The Leverage Ratio shall be determined based on the delivery of a certificate of
the Borrower by an Authorized Representative of the Borrower to the
Administrative Agent (with a copy to be sent by the Borrower to each Bank),
within 50 days of the last day of any fiscal quarter of Holdings (or on or prior
to the Initial Borrowing Date in the case of the Applicable RL Margin to be
initially established), which certificate shall set forth the calculation of the
Leverage Ratio as at the last day of the Test Period ended immediately prior to
the relevant Start Date and the Applicable RL Margins which shall be thereafter
applicable (until same is changed or ceases to apply in accordance with the
following sentences); PROVIDED that at the time of the consummation of the
Acquisition, any Permitted Transaction or any issuance of Permitted Debt or
Qualified Preferred Stock, an Authorized Representative of the Borrower shall
deliver to the Administrative Agent a certificate setting forth the calculation
of the Leverage Ratio on a PRO FORMA Basis as of the last day of the last
Calculation Period ended prior to the date on which the Acquisition or such
Permitted Transaction is consummated or such Permitted Debtor Qualified
Preferred Stock is issued for which financial statements have been made
available (or were required to be made available) pursuant to Section 8.01(b) or
(c), as the case may be, and the date of such consummation shall be deemed to be
a Start Date and the Applicable RL Margin which shall be thereafter applicable
(until same is changed or ceases to apply in accordance with the following
sentence) shall be based upon the Leverage Ratio as so calculated. The
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Applicable RL Margins so determined shall apply, except as set forth in the
succeeding sentence, from the Start Date to the earlier of (x) the date on which
the next certificate is delivered to the Administrative Agent, (y) the date on
which the next Permitted Transaction (or the Acquisition) is consummated or
Permitted Debt or Qualified Preferred is issued or (z) the date which is 50
days following the last day of the Test Period in which the previous Start Date
occurred (the "End Date"), at which time, if no certificate has been delivered
to the Administrative Agent indicating an entitlement to Applicable RL Margins
other than those described in the first sentence of this definition (and thus
commencing a new Start Date), the Applicable RL Margins shall be those described
in the first sentence of this definition. Notwithstanding anything to the
contrary contained above in this definition, the Applicable RL Margins shall be
those described in the first sentence of this definition at all times during
which there shall exist a Default or any Event of Default.
"Applicable TL Margin" shall mean a percentage per annum equal to (i)
in the case of Term Loans maintained as Base Rate Loans, 1-1/2% and (ii) in the
case of Term Loans maintained as Eurodollar Loans, 2-1/2%.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit J (appropriately
completed).
"Attributed Receivables Facility Indebtedness" at any time shall mean
the principal amount of Indebtedness which would be outstanding at such time
under the Receivables Facility if same were structured as a secured lending
agreement rather than a purchase agreement.
"Authorized Representative" shall mean, with respect to (i) delivering
Notices of Borrowing, Notices of Conversion, Letter of Credit Requests and
similar notices, any person or persons that has or have been authorized by the
board of directors of the Borrower to deliver such notices pursuant to this
Agreement and that has or have appropriate signature cards on file with the
Administrative Agent, BTCo and each Issuing Bank; (ii) delivering financial
information and officer's certificates pursuant to this Agreement, any treasurer
or other financial officer of Holdings or the Borrower and (iii) any other
matter in connection with this Agreement or any other Credit Document, any
officer (or a person or persons so designated by any two officers) of Holdings
or the Borrower.
"Available Revolving Loan Commitment" for any Bank shall mean,at any
time, such Bank's Percentage of the Total Available Revolving Loan Commitment.
"Bank" shall mean each financial institution with a Commitment listed
on Schedule I (as amended from time to time), as well as any Person which
becomes a "Bank" hereunder pursuant to Section 1.13 and/or 13.04(b).
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"Bank Book" shall mean the Supplemental Confidential Memorandum, dated
February 1996, distributed to the Banks in connection with the Acquisition.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.03 or (ii) a Bank having notified in writing the Borrower and/or
the Administrative Agent that it does not intend to comply with its obligations
under Section 1.01(a), Section 1.01(d) or Section 2, in the case of either
clause (i) or (ii) as a result of any takeover of such bank by any regulatory
authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the highest of (i) 1/2 of 1% in
excess of the Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each Loan
designated or deemed designated as such by the Borrower at the time of the
incurrence thereof or conversion thereto.
"BFP" shall mean Big Flower Press, Inc., a Delaware corporation, which
corporation was merged with and into Holdings pursuant to the Merger as defined
in the Original Credit Agreement.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower Common Stock" shall have the meaning provided in Section
7.14(c).
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche (or from
BTCo in the case of Swingline Loans) on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar Loans
the same Interest Period, PROVIDED that Base Rate Loans incurred pursuant to
Section 1.10(b) shall be considered part of the related Borrowing of Eurodollar
Loans.
"BTCC" shall mean BT Commercial Corporation, a Delaware corporation.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New
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York City a legal holiday or a day on which banking institutions are authorized
or required by law or other government action to close and (ii) with respect to
all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) above and which is also a day for trading by and between banks in the
New York interbank Eurodollar market.
"Calculation Period" shall have the meaning provided in Section 8.14.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and the amount of Capitalized Lease
Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under GAAP, are or will be required to be capitalized on the
books of such Person, in each case taken at the amount thereof accounted for as
indebtedness in accordance with such GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (PROVIDED that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition, (ii) time deposits and certificates of
deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any State thereof, the District of Columbia or any foreign jurisdiction
having capital, surplus and undivided profits aggregating in excess of
$200,000,000, with maturities of not more than one year from the date of
acquisition by such Person, (iii) repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) commercial paper issued by any Person incorporated in the
United States rated at least A-1 or the equivalent thereof by S&P's or at least
P-1 or the equivalent thereof by Moody's and in each case maturing not more than
one year after the date of acquisition by such Person, (v) investments in money
market funds substantially all of whose assets are comprised of securities of
the types described in clauses (i) through (iv) above and (vi) demand deposit
accounts maintained in the ordinary course of business not in excess of $100,000
in the aggregate.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time. 42 U.S.C. Section 9601 ET SEQ.
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"Change of Control" shall mean (i) Holdings shall at any time cease to
own 100% of the capital stock of the Borrower; (ii) at any time a "Change of
Control" under, and as defined in, any Existing Indebtedness (but excluding the
"Change of Control" occurring under the WTI Senior Subordinated Notes Indenture
as a result of the Acquisition) or any Permitted Unsecured Indebtedness or
Qualified Preferred Stock, in each case to the extent then outstanding, shall
have occurred; or (iii) at any time and for any reason whatsoever (a) the Ammon
Permitted Holders shall own less than 6.5% of the outstanding common stock of
Holdings, (b) any "Person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), excluding the Permitted Holders, is or becomes
the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act), directly or indirectly, of 30% or more of Voting Stock of
Holdings or (c) the Board of Directors of Holdings shall cease to consist of a
majority of Continuing Directors.
"Change of Control Offer to Purchase" shall have the meaning provided
in Section 8.17.
"Change of Control Payment Date" shall mean the date upon which
payments are made in respect of WTI Change of Control Offer Repurchases made
pursuant to the Change of Control Offer to Purchase.
"Clean-Down Period" shall mean any 30 consecutive day period
commencing on or after the Restatement Effective Date, during which the amount
of the Total Unutilized Revolving Loan Commitment shall be equal to or greater
than $40,000,000 for such consecutive 30-day period.
"Co-Agents" shall have the meaning provided in the first paragraph of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provision of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean and include all Pledge and Security Agreement
Collateral (which shall include all capital stock of, and promissory notes
issued by, the Receivables Subsidiary, to the extent held by any Credit Party),
all cash and Cash Equivalents delivered as collateral pursuant to Section 4.02
or 10 hereof and all Additional Collateral, if any.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors pursuant to the Security Documents.
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"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.06.
"Commitment" shall mean any of the Commitments of any Bank, I.E., its
Term Loan Commitment and/or Revolving Loan Commitment.
"Consolidated Current Assets" shall mean, at any time, the current
assets at Holdings and its Subsidiaries (excluding the Receivables Subsidiary)
determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities of Holdings and its Subsidiaries determined on a
consolidated basis at such time, but excluding (i) the current portion of any
Indebtedness under this Agreement, any Attributed Receivables Facility
Indebtedness and any other long-term Indebtedness which would other-wise be
included therein, (ii) accrued but unpaid interest with respect to the
Indebtedness described in clause (i) and with respect to Capitalized Lease
Obligations, (iii) the current portion of Indebtedness constituting Capitalized
Lease Obligations and (iv) any current portion of tax liabilities of such
Persons.
"Consolidated Debt" shall mean all Indebtedness of Holdings and its
Subsidiaries determined on a consolidated basis, with respect to borrowed money
or other obligations of such Persons which would appear on the balance sheet of
such Persons as indebtedness (including unreimbursed drawings under Letters of
Credit, but excluding Consolidated Current Liabilities and deferred tax and
pension liabilities) plus, without duplication, the amount of all Attributed
Receivables Facility Indebtedness at such time, PROVIDED that in determining
Consolidated Debt, any Preferred Stock of Holdings or any of its Subsidiaries
(including, without limitation, any Qualified Preferred Stock then outstanding)
shall be treated as Indebtedness, with an amount equal to the greater of the
liquidation preference or the maximum fixed repurchase price of any such
outstanding Preferred Stock deemed to be a component of Consolidated Debt.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income of Holdings and its Subsidiaries, determined on a consolidated basis,
before Consolidated Net Interest Expense (to the extent amounts included in
Consolidated Net Interest Expense have been deducted in arriving at Consolidated
Net Income) and provision for taxes or gains or losses from sales of assets
other than inventory sold in the ordinary course of business, in each case that
were included in arriving at Consolidated Net Income.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT.
adjusted by adding thereto (w) the amount of all amortization and depreciation,
in each case that were deducted in arriving at Consolidated EBIT for such
period, (x) cash Dividends paid to Holdings by each Unrestricted Subsidiary more
than 50% of the capital stock of which is directly owned by Holdings (together
with any cash Dividends paid directly to
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Holdings by any subsidiaries of the respective such Unrestricted Subsidiary)
during the respective Test Period, to the extent such cash Dividends do not
exceed the EBITDA of such Unrestricted Subsidiary, (y) to the extent
Consolidated EBITDA is being determined for any period that includes all or a
portion of the fiscal year ended June 30, 1995, then to the extent that
Consolidated EBITDA (whether directly or through reductions to Consolidated Net
Income) has been reduced by not more than $1.9 million of relocation costs
incurred in the fiscal year ended June 30, 1995, the amount of such reductions
(but in no event to exceed $1.9 million for the fiscal year ended June 30, 1995)
and (z) to the extent Consolidated EBITDA is being determined for any period
that includes all or a portion of the twelve month period ended June 30, 1996,
then to the extent that Consolidated EBITDA (whether directly or through
reductions to Consolidated Net Income) has been reduced by not more than $3.7
million of relocation costs incurred in the twelve month period ended June 30,
1996, the amount of such reductions (but in no event to exceed $3.7 million for
the twelve month period ended June 30, 1996).
"Consolidated Net Income" shall mean, for any period, the net after
tax income of Holdings and its Subsidiaries determined on a consolidated basis,
without giving effect to any extraordinary non-cash gains or non-cash losses,
any other non-cash expenses incurred or payments made in connection with the
Transaction and purchase accounting adjustments, and without giving effect to
gains and losses from the sale or disposition of assets (other than sales or
dispositions of inventory, equipment, raw materials and supplies) by Holdings
and its Subsidiaries after the Initial Borrowing Date; PROVIDED that, in
calculating Consolidated Net Income for the purposes of Section 9.03(v),
Consolidated Net Income shall mean the amount determined by reference to the
preceding clause less the amount of all cash Dividend requirements (whether or
not declared or paid) on Preferred Stock (including, without limitation, any
Qualified Preferred Stock then outstanding) paid, accrued or scheduled to be
paid or accrued during such period.
"Consolidated Net Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBITDA to Consolidated Net Interest Expense for such
period.
"Consolidated Net Interest Expense" shall mean, for any period, the
total consolidated interest expense of Holdings and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, (i) that portion of Capitalized Lease Obligations of
Holdings and its Subsidiaries representing the interest factor for such period,
and capitalized interest expense, (ii) all Receivables Facility Financing Costs
for such period and (iii) the amount of all cash Dividend requirements (whether
or not declared or paid) on Preferred Stock paid or accrued or scheduled to be
paid or accrued during such period, in each case net of the total consolidated
cash interest income of Holdings and its Subsidiaries for such period, but
excluding the amortization of any deferred financing costs or of any costs in
respect of the Existing Interest Rate Swap. Notwithstanding anything to the
contrary contained above, to the extent Consolidated Net Interest Expense is to
be determined for any Test Period which ends prior to the first anni-
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versary of the Restatement Effective Date, Consolidated Net Interest Expense for
all portions of such period occurring prior to the Restatement Effective Date
shall be calculated in accordance with the definition of Test Period contained
herein.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; PROVIDED, HOWEVER,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on the
Restatement Effective Date and each other director, if such director's
nomination for election to the Board of Directors of Holdings is recommended
by a majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, each
Security Document and the Subsidiaries Guaranty and, after the execution and
delivery thereof, each additional guaranty or security document executed
pursuant to Section 8.11.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean the Borrower, the Parent Guarantor and each
Subsidiary Guarantor.
"Cumulative Consolidated Net Income" shall initially mean $0, which
amount shall be increased or decreased after the end of each fiscal quarter
ended after
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March 31, 1996 (which increase or decrease shall occur on the date of the
delivery of the financial statements with respect to such fiscal quarter
delivered pursuant to Section 8.01(b) or (c), as the case may be) by the amount
of Consolidated Net Income for the respective fiscal quarter (with Cumulative
Consolidated Net Income to be increased if such Consolidated Net Income is
positive, and decreased if it is negative).
"Debt Agreements" shall have the meaning provided in Section 5.06.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or partners or authorized or made any other distribution, payment or delivery of
property (other than distributions or dividends of common stock of such Person)
or cash to its stockholders or partners as such, or redeemed, retired, purchased
or otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock or any partnership interests outstanding on or
after the Effective Date (or any options or warrants issued by such Person with
respect to its capital stock or any partnership interests), or set aside any
funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock or any partnership interests of such Person
outstanding on or after the Effective Date (or any options or warrants issued by
such Person with respect to its capital stock or any partnership interests).
Without limiting the foregoing, "Dividends" with respect to any Person shall
also include all payments made or required to be made during any period by such
Person with respect to any stock appreciation rights, plans, equity incentive or
achievement plans or any similar plans, or the Rights Plan described in the
Registration Statement, or setting aside of any funds for the foregoing
purposes, except to the extent such payments have reduced Consolidated EBITDA
during the respective period.
"Documentation Agent" shall mean Credit Suisse, in its capacity as
Documentation Agent for the Banks hereunder.
"Documents" shall mean the Credit Documents, the Receivables
Documents, the Acquisition Documents and the Refinancing Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
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"Domestic Subsidiary" shall mean a Subsidiary which is not a Foreign
Subsidiary.
"Domestic Unrestricted Subsidiary" shall mean any Unrestricted
Subsidiary which is not a Foreign Unrestricted Subsidiary.
"Drawing" shall have the meaning provided in Section 2.05(b).
"EBITDA" shall mean, for any Unrestricted Subsidiary for any period,
the Consolidated EBITDA as determined for such Unrestricted Subsidiary and its
subsidiaries on a basis substantially the same (with necessary reference
changes) as provided in the definition of Consolidated EBITDA contained herein,
except that (i) all references therein and in the component definitions used in
determining Consolidated EBITDA to "Holdings and its Subsidiaries" shall be
deemed to be references to the respective Unrestricted Subsidiary and its
subsidiaries and (ii) the adjustment contained in clauses (x), (y) and (z) of
the definition of Consolidated EBITDA shall not be made.
"Effective Date" shall mean the Effective Date of, and as defined in,
the Original Credit Agreement.
"Eligible Transferee" shall mean and include a commercial bank, mutual
fund, financial institution or other "accredited investor" (as defined in
Regulation D of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in Section
5.06.
"Employment Agreements" shall have the meaning provided in Section
5.06.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, for the purposes of this
definition, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief in connection with alleged injury or threat of injury to
health, safety or the environment due to the presence of Hazardous Materials.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guidance and rule of common law, now or hereafter in effect and in each case as
amended, and any judicial
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or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Holdings or the Borrower or any of their respective Subsidiaries, relating to
the environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 ET SEQ; the Toxic Substances Control Act, 15 U.S.C. Section
2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe
Drinking Water Act, 42 U.S.C. Section 3803 ET SEQ.; the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ., the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 ET SEQ, and the Occupational
Safety and Health Act, 29 U.S.C. Section 651 ET SEQ. (to the extent it regulates
occupational exposure to Hazardous Materials); the New Jersey Industrial Site
Recovery Act and any state and local or foreign counterparts or equivalents, in
each case as amended from time to time. Notwithstanding the foregoing
definition of "Environmental Law", for purposes of the representations and
warranties contained in Section 7.19, "Environmental Law" shall only mean any
Environmental Law in effect as of the date such representations and warranties
are made or are deemed to be made.
"Equity Financing Transactions" shall mean all of the equity financing
transactions described in Section 5.08(e).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at the
date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of Holdings or any Subsidiary of
Holdings being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Loan (excluding Swingline Loans)
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by BTCo for Dollar deposits of
amounts in immediately available funds comparable to the outstanding principal
amount of the Eurodollar Loan of BTCo with maturities comparable to the Interest
Period applicable to such Eurodollar Loan commencing two Business Days
thereafter as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded off
to the nearest 1/16 of 1%) by (b) a percentage
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equal to 100% minus the then stated maximum rate of ail reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves required by applicable law) applicable to any member bank of
the Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a)
the sum of (i) Adjusted Consolidated Net Income for such period, and (ii) the
decrease, if any, in Adjusted Consolidated Working Capital from the first day to
the last day of such period, minus (b) the sum of (i) the amount of Capital
Expenditures made by the Borrower and its Subsidiaries on a consolidated basis
during such period pursuant to and in accordance with Section 9.07(a) and (b),
except in either case to the extent financed with the proceeds of Qualified
Preferred Stock or Indebtedness or pursuant to Capitalized Lease Obligations,
(ii) the aggregate amount of permanent principal payments of Indebtedness for
borrowed money of the Borrower and its Subsidiaries and the permanent repayment
of the principal component of Capitalized Lease Obligations of the Borrower and
its Subsidiaries (excluding (1) payments with proceeds of asset sales, (2)
payments of Attributed Receivables Facility Indebtedness, (3) payments pursuant
to the Original Credit Agreement Transaction or the Transaction or with the
proceeds of other Indebtedness or equity and (4) payments of Loans or other
Obligations, PROVIDED that repayments of Loans shall be deducted in determining
Excess Cash Flow if such repayments were (x) required as a result of a Scheduled
Commitment Reduction under Section 3.03 or a Term Loan Scheduled Repayment under
Section 4.02 or (y) made as a voluntary prepayment pursuant to Section 4.01 with
internally generated funds (but in the case of a voluntary prepayment of
Revolving Loans, only to the extent accompanied by a voluntary reduction to the
Total Revolving Loan Commitment)) during such period, and (iii) the increase, if
any, in Adjusted Consolidated Working Capital from the first day to the last day
of such period.
"Excess Cash Flow Payment Date" shall mean the date occurring on or
before 95 days after the last day of each fiscal year (beginning with the fiscal
year ended closest to December 31, 1997).
"Excess Cash Flow Payment Period" shall mean, with respect to each
Excess Cash Payment Date, the immediately preceding fiscal year.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Existing Credit Agreement" shall mean the Amended and Restated Loan
and Security Agreement, dated as of April 27, 1994, among Treasure Chest
Advertising Company, Inc., Retail Graphics Printing Company, KTB Associates,
Inc., the financial
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institutions from time to time party thereto, BT Commercial Corporation, as
Agent and Citicorp U.S.A., Inc. as Co-agent, as in effect on the Effective
Date.
"Existing Indebtedness" shall have the meaning provided in
Section 5.14.
"Existing Interest Rate Swap" shall mean the Interest Rate Swap
Agreement, dated as of January 19, 1994, entered into by the Borrower.
"Existing Letters of Credit" shall have the meaning provided in
Section 2.01(d).
"Existing 10-3/4% Senior Subordinated Note Indentures" shall mean and
include the Indenture, dated as of August 1, 1993, and the Indenture, dated as
of April 15, 1994, in each case entered into by and between Holdings (as
successor by merger to BFP) and Shawmut Bank Connecticut, National Association,
as trustee thereunder, as in effect on the Restatement Effective Date and as the
same maybe modified, amended or supplemented from time to time to the extent
permitted in accordance with the terms hereof and thereof.
"Existing 10-3/4% Senior Subordinated Notes" shall mean Holdings' (as
successor by merger to BFP) 10-3/4% Senior Subordinated Notes due 2003, as in
effect on the Restatement Effective Date and as the same may be modified,
supplemented or amended from time to time to the extent permitted pursuant to
the terms hereof and thereof.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean December 31, 2001.
"Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings or any one or more
of its Subsidiaries primarily for
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the benefit of employees of Holdings or any of its Subsidiaries residing outside
the United States of America, which plan, fund or other similar program
provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of Holdings that is
incorporated under the laws of any jurisdiction other than the United States of
America, any State thereof, the United States Virgin Islands or Puerto Rico.
"Foreign Unrestricted Subsidiary" shall mean each Unrestricted
Subsidiary that is incorporated under the laws of any jurisdiction other than
the United States of America, any State thereof, the United States Virgin
Islands or Puerto Rico.
"GAAP" or "Generally Accepted Accounting Principles" shall have the
meaning provided for GAAP in Section 13.07(a).
"Guaranteed Creditors" shall mean and include each of the Agents, the
Collateral Agent, the Banks and each party (other than any Credit Party) party
to an Interest Rate Protection Agreement to the extent such party constitutes a
Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of the
principal of and interest on each Note issued by the Borrower to each Bank, and
Loans made, under this Agreement and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit, together with all the other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Borrower to such Bank now existing or hereafter incurred under, arising out of
or in connection with this Agreement or any other Credit Document and the due
preformance and compliance with all the terms, conditions and agreements
contained in the Credit Documents by the Borrower and (ii) the full and prompt
payment when due (whether by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) of the Borrower owing under any such
Interest Rate Protection Agreement entered into by the Borrower or any of its
Subsidiaries with any Bank or any affiliate thereof (even if such Bank
subsequently ceases to be a Bank under this Agreement for any reason) so long as
such Bank or affiliate participates in such Interest Rate Protection Agreement,
and their subsequent assigns, if any, whether now in existence or hereafter
arising, and the due performance and compliance with all terms, conditions and
agreements contained therein.
"Guarantor" unless further qualified, shall mean and include the
Parent Guarantor and each of the Subsidiary Guarantors.
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"Guaranty" unless further qualified, shall mean and include each of
the Parent Guaranty and the Subsidiaries Guaranty.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable and
require abatement, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
and radon gas; (b) any chemicals, materials or substances included as "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import, under
any applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated under
Environmental Laws.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Class B Stock" shall have the meaning provided in Section
7.14(a).
"Holdings Common Stock" shall have the meaning provided in Section
7.14(a).
"Holdings Intercompany Loans" shall mean intercompany loans made by
the Borrower or Laser Tech to Holdings on the Restatement Effective Date in
accordance with Section 5.08(e), which loans shall (i) be in all respects
satisfactory to the Agents, (ii) be evidenced by Holdings Intercompany Notes
pledged by the Borrower or Laser Tech, as the case may be, pursuant to the
Pledge and Security Agreement and (iii) be made in accordance with the
requirements of Section 5.08(e).
"Holdings Intercompany Note" shall mean one or more promissory notes
issued by Holdings to the Borrower or Laser Tech, as the case may be, in the
form of Exhibit N.
"Holdings Preferred Stock" have the meaning provided in Section
7.14(a).
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person (to the extent of the value of the respective
property), (iv) the aggregate
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amount required to be capitalized under leases under which such Person is the
lessee, (v) all obligations of such person to pay a specified purchase price for
goods or services, whether or not delivered or accepted, I.E., take-or-pay and
similar obligations, (vi) all Contingent Obligations of such Person and (vii)
all obligations under any Interest Rate Protection Agreement or under any
similar type of agreement. In addition to the foregoing, all Attributed
Receivables Facility Indebtedness shall constitute Indebtedness.
"Initial Borrowing Date" shall mean the Initial Borrowing Date under,
and as defined in, the Original Credit Agreement.
"Insignificant Subsidiary" shall mean any Subsidiary of Holdings which
has assets of not greater than $1,000,000 in the aggregate and which, if
aggregated with all other Subsidiaries of Holdings with respect to which an
event described under Section 10.05 has occurred and is continuing, would have
assets of not greater than $1,000,000.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement, interest rate floor agreement or other similar agreement or
arrangement.
"Interest Rate Protection Creditors" shall have the meaning provided
in the Security Documents.
"Investor Certificates" shall have the meaning provided in the
Receivables Pooling Agreement.
"Investments" shall have the meaning provided in Section 9.05.
"ISRA" shall mean the New Jersey Industrial Site Recovery Act.
"Issuing Bank" shall mean BTCo and any Bank which at the request of
the Borrower and with the consent of the Administrative Agent agrees, in such
Bank's sole discretion, to become an Issuing Bank for the purpose of issuing
Letters of Credit pursuant to Section 2. The sole Issuing Bank on the
Restatement Effective Date is BTCo.
"Laser Tech" shall mean Laser Tech Color, Inc., a Delaware
corporation.
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"Laser Tech Initial Receivables Facility Amount" shall mean the net
cash proceeds received by Laser Tech from the transfer of its Receivables
Facility Assets pursuant to the Receivables Facility on or prior to the
Restatement Effective Date.
"Laser Tech - WTI Intercompany Loans" shall mean intercompany loans
made by Laser Tech to WTI on the Restatement Effective Date, which Loans shall
(i) be in all respects satisfactory to the Agents, (ii) be evidenced by Laser
Tech- WTI Intercompany Notes pledged by Laser Tech pursuant to the Pledge and
Security Agreement, (iii) constitute "Senior Debt" under, and as defined in, the
WTI Senior Subordinated Notes Indenture and (iv) be made in accordance with the
requirements of Section 5.08(e).
"Laser Tech - WTI Intercompany Note" shall mean a promissory note
issued by WTI to Laser Tech in the form of Exhibit M-2.
"L/C Supportable Indebtedness" shall mean (i) obligations of WTI,
Laser Tech, the Borrower or any of their respective Wholly-Owned Subsidiaries
incurred in the ordinary course of business with respect to contractual
obligations (including with respect to lottery contracts), environmental
responsibilities, employee benefit obligations, insurance obligations and
workers' compensation, surety bonds and other similar statutory obligations and
(ii) such other obligations of the Borrower, any Subsidiary Guarantor or WTI and
its Wholly-Owned Subsidiaries as are permitted to remain outstanding hereunder
without giving rise to any violation of this Agreement.
"L/C Supportable Obligations" shall mean obligations of the Borrower,
WTI, Laser Tech or any of their respective Wholly-Owned Subsidiaries incurred in
the ordinary course of business with respect to contractual obligations
(including with respect to lottery contracts), environmental responsibilities,
employee benefit obligations, insurance obligations and workers' compensation,
surety bonds and other similar statutory obligations, and all obligations
customarily supported by standby letters of credit and satisfactory to the
Administrative Agent.
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a)
and shall include Trade Letters of Credit and Standby Letters of Credit.
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate Stated Amount of all outstanding Letters of Credit which have not
terminated and (ii) the amount of all Unpaid Drawings.
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"Letter of Credit Request" shall mean any request for the issuance of
a Letter of Credit made by the Borrower pursuant to Section 2.03(a), including
any request for issuance of either a Trade Letter of Credit or a Standby Letter
of Credit.
"Levelco" shall mean Levelco 84, a California limited partnership.
"Levelco Dissolution" shall have the meaning provided in Section
9.02(xii).
"Leverage Ratio" shall mean on any date the ratio of (i) Consolidated
Debt on such date to (ii) Consolidated EBITDA for the period of four consecutive
fiscal quarters most recently ended on or prior to such date, in each case taken
as one accounting period; PROVIDED that if the Acquisition or one or more
Permitted Transactions is effected during the respective Test Period,
Consolidated EBITDA shall, for the purposes of this definition only, be
calculated on a PRO FORMA Basis (but only giving effect to adjustments described
in clause (iii) of the definition of PRO FORMA Basis) after giving effect to the
Transaction or such Permitted Transaction.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, Revolving Loan and each Swingline
Loan.
"Lowest Outstanding Amount" shall have the meaning provided in Section
13.17.
"Majority Banks" of any Tranche shall mean those Non-Defaulting Banks
which would constitute the Required Banks under, and as defined in, this
Agreement if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"Management Agreements" shall have the meaning provided in Section
5.06.
"Management Services Agreement" shall mean the Management Agreement,
by and between Holdings and WTI, as (and to the extent) in effect on the
Restatement Effective Date and as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
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"Margin Stock" shall have the meaning provided in Regulation U.
"Master Trust" shall mean the trust created pursuant to the
Receivables Bridge Facility, and any successor or similar trust created pursuant
to any subsequent Receivables Facility.
"Material Contracts" shall have the meaning provided in Section 5.06.
"Maturity Date" shall mean, with respect to any Tranche of Loans, the
Term Loan Maturity Date or the Final Maturity Date, as the case may be.
"Maximum Swingline Amount" shall mean $25,000,000.
"Media Business" shall mean the Printing Business and any business that
creates, communicates, licenses, markets, leases or disseminates ideas,
information or entertainment, together with all businesses related thereto, and
any business that generates a significant portion of its revenues from
advertising.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of February 1, 1996, by and among WTI, Holdings and Acquisition Corp.
"Merger Consideration" shall mean the merger consideration payable
pursuant to, and in accordance with the terms of, the Merger Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Net Cash Proceeds" shall mean for any event requiring a commitment
reduction and/or repayment of Loans pursuant to Section 3.03 or 4.02, the gross
cash proceeds (including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise, but only as and when received)
received from such event, net of reasonable transaction costs (including, as
applicable, any underwriting, brokerage or other customary commissions and
reasonable legal, advisory and other fees and expenses associated therewith)
received from any such event; PROVIDED, that for purposes of Section 4.02(d)
only, to the extent proceeds from the sale or issuance of equity described in
said Section 4.02(d) are received by a Subsidiary of Holdings which is not a
Wholly-Owned Subsidiary, Net Cash Proceeds shall mean the amount otherwise
calculated by reference to the preceding clause multiplied by a number, the
numerator of which shall be the aggregate percentage of the equity interests of
such non-Wholly-Owned Subsidiary owned directly or indirectly by Holdings and
its Wholly-Owned Subsidiaries before giving effect to any such equity sale or
issuance and the denominator of which shall be 100%.
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory
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note, receivable or otherwise, but only as and when received) received from
any sale of assets, net of reasonable transaction costs (including, without
limitation, any underwriting, brokerage or other customary selling
commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith) and payments of
unassumed liabilities relating to the assets sold at the time of, or within
30 days after, the date of such sale, the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, and the estimated marginal increase in income taxes which
will be payable by Holdings' consolidated group with respect to the fiscal
year (for U.S. federal income tax purposes) in which the sale occurs as a
result of such sale; but excluding any portion of any such gross cash
proceeds which the Borrower determines in good faith should be reserved for
post-closing adjustments (to the extent the Borrower delivers to the Banks a
certificate signed by its chief financial officer or treasurer, controller or
chief accounting officer as to such determination), it being understood and
agreed that on the day that all such post-closing adjustments have been
determined, (which shall not be later than six months following the date of
the respective asset sale), the amount (if any) by which the reserved amount
in respect of such sale or disposition exceeds the actual post-closing
adjustments payable by Holdings or any of its Subsidiaries shall constitute
Net Sale Proceeds on such date received by Holdings and/or any of its
Subsidiaries from such sale, lease, transfer or other disposition.
"New Banks" shall mean each of the Persons which becomes a Bank on the
Restatement Effective Date, but which was not theretofore a Bank under this
Agreement.
"Non-Cash Pay Permitted Unsecured Indebtedness" shall mean each
issue of Permitted Unsecured Indebtedness where, pursuant to the terms
thereof, no cash payment of interest (or any charge in the nature of
interest), principal or premium shall be required to be paid (except in the
case of an acceleration of the maturity thereof in accordance with provisions
consistent with the requirements of the definition of Permitted Unsecured
Indebtedness) at any time prior to the date which is one year after the Term
Loan Maturity Date as in effect at the time of the issuance of such
Indebtedness; PROVIDED, that regular cash interest payments may begin not
sooner than 180 days after the Term Loan Maturity Date as in effect at the
time of the issuance of such Indebtedness.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
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"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Christopher
Kinslow or such other office as the Administrative Agent may hereafter designate
in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Agents, the
Collateral Agent, any Issuing Bank or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Optional WTI Note Repurchase" shall mean one or more repurchases of
WTI Senior Subordinated Notes by WTI on or prior to the Term Loan Contingent
Repayment Date at a cash price up to $1,010 per $1,000 principal amount, plus
accrued and unpaid interest thereon; PROVIDED, that (i) WTI shall effect any
Optional WTI Note Repurchases in accordance with all applicable law and the WTI
Senior Subordinated Notes Indenture, (ii) Optional WTI Note Repurchases shall
not be effected on the Restatement Effective Date if the WTI Tender
Offer/Consent Solicitation Consummation has occurred and (iii) WTI shall effect
any Optional WTI Note Repurchases with funds made available to WTI by the
Borrower by means of WTI Intercompany Loans; PROVIDED FURTHER, that any WTI
Senior Subordinated Notes so repurchased shall be immediately and permanently
retired (and shall not thereafter be reissued).
"Optional WTI Note Repurchase Date" shall mean any date upon which
payments are made to effect any Optional WTI Note Repurchase in accordance with
the definition thereof contained in this Agreement.
"Original Banks" shall mean each Person which was a Bank under, and as
defined in, the Original Credit Agreement.
"Original Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Original Credit Agreement Transaction" shall mean the Transaction
under, and as defined in, the Original Credit Agreement.
"Parent Guarantor" shall mean Holdings.
"Parent Guaranty" shall mean the guaranty of the Parent Guarantor
pursuant to Section 14.
"Participant" shall have the meaning provided in Section 2.04(a).
"Partnership Acknowledgment" shall have the meaning provided in the
Pledge and Security Agreement.
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"Partnership Notice" shall have the meaning provided in the Pledge and
Security Agreement.
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006, or such other
office as the Administrative Agent may hereafter designate in writing as such to
the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the Revolving Loan Commitment of such
Bank at such time and the denominator of which is the Total Revolving Loan
Commitment at such time, PROVIDED that if the Percentage of any Bank is to be
determined after the Total Revolving Loan Commitment has been terminated, then
the Percentages of the Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Permitted Acquired Debt" shall mean Indebtedness of Laser Tech or of
any Subsidiary of the Borrower, Laser Tech or WTI acquired pursuant to a
Permitted Acquisition or the Suncraft Acquisition, which Indebtedness existed at
the time of the consummation of any such acquisition and was not created in
contemplation thereof (and the provisions of which were not altered in
contemplation thereof), so long as (x) Holdings and its other Subsidiaries
(other than the Subsidiary being so acquired) have no liability with respect to
any such Indebtedness and (y) any Liens securing such Indebtedness apply only to
assets of the Subsidiary so acquired (and so long as additional assets of such
Subsidiary are not granted as security following, or in contemplation of, the
respective Permitted Acquisition or the Suncraft Acquisition, as the case may
be).
"Permitted Acquisition" shall mean the acquisition by the Borrower,
Laser Tech or WTI of assets constituting part of or an entire business, division
or product line of any Person not already a Subsidiary of the Borrower, Laser
Tech or WTI or of 100% of the capital stock of any such Person, which Person
shall, as a result of such acquisition, become a Subsidiary, PROVIDED that (A)
the consideration paid by the Borrower, Laser Tech or WTI, as the case may be,
consists solely of cash (including proceeds of Revolving Loans or WTI
Intercompany Loans, as the case may be) or common stock, the issuance of any
Qualified Preferred Stock otherwise permitted in Section 9.12, the issuance of
Indebtedness otherwise permitted in Section 9.04 and the assumption/acquisition
of any Permitted Acquired Debt (calculated at face value) relating to such
business, division, product line or Person which is permitted to remain
outstanding in accordance with the requirements of Section 9.04, (B) the assets
acquired, or the business of the Person whose stock is acquired, shall be in the
Printing Business, and (C) in the case of the acquisition of 100% of the capital
stock of any Person, such Person shall own no capital stock of any other Person
unless either (x) such Person owns 100% of the capital stock of such other
Person or (y)
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(1) such Person and/or its Wholly-Owned Subsidiaries own 80% of the consolidated
assets of such Person and its Subsidiaries and (2) any non-Wholly Owned
Subsidiary of such Person was non-Wholly Owned prior to the date of such
Permitted Acquisition of such Person. Notwithstanding anything to the contrary
contained in the immediately preceding sentence, any acquisition shall be a
Permitted Acquisition only if all requirements of Sections 8.14 and 9.02(vi)
applicable to Permitted Acquisitions are met with respect thereto.
Notwithstanding anything to the contrary contained above, (x) the acquisition by
Holdings of Laser Tech on the Initial Borrowing Date shall be deemed to have
constituted a Permitted Acquisition and (y) the Suncraft Acquisition shall only
constitute a Permitted Acquisition if same is effected in accordance with the
requirements of Section 8.14 and 9.02(vi).
"Permitted Acquisition Loans" shall mean intercompany loans made by
the Borrower to Laser Tech or WTI in accordance with the requirements of
Sections 9.05(xxii) and 8.14, which loans shall (i) be evidenced by Permitted
Acquisition Notes pledged by the Borrower pursuant to the Pledge and Security
Agreement and (ii) in the case of any such loans made by the Borrower to WTI,
constitute "Senior Debt" under, and as defined in, the WTI Senior Subordinated
Notes Indenture.
"Permitted Acquisition Note" shall mean a promissory note issued by
Laser Tech or WTI to the Borrower in the form of Exhibit O.
"Permitted Debt" shall mean and include Permitted Secured Indebtedness
and Permitted Unsecured Indebtedness.
"Permitted Holders" shall mean and include (i) the Ammon Permitted
Holders, (ii) BT Securities Corporation and its Affiliates and (iii) Apollo
Advisors, L.P. and entities controlled by Apollo Advisors, L.P.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Permitted Secured Indebtedness" shall mean any Indebtedness for
borrowed money incurred by the Borrower and/or one or more Subsidiary Guarantors
(which Indebtedness may be guaranteed by the Borrower and/or one or more
Subsidiary Guarantors, but not by any other Person), so long as (i) calculations
are made by the Borrower of compliance with the covenants contained in Sections
9.08 and 9.09 for the Calculation Period most recently ended prior to the date
of the incurrence of such Indebtedness, on a PRO FORMA Basis after giving effect
to the incurrence of such Indebtedness, and such calculations shall show that
such financial covenants would have been complied with if such Indebtedness had
been incurred on the first day of the respective Calculation Period, (ii) based
on good faith projections prepared by the Borrower for the period from the date
of the incurrence of such Indebtedness to the date which is one year thereafter,
the level of financial performance measured by the covenants set forth in
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Sections 9.08 and 9.09 shall be better than or equal to such level as would be
required to provide that no Default or Event of Default would exist under the
financial covenants contained in Sections 9.08 and 9.09 of this Agreement as
compliance with such covenants would be required through the date which is one
year from the date of the incurrence of such Indebtedness, (iii) the Borrower
shall furnish to the Administrative Agent for distribution to each of the Banks
an officer's certificate by the chief financial officer or treasurer of the
Borrower certifying to the best of his knowledge as to compliance with the
requirements of the preceding clauses (i) and (ii) and containing the
calculations required by the preceding clauses (i) and (ii), (iv) the maturity
of any such Indebtedness shall be at least one year after the latest Maturity
Date as then in effect, the weighted average life of such Indebtedness shall be
at least one year longer than the weighted average life of the Indebtedness then
outstanding pursuant to this Agreement and such Indebtedness shall have no
required payments of principal (other than (x) pursuant to "change of control"
or "asset sale" provisions which are at least as favorable to Holdings as those
contained in the Existing 10-3/4% Senior Subordinated Note Indentures and (y)
scheduled amortizations of principal which comply with the weighted average
requirements set forth above) prior to the date which occurs one year after the
latest Maturity Date then in effect, (v) with respect to each issue of Permitted
Secured Indebtedness, the Borrower or such Subsidiary shall receive gross cash
proceeds from the issuance thereof in an amount at least equal to the aggregate
principal amount thereof (or the discounted amount thereof if such Permitted
Secured Indebtedness is issued with original issue discount), (vi) such
Indebtedness may be secured, but only to the extent the Liens securing such
Indebtedness are permitted pursuant to Section 9.01(xvi), and (vii) such
Indebtedness shall not contain any provision (including, without limitation,
covenants, defaults and remedies) in the documents governing or evidencing the
same which, in the opinion of the Administrative Agent, are more restrictive in
any material respect than, or less favorable in any material respect to Holdings
and its Subsidiaries or the Banks than, the provisions contained in this
Agreement; PROVIDED, that each issue of Permitted Secured Indebtedness shall
expressly permit Total Outstandings under this Agreement (or any refinancing or
successive refinancings hereof) to be outstanding at any time, without requiring
calculations pursuant to any financial tests, in an amount equal to or greater
than the lesser of (a) $425,000,000 or (b) 110% of the Term Loans then
outstanding and the Total Commitment then in effect, and shall permit any such
Indebtedness to be guaranteed and secured without limitation.
"Permitted Transaction" shall mean any Permitted Acquisition effected
by the Borrower, Laser Tech or WTI, or any Permitted Unrestricted Subsidiary
Investment effected by Holdings.
"Permitted Unrestricted Subsidiary Amount" shall mean the sum of:
(i) $50,000,000;
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(ii) the aggregate amount of cash Restricted Payments made after the
Restatement Effective Date pursuant to Section 9.03(v), but only to the extent
the amount of such cash Restricted Payments are used by Holdings to effect
Permitted Unrestricted Subsidiary Investments and are not used by Holdings to
pay Dividends;
(iii) the 50% of net cash proceeds from issuances by Holdings of
Holdings Common Stock after the Restatement Effective Date which are not
required to be used to effect a mandatory repayment of Term Loans and/or a
reduction to the Total Commitment pursuant to Section 4.02(d); and
(iv) the aggregate amount of cash proceeds received by Holdings from
Unrestricted Subsidiaries after the Restatement Effective Date.
"Permitted Unrestricted Subsidiary Investment" shall mean the
expenditure of any amount to acquire or establish an Unrestricted Subsidiary
(including, without limitation, any capital contribution therein, the
acquisition price thereof or otherwise) and/or the making of any Investment by
Holdings in any Unrestricted Subsidiary; PROVIDED that in no event shall the
aggregate amount (including, without limitation, the amount of all cash
investments, the greater of the aggregate liquidation preference and the fair
market value (at the time of issuance) of all Preferred Stock directly issued as
a component of the consideration, and the fair market value of any other
consideration issued or invested in connection with a Permitted Unrestricted
Subsidiary Investment, but excluding any Holdings Common Stock directly issued
as consideration in connection with a Permitted Unrestricted Subsidiary
Investment where no Net Cash Proceeds are received by Holdings or any of its
Subsidiaries in connection therewith) of Permitted Unrestricted Subsidiary
Investments made on or after the Restatement Effective Date exceed the Permitted
Unrestricted Subsidiary Amount as determined on the date of the making of the
respective Permitted Unrestricted Subsidiary Investment; PROVIDED FURTHER, that
the term "Permitted Unrestricted Subsidiary Investment" shall mean and include
the making of any Investment (but excluding the purchase of Margin Stock) by
Holdings in Persons not Subsidiaries or Unrestricted Subsidiaries of Holdings
which are engaged in the Media Business so long as the aggregate amount of such
Investments (for this purpose including the amount of cash and the fair market
value of all other consideration, including the fair market value of any equity
of Holdings issued in connection with any such Investment) made on or after the
Restatement Effective Date shall not exceed $25,000,000 in the aggregate.
"Permitted Unsecured Indebtedness" shall mean any general unsecured
Indebtedness incurred by Holdings (which is not directly or indirectly
guaranteed by, and does not constitute Indebtedness of, any other Person), so
long as (i) calculations are made by the Borrower of compliance with the
covenants contained in Sections 9.08 and 9.09 for the Calculation Period most
recently ended prior to the date of the incurrence of such Indebtedness on a PRO
FORMA Basis after giving effect to the incurrence of such Indebtedness, and such
calculations shall show that such financial covenants would have
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been complied with if such Indebtedness had been incurred on the first day of
the respective Calculation Period, (ii) based on good faith projections prepared
by the Borrower for the period from the date of the incurrence of such
Indebtedness to the date which is one year thereafter, the level of financial
performance measured by the covenants set forth in Sections 9.08 and 9.09 shall
be better than or equal to such level as would be required to provide that no
Default or Event of Default would exist under the financial covenants contained
in Sections 9.08 and 9.09 of this Agreement as compliance with such covenants
would be required through the date which is one year from the date of the
incurrence of such Indebtedness, (iii) the Borrower shall furnish to the
Administrative Agent for distribution to each of the Banks an officer's
certificate by the chief financial officer or treasurer or treasurer of the
Borrower certifying to the best of his knowledge as to compliance with the
requirements of the preceding clauses (i) and (ii) and containing the
calculations required by the preceding clauses (i) and (ii), (iv) the maturity
of any such Indebtedness shall be at least one year after the latest Maturity
Date as then in effect, and such Indebtedness shall have no required repayments
of principal (other than pursuant to "change of control" or "asset sale"
provisions which are at least as favorable to Holdings as those contained in the
Existing 10-3/4% Senior Subordinated Notes Indenture) prior to the date which
occurs one year after the latest Maturity Date then in effect, (v) if the
proceeds of the respective issuance of Permitted Unsecured Indebtedness are to
be used to refinance then outstanding Existing 10-3/4% Senior Subordinated
Notes, any Indebtedness which subsequently refinanced same or any other
Subordinated Permitted Unsecured Indebtedness, such Permitted Unsecured
Indebtedness shall be subordinated to the Obligations and the Guaranteed
Obligations at least to the same extent as the subordination provisions
applicable to the Existing 10-3/4% Senior Subordinated Notes on the Restatement
Effective Date, (vi) each issue of Permitted Unsecured Indebtedness shall
contain express provisions whereby the holders thereof agree that such
Indebtedness constitutes only the obligation of Holdings, and that no Subsidiary
or Unrestricted Subsidiary of Holdings shall have any liability whatsoever with
respect to such Indebtedness and whereby the holders waive any right to proceed
against any such Subsidiary or Unrestricted Subsidiary for any such payment,
(vii) each issue of Permitted Unsecured Indebtedness shall constitute either
Subordinated Permitted Unsecured Indebtedness or Non-Cash Pay Permitted
Unsecured Indebtedness, PROVIDED that Non-Cash Pay Permitted Unsecured
Indebtedness shall not be permitted to be incurred to the extent the proceeds
thereof are used as described in preceding clause (v).(viii) with respect to
each issue of Permitted Unsecured Indebtedness, Holdings shall receive gross
cash proceeds from the issuance thereof in an amount at least equal to the
aggregate principal amount thereof (or the discounted amount thereof if such
Permitted Unsecured Indebtedness is issued with original issue discount) and
(ix) such Indebtedness shall not contain any provision (including, without
limitation, covenants, defaults and remedies) in the documents governing or
evidencing the same which, in the opinion of the Administrative Agent, are more
restrictive in any material respect than, or less favorable in any material
respect to Holdings and its Subsidiaries or the Banks than, the provisions
contained in the Existing 10-3/4% Senior Subordinated Notes Indenture; PROVIDED
that each issue of Permitted Unsecured Indebtedness shall expressly permit Total
Outstandings under
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this Agreement (or any refinancing or successive refinancings hereof) to be
outstanding at any time, without requiring calculations pursuant to any
financial tests, in an amount equal to or greater than the lesser of (a)
$425,000,000 or (b) 110% of the Term Loans then outstanding and the Total
Commitment then in effect, and shall permit any such Indebtedness to be
guaranteed and secured without limitation.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean (i) any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), Holdings or a Subsidiary of
Holdings or an ERISA Affiliate and that is subject to Title IV of ERISA, and
(ii) each such plan for the five year period immediately following the latest
date on which Holdings, a Subsidiary of Holdings or an ERISA Affiliate
maintained, contributed or had an obligation to contribute to such plan;
PROVIDED that any plan referred to in clause (ii) hereof but not in clause (i)
hereof (a "Former Plan") shall be deemed a Plan only during such period of time
(the "Applicable Period") during which Holdings, a Subsidiary of Holdings or an
ERISA Affiliate actually maintained, contributed to or had an obligation to
contribute to such plan or with respect to which Holdings, any Subsidiary of
Holdings or any ERISA Affiliate may have any liability, such that any
representations and warranties contained in this Agreement with respect to any
Former Plan shall be deemed made only with respect to the Applicable Period.
"Pledge and Security Agreement" shall have the meaning provided in
Section 5.11.
"Pledge and Security Agreement Collateral" shall mean all "Collateral"
as defined in the Pledge and Security Agreement.
"Pledged Partnership" shall have the meaning provided in the Pledge
and Security Agreement.
"Pledged Securities" shall mean "Pledged Securities" as defined in the
Pledge and Security Agreement.
"Portfolio Companies" shall mean operating companies which may be
deemed to be Affiliates of Holdings, but only because the respective such
operating company is directly or indirectly controlled by BT Securities and its
Affiliates or Apollo Advisors, L.P., and its Affiliates.
"Preferred Stock," as applied to the capital stock of any Person,
means capital stock of such Person (other than common stock of such Person) of
any class or
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classes (however designed) that ranks prior, as to the payment of dividends or
as to the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of capital stock of any
other class of such Person.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Printing Business" shall mean the printing business as conducted by
the Borrower, WTI, Laser Tech and their respective Subsidiaries on the
Restatement Effective Date, and any printing business and reasonable extensions
thereof engaged in by the Borrower and its Subsidiaries in the future.
"PRO FORMA Basis" shall mean, in connection with any calculation of
compliance with any financial covenant or financial term, the calculation
thereof after giving effect on a PRO FORMA basis to (u) if the relevant period
to be tested includes any period occurring prior to the Initial Borrowing Date,
the consummation of the Original Credit Agreement Transaction as if same had
occurred on the first day of such period, (w) if the relevant period to be
tested includes any period occurring prior to the Restatement Effective Date,
the consummation of the Transaction (but excluding any Optional WTI Note
Repurchases and any WTI Change of Control Offer Repurchases except to the extent
same have actually occurred prior to the date the respective calculation is to
be made) as if same had occurred on the first day of such period, (x) the
incurrence of any Indebtedness or issuance of any Qualified Preferred Stock
(other than revolving Indebtedness, except to the extent same is incurred to
finance the Original Credit Agreement Transaction or the Transaction, to
refinance other outstanding Indebtedness or to finance Permitted Transactions)
after the first day of the relevant Calculation Period as if such Indebtedness
had been incurred or Qualified Preferred Stock issued (and the proceeds thereof
applied) on the first day of the relevant Calculation Period, (y) the permanent
repayment of any Indebtedness (other than revolving Indebtedness except to the
extent paid with Permitted Debt or Qualified Preferred Stock) after the first
day of the relevant Calculation Period as if such Indebtedness had been retired
or redeemed on the first day of the relevant Calculation Period and (z) the
Permitted Transaction, if any, then being consummated as well as any other
Permitted Transaction consummated after the first day of the relevant
Calculation Period and on or prior to the date of the respective Permitted
Transaction then being effected, with the following rules to apply in connection
therewith:
(i) all Indebtedness and Qualified Preferred Stock (x) (other
than revolving Indebtedness, except to the extent same is incurred to
finance the Original Credit Agreement Transaction or the Transaction, to
refinance other outstanding Indebtedness, to make Optional WTI Note
Repurchases, to make WTI Change of
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Control Offer Repurchases or to finance Permitted Transactions) incurred or
issued after the first day of the relevant Calculation Period (whether
incurred to finance a Permitted Transaction, to refinance Indebtedness or
otherwise) shall be deemed to have been incurred or issued (and the
proceeds thereof applied) on the first day of the respective Calculation
Period and remain outstanding through the date of determination (and
thereafter in the case of projections pursuant to Section 8.14(a)(iv) or
clause (ii) of the definitions of Permitted Unsecured Indebtedness,
Permitted Secured Indebtedness or Qualified Preferred Stock)and (y)(other
than revolving Indebtedness except to the extent paid with Permitted Debt
or Qualified Preferred Stock) permanently retired or redeemed after the
first day of the relevant Calculation Period shall be deemed to have been
retired or redeemed on the first day of the respective Calculation Period
and remain retired through the date of determination (and thereafter in the
case of projections pursuant to Section 8.14(a)(iv) or clause (ii) of the
definitions of Permitted Unsecured Indebtedness, Permitted Secured
Indebtedness or Qualified Preferred Stock);
(ii) all Indebtedness or Qualified Preferred Stock assumed to be
outstanding pursuant to preceding clause (i) shall be deemed to have borne
interest or dividends at (x) the rate applicable thereto, in the case of
fixed rate indebtedness or Qualified Preferred Stock or (y) the rates which
would have been applicable thereto during the respective period when same
was deemed outstanding, in the case of floating rate Indebtedness or
Qualified Preferred Stock (although interest or dividends expense with
respect to any Indebtedness or Qualified Preferred Stock for periods while
same was actually outstanding during the respective period shall be
calculated using the actual rates applicable thereto while same was
actually outstanding); provided that for purposes of calculations pursuant
to Section 8.14(a)(iv) or clause (ii) of the definitions of Permitted
Unsecured Indebtedness, Permitted Secured Indebtedness or Qualified
Preferred Stock, all Indebtedness or Qualified Preferred Stock (whether
actually outstanding or deemed outstanding) bearing interest or dividends at
a floating rate of interest or dividends shall be tested on the basis of
the rates applicable at the time the determination is made pursuant to said
provisions; and
(iii) in making any determination of Consolidated EBITDA, PRO FORMA
effect shall be given to the Original Credit Agreement Transaction and the
Transaction (other than any Optional WTI Note Repurchases and any WTI
Change of Control Offer Repurchases which have not theretofore been
effected) and any Permitted Transaction for the periods described above,
taking into account, in the case of any Permitted Acquisition, cost savings
and expenses which would otherwise be accounted for as an adjustment
pursuant to Article 11 of Regulation S-X under the Securities Act, as if
such cost savings or expenses were realized on the first day of the
respective period.
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"Projections" shall have the meaning provided in Section 5.15(b).
"Purchased Interest" shall have the meaning provided in the
Receivables Pooling Agreement.
"Qualified Preferred Stock" shall mean any Preferred Stock issued, so
long as (i) calculations are made by the Borrower of compliance with the
covenants contained in Sections 9.08 and 9.09 for the Calculation Period most
recently ended prior to the date of the issuance of such Qualified Preferred
Stock, on a PRO FORMA Basis after giving effect to the issuance of such
Qualified Preferred Stock, and such calculations shall show that such financial
covenants would have been complied with if such Qualified Preferred Stock had
been incurred on the first day of the respective Calculation Period, (ii) based
on good faith projections prepared by the Borrower for the period from the date
of the issuance of such Qualified Preferred Stock to the date which is one year
thereafter, the level of financial performance measured by the covenants set
forth in Sections 9.08 and 9.09 shall be better than or equal to such level as
would be required to provide that no Default or Event of Default would exist
under the financial covenants contained in Sections 9.08 and 9.09 of this
Agreement as compliance with such covenants would be required through the date
which is one year from the date of the issuance of such Qualified Preferred
Stock, (iii) the Borrower shall furnish to the Administrative Agent for
distribution to each of the Banks an officer's certificate by the chief
financial officer or treasurer or treasurer of the Borrower certifying to the
best of his knowledge as to compliance with the requirements of the preceding
clauses (i) and (ii) and containing the calculations required by the preceding
clauses (i) and (ii), (iv) the maturity of any such Qualified Preferred Stock
shall be at least one year after the latest Maturity Date as then in effect, and
such Qualified Preferred Stock shall have no required redemptions (other than
pursuant to "change of control" or "asset sale" provisions which are at least as
favorable to Holdings as those contained in the Existing 10-3/4% Senior
Subordinated Notes Indenture) prior to the date which occurs one year after the
latest Maturity Date then in effect, and (v) such Qualified Preferred Stock
shall not contain any provision in the documents governing or evidencing the
same which, in the opinion of the Administrative Agent, are more restrictive in
any material respect than, or less favorable in any material respect to Holdings
and its Subsidiaries or the Banks than, the provisions contained in the Existing
10-3/4% Senior Subordinated Note Indentures.
"Quarterly Payment Date" shall mean the last Business Day of each
June, September, December and March, occurring after the Initial Borrowing Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
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"Receivables Amendment Conditions" means, with respect to any
amendment or modification of any Receivables Document, the requirement that the
following shall be true after giving effect to such amendment or modification:
(A) the Receivables Maximum Funding Amount shall not be less than $100
million except to the extent that such amount is less than $100 million due
to a shrinkage of receivables of Holdings' Subsidiaries which are sellers
of Receivables Facility Assets pursuant to the Receivables Facility after
the Restatement Effective Date;
(B) the scheduled maturities of the Investor Certificates and the
Purchased Interests shall not be earlier than the scheduled maturities of
Investor Certificates issued under the Receivables Bridge Facility;
(C) the weighted average of the PER ANNUM interest rates payable in
respect of Investor Certificates and Purchased Interests would not exceed
the PER ANNUM interest rates applicable to the Receivables Bridge Facility
(as applicable after the first anniversary of the closing of the
Receivables Bridge Facility and, if fixed rate financing is to be made
available pursuant to the Receivables Facility, calculated on a swapped
equivalent basis);
(D) the Receivables Subsidiary would be required to apply all funds
available to it (after giving effect to the allocation of funds to reserves
required under the terms of the Receivables Documents and to the payment of
interest, principal and other amounts owed under the Receivables Documents)
to pay the purchase price for accounts receivables (including any deferred
portion of the purchase price) or to make Restricted Payments to the
Borrower;
(E) if any early amortization event that is not in the Receivables
Bridge Facility shall be added to the Receivables Documents or any early
amortization event that is in the Receivables Documents is made more
restrictive, such additional early amortization event or change in an
existing early amortization event shall not be adverse in any material
respect to the interests of Holdings and its Subsidiaries, taken as a whole
(as determined in good faith by the Borrower); provided that the inclusion
of an early amortization event from the Receivables Bridge Facility in the
documentation for another series of Investor Certificates or Purchased
Interests shall not be construed as the addition of an early amortization
event for purposes hereof;
(F) the degree of recourse to Holdings or its Subsidiaries (other than
the Receivables Subsidiary) under or in respect of the Receivables
Documents shall not be increased in any material respect (as determined in
good faith by the Borrower) and in no event shall Holdings or any of its
Subsidiaries (other than the Receivables Subsidiary) have recourse
liability (except pursuant to Standard Securitization
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Undertakings) for the payment of any Receivables Facility Assets or any
Investor Certificates or Purchased Interests;
(G) if additional covenants are included in the Receivables Documents
or existing covenants in the Receivables Documents are made more
restrictive, such additional covenants or changes to existing covenants
shall not be adverse in any material respect to the interests of Holdings
and its Subsidiaries taken as a whole (as determined in good faith by the
Borrower);
(H) if additional representations and warranties are included in the
Receivables Documents or existing representations and warranties are made
more restrictive, such additional representations and warranties shall not
be adverse in any material respect to the interest of Holdings and its
Subsidiaries taken as a whole (as determined in good faith by the
Borrower); and
(I) the provisions of the Receivables Facility shall not conflict with
the relevant requirements of Sections 8.19, 9.02, 9.04 and 9.05;
PROVIDED that, notwithstanding anything to the contrary contained in the
definition, any changes to the Receivables Documents which relate to Holdings'
or any Subsidiary's servicing or origination or Receivables Facility Assets that
are transferred to the Receivable Subsidiary pursuant to the Receivable
Documents shall be permitted.
"Receivables Bridge Facility" shall mean the transactions contemplated
by the Series 1996-1 Supplement to the Receivables Pooling Agreement dated as of
March 19,1996, among BFP Receivables Corporation, Holdings and Manufacturers and
Traders Trust Company, as Trustee, and the Certificate Purchase Agreement
(Series 1996-1), dated as of March 19,1996, among BFP Receivables Corporation,
the Purchasers described therein and Credit Suisse, as Co-Agent, and Bankers
Trust Company, as Agent,
"Receivables Documents" shall mean all documentation relating to any
Receivables Facility, including, without limitation, the Receivables Pooling
Agreement and the documentation delivered in connection therewith (including any
documentation relating to a series of certificates or purchased interests issued
and sold pursuant thereto).
"Receivables Facility" shall mean the Receivables Bridge Facility,
pursuant to which (x) the Borrower and its Subsidiaries and Laser Tech will, and
after the WTI Subsidiaries Guaranty Date WTI and its Subsidiaries may, from time
to time sell or otherwise transfer accounts receivable and related assets to
the Receivables Subsidiary and (y)the Receivables Subsidiary shall sell or
otherwise transfer accounts receivable and related assets (or interests therein)
to the Receivables Purchasers, as more fully set forth in the Receivables
Documents; PROVIDED that the Receivables Facility may be replaced or
supplemented, or successively replaced or supplemented, after the Effective Date
so long
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as the Receivables Amendment Conditions are satisfied (in which event such
replacement facility shall be deemed to be the Receivables Facility hereunder).
"Receivables Facility Assets" shall mean all accounts receivable
(whether now existing or arising in the future) of any of Holdings' Subsidiaries
(other than the Receivables Subsidiary) which are transferred to the Receivables
Subsidiary pursuant to the Receivables Facility, and any assets directly related
thereto, including, without limitation, (i) Transferred Assets (as defined in
Section 2.1 of the Receivables Pooling Agreement as originally in effect), (ii)
all collateral given by the respective account debtor or on its behalf (but not
by Holdings or any of its Subsidiaries) securing such accounts receivable, (iii)
all contracts and all guarantees (but not by Holdings or any of its
Subsidiaries) or other obligations directly related to such accounts receivable,
(iv) other related assets which are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable, and (v) proceeds of
all of the foregoing.
"Receivables Facility Financing Costs" shall mean, for any period, the
total consolidated interest and fee expense of Holdings and its Subsidiaries
which would have existed for such period pursuant to the Receivables Facility if
same were structured as a secured lending arrangement rather than as a facility
for the sale of Receivables Facility Assets.
"Receivables Facility Threshold Amount" shall mean $150 million;
provided that, (A)on each date upon which a mandatory repayment or commitment
reduction is required pursuant to Section 4.02(e) of this Agreement as a result
of the incurrence of Attributed Receivables Facility Indebtedness in excess of
the Receivables Facility Threshold Amount as theretofore in effect, the
Receivables Facility Threshold Amount shall be increased (on the date of, and
after giving effect to, the respective mandatory repayment and/or commitment
reduction) by the amount of the mandatory repayment and/or commitment reduction
required on such date pursuant to Section 4.02(e) to the extent required as a
result of the respective incurrence of Attributed Receivables Facility
Indebtedness and (B) to the extent any Permitted Acquisition made after the
Restatement Effective Date is financed with Attributed Receivables Facility
Indebtedness actually incurred and extended with respect to the accounts
receivables of the entity being acquired pursuant to the respective Permitted
Acquisition, and so long as the Borrower certifies to the Administrative Agent
the amount of Attributed Receivables Facility Indebtedness being so incurred in
connection with the respective Permitted Acquisition, the Receivables Facility
Threshold Amount shall be increased by the amount of Attributed Receivables
Facility Indebtedness being incurred as described in this clause (B) in
connection with such Permitted Acquisition; provided further that the maximum
aggregate increases to the Receivables Facility Threshold Amount pursuant to
clause (B) of the immediately preceding proviso from all Permitted Acquisitions
effected after the Restatement Effective Date shall be $25 million.
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"Receivables Maximum Funding Amount" shall mean the sum of (x) with
respect to outstanding Investors Certificates and Purchased Interests that have
fixed principal amounts, such principal amounts plus (y) with respect to
Investors Certificates or Purchased Interests that have variable principal
amounts, the Receivables Stated Amounts thereof.
"Receivables Pooling Agreement" shall mean the Big Flower Receivables
Master Trust Pooling and Servicing Agreement, dated as of March 19, 1996 among
BFP Receivables Corporation, Holdings and Manufacturers and Traders Trust
Company, as Trustee, as amended or modified from time to time.
"Receivables Purchasers" shall mean and include (i) Manufacturers and
Traders Trust Company, as Trustee under the Receivables Pooling Agreement, and
its successors in that capacity, (ii) the purchaser or purchasers of any
interest in the Receivables Facility Assets under or in connection with any
Receivables Facility and (iii) the respective successors and assigns of the
foregoing Receivables Purchasers.
"Receivables Stated Amount" means, with respect to an Investor
Certificate or Purchased Interest, the maximum amount of the funding commitment
with respect thereto.
"Receivables Sellers" at any time shall mean the Borrower and any
Subsidiary Guarantor which is, at such time, a Person which is selling or
transferring Receivables Facility Assets to the Receivables Subsidiary.
"Receivables Subsidiary" shall mean a Wholly-Owned Subsidiary of the
Borrower which engages in no activities other than in connection with the
financing of accounts receivable and which is designated (as provided below)
as the Receivables Subsidiary (a) no portion of the Indebtedness or any other
obligations (contingent or otherwise) of which (i) is guaranteed by Holdings
or any other Subsidiary of Holdings (excluding guarantees of obligations
(other than the principal of, and interest on, Indebtedness)) pursuant to
Standard Securitization Undertakings, (ii) is recourse to or obligates
Holdings or any other Subsidiary of Holdings in any way other than pursuant
to Standard Securitization Undertakings or (iii) subjects any property or
asset of Holdings or any other Subsidiary of Holdings, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings, (b) with which neither
Holdings nor any of its Subsidiaries has any contract, agreement, arrangement
or understanding (other than pursuant to the Receivables Documents (including
with respect to fees payable in the ordinary course of business in connection
with the servicing of accounts receivable and related assets)) on terms less
favorable to Holdings or such Subsidiary than those that might be obtained at
the time from persons that are not Affiliates of Holdings, and (c) to which
neither Holdings nor any other Subsidiary of Holdings has any obligation to
maintain or preserve such entity's financial condition or
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cause such entity to achieve certain levels of operating results. Any such
designation shall be evidenced to the Administrative Agent by filing with the
Administrative Agent an officer's certificate of the Borrower certifying that,
to the best of such officer's knowledge and belief after consultation with
counsel, such designation complied with the foregoing conditions.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable (i) by
reason of theft, loss, physical destruction or damage or any other similar event
with respect to any property or assets of Holdings or any of its Subsidiaries
and (ii) under any policy of insurance required to be maintained under Section
8.03.
"Refinancing Documents" shall mean the documents entered into with
respect to the Refinancing Transactions.
"Refinancing Transactions" shall mean (i) the refinancing of the WTI
Credit Agreement on the Restatement Effective Date, (ii) the WTI Tender Offer
Repurchases and, if applicable, the execution and delivery of the WTI Senior
Subordinated Notes Indenture Supplement in accordance with the requirements of
Section 5.08(d), (iii) any Optional WTI Note Repurchases made in accordance with
the definition thereof and (iv) if the WTI Tender Offer/Consent Solicitation
Consummation has not occurred on or prior to the Restatement Effective Date, the
WTI Change of Control Offer Repurchases.
"Register" shall have the meaning provided in Section 13.17.
"Registration Statement" shall mean the Form S-1 Registration
Statement and Exhibits, as amended prior to the Effective Date, Registration
Number 33-97082, filed by Holdings in connection with the Equity Financing (as
defined in the Original Credit Agreement).
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
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"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing or
migration into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Replacement Working Capital Facility" shall have the meaning provided
in Section 5.08(c).
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived by statute, under subsection .13, .14, .16, .18, .19 or
.20 of PBGC Regulation Section 2615 or otherwise.
"Reporting Company" shall mean a company required to file Form 10-K
Reports and Form 10-Q Reports under the Exchange Act.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose (i)
outstanding Term Loans (or, if prior to the Term Loan Borrowing Date, Term Loan
Commitments) and (ii) Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans and Adjusted Percentage of Swingline Loans
and Letter of Credit Outstandings) represent greater than 50% of the sum of (i)
all outstanding Term Loans (or, if prior to the Term Loan Borrowing Date, Term
Loan Commitments) of Non-Defaulting Banks and (ii) the Adjusted Total Revolving
Loan Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks and the aggregate Adjusted
Percentages of all Non-Defaulting Banks of the total outstanding Swingline Loans
and Letter of Credit Outstandings at such time).
"Required Investment Grade Rating" shall mean a rating of (i) BBB or
better assigned by S&P or (ii) Baa2 or better assigned by Moody's.
"Requisite Consents" shall have the meaning provided in Section
5.08(d).
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"Restatement Effective Date" shall have the meaning provided in
Section 13.10.
"Restricted Payment" shall mean (i) the authorization, declaration or
payment of any Dividend with respect to Holdings or any of its Subsidiaries,
(ii) the payment by WTI, Laser Tech or the Borrower or any of their respective
Subsidiaries of any principal of, interest on, or any other amount owing with
respect to, any advance or loan made by, or owing by such Person to, Holdings or
(iii) the making of any other payment by WTI, Laser Tech or the Borrower or any
of their respective Subsidiaries to Holdings.
"Restricted Subsidiaries" shall mean, (x) all of the Subsidiaries of
Holdings and its Subsidiaries in existence on the Restatement Effective Date and
(y) any Subsidiary (other than an Unrestricted Subsidiary) that is created,
established or acquired after the Effective Date.
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan" shall have the meaning provided in Section 1.01(a),
and shall include all Revolving Loans made pursuant to the Original Credit
Agreement.
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I hereto directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time to
time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section 1.13
or 13.04(b). It is understood that, on the Restatement Effective Date, the
Revolving Loan Commitment of each Bank is the same as its "Commitment" under the
Original Credit Agreement, which has been renamed "Revolving Loan
Commitment" under this Agreement for convenience purposes only.
"Revolving Loan Sharing Percentage" at any time shall mean a
percentage equal to 100% less the Term Loan Sharing Percentage at such time.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RGP" shall mean RGP Limited Partnership, a limited partnership
organized and existing under the laws of the State of Nevada.
"Rights Plan" shall mean the Rights Agreement between Holdings and the
Bank of New York, as Rights Agent, included as an Exhibit to the Registration
Statement.
"RL Commitment Commission" shall have the meaning provided in Section
3.01(a).
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"Rollover Amount" shall have the meaning provided in Section 9.07(b).
"S&P" shall mean Standard & Poors Ratings Group.
"Scheduled Commitment Reduction" shall have the meaning provided in
Section 3.03(d).
"Scheduled Commitment Reduction Date" shall have the meaning provided
in Section 3.03(d).
"Scheduled Existing Indebtedness" shall have the meaning provided in
Section 5.14.
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b).
"Secured Creditors" shall have the meaning assigned that term in the
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Document" shall mean the Pledge and Security Agreement and,
after the execution and delivery thereof, each Additional Security Document.
"Shareholders' Agreements" shall have the meaning provided in Section
5.06.
"Specified Default" shall mean any Default under Section 10.01 or
10.05.
"Standby Letter of Credit" shall mean any standby letter of credit
or similar instrument issued or deemed issued for the account of the Borrower
pursuant to Section 2.01 for the purpose of supporting L/C Supportable
Obligations.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Holdings or any Subsidiary
thereof in connection with a Receivables Facility which are reasonably customary
in an accounts receivable transaction.
"Start Date" shall have the meaning provided in the definition of
Applicable Margin.
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"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Subordinated Permitted Unsecured Indebtedness" shall mean any issue
of Permitted Unsecured Indebtedness which is subordinated to the Obligations and
the Guaranteed Obligations at least to the same extent as the subordination
provisions applicable to the Existing 10-3/4% Senior Subordinated Notes on the
Restatement Effective Date.
"Subsidiaries Guaranty" shall have the meaning provided in Section
5.10.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time. Notwithstanding
the foregoing (and except for purposes of the definitions of Unrestricted
Subsidiary and Wholly-Owned Unrestricted Subsidiary contained herein), an
Unrestricted Subsidiary shall be deemed not to be a Subsidiary of Holdings or
any of its other Subsidiaries for purposes of this Agreement. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Credit
Agreement shall refer to a Subsidiary or Subsidiaries of Holdings.
"Subsidiary Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary of Holdings as of the Restatement Effective Date (other than the
Borrower, the Receivables Subsidiary. RGP, Treasure Chest of Nevada and, unless
and until the WTI Subsidiaries Guaranty Date has occurred, WTI and its Wholly-
Owned Subsidiaries) and any Wholly-Owned Domestic Subsidiary of the Borrower
created after the Restatement Effective Date pursuant to Section 9.11.
"Suncraft" shall mean Suncraft, Inc., an Illinois corporation.
"Suncraft Acquisition" shall mean the acquisition by WTI of all
capital stock of Suncraft not previously acquired by it pursuant to the Suncraft
Option Exercise.
"Supermajority Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
(x) no Term Loans or Term Loan Commitments were then outstanding and (y) the
percentage "50%" contained therein were changed to "66-2/3%."
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"Supermajority Term Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
(x) no Revolving Loan Commitments or extensions of credit pursuant thereto
(i.e., Revolving Loans, Swingline Loans and Letter of Credit Outstandings) were
then outstanding and (y) the percentage "50%" contained therein were changed to
"66-2/3%".
"Swingline Expiry Date" shall mean the date which is two Business Days
prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(b).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Taxes" shall have the meaning provided in Section 4.04(a).
"TC Letter of Credit" shall mean and include all Letters of Credit
which are not WTI Letters of Credit.
"Term Loan" shall have the meaning provided in Section 1.01(d).
"Term Loan Borrowing Date" shall have the meaning provided in Section
1.01(d).
"Term Loan Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I hereto directly below the column
entitled "Term Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.03, 4.02 and/or 10 or (y) adjusted from time to time as
a result of assignments to or from such Bank pursuant to Section 1.13 or
13.04(b).
"Term Loan Contingent Repayment Date" shall mean the date occurring 70
days after the Restatement Effective Date.
"Term Loan Maturity Date" shall mean the last Business Day of
December, 2001, PROVIDED, that so long as no more than $25 million aggregate
principal amount of WTI Senior Subordinated Notes remain outstanding on the Term
Loan Contingent Repayment Date, then the "Term Loan Maturity Date" shall instead
mean the last Business Day of December, 2002.
"Term Loan Scheduled Repayment" shall have the meaning provided in
Section 4.02(c).
"Term Loan Scheduled Repayment Date" shall have the meaning provided
in Section 4.02(c).
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"Term Loan Sharing Percentage" at any time shall be a fraction
(expressed as a percentage) the numerator of which is the outstanding principal
amount of Term Loans at such time and the denominator of which is the sum of the
numerator as provided above and the Total Revolving Loan Commitment as then in
effect.
"Term Loan Syndication Date" shall mean the date upon which the Agents
determine in their sole discretion (and notify the Borrower) that the primary
syndication of the Term Loans (and the resultant addition of institutions as
Banks pursuant to Section 13.04) has been completed.
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Period" shall mean each period of four consecutive fiscal
quarters then last ended, in each case taken as one accounting period, with the
first Test Period to end on the last day of the fiscal quarter ending September
30, 1995. Notwithstanding anything to the contrary contained above or in
Section 13.07 or otherwise required by GAAP, in the case of any Test Period
ending prior to the first anniversary of the Restatement Effective Date, such
period shall be a one-year period ending on the last day of the fiscal quarter
last ended, with any calculations of Consolidated Net Interest Expense required
in determining compliance with Section 9.08 or the Applicable Margin to be made
on a Pro Forma Basis in accordance with the immediately succeeding sentence. To
the extent the respective Test Period (i) includes the fiscal quarter of
Holdings ended closest to March 31, 1995, Consolidated Net Interest Expense for
such fiscal quarter shall be deemed to be $10 million, (ii) includes the fiscal
quarter of Holdings ended closest to June 30, 1995, the Consolidated Net
Interest Expense for such fiscal quarter shall be deemed to be $10 million,
(iii) includes the fiscal quarter of Holdings ended closest to September 30,
1995, the Consolidated Net Interest Expense for such fiscal quarter shall be
deemed to be $10 million, (iv) includes the fiscal quarter of Holdings ended
closest to December 31, 1995, Consolidated Net Interest Expense for such fiscal
quarter shall be deemed to be $10 million and (v) includes the fiscal quarter of
Holdings ended closest to March 31, 1996, Consolidated Net Interest Expense
shall be deemed to be $10 million; provided that the amounts provided above in
this sentence shall be adjusted, to the extent required by the definition of PRO
FORMA Basis, but only for Permitted Acquisitions effected, and increased
Indebtedness incurred, after the Restatement Effective Date and not as part of
the financing for the Transaction.
"Threshold Amount" shall mean an amount equal to $75,000,000.
"Total Available Revolving Loan Commitment" shall mean at any time an
amount equal to the Total Revolving Loan Commitment; PROVIDED that at any time
while a Clean-Down Period is required to be in existence pursuant to the
provisions of Section 4.02(b), the Total Available Revolving Loan Commitment as
determined above shall be reduced by $40,000,000 for the duration of such Clean-
Down Period.
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"Total Commitment" shall mean, at any time, the sum of the Commitments
of each of the Banks.
"Total Outstandings" at any time shall mean the then outstanding
principal of Term Loans, Revolving Loans and Swingline Loans and the then
aggregate amount of Letter of Credit Outstandings.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.
"Total Revolving Outstandings" at any time shall mean the then
outstanding principal of Revolving Loans and Swingline Loans and the then
aggregate amount of Letter of Credit Outstandings.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans and Swingline Loans outstanding plus the then aggregate amount of Letter
of Credit Outstandings.
"Trade Letter of Credit" shall mean any Letter of Credit or similar
instrument issued for the account of any Borrower pursuant to Section 2.01 for
the purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrower, any Subsidiary
Guarantor, WTI or any Subsidiary of WTI in the ordinary course of business of
the Borrower, any Subsidiary Guarantor, WTI or any Subsidiary of WTI.
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being two separate Tranches, I.E., Term
Loans and Revolving Loans.
"Transaction" shall mean, collectively, (i) the consummation of the
Acquisition, (ii) the consummation of the Refinancing Transactions, (iii) the
entering into of the Receivables Facility, (iv) the Equity Financing
Transactions and (v) the entering into of the Credit Documents and the
incurrence of Loans hereunder on the Restatement Effective Date.
"Transaction Documents" shall mean all Documents (other than the
Credit Documents) and agreements and instruments entered into in connection with
the Transaction.
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"Treasure Chest of Nevada" shall mean Treasure Chest Advertising
Company of Nevada, Inc., a corporation organized and existing under the laws of
the State of Nevada.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, I.E., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year each exceeds the fair market
value of the assets allocable thereto, determined in accordance with Statement
of Financial Accounting Standards No. 87, based upon the actuarial assumptions
used by the Plan's actuary in the most recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unrestricted Subsidiary" shall mean any Subsidiary of Holdings (none
of the capital stock of which shall be owned by the Borrower or any of Holdings'
Restricted Subsidiaries) that is acquired or created after the Restatement
Effective Date and designated by Holdings as an Unrestricted Subsidiary
hereunder by written notice to the Administrative Agent; PROVIDED that Holdings
shall only be permitted to so designate a new Unrestricted Subsidiary after the
Restatement Effective Date and so long as (i) no Default or Event of Default
exists or would result therefrom and (ii) all of the provisions of Section 9.11
shall have been complied with in respect of such newly designated Unrestricted
Subsidiary and such Unrestricted Subsidiary shall be capitalized (to the extent
capitalized by Holdings or any of its Subsidiaries) through Permitted
Unrestricted Subsidiary Investments as permitted by, and in compliance with,
Sections 8.14 and 9.05, PROVIDED that at the time of the initial Investment by
Holdings in such Subsidiary (x) Holdings shall designate such entity as an
Unrestricted Subsidiary in a written notice to the Administrative Agent and (y)
such entity. Holdings and the Borrower shall have entered into the Amended Tax
Sharing Agreement on a basis which is satisfactory to the Administrative Agent.
Additionally, Holdings may not designate the Borrower, WTI or any of its
Subsidiaries. Laser Tech or any of its Subsidiaries, the Receivables
Subsidiary, any Credit Party or any Subsidiary created or acquired pursuant to a
Permitted Acquisition or the Suncraft Acquisition as an Unrestricted Subsidiary.
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time, if
any, less the
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sum of (i) the aggregate outstanding principal amount of Revolving Loans made by
such Bank at such time plus (ii) such Bank's Adjusted Percentage of the Letter
of Credit Outstandings at such time.
"Voting Stock" shall mean, as to any Person, any class or classes of
capital stock of such Person pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the Board of Directors of such Person.
"Wholly-Owned Domestic Subsidiary" shall mean any Wholly-Owned
Subsidiary which is not a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time; PROVIDED
that, other than in the definition of Wholly-Owned Unrestricted Subsidiary, no
Unrestricted Subsidiary shall be considered a Wholly-Owned Subsidiary.
"Wholly-Owned Unrestricted Subsidiary" shall mean any Wholly-Owned
Subsidiary which is an Unrestricted Subsidiary.
"WTI" shall have the meaning provided in the recitals to this
Agreement.
"WTI Attributed Receivables Facility Indebtedness" shall mean all
Attributed Receivables Facility Indebtedness which arises as a result of any
sales or transfers of Receivables Facility Assets by WTI or any of its
Subsidiaries.
"WTI Change of Control Offer Documents" shall mean all of the
documents and agreements entered into in connection with the Change of Control
Offer to Purchase.
"WTI Change of Control Offer Repurchases" shall have the meaning
provided in Section 8.17.
"WTI Credit Agreement" shall mean the Credit Agreement, dated as of
December 6, 1993, among WTI, Webcraft Games, Inc., Webcraft Chemicals, Inc, the
financial institutions from time to time party thereto, and BTCC, as Agent, as
in effect on the Restatement Effective Date.
"WTI Intercompany Loans" shall mean intercompany loans made by the
Borrower to WTI on the Restatement Effective Date, the Change of Control Payment
Date or any Optional WTI Note Repurchase Date, which loans shall (i) be in all
respects
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satisfactory to the Agents, (ii) be evidenced by WTI Intercompany Notes pledged
by the Borrower pursuant to the Pledge and Security Agreement, (iii) constitute
"Senior Debt" under, and as defined in, the WTI Senior Subordinated Notes
Indenture and (iv) be made in accordance with the requirements of Section
5.08(d), 5.08(e) or 8.17, as applicable.
"WTI Intercompany Note" shall mean a promissory note issued by WTI to
the Borrower in the form of Exhibit M-l, which note shall, if the WTI Tender
Offer/Consent Solicitation Consummation does not occur on the Restatement
Effective Date, contain provisions, in form and substance satisfactory to the
Agents, for mandatory principal prepayments based upon excess cash flow
generated by WTI and its Subsidiaries.
"WTI Intercompany Preferred Stock" shall mean Preferred Stock of
Acquisition Corp.(which, upon the consummation of the Acquisition, shall remain
outstanding as Preferred Stock of WTI) issued to Holdings on or prior to the
Restatement Effective Date in accordance with the requirements of Section
5.08(e), which Preferred Stock shall (i) pay quarterly cash dividends at an
annual rate of 11.0%, (ii) not be redeemable (mandatorily or optionally) until
February 16, 2002, (iii) be pledged by Holdings pursuant to the Pledge and
Security Agreement and (iv)be in all respects satisfactory to the Agents.
"WTI Letter of Credit" shall mean any Letter of Credit issued for the
benefit of WTI and/or its Subsidiaries, including all Existing Letters of Credit
issued prior to the Restatement Effective Date pursuant to the WTI Credit
Agreement.
"WTI Noteholders" shall have the meaning provided in Section 5.08(d).
"WTI Senior Subordinated Notes" shall mean 9-3/8% Senior Subordinated
Notes due 2002, as in effect on the Restatement Effective Date and as the same
may be modified, supplemented or amended from time to time to the extent
permitted pursuant to the terms hereof and thereof.
"WTI Senior Subordinated Notes Indenture" shall mean the Indenture,
dated as of February 15, 1994, entered into by and between WTI, as Issuer, and
KSS Transportation Corp., Webcraft Chemicals, Inc., Webcraft Games, Inc.,
Webcraft Investors, Inc., and Webtech Holdings, Inc., as Guarantors thereunder,
and State Street Bank and Trust Company of Connecticut, National Association, as
trustee thereunder, as in effect on the Restatement Effective Date and as the
same may be modified, amended or supplemented from time to time to the extent
permitted in accordance with the terms hereof and thereof.
"WTI Senior Subordinated Notes Indenture Amendment" shall have the
meaning provided in Section 5.08(d).
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"WTI Senior Subordinated Notes Indenture Supplement" shall mean the
Supplemental Indenture to the WTI Senior Subordinated Notes Indenture in form
and substance satisfactory to the Agents and entered into by WTI and the trustee
for the WTI Senior Subordinated Notes in connection with the WTI Tender
Offer/Consent Solicitation.
"WTI Subsidiaries Guaranty Date" shall mean the first to occur of (x)
the Restatement Effective Date, but only if the WTI Senior Subordinated Notes
Indenture Supplement is executed on or prior to such date and (y) the first date
occurring on or after the Restatement Effective Date upon which no WTI Senior
Subordinated Notes remain outstanding or the WTI Senior Subordinated Notes
Indenture no longer regulates (or restricts) the granting of guaranties by
Wholly-Owned Subsidiaries of WTI.
"WTI Swingline Note" shall mean the promissory note issued by WTI
pursuant to the Replacement Working Capital Facility in the form of Exhibit L-2.
"WTI Tender Offer/Consent Solicitation" shall have the meaning
provided in Section 5.08(d).
"WTI Tender Offer/Consent Solicitation Consummation" shall have the
meaning provided in Section 5.08(d).
"WTI Tender Offer Repurchases" shall have the meaning provided in
Section 5.08(d).
"WTI Working Capital Note" shall mean the promissory note issued by
WTI pursuant to the Replacement Working Capital Facility in the form of Exhibit
L-l.
SECTION 12. THE AGENTS.
12.01 APPOINTMENT. The Banks hereby designate BTCo as Administrative
Agent (for purposes of this Section 12, the term "Agent" shall include BTCo in
its capacity as Administrative Agent hereunder and Collateral Agent pursuant to
the Security Documents) and Credit Suisse as Documentation Agent to act as
specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent and the Documentation
Agent to take such action on its behalf under the provisions of this Agreement,
the other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Agent or Documentation Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. Each of the Agent and the
Documentation Agent may perform any of its duties hereunder by or through its
respective officers, directors, agents, employees or affiliates.
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12.02 NATURE OF DUTIES. The Agent and the Documentation Agent shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and the Security Documents. The Co-Agents, in their capacity as such,
shall not have any duties or responsibilities pursuant to this Agreement or any
of the Security Documents. None of the Agent, the Documentation Agent or the
Co-Agents nor any of their respective officers, directors, agents, employees or
affiliates shall be liable for any action taken or omitted by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Agent, the Documentation Agent and the Co-Agents shall be
mechanical and administrative in nature; the Agent, the Documentation Agent and
the Co-Agents shall not have by reason of this Agreement or any other Credit
Document a fiduciary relationship in respect of any Bank or the holder of any
Note; and nothing in this Agreement or any other Credit Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent,
the Documentation Agent and the Co-Agents any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
12.03 LACK OF RELIANCE ON THE AGENT, THE DOCUMENTATION AGENT AND THE
CO-AGENTS. Independently and without reliance upon the Agent, the
Documentation Agent and the Co-Agents, each Bank and the holder of each Note,
to the extent it deems appropriate, has made and shall continue to make (i)
its own independent investigation of the financial condition and affairs of
Holdings and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Holdings and its Subsidiaries and, except as expressly provided in this
Agreement, the Agent, the Documentation Agent and the Co-Agents shall not
have any duty or responsibility, either initially or on a continuing basis,
to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before
the making of the Loans or at any time or times thereafter. None of the
Agent, the Documentation Agent, the Co-Agents or any of their respective
affiliates nor any of their respective officers, directors, agents, or
employees shall be responsible to any Bank or the holder of any Note for, or
be required or have any duty to ascertain, inquire or verify the accuracy of,
(i) any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in
connection herewith, (ii) the execution, effectiveness, genuineness,
validity, enforceability, perfection, collectibility, priority or sufficiency
of this Agreement or any other Credit Document, (iii) the financial condition
of Holdings and any of its Subsidiaries, (iv) the performance or observance
of any of the terms, provisions or conditions of this Agreement or any other
Credit Document, (v) the satisfaction of any of the conditions precedent set
forth in Section 5 or 6, or (vi) the existence or possible existence of any
Default or Event of Default.
12.04 CERTAIN RIGHTS OF THE AGENT, THE DOCUMENTATION AGENT AND THE CO-
AGENTS. If the Agent, the Documentation Agent or the Co-Agents shall request
instructions
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from the Required Banks with respect to any act or action (including failure to
act) in connection with this Agreement or any other Credit Document, such Agent,
Documentation Agent or Co-Agent shall be entitled to refrain from such act or
taking such action unless and until the Agent shall have received instructions
from the Required Banks, and such Agent, Documentation Agent or Co-Agent shall
not incur liability to any Person by reason of so refraining. Without limiting
the foregoing, no Bank or the holder of any Note shall have any right of action
whatsoever against such Agent, Documentation Agent or Co-Agent as a result of
the Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 RELIANCE. The Agent, Documentation Agent and Co-Agents shall be
entitled to rely, and shall be fully protected (and shall have no liability to
any person) in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopie message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by any Person that
such Agent, Documentation Agent or Co-Agent believed to be the proper Person,
and, with respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties here under and there under, upon advice of
counsel selected by such Agent, Documentation Agent or Co-Agent (which may be
counsel for the Credit Parties).
12.06 INDEMNIFICATION. To the extent each of the Agent, Documentation
Agent or Co-Agent is not reimbursed and indemnified by the Borrower or the
Parent Guarantor, the Banks will reimburse and indemnify such Agent,
Documentation Agent or Co-Agent, in proportion to their respective "percentages"
as used in determining the Required Banks, for and against any and
allliabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by such Agent, Documentation
Agentor Co-Agent in performing its respective duties hereunder or under any
other Credit Document, or in any way relating to or arising out of this
Agreement or any other Credit Document; PROVIDED that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent's, Documentation Agent's or Co-Agent's gross negligence or willful
misconduct.
12.07 THE AGENT, DOCUMENTATION AGENT AND THE CO-AGENTS IN THEIR
INDIVIDUAL CAPACITIES. With respect to its obligation to make Loans or issue or
participate in any Letter of Credit under this Agreement, each of the Agent,
Documentation Agent and Co-Agents shall have the rights and powers specified
herein for a "Bank" and may exercise the same rights and powers as though it
were not performing the duties specified herein; and the term "Banks," "Required
Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent, the Documentation Agent and the
Co-Agents in their individual capacity. Each of the Agent, the Documentation
Agent and the Co-Agents may accept deposits from, lend money to, and generally
engage
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in any kind of banking, trust or other business with any Credit Party or any
Affiliate of any Credit Party as if they were not performing the duties
specified herein, and may accept fees and other consideration from any Credit
Party for services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
12.08 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
12.09 Resignation by the Agent. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Banks. Such resignation shall take effect upon the appointment of a
successor Agent pursuant to clauses (b) and (c) below or as otherwise provided
below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower (which
consent will not be unreasonably withheld or delayed), shall then appoint a
commercial bank or trust company as successor Agent who shall serve as Agent
hereunder or thereunder until such time, if any, as the Required Banks appoint a
successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b) or
(c) above by the 20th Business Day after the date such notice of resignation was
given by the Agent, the Agent's resignation shall become effective and the Banks
shall thereafter perform all the duties of the Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Banks appoint a
successor Agent as provided above.
(e) The Documentation Agent may resign from the performance of all its
functions and duties hereunder and/or under the other Credit Documents at any
time by giving five Business Days' prior written notice to the Banks. Such
resignation shall take effect at the end of such five Business Day period.
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(f) Each Co-Agent may resign from the performance of all its functions
and duties hereunder and/or under the other Credit Documents at any time by
giving five Business Days' prior written notice to the Banks. Such resignation
shall take effect at the end of such five Business Day period.
SECTION 13. MISCELLANEOUS.
13.01 PAYMENT OF EXPENSES. ETC. The Borrower shall: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents (including, without limitation,
the reasonable fees and disbursements of White & Case and local counsel and all
appraisal fees, trustee's fees, documentary and recording taxes, title insurance
and recording, filing and other expenses) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein and any amendment,
waiver or consent relating hereto or thereto, of the Agents in connection with
its syndication efforts with respect to this Agreement and of the Agents and
each of the Banks in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and disbursements of
counsel for the Agents and, following and during the continuation of an Event of
Default in connection with the enforcement of this Agreement and the other
Credit Documents, for each of the Banks); (ii) pay and hold each of the Agents
and each of the Banks harmless from and against any and all present and future
stamp, excise and other similar taxes with respect to the foregoing matters and
save each of the Agents and each of the Banks harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iii)
indemnify the Agents and each Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including attorneys' and consultants'
fees and disbursements) incurred by, imposed on or assessed against any of them
as a result of, or arising out of, or in any way related to, or by reason of,
(a) any investigation, litigation or other proceeding (whether or not any Agent
or any Bank is a party thereto) related to the entering into and/or performance
of this Agreement or any other Credit Document or the use of any Letter of
Credit or the proceeds of any Loans hereunder or the consummation of any
transactions contemplated herein (including, without limitation, the
Transaction) or in any other Credit Document or the exercise of any of their
rights or remedies provided herein or in the other Credit Documents, or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property owned, leased
or at any time operated by any Credit Party or any of its Subsidiaries, the
release, generation, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned, leased or operated by any
Credit Party or any of its Subsidiaries, the non-compliance of any Real Property
with foreign, federal,
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state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim asserted
against any Credit Party, any of its Subsidiaries, its operations or any Real
Property owned or at any time operated by any Credit Party or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other reasonably necessary consultants incurred
in connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified). To the extent that the undertaking to indemnify, pay or
hold harmless any Agent or any Bank set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
13.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or any of its Subsidiaries or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of any Credit
Party or any of its Subsidiaries against and on account of the Obligations and
liabilities of such Credit Party or such Subsidiary to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 13.06(b), and all other claims of any nature or description arising out
of or connected with this Agreement or any other Credit Document, irrespective
of whether or not such Bank shall have made any demand here under and although
said Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
13.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Parent
Guarantor or the Borrower, at such Person's address specified opposite its
signature below; if to the Documentation Agent or any Bank, at its address
specified opposite its name on Schedule II below; and if to the Administrative
Agent, at its Notice Office; or, as to any Credit Party or the Administrative
Agent, at such other address as shall be designated by such party in a written
notice to the other paries hereto and, as to each Bank, at such other address as
shall be designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective two days after deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex
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or telecopier, except that notices and communications to the Borrower and either
of the Agents shall not be effective until received by the Borrower and such
Agent.
13.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; PROVIDED, HOWEVER, no Credit Party may assign or
transfer any of its rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of the Banks and, PROVIDED
FURTHER, that, although any Bank may transfer, assign or grant participations in
its rights hereunder, such Bank shall remain a "Bank" for all purposes hereunder
(and may not transfer or assign all or any portion of its Commitments hereunder
except as provided in Section 13.04(b)) and the transferee, assignee or
participant, as the case may be, shall not constitute a "Bank" hereunder and,
PROVIDED FURTHER, that no Bank shall transfer or grant any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) extend the final scheduled maturity of any Loan, Note or
Letter of Credit (unless such Letter of Credit is not extended beyond the Final
Maturity Date) in which such participant is participating, or reduce the rate or
extend the time of payment of interest or Fees thereon (except in connection
with a waiver of applicability of any post-default increase in interest rates)
or reduce the principal amount thereof, or increase the amount of the
participant's participation over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute a change in the terms of
such participation, and that an increase in any Commitment or Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof), (ii) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement or (iii) release all or substantially all of the Collateral
under all of the Security Documents (except as expressly provided in the Credit
Documents) supporting the Obligations hereunder in which such participant is
participating. In the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans (and if prior to the Term Loan Borrowing Date, Term Loan
Commitment) to its parent company and/or any affiliate of such Bank which is at
least 50% owned by such Bank or its parent company or to one or more Banks or
(y) assign all, or if less than all, a portion equal to at least (A)
$10,000,000, in the case of assignments of Revolving Loans or (B) $5,000,000, in
the case of assignments of Term Loans (and, if prior to the Term
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Loan Borrowing Date, Term Loan Commitments), in the aggregate for the assigning
Bank or assigning Banks, of such Revolving Loan Commitments and outstanding
principal amount of Term Loans (and, if prior to the Term Loan Borrowing Date,
Term Loan Commitments) hereunder to one or more Eligible Transferees, each of
which assignees shall become a party to this Agreement as a Bank by execution of
an Assignment and Assumption Agreement, PROVIDED that, (i) at such time Schedule
I shall be deemed modified to reflect the Commitments (and/or outstanding Term
Loans, as the case may be) of such new Bank and of the existing Banks, (ii) upon
surrender of the old Notes, new Notes will be issued, at the Borrower's expense,
to such new Bank and to the assigning Bank upon the request of such new Bank or
assigning Bank, such new Notes to be in conformity with the requirements of
Section 1.05 (with appropriate modifications) to the extent needed to reflect
the revised Commitments (and/or outstanding Term Loans, as the case may be),
(iii) the consent of BTCo shall be required in connection with any such
assignment pursuant to clause (y) above (which consent shall not be unreasonably
withheld), (iv) the consent of the Borrower and each Issuing Bank shall be
required in connection with any assignment of any Revolving Loan Commitments
pursuant to clause (y) above) (which consent shall not be unreasonably withheld)
and, (v) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment fee of $3,500 in the case of any such assignment pursuant to clause
(y) above and $1,750 in the case of any such assignment pursuant to clause (x)
above; and, PROVIDED FURTHER, that such transfer or assignment shall not be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 13.16. To the extent of any assignment pursuant to this Section
13.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitment. At the time of each assignment pursuant to
this Section 13.04(b) to a Person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable, a Section
4.04(b)(ii) Certificate) described in Section 4.04(b)). To the extent that an
assignment of all or any portion of a Bank's Commitment and related outstanding
Obligations pursuant to Section 1.13 or this Section 13.04(b) would, at the time
of such assignment, result in increased costs under Section 1.10, 1.11, 2.06 or
4.04 from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes or occurrences of the types
described in said Sections after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
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13.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of any Agent or any Bank or any holder of any Note in exercising any
right, power or privilege hereunder or under any other Credit Document and no
course of dealing between the Borrower or any other Credit Party and any
Agent or any Bank or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or
in any other Credit Document expressly provided are cumulative and not
exclusive of any rights, powers or remedies which any Agent or any Bank or
the holder of any Note would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Agent or any Bank or the holder of any Note to
any other or further action in any circumstances without notice or demand.
13.06 PAYMENTS PRO RATA. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of any Credit Party in respect of any
Obligations of such Credit Party, it shall distribute such payment to the
Banks (other than any Bank that has consented in writing to waive its PRO
RATA share of any such payment) PRO RATA based upon their respective shares,
if any, of the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, RL Commitment Commission or Letter of Credit
Fees, of a sum which with respect to the related sum or sums received by other
Banks is in a greater proportion than the total of such Obligation then owed and
due to such Bank bears to the total of such Obligation then owed and due to all
of the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; PROVIDED that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
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13.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Banks),
PROVIDED that (i) except as otherwise specifically provided herein, all
computations of Excess Cash Flow, the Applicable RL Margin and all computations
determining compliance with Section 9 shall utilize accounting principles and
policies in conformity with those used to prepare the historical financial
statements delivered to the Banks pursuant to Section 7.05(a) (with the
foregoing generally accepted accounting principles, subject to the preceding
proviso, herein called "GAAP"), (ii) to the extent expressly required pursuant
to the provisions of this Agreement, certain calculations shall be made on a PRO
FORMA Basis, (iii) to the extent compliance with either of Sections 9.08 or 9.09
or calculations of the Applicable RL Margin would include periods occurring (x)
prior to the Initial Borrowing Date, such calculation shall be adjusted on a PRO
FORMA Basis to give effect to the Original Credit Agreement Transaction as if
same had occurred on the first day of the respective period and/or (y) prior to
the Restatement Effective Date, such calculation shall be adjusted on a PRO
FORMA Basis to give effect to the Transaction (other than any Optional WTI Note
Repurchases and any WTI Change of Control Offer Repurchases which have not
theretofore been effected) as if same had occurred on the first day of the
respective period, (iv) in the case of any determinations of Consolidated Net
Interest Expense for any portion of any Test Period which ends prior to the
Restatement Effective Date, all computations determining compliance with Section
9.08 shall be calculated in accordance with the definition of Test Period
contained herein, (v) for all purposes of this Agreement, all Attributed
Receivables Facility Indebtedness shall be included as Indebtedness in the
consolidated financial statements of Holdings and its Subsidiaries, and shall be
considered Indebtedness of a Subsidiary of Holdings hereunder, regardless of any
differing treatment pursuant to generally acceptable accounting principles, and
(vi) for purposes of computations as described in preceding clause (i)
Unrestricted Subsidiaries shall be treated as if same did not exist.
(b) All computations of Eurodollar interest, RL Commitment Commission
and other Fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, RL Commitment Commission or
Fees are payable. All computations of Base Rate interest hereunder shall be
made on the basis of a year of 365/366 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE: WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
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YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY
IRREVOCABLY DESIGNATES AND APPOINTS HOLDINGS, LOCATED AT THE ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, AS ITS AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON HOLDINGS SHALL CEASE TO BE AVAILABLE TO
ACT AS SUCH, EACH OF THE CREDIT PARTIES AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS
PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. EACH
OF THE CREDIT PARTIES FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
EACH OF THE CREDIT PARTIES, AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE
BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHTS OF THE AGENTS UNDER THIS AGREEMENT, ANY BANK OR
THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN
ANY OTHER JURISDICTION.
(b) EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO
IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS
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AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
13.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 EFFECTIVENESS. This Agreement shall become effective on the
date (the "Restatement Effective Date")on which (i) the Borrower, the Required
Banks (determined immediately before the occurrence of the Restatement Effective
Date and without including any Term Loans or Term Loan Commitments in the
computation thereof), Banks (whether Original Banks and/or New Banks) with
aggregate Term Loan Commitments of $75 million, and each Agent shall have signed
a counterpart hereof (whether the same or different counterparts) and shall have
delivered (including by way of facsimile device) the same to the Administrative
Agent at its Notice Office and (ii) the conditions contained in Sections 5 and 6
are met to the satisfaction of the Agents and the Required Banks (determined
immediately after the occurrence of the Restatement Effective Date). Unless the
Administrative Agent has received actual notice from any Bank that the
conditions contained in Sections 5 and 6 have not been met to its satisfaction,
upon the satisfaction of the condition described in clause (i) of the
immediately preceding sentence and upon the Administrative Agent's good faith
determination that the conditions described in clause (ii) of the immediately
preceding sentence have been met, then the Restatement Effective Date shall have
been deemed to have occurred, regardless of any subsequent determination that
one or more of the conditions thereto had not been met (although the occurrence
of the Restatement Effective Date shall not release the Borrower from any
liability for failure to satisfy one or more of the applicable conditions
contained in Section 5 or 6). The Administrative Agent will give the Borrower
and each Bank prompt written notice of the occurrence of the Restatement
Effective Date.
13.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 AMENDMENT OR WAIVER; ETC. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, PROVIDED that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby), (i) extend the final scheduled
maturity of any Loan or Note or extend the stated maturity of any Letter of
Credit beyond the Final Maturity Date, or reduce the rate or extend the time of
payment
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of interest or Fees thereon, or reduce the principal amount thereof (except
to the extent repaid in cash), (ii) release all or substantially all of the
Collateral (except as expressly provided in the Credit Documents) under all
the Security Documents, (iii) release the Parent Guarantor from its
Obligations pursuant to the Parent Guaranty (except as expressly provided
therein), (iv) amend, modify or waive any provision of this Section 13.12,
(v) reduce the percentage specified in the definition of Required Banks (it
being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Banks on substantially the same basis as the
extensions of Commitments are included on the Effective Date), (vi) consent
to the assignment or transfer by the Borrower or the Parent Guarantor of any
of its rights and obligations under this Agreement or the Parent Guaranty, as
the case may be or (vii) amend, waive or modify the approval rights of the
Banks in respect of a nine or twelve-month Interest Period as provided in
Section 1.09; PROVIDED FURTHER, that no such change, waiver, discharge or
termination shall (u) increase the Commitment of any Bank over the amount
thereof then in effect without the consent of such Bank (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitment shall
not constitute an increase of the Commitment of any Bank, and that an
increase in the available portion of any Commitment of any Bank shall not
constitute an increase in the Commitment of such Bank), (v) without the
consent of the respective Issuing Bank or Issuing Banks, amend, modify or
waive any provision of Section 2 with respect to Letters of Credit issued by
it or alter its rights or obligations with respect to Letters of Credit
issued by it, (w) without the consent of BTCo, amend, modify or waive any
provision of Sections 1.01(b) and (c) or alter its rights and obligations
with respect to Swingline Loans (including, without limitation, the
obligations of the other Banks with Commitments to fund Mandatory
Borrowings), (x) without the consent of the respective Agent, amend, modify
or waive any provision of Section 12 as same applies to such Agent or any
other provision as same relates to the rights or obligations of such Agent,
(y) without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent and
(z) without the consent of the Supermajority Banks either (A) reduce the
percentage specified in the definition of Supermajority Banks or (B) amend,
modify or waive any Scheduled Commitment Reduction.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (vii), inclusive, of the first proviso to Section
13.12(a), the consent of the Required Banks is obtained but the consent of
one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either
clauses (A) or (B) below, to either (A) replace each such non-consenting Bank
or Banks with one or more Replacement Banks pursuant to Section 1.13 so long
as at the time of such replacement, each such Replacement Bank consents to
the proposed change, waiver, discharge or termination or (B) terminate such
non-consenting Bank's Commitment (if such
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Bank's consent is required as a result of its Commitment) and repay
outstanding Revolving Loans of such Bank which gave rise to the need to
obtain such Bank's consent, in accordance with Sections 3.02(b) and/or
4.01(v), PROVIDED that, unless the Commitments are terminated, and Revolving
Loans repaid, pursuant to the preceding clause (B) are immediately replaced
in full at such time through the addition of new Banks or the increase of the
Commitments and/or outstanding Revolving Loans of existing Banks (who in each
case must specifically consent thereto), then in the case of any action
pursuant to preceding clause (B) the Required Banks (determined before giving
effect to the proposed action) shall specifically consent thereto, PROVIDED
FURTHER, that in any event the Borrower shall not have the right to replace a
Bank, terminate its Commitment or repay its Revolving Loans solely as a
result of the exercise of such Bank's rights (and the withholding of any
required consent by such Bank) pursuant to the second proviso to Section
13.12(a).
13.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.06, 4.04, 13.01, 13.06 and 13.16 shall
survive the execution, delivery and termination of this Agreement, the Notes
and any Letters of Credit, and the making and repayment of the Loans.
13.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such
Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11,
2.06 or 4.04 from those being charged by the respective Bank prior to such
transfer, then the Borrower shall not be obligated to pay such increased
costs (although the Borrower shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of
the respective transfer).
13.15 CONFIDENTIALITY. (a) Subject to the provisions of clause (b)
of this Section 13.15, each Bank agrees that it will use its best efforts not
to disclose without the prior consent of the Borrower (other than to its
Affiliates, employees, auditors, advisors or counsel or to another Bank if
the Bank or such Bank's holding or parent company in its sole discretion
determines that any such party should have access to such information,
provided such Persons shall be subject to the provisions of this Section
13.15 to the same extent as such Bank) any information with respect to
Holdings or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is
designated by Holdings to the Banks in writing as confidential, PROVIDED that
any Bank may disclose any such information (a) as has become generally
available to the public, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Bank or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons
or subpoena or in connection with any litigation, (d) in order to comply with
any law, order,
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regulation or ruling applicable to such Bank, (e) to the Agents or the
Collateral Agent and (f) to any prospective or actual transferee or
participant in connection with any contemplated transfer or participation of
any of the Notes or Commitments or any interest therein by such Bank,
PROVIDED, that such prospective transferee agrees to provisions substantially
the same as to those contained in this Section.
(b) Each Credit Party hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to Holdings or any
of its Subsidiaries (including, without limitation, any non-public customer
information regarding the creditworthiness of Holdings and its Subsidiaries),
provided such Persons shall be subject to the provisions of this Section 13.15
to the same extent as such Bank.
13.16 REGISTER. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.16, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
the Commitments and the Loans 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 pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 13.16, PROVIDED that the
Borrower shall have no obligation to indemnify the Administrative Agent for any
loss, claim, damage, liability or expense which resulted primarily from the
gross negligence or wilful misconduct of the Administrative Agent.
13.17 COMPLIANCE WITH CERTAIN EXISTING INDEBTEDNESS. (a) Holdings and
the Borrower represent and warrant to the Banks that, on the Restatement
Effective Date (after giving effect to the Borrowings to occur on such date),
Loans and Letters of Credit
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in aggregate principal amount equal to the Total Commitment and, without
duplication, the then aggregate outstanding principal amount of Term Loans as in
effect on such date would be permitted to be incurred pursuant to the first
paragraph of Section 4.9 of the Existing 10-3/4% Senior Subordinated Notes
Indentures (and that Holdings' Fixed Charge Coverage Ratio referred to therein
would be at least equal to 2.25 to 1 after giving effect thereto) and any such
incurrence of Indebtedness would constitute "Senior Indebtedness" and
"Designated Senior Indebtedness" thereunder. If at any time after the
Restatement Effective Date the Total Revolving Outstandings are, or are reduced
below, an amount equal to $275,000,000 (with the amount of the Total Revolving
Outstandings on the Restatement Effective Date, or the lowest amount to which
the Total Revolving Outstandings have at any time been reduced thereafter, as
such amount may be adjusted as herein provided, being herein called the "Lowest
Outstanding Amount"), then if the Total Revolving Outstandings at any time
thereafter exceed the then previous Lowest Outstanding Amount by more than the
Threshold Amount, the then previous Lowest Outstanding Amount shall be increased
by an amount equal to such excess over the Threshold Amount, provided that in no
event shall the Lowest Outstanding Amount ever exceed $275,000,000. Furthermore,
and notwithstanding anything to the contrary contained elsewhere in this
Agreement or any other Credit Document, it is understood and agreed that (x) the
Borrower and its Subsidiaries shall not incur any Indebtedness, except pursuant
to this Agreement, which is justified as being outstanding pursuant to clause
(i) of the second paragraph of Section 4.9 of the Existing 10-3/4% Senior
Subordinated Notes Indentures and (y) the Borrower shall not be permitted to
incur Loans or have Letters of Credit issued at any time after the Restatement
Effective Date which would cause the Total Revolving Outstandings to exceed the
Lowest Outstanding Amount at such time by more than the Threshold Amount unless,
in connection with any such Credit Event, the Borrower complies with the
applicable requirements of Section 6.05. Holdings and the Borrower each
represent and warrant that each incurrence of Loans and issuance of any Letter
of Credit shall not be prohibited pursuant to the terms of either of the
Existing 10-3/4% Senior Subordinated Notes Indentures and any such incurrence of
Indebtedness shall constitute "Senior Indebtedness" and "Designated Senior
Indebtedness" thereunder. This Section 13.17 shall cease to be of further force
or effect at such time as all Existing 10-3/4% Senior Subordinated Notes have
been repaid in full (or fully defeased) and the provisions of Section 4.9 of the
Existing 10-3/4% Senior Subordinated Notes Indentures are no longer effective.
(b) Holdings and the Borrower represent and warrant to the Banks that
neither the consummation of the Transaction (including, without limitation, the
extension of the WTI Intercompany Loans, the issuance of the WTI Intercompany
Preferred Stock and the extensions of credit pursuant to the Replacement Working
Capital Facility) or any other transactions contemplated by this Agreement nor
the execution, delivery or performance of any Documents shall cause any
violation of the WTI Senior Subordinated Notes Indenture.
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13.18 LIMITATION ON ADDITIONAL AMOUNTS, ETC. Notwithstanding anything
to the contrary contained in Section 1.11 of this Agreement, unless a Bank gives
notice to the Borrower that it is obligated to pay an amount under such Section
within six months after the later of (x) the date the Bank incurs the respective
loss, expense or liability or (y) the date such Bank has actual knowledge of its
incurrence of the respective loss, expense or liability, then such Bank shall
only be entitled to be compensated for such amount by the Borrower pursuant to
said Section 1.11, to the extent the loss, expense or liability is incurred or
suffered on or after the date which occurs six months prior to such Bank giving
notice to the Borrower that it is obligated to pay the respective amounts
pursuant to said Section 1.11. This Section 13.18 shall have no applicability
to any Section of this Agreement other than said Section 1.11.
13.19 ADDITION OF NEW BANKS; OBLIGATION TO PAY CERTAIN AMOUNTS OWING
PURSUANT TO ORIGINAL CREDIT AGREEMENT. (a) On and as of the occurrence of the
Restatement Effective Date in accordance with Section 13.10, each New Bank shall
become a "Bank" under, and for all purposes of, this Agreement and the other
Credit Documents.
(b) The Borrower understands and agrees that all accrued but unpaid
interest and fees pursuant to the Original Credit Agreement, which have not
become due and payable pursuant to the terms of the Original Credit Agreement on
or prior to the Restatement Effective Date, shall be paid on the respective
payment date pursuant to this Agreement and shall be due and payable as
obligations pursuant to this Agreement. Furthermore, all indemnities pursuant
to the Original Credit Agreement shall survive pursuant to the terms of this
Agreement. The Borrower covenants and agrees to repay all amounts which are due
and payable pursuant to the terms of the Original Credit Agreement on or prior
to the occurrence of the Restatement Effective Date.
13.20 CERTAIN AGREEMENT FOR THE MUTUAL BENEFIT OF THE BANKS. (a) To
induce the Banks with Term Loan Commitments to make the Term Loans on the
Restatement Effective Date and for the benefit of such Banks and their
successors and assigns, each Bank which executes this Agreement agrees for
itself, and its successors and assigns, that such Bank (including for this
purpose its successors and assigns) will not in the future agree to any
amendment or modification to this Agreement which amends, modifies or waives any
Term Loan Scheduled Repayment or the definition of "Supermajority Term Banks"
without (x) the consents required by Section 13.12 and (y) the consent of the
Supermajority Term Banks at such time.
(b) To induce each Bank which executes and delivers a copy of this
Agreement to execute and deliver same, and for the benefit of such Banks and
their successors and assigns, each Bank which executes this Agreement
(including, without limitation, each Bank with a Term Loan Commitment) agrees
for itself, and its successors and assigns, that such Bank (including for this
purpose its successors and assigns) will not in the future agree to any
amendment or modification to this Agreement), without (x) the
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consents required by Section 13.12 and (y) the consent of the Majority Banks of
each Tranche which is being allocated a lesser prepayment, repayment or
commitment reduction as a result of the actions described below (or without the
consent of the Majority Banks of each Tranche in the case of an amendment to the
definition of Majority Banks), which amends the definition of Majority Banks or
alters the required application of any prepayments or repayments (or commitment
reductions) as between the various Tranches, pursuant to Section 4.01 or 4.02
(excluding Section 4.02(c))(although, subject to the requirements of (i) clause
(z) of the second proviso to Section 13.12(a) and (ii) Section 13.20(a), the
Required Banks may waive, in whole or in part, any such prepayment, repayment or
commitment reduction, so long as the application, as amongst the various
Tranches, of any such prepayment, repayment or commitment reduction which is
still required to be made is not altered).
SECTION 14. PARENT GUARANTY.
14.01 THE PARENT GUARANTY. In order to induce the Agents and the
Banks to enter into this Agreement and to extend credit hereunder, to induce
Interest Rate Protection Creditors to enter into Interest Rate Protection
Agreements and in recognition of the direct benefits to be received by the
Parent Guarantor from the proceeds of the Loans, the issuance of the Letters of
Credit, and the entering into of Interest Rate Protection Agreements, the Parent
Guarantor hereby agrees with the Guaranteed Creditors as follows: the Parent
Guarantor hereby unconditionally and irrevocably guarantees as primary obligor
and not merely as surety the full and prompt payment when due, whether upon
maturity, acceleration or otherwise, of any and all of the Guaranteed
Obligations of the Borrower to the Guaranteed Creditors. If any or all of the
Guaranteed Obligations of the Borrower to the Guaranteed Creditors becomes due
and payable hereunder, the Parent Guarantor irrevocably and unconditionally
promises to pay such indebtedness to the Guaranteed Creditors, or order, on
demand, together with any and all expenses which may be incurred by the
Guaranteed Creditors in collecting any of the Guaranteed Obligations. If claim
is ever made upon any Guaranteed Creditor for repayment or recovery of any
amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid payees repays all or part of said amount by
reason of (i) any judgment, decree or order of any court or administrative body
having jurisdiction over such payee or any of its property or (ii) any
settlement or compromise of any such claim effected by such payee with any such
claimant (including the Borrower), then and in such event the Parent Guarantor
agrees that any such judgment, decree, order, settlement or compromise shall be
binding upon the Parent Guarantor, notwithstanding any revocation of this Parent
Guaranty, and the Parent Guarantor shall be and remain liable to the aforesaid
payees hereunder for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by any such payee.
14.02 BANKRUPTCY. Additionally, the Parent Guarantor unconditionally
and irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the
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Borrower to the Guaranteed Creditors whether or not due or payable by the
Borrower upon the occurrence of any of the events specified in Section 10.05,
and unconditionally promises to pay such indebtedness to the Guaranteed
Creditors, or order, on demand, in lawful money of the United States.
14.03 NATURE OF LIABILITY. The liability of the Parent Guarantor
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations of the Borrower whether executed by the Parent
Guarantor, any other guarantor or by any other party, and the liability of the
Parent Guarantor hereunder is not affected or impaired by (a) any direction as
to application of payment by the Borrower or by any other party, or (b) any
other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of the
Borrower, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or change
in personnel by the Borrower, or (e) any payment made to any Guaranteed Creditor
on the Guaranteed Obligations which any such Guaranteed Creditor repays to the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and Parent Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
14.04 INDEPENDENT OBLIGATION. The obligations of the Parent Guarantor
hereunder are independent of the obligations of any other guarantor, any other
party or the Borrower, and a separate action or actions may be brought and
prosecuted against the Parent Guarantor whether or not action is brought against
any other guarantor, any other party or the Borrower and whether or not any
other guarantor, any other party or the Borrower be joined in any such action or
actions. The Parent Guarantor waives, to the full extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Borrower or other circumstance which
operates to toll any statute of limitations as to the Borrower shall operate to
toll the statute of limitations as to the Parent Guarantor. This Parent
Guaranty is a continuing one and all liabilities to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been created
in reliance hereon.
14.05 AUTHORIZATION. The Parent Guarantor authorizes the Guaranteed
Creditors without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in
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<PAGE>
respect thereof, and the Parent Guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party or others or otherwise act or refrain from
acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of the Parent Guarantor or the
Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default
under, this Agreement or any of the instruments or agreements referred to
herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
the Parent Guarantor from its liabilities under this Parent Guaranty.
14.06 RELIANCE. It is not necessary for any Guaranteed Creditor to
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
14.07 SUBORDINATION. Any of the indebtedness of the Borrower now or
hereafter owing to the Parent Guarantor is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Guaranteed Creditors; and if the
Administrative
-173-
<PAGE>
Agent so requests at a time when an Event of Default exists, all such
indebtedness of the Borrower to the Parent Guarantor shall be collected,
enforced and received by the Parent Guarantor for the benefit of the Guaranteed
Creditors and be paid over to the Administrative Agent on behalf of the
Guaranteed Creditors on account of the Guaranteed Obligations of the Borrower to
the Guaranteed Creditors, but without affecting or impairing in any manner the
liability of the Parent Guarantor under the other provisions of this Parent
Guaranty. Prior to the transfer by the Parent Guarantor of any note or
negotiable instrument evidencing any of the indebtedness of the Borrower to the
Parent Guarantor, the Parent Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.
Without limiting the generality of the foregoing, the Parent Guarantor hereby
agrees with the Guaranteed Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Parent
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.
14.08 WAIVER. (a) The Parent Guarantor waives any right (except as
shall be required by applicable statute and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor or
any other party, (ii) proceed against or exhaust any security held from the
Borrower, any other guarantor or any other party or (iii) pursue any other
remedy in any Guaranteed Creditor's power whatsoever. The Parent Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other guarantor or any other party, other than payment in full of the Guaranteed
Obligations, based on or arising out of the disability of the Borrower, any
other guarantor or any other party, or the validity, legality or
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the Guaranteed Obligations. The Guaranteed Creditors
may, at their election, foreclose on any security held by any Agent, the
Collateral Agent or any other Guaranteed Creditor by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Guaranteed Creditors may have against the Borrower
or any other party, or any security, without affecting or impairing in any way
the liability of the Parent Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid. The Parent Guarantor waives any defense
arising out of any such election by the Guaranteed Creditors, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of the Parent Guarantor against the
Borrower or any other party or any security.
(b) The Parent Guarantor waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Parent Guaranty, and notices of the existence. creation or incurring of
new or additional Guaranteed Obligations. The Parent Guarantor assumes all
responsibility for being and keeping itself informed of the
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<PAGE>
Borrower's financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks which the Parent Guarantor assumes and
incurs hereunder, and agrees that neither the Agents nor any Bank shall have any
duty to advise the Parent Guarantor of information known to them regarding such
circumstances or risks.
14.09 MAXIMUM LIABILITY. It is the desire and intent of the Parent
Guarantor and the Guaranteed Creditors that this Parent Guaranty shall be
enforced against the Parent Guarantor to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. If, however, and to the extent that, the obligations of the Parent
Guarantor under this Parent Guaranty shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of the Parent
Guarantor shall be deemed to be reduced and the Parent Guarantor shall pay the
maximum amount of the Guaranteed Obligations which would be permissible under
applicable law.
-175-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- --------
3 East 54th Street BIG FLOWER PRESS HOLDINGS, INC.
19th Floor
New York, NY 10022
Tel: (212) 521-1600 By /s/ David Mait
Fax: (212) 223-4074 ----------------------------
Attention: R. Theodore Ammon Title: Vice President
250 West Pratt Street TREASURE CHEST ADVERTISING
Baltimore. MD 21201 COMPANY, INC.
Tel: (410) 361-8352
Fax: (410) 528-9288
Attention: Rick Frier By /s/ Rick Frier
----------------------------
Title: Treasurer
One Bankers Trust Plaza BANKERS TRUST COMPANY,
130 Liberty Street Individually and as Administrative Agent
New York, NY 10006
Tel: (212) 250-1724
Fax: (212) 250-7200 By /s/ Christopher Kinslow
Attention: Christopher Kinslow ----------------------------
Title: Vice President
Credit Suisse CREDIT SUISSE,
12 E. 49th Street Individually
New York, NY 10017
Tel: (212) 238-5364
Fax: (212) 238-5389 By /s/ Christopher J. Eldin
Attention: Christopher J. Eldin ----------------------------
Title: Member of Senior Management
By /s/ Dawn Rubinstein
----------------------------
Title: Associate
<PAGE>
Credit Suisse CREDIT SUISSE,
12 E. 49th Street as Documentation Agent
New York, NY 10017
Tel: (212) 238-5061
Fax: (212) 238-5073 By /s/ Ira Lubinsky
Attention: Ira ----------------------------
Lubinsky Title: Associate
By /s/ Matt Moser
----------------------------
Title: Associate
ABN AMRO BANK N.V.,
NEW YORK BRANCH
By /s/ Frances O'Reilly Logan
----------------------------
Title: Vice President
By /s/ Thomas Rogers
----------------------------
Title: Assistant Vice President
BANK OF AMERICA NT & SA
By /s/ Jon M. Varnell
----------------------------
Title: Managing Director
BANK OF IRELAND
By /s/ Paddy Dowling
----------------------------
Title: Account Manager
<PAGE>
THE BANK OF NEW YORK
By /s/ Gregory Shefrin
----------------------------
Title: Assistant Vice President
CORESTATES BANK
By /s/ Matthew T. Panarese
----------------------------
Title: Vice President
COMERICA BANK
By /s/ Tamara J. Gurne
----------------------------
Title: Account Officer
CREDIT LYONNAIS -NEW YORK BRANCH
By /s/ Fred Haddad
----------------------------
Title: Authorized Signatory
CREDIT LYONNAIS -CAYMAN ISLAND BRANCH
By /s/ Fred Haddad
----------------------------
Title: Authorized Signatory
DAI-ICHI KANGYO BANK, LIMITED
By /s/ Yusuke Yanagawa
----------------------------
Title: Assistant Vice President
<PAGE>
DRESDNER BANK AG
By /s/ Ramesh Raman
----------------------------
Title: Assistant Vice President
By /s/ Andrew E. Schroeder
----------------------------
Title: Assistant Vice President
GIROCREDIT BANK AG DER SPARKASSEN, GRAND
CAYMAN ISLAND BRANCH
By /s/ John Redding
----------------------------
Title: Vice President
By /s/ Richard Stone
----------------------------
Title: First Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By /s/ Junri Oda
----------------------------
Title: Senior Vice President and Senior
Manager
THE LTCB TRUST COMPANY
By /s/ Rene O. LeBlanc
----------------------------
Title: Senior Vice President
<PAGE>
THE MITSUBISHI BANK, LIMITED -NEW YORK BRANCH
By /s/ Randy Szuch
----------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING CORPORATION
By /s/ Patricia Loret de Mola
----------------------------
Title: Senior Vice President
NATIONSBANK, N.A.
By /s/ Cathy Wilcox
----------------------------
Title: Senior Vice President
SANWA BANK CALIFORNIA
By /s/ Robert G. Moore
----------------------------
Title: Vice President
SUMITOMO BANK OF CALIFORNIA
By /s/ Robert M. Iritani
----------------------------
Title: Vice President
<PAGE>
THE FUJI BANK, LIMITED
By /s/ Katsunori Nozawa
----------------------------
Title: Vice President & Manager
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By /s/ Anthony R. Clemente
----------------------------
Title: Authorized Signatory
SENIOR HIGH INCOME PORTFOLIO,INC.
By /s/ Anthony R. Clemente
----------------------------
Title: Authorized Signatory
UNION BANK CORPORATE BANKING
By /s/ Andrew G. Ewing Jr.
----------------------------
Title: Vice President
<PAGE>
Conformed*/
Big Flower (Bridge)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATE PURCHASE AGREEMENT
(Series 1996-1)
dated as of March 19, 1996
among
BFP RECEIVABLES CORPORATION,
BIG FLOWER PRESS HOLDINGS, INC.,
THE PURCHASERS DESCRIBED HEREIN,
CREDIT SUISSE, as Co-Agent,
and
BANKERS TRUST COMPANY,
as Agent
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------
*/ Conformed as executed; the copies of Exhibits A, B and C attached hereto
are also conformed as executed.
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.1 DEFINITIONS ............................................... -1-
ARTICLE II PURCHASE AND SALE OF CERTIFICATES
SECTION 2.1 THE COMMITMENTS ........................................... -2-
SECTION 2.2 PURCHASE MECHANICS ........................................ -2-
SECTION 2.3 REDUCTION OF STATED AMOUNTS ............................... -4-
SECTION 2.4 CERTIFICATES .............................................. -4-
ARTICLE III REDUCTIONS IN INVESTED AMOUNT
SECTION 3.1 TRANSFEROR'S RIGHT TO REDUCE INVESTED AMOUNT .............. -4-
SECTION 3.2 NOTICE TO PURCHASERS ...................................... -5-
ARTICLE IV TRANCHES, INTEREST AND FEES
SECTION 4.1 TRANCHES .................................................. -5-
SECTION 4.2 FEES ...................................................... -6-
SECTION 4.3 YIELD PROTECTION .......................................... -7-
SECTION 4.4 ILLEGALITY; UNAVAILABILITY ................................ -9-
SECTION 4.5 INDEMNITY ................................................ -10-
SECTION 4.6 TAXES .................................................... -10-
ARTICLE V OTHER PAYMENT TERMS
SECTION 5.1 TIME AND METHOD OF PAYMENT ............................... -11-
SECTION 5.2 PRO RATA TREATMENT ....................................... -12-
ARTICLE VI REPRESENTATIONS AND WARRANTIES
SECTION 6.1 TRANSFEROR................................................ -12-
SECTION 6.2 BIG FLOWER................................................ -13-
SECTION 6.3 PURCHASERS................................................ -14-
ARTICLE VII CONDITIONS
SECTION 7.1 CONDITIONS TO INITIAL PURCHASE............................ -14-
SECTION 7.2 CONDITIONS TO EACH PURCHASE............................... -18-
<PAGE>
ARTICLE VIII COVENANTS
SECTION 8.1 AFFIRMATIVE COVENANTS .................................... -19-
SECTION 8.2 NEGATIVE COVENANTS ....................................... -20-
SECTION 8.3 TRANSFERS ................................................ -20-
ARTICLE IX AGENT; REQUIRED PURCHASERS
SECTION 9.1 APPOINTMENT............................................... -20-
SECTION 9.2 NATURE OF DUTIES ......................................... -21-
SECTION 9.3 LACK OF RELIANCE ON AGENT AND FINANCIAL ADVISOR .......... -21-
SECTION 9.4 CERTAIN RIGHTS OF AGENT .................................. -22-
SECTION 9.5 RELIANCE ................................................. -22-
SECTION 9.6 INDEMNIFICATION ......................................... -22-
SECTION 9.7 AGENT IN ITS INDIVIDUAL CAPACITY ......................... -22-
SECTION 9.8 RESIGNATION BY AGENT ..................................... -23-
SECTION 9.9 REQUIRED PURCHASERS ...................................... -23-
ARTICLE X MISCELLANEOUS PROVISIONS
SECTION 10.1 AMENDMENTS .............................................. -24-
SECTION 10.2 NO WAIVER; REMEDIES...................................... -24-
SECTION 10.3 SUCCESSORS AND ASSIGNS; ASSIGNMENTS ..................... -25-
SECTION 10.4 SURVIVAL OF AGREEMENT ................................... -29-
SECTION 10.5 EXPENSES; INDEMNIFICATION................................ -30-
SECTION 10.6 ENTIRE AGREEMENT ........................................ -31-
SECTION 10.7 NOTICES ................................................. -31-
SECTION 10.8 NO THIRD-PARTY BENEFICIARIES ............................ -31-
SECTION 10.9 SEVERABILITY OF PROVISIONS .............................. -32-
SECTION 10.10 COUNTERPARTS ........................................... -32-
SECTION 10.11 GOVERNING LAW .......................................... -32-
SECTION 10.12 TAX CHARACTERIZATION ................................... -32-
SECTION 10.13 NO PROCEEDINGS ......................................... -32-
SECTION 10.14 OBLIGATION AND FAILURE TO REFINANCE..................... -33-
SECTION 10.15 REFERENCE BANKS......................................... -34-
<PAGE>
SCHEDULE
SCHEDULE I Amount of Each Initial Purchaser's Certificate
EXHIBITS
EXHIBIT A Form of Pooling and Servicing Agreement
EXHIBIT B Form of Receivables Purchase Agreement
EXHIBIT C Form of Series 1996-1 Supplement
EXHIBIT D Form of Assignment Agreement
APPENDIX
APPENDIX X Index of Additional Defined Terms
<PAGE>
This CERTIFICATE PURCHASE AGREEMENT, dated as of March 19, 1996 (this
"AGREEMENT"), is made among BFP RECEIVABLES CORPORATION, a Delaware corporation
("TRANSFEROR"), BIG FLOWER PRESS HOLDINGS, INC., a Delaware corporation
("SERVICER" or "BIG FLOWER"), the purchasers named on the signatures page s of
this Agreement (together with their respective permitted assigns, the
"PURCHASERS"), CREDIT SUISSE, as Co-Agent and BANKERS TRUST COMPANY ("BTCO"), as
agent for the Purchasers (in that capacity, together with any successors in that
capacity, "AGENT").
BACKGROUND
1. Transferor (a) will enter into a Pooling and Servicing Agreement
substantially in the form of EXHIBIT A (the "POOLING AGREEMENT") with Big
Flower, as initial Servicer, and, Manufacturers and Traders Trust Company, a New
York banking corporation, as trustee (in that capacity, together with any
successors in that capacity, the "TRUSTEE"), (b) is party to a Receivables
Purchase Agreement substantially in the form of EXHIBIT B and (c) will enter
into a Series 1996-1 Supplement to the Pooling Agreement substantially in the
form of EXHIBIT C (the "SUPPLEMENT"). Pursuant to the Pooling Agreement and the
Supplement, Transferor will obtain the Series 1996-1 Certificates (the
"CERTIFICATES"), which will represent fractional undivided beneficial interests
in the assets of the Big Flower Receivables Master Trust (the "TRUST"), a trust
to be organized pursuant to the Pooling Agreement.
2. Transferor wishes to obtain the commitment of each Purchaser to purchase
fractional undivided beneficial interests in the assets of the Trust (each a
"TRUST INTEREST") that will be evidenced by its Certificate. Subject to the
terms and conditions of this Agreement, each Purchaser is willing to agree to so
make purchases of Trust Interests, up to the Stated Amount (as defined below)
set forth opposite its name in SCHEDULE I. Big Flower has joined in this
Agreement to confirm certain representations, warranties and covenants for the
benefit of the Purchasers and the Agent.
4. The Certificates and the Trust Interests represented thereby will serve
as a bridge financing until Transferor is able to effect a more widely
distributed securitization, and it is intended that they will be repaid in full
and cancelled as soon as practicable from the proceeds of such a securitization.
ARTICLE I DEFINITIONS
SECTION 1.1 DEFINITIONS. Capitalized terms used and not otherwise defined
herein have the meanings assigned to them in the Supplement or, if not
<PAGE>
defined in the Supplement, in APPENDIX A to the Pooling Agreement. An index of
terms defined directly in this Agreement is attached as APPENDIX X.
ARTICLE II PURCHASE AND SALE OF CERTIFICATES
SECTION 2.1 THE COMMITMENTS. Subject to the terms and conditions of this
Agreement, the Pooling Agreement and the Supplement, each Purchaser agrees,
severally and for itself alone, upon Transferor's request (through Servicer), to
make purchases (each a "PURCHASE") of Trust Interests from time to time during
the Revolving Period; PROVIDED, that no Purchaser will be required or permitted
to make a Purchase on any date if the funded principal amount of its
Certificate, after giving effect to the Purchase, would exceed the lesser of (a)
the Stated Amount of its Certificate and (b) its Percentage (as defined below)
MULTIPLIED by the Invested Amount. In addition, no Purchaser will be required
or permitted to make a Purchase if, after giving effect thereto (and any
corresponding reduction to the Invested Amount pursuant to SECTION 3.1), the Net
Invested Amount would exceed the Base Amount. The Purchases by the Purchasers
shall be made ratably in accordance with their respective Percentages; PROVIDED,
that the failure of any Purchaser to make any Purchase shall not relieve any
other Purchaser of its obligation to make Purchases hereunder. No Purchaser
shall, however, be responsible for the failure of any other Purchaser to make
any Purchase. Subject to the terms of this Agreement, the aggregate principal
amount of a Purchaser's investment represented by its Certificate may be
increased or decreased from time to time.
For purposes of this Agreement, "PERCENTAGE" means, with respect to each
Purchaser, the percentage equivalent (carried out to twelve decimal places) of a
fraction the numerator of which is the Stated Amount of such Purchaser's
Certificate and the denominator of which is the sum of the Stated Amounts of all
of the Purchasers' Certificates. The initial Percentages of the initial
Purchasers, and the Stated Amounts of their Certificates, are set out opposite
their names in SCHEDULE I.
SECTION 2.2 PURCHASE MECHANICS. (a) Whenever Transferor wishes the
Purchasers to make Purchases, it shall cause Servicer to notify the Agent if the
Trust Interests to be purchased initially will form a part of (i) the ABR
Tranche, not later than 3:00 p.m., New York City time, one Business Day prior to
the date of the proposed Purchase and (ii) a Eurodollar Tranche, not later than
3:00 p.m., New York City time, three Business Days prior to the date of the
proposed Purchase; PROVIDED that the notice to the Agent of the initial Purchase
hereunder may be provided up to (but no later than) 10:00 a.m. on the Closing
Date and such Purchase shall form a part of the ABR Tranche. Each notice shall
be irrevocable and shall in each case refer to this Agreement and specify (x)
the aggregate purchase price for the requested
page 2
<PAGE>
Purchases (which shall be in a minimum amount of $5,000,000 or a greater
integral multiple of $1,000,000 (or in the total unutilized amount of the
various Purchasers' Stated Amounts)), (y) whether the Trust Interests to be
purchased will form a part of the ABR Tranche or a Eurodollar Tranche and (z)
the date of the Purchase (which shall be a Business Day) and the amount thereof.
If no election required by CLAUSE (y) is made in any notice, then the Trust
Interests obtained in the Purchase shall form a part of the ABR Tranche. The
Agent shall promptly advise the Purchasers of any notice given pursuant to this
section and of the amount of each Purchaser's Purchase.
(b) After receiving notice from the Agent of any notice given pursuant to
SUBSECTION (A) and subject to the conditions in ARTICLE VII, each Purchaser
shall make a Purchase in the amount of its PRO RATA portion of aggregate
Purchases requested to be made, ratably according to its Percentage, on the
proposed date thereof by wire transfer in Dollars of immediately available funds
to the Agent at the office designated from time to time by the Agent, not later
than 10:00 a.m., New York City time, and the Agent shall (unless notified in
writing that any condition precedent has not been satisfied), by noon, New York
City time, on the same day, make available to Transferor by wire transfer of
Dollars in immediately available funds the aggregate amount of the funds
received. Unless the Agent shall have received written notice from a Purchaser
prior to the date of any Purchase that the Purchaser will not make available to
the Agent its purchase price, the Agent may (but shall not be required to)
assume that the Purchaser has made that portion available to the Agent on the
date of the Purchase in accordance with this subsection, and the Agent may, in
reliance upon that assumption, make available to Transferor on that date a
corresponding amount.
(c) If and to the extent that any Purchaser shall not have made its
purchase price available to the Agent and the Agent has made available a
corresponding amount to Transferor, such Purchaser agrees to repay to the Agent
forthwith on demand a corresponding amount, together with interest thereon, for
each day from the date the amount is made available to Transferor until the date
the amount is repaid to the Agent (i) for the first three days following the
date the amount is made available, at a rate per annum equal to the Federal
Funds Rate and (ii) thereafter, at a rate per annum equal to the Federal Funds
Rate PLUS 1%. If the Purchaser shall repay to the Agent a corresponding amount,
the amount shall constitute its Purchase for purposes of this Agreement, and if
Transferor shall have already made the repayment (as provided below), the Agent
shall make a corresponding amount immediately available to Transferor, together
with interest thereon for each day from the date the amount is repaid by
Transferor (as provided below) to the date the Purchaser repaid the Agent, but
only to the extent of interest actually paid by the Purchaser to the Agent in
respect of such period. At any time after the
page 3
<PAGE>
Agent learns that a Purchaser has failed to make the purchase price for a
Purchase available as described above, the Agent promptly shall give notice to
Transferor and Servicer of that failure, and upon notice Transferor will be
required to refund to the Agent an amount equal to that purchase price, together
with interest on the amount at the rate of interest applicable to such Purchase
(determined in accordance with SECTION 4.1 of the Supplement).
SECTION 2.3 REDUCTION OF STATED AMOUNTS. Upon at least three Business Days'
prior irrevocable notice to the Agent in writing, Transferor may reduce the
Stated Amounts of the Certificates; PROVIDED, that (a) each partial reduction of
the Stated Amounts shall be, in the aggregate for all Certificates, in an
integral multiple of $1,000,000 and in a minimum principal amount of $5,000,000
and (b) no partial reduction shall be made that would reduce the aggregate
Stated Amounts to an amount less than the Invested Amount at the time of the
reduction. Each reduction in the Stated Amounts shall be made ratably among the
Purchasers in accordance with their respective Stated Amounts. The Agent shall
promptly advise the Purchasers of any notice given pursuant to this section.
Each reference in this Agreement to the "STATED AMOUNT" of a Certificate means
the Stated Amount of the Certificate after giving effect to any reductions made
pursuant to this section.
SECTION 2.4 CERTIFICATES. The outstanding amounts of the Purchases made by
each Purchaser shall be evidenced by its Certificate, to be issued on the
Closing Date substantially in the form of EXHIBIT A to the Supplement. Each
Purchaser shall and is hereby authorized to record on the grid attached to its
Certificate (or at its option, in its internal books and records) the date and
amount of each Purchase made by it, the amount of each repayment of the
principal amount represented by its Certificate, the portions of its Purchases
that are from time to time allocated to the ABR Tranche and any Eurodollar
Tranche, and any reductions to the Stated Amount of its Certificate made
pursuant to SECTION 2.3 (which shall be conclusive absent manifest error);
PROVIDED, that failure to make any recordation on the grid or records or any
error in the grid or records shall not adversely affect the Purchaser's rights
with respect to its interest in the assets of the Trust and its right to receive
interest in respect of the outstanding principal amount of all Purchases made by
the Purchaser.
ARTICLE III REDUCTIONS IN INVESTED AMOUNT
SECTION 3.1 TRANSFEROR'S RIGHT TO REDUCE INVESTED AMOUNT. Transferor may,
on at least one Business Day's prior notice by Transferor or Servicer to the
Agent, reduce the Invested Amount by causing an amount of funds equal to the
desired amount of the reduction that are available for this purpose in
accordance with the terms of the Supplement to be transferred to
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<PAGE>
the Agent, for the account of the Purchasers (and application to the respective
and ratable reduction of the funded principal amount of the Certificate of each
Purchaser), PROVIDED that any reduction to the aggregate funded principal
amounts represented by the Certificates must be in a minimum amount of
$1,000,000 (or the entire funded principal amount, if less) or a greater
integral multiple of $500,000.
SECTION 3.2 NOTICE TO PURCHASERS. The Agent shall promptly advise the
Purchasers of any notice received by the Agent pursuant to Section 3.1.
ARTICLE IV TRANCHES, INTEREST AND FEES
SECTION 4.1 TRANCHES. (a) Each time Transferor requests the Purchasers to
make Purchases hereunder, Transferor will notify the Agent in writing as to
whether the Trust Interests included in the Purchase shall, in whole or in part,
be deemed part of the ABR Tranche or (subject to SUBSECTIONS (B)(III) and
(B)(IV) below) a Eurodollar Tranche.
(b) Subject to the terms and conditions set forth in this section and
SECTION 4.4, Transferor shall have the option: (x) on any Business Day, to
convert all or part of the ABR Tranche to a Eurodollar Tranche and (y) on the
last day of any Interest Period of a Eurodollar Tranche, to convert all or any
part of that Eurodollar Tranche to form a part of the ABR Tranche and/or to
continue all or any part of that Eurodollar Tranche as a new Eurodollar Tranche,
the Interest Period for which shall commence on the last day of the prior
Interest Period; PROVIDED, that:
(i) subject to SECTION 4.4, each conversion or continuation shall be
made ratably among the Purchasers in accordance with their respective
amounts of the Purchases comprising the converted or continued Tranche,
(ii) if less than all of the outstanding amount of any Tranche shall
be converted or continued, the aggregate amount of the Tranche converted or
continued shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $2,000,000,
(iii) no outstanding Eurodollar Tranche may be continued as a
Eurodollar Tranche, and no portion of the ABR Tranche may be converted into
a Eurodollar Tranche, at any time that an Early Amortization Event has
occurred and is continuing; and any Interest Period for a Eurodollar
Tranche that commences after the commencement of the Amortization Period
must begin on a Distribution Date and end on the next Distribution Date,
and
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(iv) there shall not be more than twelve separate Eurodollar Tranches
outstanding at any one time.
(c) If Transferor wishes to convert and/or continue a Tranche under this
section, Transferor shall notify the Agent in writing (i) in the case of a
conversion to or continuation of a Eurodollar Tranche, not later than 3:00 p.m.,
New York City time, three Business Days prior to the date of the proposed
conversion or continuation date and (ii) otherwise, not later than noon, New
York City time, one Business Day prior to the date of the proposed conversion or
continuation. Each notice shall be irrevocable and shall refer to this
Agreement and specify (x) the identity and amount of the Tranche that Transferor
wishes to convert or continue, (y) whether all or part of the Tranche is to be
converted into or continued as a Eurodollar Tranche and (z) the date of the
proposed conversion or continuation (which shall be a Business Day). If
Transferor shall not have delivered a timely notice in accordance with this
section with respect to any Tranche, the Tranche shall, at the end of the
Interest Period applicable to it (unless repaid pursuant to the terms hereof),
automatically be converted into or continued as the ABR Tranche. The Agent
shall promptly advise the Purchasers of any notice given pursuant to this
section and of each Purchaser's portion of any converted or continued Tranche.
(d) In accordance with SECTION 4.1 of the Supplement, each Purchaser and
the Agent will be entitled to receive additional interest (at the rate specified
therein) on amounts that are not paid when due under this Agreement or under its
Certificate.
SECTION 4.2 FEES. (a) Each Purchaser shall be entitled to receive from
Collections a fee (a "NON-USAGE FEE") (i) for the period from the Closing Date
up to (but not including) the day corresponding to the Closing Date in the month
falling six months after the month in which the Closing Date occurs (or if there
is no such corresponding day, through the last day of that sixth month), equal
to .40% PER ANNUM, and (ii) thereafter, until the end of the Revolving Period,
equal to .50% PER ANNUM, on the daily average of (i) the Stated Amount of its
Certificate MINUS (ii) the amount represented by the Purchaser's Percentage of
the Invested Amount. The Non-Usage Fee shall be payable in arrears on each
Distribution Date. The Non-Usage Fee for any Distribution Date shall be
calculated on the basis of the actual number of days elapsed since the preceding
Distribution Date (or, if prior to the first subsequent Distribution Date after
the Closing Date, during the period from the Closing Date to such Distribution
Date) over a year of 365 or 366 days, as applicable.
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(b) In addition, Transferor shall pay (i) to each of the initial
Purchasers, on the date of this Agreement, an up-front fee in the amount
specified in the fee letter dated February 23, 1996 from the initial Purchasers
to Treasure Chest and (ii) to the Agent, for its own account, an agency fee,
payable at the times and in the amounts specified in such fee letter.
SECTION 4.3 YIELD PROTECTION. (a) Notwithstanding any other provision
herein, if, after the date hereof, either:
(i) the adoption of any law, rule or regulation (including any
imposition or increase of reserve requirements but in all events,
excluding reserves under Regulation D to the extent included in the
calculation of Reserve Adjusted Eurodollar Rate) or any change after the
date hereof in the interpretation or administration of any law, rule or
regulation by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
(ii) the compliance by a Purchaser with any new or revised guideline
or request from any central bank or other Governmental Authority or quasi-
governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law),
shall subject a Purchaser to the imposition or modification of any reserve
(including any imposed by the Federal Reserve Board), special deposit or similar
requirement (including a reserve, special deposit or similar requirement that
takes the form of a tax) against assets of, deposits with or for the account of,
or credit extended by, the Purchaser or the office from time to time that it
designates to the Agent as the office through which it makes and maintains its
Purchases comprising part of a Eurodollar Tranche (as to each Purchaser, its
"LIBOR Office") or impose any other condition on a Purchaser affecting its
Eurodollar Tranches or its obligations hereunder, and as a result of either of
the foregoing there shall be any increase in the cost to the Purchaser of
agreeing to make or making, funding or maintaining Purchases as Eurodollar
Tranches (except to the extent already included in the determination of the
Reserve-Adjusted Eurodollar Rate), or there shall be a reduction in the amount
received or receivable by the Purchaser or its LIBOR Office, then, upon written
notice from the Purchaser to Transferor and Servicer (with a copy to the Agent),
signed by an officer of the Purchaser with knowledge of and responsibility for
such matters, and setting forth in reasonable detail the calculation used to
arrive at the amounts, the Purchaser shall be entitled to receive such
additional amounts sufficient to indemnify that Purchaser against
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the increased cost or reduction in amounts received or receivable, solely from
amounts allocated thereto and paid pursuant to the Supplement.
(b) If a Purchaser shall reasonably determine that the adoption after the
date hereof of any law, rule or regulation regarding capital adequacy or capital
maintenance, or any change after the date hereof in any of the foregoing or 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 a Purchaser, any of its lending offices
or its holding company with any new or revised request or directive regarding
capital adequacy or capital maintenance (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the Purchaser's capital
or the capital of its holding company as a consequence of this Agreement, the
commitment of such Purchaser to make Purchases or the Purchases made by such
Purchaser pursuant hereto to a level below what the Purchaser or its holding
company could have achieved but for the adoption, change or compliance (taking
into consideration the Purchaser's policies, and the policies of its holding
company, with respect to capital adequacy), then, upon written notice from the
Purchaser to Transferor and Servicer (with a copy to the Agent), signed by an
officer of the Purchaser with knowledge of and responsibility for such matters,
and setting forth in reasonable detail the calculation used to arrive at the
amounts, the Purchaser shall be entitled to receive such additional amounts as
will compensate the Purchaser or its holding company for the reduction, solely
from amounts allocated thereto and paid pursuant to the Supplement.
(c) A Purchaser shall promptly notify Transferor, Servicer and the Agent in
writing of any event of which it has knowledge occurring after the date hereof
that will entitle it to compensation pursuant to this section. A certificate of
the Purchaser, signed by an officer of the Purchaser with knowledge of and
responsibility for such matters, and setting forth in reasonable detail the
calculation used to arrive at the amounts necessary to compensate the Purchaser
or its holding company as specified in SUBSECTION (a) or (b), as the case may
be, shall be delivered to Transferor and Servicer and shall be conclusive absent
demonstrable error.
(d) Failure on the part of a Purchaser to demand compensation for any
amounts as specified in SUBSECTION (a) or (b) with respect to any period shall
not constitute a waiver of its right to demand compensation with respect to that
period or any other period. The protection of this section shall be available to
the Purchasers regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition that shall have occurred or been imposed.
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(e) Promptly after giving any notice to Transferor pursuant to this
section, a Purchaser will seek to designate one of its offices located at an
address other than that previously designated pursuant to this Agreement as the
office from which its Purchases will be made after the designation if it will
avoid the need for, or materially reduce the amount of, any payment to which the
Purchaser would otherwise be entitled pursuant to this section and will not, in
the sole discretion of the Purchaser, be otherwise disadvantageous to the
Purchaser.
SECTION 4.4 ILLEGALITY; UNAVAILABILITY. (a) In the event that on any date
any Purchaser shall have determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
Purchases as Eurodollar Tranches has become unlawful by compliance by the
Purchaser in good faith with any law, governmental rule, regulation or order or
has become impossible as a result of a contingency occurring after the date
hereof that materially and adversely affects its interbank eurodollar market,
then, and in any such event, that Purchaser shall promptly give notice (by
telephone confirmed in writing) to Transferor, Servicer and the Agent (which
notice the Agent shall promptly transmit to each Purchaser) of that
determination. The obligation of the affected Purchaser to make or maintain its
Purchases as Eurodollar Tranches during any such period shall be terminated at
the earlier of the termination of the Interest Period then in effect for each
Eurodollar Tranche or when required by law, and Transferor shall, no later than
the time specified for the termination, convert any Purchases of the affected
Purchaser that constitute part of any Eurodollar Tranche into a part of the ABR
Tranche.
(b) If, prior to the beginning of any Interest Period, the Agent shall have
determined (which determination shall be final and conclusive and binding upon
all parties) that: (i) Dollar deposits in the relevant amount and for the
Interest Period are not available in the relevant interbank eurodollar market or
(ii) by reason of circumstances arising after the date of this Agreement and
affecting the interbank eurodollar market, that adequate and fair means do not
exist for ascertaining the Reserve Adjusted Eurodollar Rate applicable to a
Eurodollar Tranche, then the Agent shall promptly give notice of this
determination to Transferor and to each Purchaser. Thereafter, and continuing
until the Agent shall notify Transferor that the circumstances giving rise to
this determination no longer exist, (x) each Eurodollar Tranche will, on the
last day of the applicable Interest Period, convert into a part of the ABR
Tranche, (y) the right of Transferor to request Eurodollar Tranches shall be
suspended and (z) any Purchases requested to be made as Eurodollar Tranches
prior to such time but not yet made shall be made as ABR Tranches.
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SECTION 4.5 INDEMNITY. If a Purchaser shall incur any losses, expenses or
liabilities (including any interest paid to lenders of funds borrowed by it to
fund any Purchase of a Certificate as a Eurodollar Tranche and any loss
sustained in connection with the re-deployment of such funds) as a result of (a)
the failure of a Purchase to be made on a date specified therefor in a notice
delivered by Transferor pursuant to SECTION 2.2 (other than any such failure
resulting from the Purchaser's default in the performance of its obligations
hereunder) or (b) any repayment, including under SECTION 3.1, of any part of the
Invested Amount allocated to a Eurodollar Tranche on a date that is not the last
day of the Interest Period applicable to that part of the Invested Amount or
that is any date other than the date specified in a notice of repayment given by
Servicer, then, upon written notice (which notice shall be signed by an officer
of the Purchaser with knowledge of and responsibility for such matters and shall
set forth in reasonable detail the basis for requesting the amounts) from the
Purchaser to Transferor and Servicer, additional amounts sufficient to indemnify
the Purchaser against the losses, liabilities and reasonable expenses, but not
for any lost profits associated therewith, shall constitute "Additional Amounts"
for purposes of the Supplement, and the Purchaser shall be entitled to receive
these additional amounts, solely from amounts allocated thereto and paid
pursuant to the Supplement.
SECTION 4.6 TAXES. (a) Any and all payments made to each Purchaser under its
Certificate shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, duties, charges, fees, deductions
or withholdings of any nature and whatever called, by whomsoever, on whomsoever
and wherever imposed, levied, collected, withheld or assessed, EXCLUDING taxes
imposed by the jurisdiction in which (i) that Purchaser is incorporated or (ii)
that Purchaser's principal office (and/or the office where it books its
investment in its Certificate) is located, on all or part of the net income,
profits or gains of that Purchaser (whether worldwide, or only insofar as such
income, profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise) (all the nonexcluded taxes, levies, imposts,
charges, deductions, withholdings and liabilities being hereinafter referred to
as "TAXES"). If Trustee or the Agent are required by law to deduct or withhold
any Taxes from or in respect of any sum payable hereunder or under any
Certificate to a Purchaser, then the sum payable shall be increased by the
amount necessary to yield to such Purchaser (after payment of all Taxes) an
amount equal to the sum it would have received had no such deductions or
withholdings been made, and the additional amount shall constitute "Additional
Amounts" for purposes of the Supplement, and the Purchaser shall be entitled to
receive these additional amounts, solely from amounts allocated thereto and paid
pursuant to the Supplement.
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(b) Whenever any Taxes are paid by Trustee pursuant to SUBSECTION (a), as
promptly as possible thereafter Servicer shall send to the relevant Purchaser
the original or a certified copy of an original official receipt showing payment
thereof (if any) or any other evidence of the payment as may be available to
Servicer through the exercise of its reasonable efforts. If Trustee fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Purchaser the required receipts or other required documentary evidence, the
Purchaser shall be entitled to receive, solely from amounts allocated with
respect thereto and paid pursuant to the Supplement, additional amounts
necessary to indemnify it for any incremental taxes, interest or penalties that
may become payable by the Purchaser as a result of any such failure, and the
amounts shall constitute "Additional Amounts" for purposes of the Supplement,
and the Purchaser shall be entitled to receive these additional amounts, solely
from amounts allocated thereto and paid pursuant to the Supplement.
(c) On or before the date it becomes a party to this Agreement (and, so
long as it may properly do so, periodically thereafter, as requested by
Servicer, to keep forms up to date), each Purchaser, including any Assignee,
that is not a United States person (as defined in section 7701(a)(30) of the
Internal Revenue Code), shall deliver to Trustee any certificates, documents or
other evidence that shall be required by the Internal Revenue Code or Treasury
Regulations issued pursuant thereto to establish that, assuming the Certificates
are properly characterized as indebtedness for Federal income tax purposes, it
is exempt from existing United States Federal withholding (including backup
withholding) requirements, including (i) two original copies of Internal Revenue
Service Form 4224 or successor applicable form, properly completed and duly
executed by the Purchaser or Assignee certifying that it is entitled to receive
payments under this Agreement or any Certificate without deduction or
withholding of any United States Federal income taxes, or (ii) an original copy
of Internal Revenue Service Form W-8 or applicable successor form, properly
completed and duly executed; PROVIDED, that if any Purchaser does not comply
with this SUBSECTION 4.6(c), amounts payable to such Purchaser under this
SECTION 4.6 shall be limited to amounts that would have been payable under this
section if such Purchaser had so complied.
ARTICLE V OTHER PAYMENT TERMS
SECTION 5.1 TIME AND METHOD OF PAYMENT. (a) All amounts payable to any
Purchaser hereunder or with respect to its Certificate shall be made to the
Agent for the account of the Purchaser by wire transfer of immediately available
funds in Dollars not later than 2:00 p.m., New York City time, on the date due.
Any funds received after that time will be deemed to have been received on the
next Business Day. The Agent shall distribute all payments to
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the Purchasers, in accordance with their respective interests, prior to the
close of business on the Business Day on which any payment is deemed received.
(b) On any date on which a payment to one or more Purchasers hereunder or
under the Certificates is due and payable, the Agent may (but in no event shall
be required to) assume that the payment has been made available to the Agent on
the date of the payment in accordance with this section, and the Agent may (but
in no event shall be required to), in reliance upon this assumption, make
payment of a corresponding amount to the Purchasers. If and to the extent any
amounts shall not have so been made available to the Agent, each Purchaser
irrevocably and unconditionally agrees to repay to the Agent forthwith on demand
the amount of payment it received together with interest thereon, for each day
from the date payment is made by the Agent until the date the amount is repaid
to the Agent, (i) for the first three days following the date the payment is
made, at a rate per annum equal to the Federal Funds Rate and (ii) thereafter,
at a rate per annum equal to the Federal Funds Rate PLUS 1%.
SECTION 5.2 PRO RATA TREATMENT. Each repayment of the principal of the
Certificates, (except as otherwise required by SECTION 2.2(c)), each payment of
interest thereon, each payment of the Non-Usage Fee, each reduction of the
Stated Amounts and each conversion or continuation of any Tranche (except as
otherwise required by SECTION 4.4(a) with respect to conversions) shall be
allocated PRO RATA among the Purchasers on the date of payment or reduction, in
accordance with their respective Percentages (unless the Agent has made the
election specified in SECTION 2.2(c), in which case such allocation shall be PRO
RATA in accordance with funded principal amounts). Each Purchaser agrees that
in computing its portion of any Purchases to be made hereunder, the Agent may,
in its discretion, round each Purchaser's PRO RATA share of the Purchases to the
next higher or lower whole dollar amount.
ARTICLE VI REPRESENTATIONS AND WARRANTIES
SECTION 6.1 TRANSFEROR. As of the Closing Date, Transferor represents and
warrants to the Purchasers that each of its representations and warranties in
the Pooling Agreement and Purchase Agreement is true and correct, as if made on
the Closing Date, and further represents and warrants that:
(a)no Early Amortization Event or Unmatured Early Amortization Event
exists;
(b) assuming the accuracy of each Purchaser's representations set out
in SECTION 6.3 and that no Purchaser (and no Person acting on
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any Purchaser's behalf) has made a general solicitation or general
advertising within the meaning of the Securities Act, the offer and sale
of the Certificates in the manner contemplated by this Agreement is a
transaction exempt from the registration requirements of the Securities
Act, and the Pooling Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended; and
(c) no information supplied by or on behalf of Transferor or Big
Flower or any of its Subsidiaries to the Agent or the Purchasers in
connection with the Transaction Documents contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
SECTION 6.2 BIG FLOWER. As of the Closing Date, Big Flower represents and
warrants to the Purchasers that:
(a) each of its representations and warranties in the Pooling
Agreement (in its capacity as Servicer) and the Purchase Agreement (in its
capacity as a Seller) is true and correct, as if made on the Closing Date
with the same effect as if made on that date (unless specifically stated to
relate to an earlier date);
(b) the Pro Forma Financial Data present fairly in all material
respects the PRO FORMA financial position, results of operations and cash
flows of Big Flower and its consolidated Subsidiaries at the dates and for
the periods to which they relate and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
except as otherwise stated therein (except, in the case of quarterly
financial statements, for the omission of footnotes and ordinary year-end
adjustments, none of which, individually or in the aggregate, would be
material);
(c) since December 31, 1995 through to the Closing Date (andexcept as
contemplated in the Pro Forma Financial Data), (i) there has been no
material adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of Transferor or Big
Flower, whether or not arising in the ordinary course of business, and (ii)
there have been no transactions (except the execution and delivery of
Transaction Documents, the Big Flower Credit Agreement and the consummation
of the transactions and refinancings contemplated thereby) entered into by
Transferor or Big Flower that are material with respect to the condition,
financial or
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otherwise, or the earnings, business affairs or business prospects of
Transferor or Big Flower; and
(d) no information supplied by or on behalf of Transferor or Big
Flower or any of its Subsidiaries to the Agent or the Purchasers in
connection with the Transaction Documents contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
SECTION 6.3 PURCHASERS. As of the Closing Date (or such later date on which
it acquires its Certificate in accordance with SECTION 10.3), each Purchaser
represents and warrants (and each Assignee shall be deemed to represent and
warrant as of the date that its assignment becomes effective) that:
(a) it is a "qualified institutional buyer" as that term is
defined under Rule 144A of the Securities Act (or, in the case of an
Assignee,a "qualified institutional buyer" as that term is defined under
Rule 144A of the Securities Act or an "accredited investor" within
the meaning of Rule 501(a) (1), (2), (3) or (7) of the Securities Act) and
it is not purchasing its Certificate with a view to making a distribution
thereof (within the meaning of the Securities Act); and
(b) it is not a pension, profit sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1975, as amended.
ARTICLE VII CONDITIONS
SECTION 7.1 CONDITIONS TO INITIAL PURCHASE. The obligation of each
Purchaser to Purchase its Certificate shall be subject to the satisfaction of
the conditions precedent that (x) the Agent shall have received, for the account
of such Purchaser, a duly executed and authenticated Certificate registered in
its name and in a Stated Amount equal to the amount set out opposite its name on
the signature pages of this Agreement, (y) the Agent shall have received
certain fees and reimbursement of any expenses referred to in SECTION 10.5 for
which invoices have been presented and (z) the Agent shall have received, for
the account of such Purchaser, an original (except as indicated below)
counterpart of the following (each of which, if not in a form attached to this
Agreement, shall be in form and substance satisfactory to the Agent):
(a) the Pooling Agreement, the Purchase Agreement and the Guaranty,
each of which shall be in full force and effect, and all actions
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required to be taken under those documents in connection with the issuance
of the Certificates shall have been taken;
(b) copies of each Account Agreement;
(c) a certificate of the Secretary, or an Assistant Secretary, of each of
Transferor, Servicer, Guarantor and each Seller with respect to:
(i) attached copies of resolutions of its Board of Directors
then in full force and effect authorizing the execution, delivery and
performance of the Transaction Documents,
(ii) the incumbency and signatures of those of its officers
authorized to act with respect to the Transaction Documents,
(iii) attached copies of its certificate of incorporation and
by-laws;
(d) a certificate of an Authorized Officer of each of Transferor, Servicer,
Guarantor and each Seller as to the satisfaction of the conditions precedent set
forth in SECTION 7.2,
(e) a certificate of an appropriate officer of Trustee stating that the
Pooling Agreement has been duly authorized, executed and delivered by Trustee
and the Certificates have been duly authenticated by Trustee in accordance with
the Pooling Agreement and an opinion of counsel to Trustee as to related
matters;
(f) the Daily Report for the Closing Date;
(g) copies of any management or other agreements with regard to the
administration of Transferor's business, certified by an Authorized Officer of
Transferor;
(h) a pro forma balance sheet of Transferor as of the date hereof, after
giving effect to the transactions contemplated by the Supplement;
(i) confirmation satisfactory to the Agent that the following have been
placed with Lexis Document Services or another filing service selected by the
Agent for filing, the filing to occur on the Closing Date or the first Business
Day thereafter:
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(i) UCC financing statements naming each Seller, as seller/debtor, and
Transferor, as secured party/purchaser, in each office where the filing is
necessary for the perfection of the sales or contribution of Receivables
and Related Transferred Assets by each Seller to Transferor;
(ii) assignments of such existing UCC financing statements to Trustee,
as assignee of the secured party, in each office where the filing is
necessary for the perfection of the sales of Receivables and Related
Transferred Assets by each Seller to Transferor; and
(iii) UCC financing statements naming Transferor, as seller/debtor,
and Trustee, as secured party, in each office where the filing is necessary
for the perfection of the transfers of Receivables, Related Assets and
other Transferred Assets by Transferor to Trustee;
(j) results of recent searches of the UCC filing records and tax and ERISA
and judgment lien records in each jurisdiction in which a filing referred to in
SUBSECTION (i) is to be made for filings against each Seller (including any
predecessors in interest to any Seller going back five years) and Transferor,
showing no filings of record that cover any of the Receivables or the Related
Transferred Assets other than (i) the financing statements referred to in
SUBSECTION (i) (to the extent shown in the searches) and (ii) any other filings
as to which the Agent has received signed UCC-3 termination statements or pay-
off letters in form and substance satisfactory to it;
(k) the following opinions addressed to the Agent, the Purchasers and
Trustee, and in each case as to the matters and in such form and substance as
shall be satisfactory to the Agent, the Purchasers and Trustee:
(i) opinions of Skadden, Arps, Slate, Meagher & Flom as to certain
corporate and securities matters, Federal and state tax and UCC matters,
true sale and non-consolidation; and
(ii) an opinion of Ira Horowitz, general counsel to Webcraft
Technologies, Inc. as to certain corporate, state tax and UCC matters;
(iii) an opinion of Hunton & Williams, as to Maryland law issues;
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(iv) opinions of Jones, Day, Reavis & Pogue, as to Texas and
Pennsylvania law issues; and
(v) an opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, as
to New Jersey law issues.
(l) a solvency certificate of the chief financial Authorized Officer
of Big Flower with respect to the Sellers, which certificate shall be
addressed to the Agent and the Purchasers and shall be in form and
substance satisfactory to the Agent;
(m) an agreed-upon procedures letter, in form and substance
satisfactory to the Agent, from Deloitte & Touche, with respect to certain
historical information provided by Big Flower and the Sellers relating to
the Receivables, and a form of agreed-upon procedures letter, in form and
substance satisfactory to the Agent, as to the reports to be delivered
under Section 3.7 of the Pooling Agreement;
(n) evidence that the acquisition of Webcraft Technologies, Inc. and
related merger transactions have been completed;
(o) a certificate of the Secretary of Big Flower to the effect that
the conditions precedent to the effectiveness of the Big Flower Credit
Agreement and any necessary amendments to other debt documents shall have
been satisfied or waived;
(p) such sublicenses and assignments as the initial Purchasers shall
require with regard to all computer and data recovery software used by
Servicer or any Seller in connection with the servicing of the Transferred
Assets, which sublicenses and assignments will permit any substitute
Servicer to use such software;
(q) a certificate of an Authorized Officer of Transferor, evidencing
the capitalization of Transferor (the amount and type of which shall be
satisfactory to the Agent);
(r) evidence that Big Flower and Transferor shall have engaged a
person or entity acceptable to the initial Purchasers to arrange the
refinancing of Certificates on such terms and conditions as are acceptable
to the initial Purchaser (such acceptance in each case not to be
unreasonably withheld);
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(s) evidence that Transferor shall have approved the Information
Memorandum dated March 1996 which refers to Transferor and Big Flower; and
(t) any other information, certificates, opinions and documents as the
Agent may have reasonably requested.
If the conditions specified above have not been fulfilled on the date
hereof, any condition specified in this Agreement shall not have been
fulfilled when and as required in this Agreement or waived by the Purchasers,
in each case a Purchaser's obligations to purchase the Certificates pursuant
to this Agreement may be terminated by notice to Transferor. In addition, if,
under the circumstances, it shall not be feasible for the Purchasers to
invest on the date the funds that are held available by the Purchasers for
the Purchase, Transferor shall pay the Purchasers interest on the funds at
the Alternate Base Rate from the date of the notice until the next succeeding
Business Day on which it is feasible for the Purchasers to invest the funds.
Nothing in this paragraph shall operate to relieve Transferor from any of its
obligations hereunder or otherwise waive any of the Purchasers' rights
against Transferor.
SECTION 7.2 CONDITIONS TO EACH PURCHASE. The obligation of each Purchaser
to make any Purchase on any day (including those comprising the initial
Purchase) shall be subject to the Agent's receipt of the Daily Report for
that day and to the conditions precedent that on the date of the Purchase,
before and after giving effect thereto and to the application of any proceeds
therefrom, the following statements shall be true:
(a) the representations and warranties of Transferor and Big Flower
set out in this Agreement (other than in SECTION 6.2(b) or (c)) are true and
accurate as of that date with the same effect as though made on that date
(unless specifically stated to relate to an earlier date); and
(b) no Early Amortization Event or Unmatured Early Amortization Event
has occurred and is continuing.
The giving of any notice pursuant to SECTION 2.2 shall constitute a
representation and warranty by Transferor and Big Flower that the foregoing
statements (limited, in the case of SUBSECTION (a) to the representations and
warranties of the Person deemed to make the representation and warranty referred
to in this sentence) are true.
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ARTICLE VIII COVENANTS
SECTION 8.1 AFFIRMATIVE COVENANTS. Transferor and Big Flower each severally
covenant and agree that, until the Certificates have been paid in full, it will:
(a) duly and timely perform all of its covenants and obligations under
each Transaction Document to which it is a party;
(b) with reasonable promptness deliver to each Purchaser such
information, documents, records or reports respecting the Program or the
Receivables as the Purchaser may from time to time reasonably request;
(c) at the same time any report (including any Daily Report, Monthly
Report or annual auditors' report), notice or other document is provided,
or caused to be provided, by Transferor or Servicer to Trustee under the
Pooling Agreement, provide each Purchaser with a copy of the report;
(d) if requested by the Purchasers, cause the Certificates to be rated
by one or two nationally recognized rating agencies, at the expense of
Servicer paid out of the Servicing Fee;
(e) during regular business hours and (so long as no Early
Amortization Event has occurred and is continuing) upon two Business Days
prior written notice, permit the Agent or the Co-Agent (or such other
Person as the Agent or Co-Agent, as the case may be, may designate from
time to time), or their respective agents or representatives (including
certified public accountants or other auditors), as the expense of the
Purchasers, (i) to examine and make copies of and abstracts from, and to
conduct accounting reviews of, all Records in the possession or under the
control of Servicer, Transferor or any Seller, including the related
Contracts and purchase orders, invoices and other agreements related
thereto, and (ii) to visit the offices and properties of Servicer,
Transferor or any Seller for the purpose of examining such materials
described in CLAUSE (i), and to discuss matters relating to the Receivables
or the Related Transferred Assets or the performance by Servicer,
Transferor or any Seller of their respective obligations under any
Transaction Document with any officer, employee or representative of
Servicer, Transferor or any Seller. The Agent may (but shall not be
obligated to) conduct, or cause its agents or representatives to conduct,
reviews of the types described in this paragraph (each such review, a
"RECEIVABLES REVIEW") whenever
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the Agent or the Co-Agent, in its reasonable judgment, deems any such review
appropriate.
SECTION 8.2 NEGATIVE COVENANTS. (a) Notwithstanding SECTION 1.7 of the
Purchase Agreement, Big Flower shall not cause or permit any Subsidiary of Big
Flower to become a new Seller unless the Required Purchasers have consented in
writing to that addition.
(b) Transferor covenants and agrees that it will not, and Big Flower
covenants and agrees that it will not and will not permit any of its
Subsidiaries to, use any proceeds of Certificates purchased by Bankers Trust
Company to purchase any WTI Senior Subordinated Notes (as such term is defined
in the Big Flower Credit Agreement).
(c) Transferor covenants and agrees that, until the Certificates have been
paid in full, it will not allow (i) to be outstanding over 96 Private Holders of
Subject Instruments and (ii) any Subject Instruments to be traded on an
Established Securities Market, registered under the Securities Act or offered or
sold pursuant to Regulation S (17 CFR 230.901 through 230.904 or any successor
thereto) if such offering or sale would have been required to be registered
under the Securities Act if the interests so offered or sold had been offered
and sold within the United States.
SECTION 8.3 TRANSFERS. Each Purchaser represents that neither it nor any
Person acting on its behalf has made a general solicitation or general
advertising, within the meaning of the Securities Act and the rules and
regulations thereunder, for the offer or sale of the Certificates. Each
Purchaser further agrees that it will not make any general solicitation or
general advertising for the offer or sale of the Certificates and will not
transfer its Certificate (or any portion thereof) to any Person unless such
Person shall have provided the Trustee and Transferor with a certificate to the
effect that such Person: (a) is a "qualified institutional buyer" as that term
is defined under Rule 144A of the Securities Act or an "accredited investor"
within the meaning of Rule 501(a) (1), (2), (3) or (7) of the Securities Act and
is not purchasing its Certificate with a view to making a distribution thereof
(within the meaning of the Securities Act) and (b) is not a pension, profit
sharing or other employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended.
ARTICLE IX AGENT; REQUIRED PURCHASERS
SECTION 9.1 APPOINTMENT. The Purchasers hereby designate Bankers Trust
Company as Agent. Each Purchaser hereby irrevocably authorizes the Agent to
take action on its behalf under the provisions of the Transaction
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Documents and any other instruments and agreements referred to therein and to
exercise the powers and perform the duties hereunder and thereunder that are
specifically delegated to or required of the Agent by the terms hereof and
thereof, and any other powers as are reasonably incidental thereto. The Agent
may perform any of its duties by or through its officers, directors, agents or
employees.
SECTION 9.2 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement. Neither the
Agent nor any of its officers, directors, agents or employees shall be liable
for any action taken or omitted by it or them under any Transaction Document or
in connection herewith or therewith, unless caused by their gross negligence or
willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature, the Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Purchaser, and nothing in any
Transaction Document, expressed or implied, is intended to or shall be construed
as to impose upon the Agent any obligations in respect of any Transaction
Document except as expressly set forth herein.
SECTION 9.3 LACK OF RELIANCE ON AGENT AND FINANCIAL ADVISOR. Independently
and without reliance upon the Agent or the Financial Advisor, each Purchaser, to
the extent it deems appropriate, has made and shall continue to make (a) its own
independent investigation of the financial condition and affairs of Transferor,
the Sellers, Servicer, Guarantor and the Trust in connection with the making and
the continuation of each Purchase and the taking or not taking of any action in
connection herewith and (b) its own appraisal of the creditworthiness of
Transferor, the Sellers, Servicer and Guarantor and the merits and risks of an
investment in the Certificates, and, except as expressly provided in this
Agreement, the Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to provide any Purchaser with any credit or other
information with respect thereto, whether coming into its possession before the
making of a Purchase or at any time or times thereafter. The Agent shall not be
responsible to any Purchaser for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of the Transaction Documents or the financial condition of
Transferor, the Sellers, Servicer, Guarantor or the Trust or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of any Transaction Document, or the financial condition
of Transferor, the Sellers, Servicer, Guarantor or the Trust or the existence or
possible existence of any Early Amortization Event or Unmatured Early
Amortization Event.
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SECTION 9.4 CERTAIN RIGHTS OF AGENT. If the Agent shall request
instructions from the Required Purchasers with respect to any act or action
(including failure to act) in connection with any Transaction Document, the
Agent shall be entitled to refrain from acting or taking the action unless and
until the Agent shall have received instructions from the Required Purchasers,
and the Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Purchaser shall have any right
of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting under any Transaction Document in accordance with the
instructions of the Required Purchasers or for refraining to act in the absence
of instruction.
SECTION 9.5 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person. The Agent may
consult with legal counsel (including counsel for any Big Flower Person),
independent public accountants and other experts selected by the Agent and shall
not be liable for any action taken or omitted to be taken in accordance with the
advice of such counsel, accountants or experts.
SECTION 9.6 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by Transferor or Servicer, the Purchasers will reimburse and
indemnify the Agent ratably in accordance with their respective Percentages from
and against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses or disbursements of
whatsoever kind or nature that may be imposed on, asserted against or incurred
or suffered by the Agent (including fees and expenses of legal counsel,
accountants and experts) in performing its duties or as a result of any action
taken or omitted to be taken by the Agent under any Transaction Document or in
any way relating to or arising out of any Transaction Document; PROVIDED that no
Purchaser shall be liable for any portion of these liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, costs, expenses
or disbursements resulting from the Agent's gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
non-appealable order).
SECTION 9.7 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to purchase a Certificate under this Agreement, the Agent shall have
the rights and powers specified herein for a Purchaser and may exercise the same
rights and powers as though it were not performing the duties of the "Agent"
specified herein, and the term "Purchasers," "Required Purchasers" and "Holders"
or "payees" of any Certificates or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its
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individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with Transferor or Servicer or any Big Flower Person as if the Agent were not
performing the duties specified herein, and may accept fees and other
consideration from Transferor or Servicer for services in connection with this
Agreement and otherwise without having to account for the same to the
Purchasers. Each of the parties hereto acknowledges that the Agent will be
acting both as agent and as lender under the Big Flower Credit Agreement and as
a Purchaser and the Agent under this Agreement.
SECTION 9.8 RESIGNATION BY AGENT. (a) The Agent may resign at any time by
giving notice to Transferor and the Purchasers. Such resignation shall take
effect upon the appointment of a successor Agent pursuant to SUBSECTIONS (b) and
(c) below or as otherwise provided below.
(b) Upon any notice of resignation of the Agent, the Required Purchasers
shall appoint a successor Agent hereunder who shall be a commercial bank or
trust company reasonably acceptable to Transferor (it being understood and
agreed that any Purchaser is deemed to be acceptable to Transferor).
(c) If a successor Agent is not appointed pursuant to SUBSECTION (b) within
30 days after the delivery of the notice referred to in SUBSECTION (a), the
resigning Agent, with the consent of Transferor, shall then appoint a successor
Agent who shall serve as Agent hereunder until the time, if any, that the
Required Purchasers appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to SUBSECTION (b) or
(c) above by the 60th day after the date notice of resignation was given by the
resigning Agent, such Agent's resignation shall become effective and the
Purchasers shall thereafter perform all the duties of the Agent under the
Transaction Documents until the time, if any, that the Purchasers appoint a
successor Agent as provided above.
SECTION 9.9 REQUIRED PURCHASERS. "REQUIRED PURCHASERS" means (i) for
purposes of SECTIONS 6.2 and 8.4 of the Supplement, Purchasers having
Percentages that aggregate at least 66 2/3%, and (ii) otherwise, Purchasers
having Percentages that aggregate over 50%; PROVIDED, HOWEVER, that if at any
time there shall be only two Purchasers, then "REQUIRED PURCHASERS" shall mean
(x) either Purchaser (so long as such Purchaser has a Percentage at least equal
to 40%), for purposes of instructing the Trustee to declare that the Early
Amortization Period has commenced pursuant to Section 6.2 of the Supplement, and
(y) otherwise, both such Purchasers; and PROVIDED FURTHER that
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for purposes of the foregoing proviso, a Structured Lender and its Support Banks
shall be deemed to be a single Purchaser.
SECTION 9.10 DUTIES AND RIGHTS OF CO-AGENT. Credit Suisse, in its capacity
as Co-Agent, shall have no rights, duties or responsibilities hereunder, except
as set forth in SECTION 8.1(e).
ARTICLE X MISCELLANEOUS PROVISIONS
SECTION 10.1 AMENDMENTS. Except as provided in SECTION 13.1(a) or (b) of
the Pooling Agreement, neither Transferor nor Big Flower shall amend, waive or
otherwise modify any provision of any Transaction Document to which it is a
party, consent to any departure therefrom, or grant any waiver or consent
thereunder, unless the same shall have been consented to in writing by the
Required Purchasers prior to the effectiveness of the same; PROVIDED, HOWEVER,
that no amendment shall (a) decrease in any manner the amount of, or delay the
timing of, any allocation, payment or distribution in respect of any Certificate
without the prior written consent of each Purchaser affected thereby, (b) amend,
modify or waive any provision of this Agreement that requires the approval or
consent of a specified percentage of Purchasers without the prior written
consent of that percentage of Purchasers, (c) amend, modify or waive the
provisions of this section with respect to the rights of any Purchaser without
the consent of that Purchaser, (d) waive any Early Amortization Event arising
from a Bankruptcy Event with respect to Transferor, Big Flower or any Seller
without the consent of each Purchaser, (e) amend or modify the Percentage of any
Purchaser without its prior written consent, (f) waive any of the requirements
hereunder that the interests of Trustee in the Receivables and the other
Transferred Assets be perfected by appropriate UCC filings without the prior
written consent of each Purchaser or (g) amend, modify or otherwise affect the
rights or duties of the Agent hereunder without the prior written consent of the
Agent; PROVIDED FURTHER that neither the execution and delivery of a Supplement
relating to a refinancing of the Certificates as contemplated by SECTION 4.9 of
the Supplement relating to the Certificates, nor any other amendment to the
Transaction Documents in connection with such a refinancing, shall require any
consent from any Purchaser, so long as the prior or contemporaneous repayment in
full of the Certificates in accordance with SECTION 5.2 of the Supplement
relating to the Certificates is a condition to the issuance of the refinancing
certificates, and of the effectiveness of such related amendment. Each Purchaser
shall be bound by any modification, waiver or consent authorized by this
section.
SECTION 10.2 NO WAIVER; REMEDIES. Any waiver, consent or approval given by
any party hereto shall be effective only in the specific instance and for the
specific purpose for which given, and no waiver by a
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party of any breach or default under this Agreement shall be deemed a waiver of
any other breach or default. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder,
or any abandonment or discontinuation of steps to enforce the right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other right. No notice to or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in the same, similar
or other circumstances. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 10.3 SUCCESSORS AND ASSIGNS; ASSIGNMENTS. (a) This Agreement shall
be binding upon, and inure to the benefit of, Transferor, Servicer, the Agent,
the Purchasers and their respective successors and assigns; PROVIDED that
neither Transferor nor Servicer may assign its rights or obligations hereunder
or in connection herewith or any interest herein (voluntarily, by operation of
law or otherwise) without the prior written consent of all the Purchasers,
except that Servicer may be terminated in accordance with SECTIONS 10.1 and 10.2
of the Pooling Agreement; and PROVIDED FURTHER, that no Purchaser or Participant
may transfer, pledge, assign, sell participations in or otherwise encumber its
rights or obligations hereunder or any interest herein except as permitted under
this section.
(b) No transfer, assignment or other conveyance of a Certificate, other
than a transfer, assignment or other conveyance by Greenwich Funding Corporation
to a Permitted Transferee, shall be made unless the aggregate outstanding
principal amount transferred pursuant to such transfer is equal to at least 2.1%
of the aggregate principal amount of all outstanding Certificates. No
Certificate may be subdivided into an aggregate principal amount of less than
2.1% of the aggregate principal amount of all outstanding Certificates (other
than as a direct result of a transfer, assignment or other conveyance by
Greenwich Funding Corporation to a Permitted Transferee). Subject to the terms
of SECTION 10.3(f), each Purchaser may at any time sell to one or more banks or
other entities ("PARTICIPANTS") participating interests in all or any portion of
its Certificate and its obligations hereunder (its "CREDIT EXPOSURE"); provided
that such Participant shall have certified to the selling Purchaser that such
Participant is a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) or an "accredited investor" within the meaning of Rule
501(a) (1), (2), (3) or (7) of the Securities Act. In the event of any sale by a
Purchaser of participating interests to a Participant, the Purchaser shall
notify Transferor of the identity of the Participant upon a request by
Transferor, the Purchaser's obligations under this Agreement shall remain
unchanged, the Purchaser shall remain solely responsible for the performance
thereof, and the Purchaser shall remain the holder of its rights under its
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Certificate and this Agreement for all purposes under this Agreement, and the
other parties to the Transaction Documents shall continue to deal solely and
directly with the Purchaser in connection with such rights and obligations under
this Agreement. If the proposed Participant is not a Permitted Transferee, prior
to any rights of such Participant being recognized hereunder or under any other
Transaction Document or Certificates the Purchaser shall provide, or shall cause
such Participant to provide, to Transferor such information as Transferor
reasonably requests to make the determination required by SECTION 10.3(f).
Transferor agrees that each Participant shall be entitled to the benefits of
SECTIONS 4.3, 4.5 and 4.6 with respect to its participation in the Certificate.
The Purchasers agree that any agreement between them and any Participant in
respect of a participating interest shall (x) contain a covenant of the
Participant not to make any general solicitation or general advertising for the
offer or sale of its interest in the Certificates, (y) require the Participant
to comply with the terms of SECTION 10.13 and (z) not restrict the Purchasers'
right to agree to any amendment, supplement or modification of the Transaction
Documents except to (i) extend the final maturity of any obligation, (ii) reduce
the rate or extend the time of payment of interest thereon or any fees owed to
the Purchasers under the Transaction Documents, (iii) reduce the principal
amount of any obligation, (iv) release or direct the release of all or
substantially all of the Transferred Assets or Trustee's claim to the
Transferred Assets, (v) reduce substantially the amount of any reserve included
in the calculation of the Base Amount, (vi) increase the amount of the
participation from the amount thereof then in effect, or (vii) permit assignment
or transfer by Transferor or any Seller of its rights or obligations under the
Transaction Documents.
(c) Subject to the terms of SECTION 10.3(f), any Purchaser may at any time
assign to any Permitted Transferee or to one or more banks or other financial
institutions (each, an "Assignee") all or any part of its Credit Exposure;
PROVIDED that (i) unless assigned to an Affiliate of the Purchaser or to a
Permitted Transferee, it assigns all of its Credit Exposure or a portion of its
Credit Exposure in an amount not less than $10,000,000, (ii) such Assignee,
other than an existing Purchaser, an Affiliate of the Purchaser or a Permitted
Transferee, must be reasonably acceptable to the Agent and Transferor, which
acceptance shall not be delayed or withheld unreasonably, (iii) if such Assignee
is not a United States person (as defined in section 7701(a)(30) of the Internal
Revenue Code), such Assignee shall satisfy the requirements of SECTION 4.6(c),
PROVIDED, that if such Assignee thereafter fails to comply with the requirements
of SECTION 4.6, amounts payable to it under SECTION 4.6 shall be limited to
amounts that would be payable if such Assignee had complied with SECTION 4.6(c),
and (iv) such Assignee shall have certified to the assigning Purchaser that such
Assignee is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) or an institutional
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accredited investor within the meaning of Rule 501(a) (1), (2), (3) or (7) of
the Securities Act. For purposes of this SECTION 10.3, a "Permitted Transferee"
means Credit Suisse or any other Person listed on the letter from Credit Suisse
to Transferor and the Agent dated the Closing Date, as such list may be
augmented from time to time with the consent of Transferor and the Agent;
PROVIDED, HOWEVER, that the aggregate number of Permitted Transferees at any
time shall not exceed four . In the event of any assignment, the Purchaser (x)
shall comply with ARTICLE VI of the Pooling Agreement; PROVIDED that no Opinion
of Counsel shall be required to be delivered pursuant to SECTION 6.3(e) of the
Pooling Agreement with respect to any transfer to a Permitted Transferee, and
(y) shall give notice to Transferor and the Agent and shall deliver to the
Agent, for acceptance and recording in its records, an assignment agreement
substantially in the form of EXHIBIT D together with a processing and
recordation fee of, in the case of assignments to a Purchaser or an Affiliate of
a Purchaser, $1,500 and, in cases of any other assignment, $3,500; PROVIDED,
that no processing and recordation fee shall be payable in connection with any
assignment by Greenwich Funding Corporation to a Permitted Transferee. Within
five Business Days of receipt thereof, the Agent shall, if the assignment
agreement has been fully executed by the Assignee and the assignor Purchaser, is
completed and is in substantially the form of EXHIBIT D, execute the assignment
agreement and record the information contained therein in its records. Upon the
earlier of the expiration of the five Business Day period or the date of the
recording, the assignment will become effective; PROVIDED, that any assignment
by Greenwich Funding Corporation to a Permitted Transferee shall not require
acceptance or recording by the Agent or Transferor prior to effectiveness and
shall become effective immediately upon receipt by the Agent of an assignment
agreement appropriately completed in substantially the form of EXHIBIT D and
executed by Greenwich Funding Corporation and the applicable Permitted
Transferee. Transferor, the Agent and the Purchasers agree to extend the rights
and benefits under this Agreement to the Assignee to the extent the Assignee
would have had if it were a Purchaser that was an original signatory to this
Agreement; PROVIDED, that Transferor shall be entitled to continue to deal
solely and directly with the assignor Purchaser in connection with the interests
so assigned to the Assignee until the assignment agreement and any required fee,
as described above, shall have been delivered to the Agent by the Purchaser and
the Assignee and the assignment shall have become effective; PROVIDED, FURTHER,
that notwithstanding anything herein or in the assignment agreement, the
Transaction Documents or any Certificate to the contrary, an assignment to an
existing Purchaser or an Affiliate of the assigning Purchaser (other than to a
Permitted Transferee) shall not become effective, an Assignee (other than a
Permitted Transferee) shall not be recognized as a Purchaser and no other rights
of an Assignee hereunder or under any other Transaction Document or Certificate
shall be recognized unless and until the assigning Purchaser shall have
provided, or caused the
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Assignee to provide, to Transferor such information as Transferor reasonably
requests to make the determinations required by SECTION 10.3(f). Upon the
effective assignment of its Credit Exposure, the Purchaser shall be relieved of
its obligations hereunder to the extent of the assignment.
(d) The sale or assignment of any Credit Exposure to any Assignee or
Participant (each, a "TRANSFEREE") shall not be effective until it has agreed to
be bound by the provisions of SECTION 10.13. Transferor and Big Flower each
authorize the Purchasers to disclose to any Transferee and any prospective
Transferee any and all information in their possession concerning Transferor,
Big Flower, Treasure Chest or any other Seller that has been delivered to them
by Transferor, Big Flower, Treasure Chest, any other Seller or Trustee in
connection with their credit evaluation of the Program prior to entering into
this Agreement.
(e) Notwithstanding any other provision set forth in this Agreement, the
Purchasers may at any time create a security interest in all or any portion of
their rights under this Agreement and the Certificates in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
(f) No transfer, assignment or other conveyance of, or sale of a
participation interest in, a Certificate (other than by Greenwich Funding
Corporation to a Permitted Transferee) shall be made unless (i) the aggregate
outstanding principal amount of all Certificates transferred, or in which a
participation interest is sold, pursuant to such transfer or sale is equal to a
principal amount of Certificates that would represent at least 2.1% of the total
interests in partnership capital or profits, within the meaning of Treasury
Regulation Section 1.7704-1, and (ii) after giving effect thereto, there shall
be no more than 96 Private Holders of Subject Instruments, as reasonably
determined by Transferor. No Certificate may be subdivided into an aggregate
principal amount that would represent less than 2.1% of the total interest in
partnership capital or profits as determined pursuant to the preceding sentence.
Any attempted transfer, assignment, conveyance, participation or subdivision in
contravention of the preceding restrictions, as reasonably determined by the
Transferor, shall be void ab initio and the purported transferor, seller or
subdivider of such Certificate shall continue to be treated as the
Certificateholder of any such Certificate for all purposes of this Agreement.
(g) Each Affected Party with respect to each Purchaser shall be entitled to
receive additional payments pursuant to Sections 4.3, 4.5, 4.6, and 10.5 as
though it were a Purchaser and such Sections applied to its interest in a
Certificate or commitment to make or acquire interests in Purchases; PROVIDED
that such Affected Party shall not be entitled to additional payments
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pursuant to SECTION 4.6 attributable to its failure to satisfy the requirements
of SUBSECTION 4.6(c) as if it were an Assignee.
(h) Each Affected Party claiming increased amounts described in SECTIONS
4.3, 4.5, 4.6 or 10.5 shall furnish, through its related Purchaser, to the
Trustee, the Agent, Servicer and Transferor a certificate setting forth in
reasonable detail the basis and amount of each request by such Affected Party
for any such amounts referred to in such Section, which certificate will be
prepared in accordance with the requirements of such Section (if any).
Determinations by an Affected Party of any increased amounts referred to in such
Sections shall be conclusive, absent demonstrable error. Each Affected Party
shall promptly notify, through its related Purchaser, the Trustee, the Agent,
Servicer and Transferor of the occurrence of any event of which such Affected
Party is aware that would be likely to result in a demand for compensation
pursuant to SECTION 4.3, 4.5, 4.6 or 10.5.
(i) In connection with any proposal that a bank or other financial
institution become a Support Bank for a Purchaser which is a Structured Lender,
such Purchaser at its sole discretion, shall be entitled to distribute to any
proposed Support Bank on a confidential basis any information furnished to such
Purchaser by the Agent pursuant to the Transaction Documents. Each Purchaser
which is a Structured Lender shall promptly notify the Agent (who shall promptly
notify Transferor) in writing of the identity and interest of each Support Bank
for such Purchaser promptly upon the obtaining of such Support Bank. Such
Purchaser shall provide to the Agent (who shall, upon request, provide copies of
the same to Transferor, Servicer and the Trustee), with respect to each Support
Bank, such forms as would be required to be furnished by such Support Bank
pursuant to SUBSECTION 4.6(c) if such Support Bank were an Assignee.
(j) Big Flower agrees to assist the Agent in any marketing of the Series
1996-1 Certificates, or any other Certificates or Purchased Interests issued or
sold in a restructuring of the transactions contemplated in the Transaction
Documents, and Big Flower agrees (promptly upon request) to review any related
marketing materials and to provide all reasonably available information deemed
necessary by the Agent in such marketing. In addition, Big Flower will use its
best efforts to make appropriate officers and representatives of Big Flower
available to participate in the information meetings for potential investors at
such times and places as the Agent may reasonably request. Transferor will
cooperate with Big Flower and the Agent in the matters described in this
paragraph.
SECTION 10.4 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made herein and in the Certificates delivered
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<PAGE>
pursuant hereto shall survive the making and the repayment of the Purchases and
the execution and delivery of this Agreement and the Certificates and shall
continue in full force and effect until all obligations have been paid in full
and all commitments of the Purchasers hereunder have been terminated. In
addition, the obligations of Transferor under SECTIONS 4.2, 4.3, 4.4, 4.6 and
10.5 and the obligations of the Purchasers under SECTION 9.6 shall survive the
termination of this Agreement.
SECTION 10.5 EXPENSES; INDEMNIFICATION. Transferor and Big Flower jointly
and severally shall pay on demand (a) all reasonable out-of-pocket fees and
expenses (including reasonable attorneys' fees and expenses) of the Agent
incurred in connection with the preparation, execution, delivery,
administration, amendment, modification and waiver of the Transaction Documents
and the making and repayment of the Purchases, including any Servicer or
collection agent fees paid to any third party for services rendered to the
Purchasers and the Agent in collecting the Receivables and (b) all reasonable
out-of-pocket fees and expenses of the Purchasers and the Agent (including
reasonable attorneys' fees and expenses of their counsel) incurred in connection
with the enforcement of the Transaction Documents against Transferor, Servicer,
Guarantor and the Sellers and in connection with any workout or restructuring of
the Transaction Documents; PROVIDED, that Transferor and Big Flower shall not be
required to reimburse the Agent for attorneys' fees incurred in connection with
the preparation, execution and delivery of the Transaction Documents on the
Closing Date in excess of $300,000. In addition, Transferor will pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing, recording or enforcement of this Agreement
or any payment made under the Transaction Documents, and hereby indemnifies and
saves the Agent and the Purchasers harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay the taxes and fees. Transferor and Big Flower jointly and severally agree to
reimburse and indemnify the Agent and each Purchaser and their respective
officers, directors, shareholders, controlling Persons, employees and agents
(collectively, the "INDEMNITEES") from and against any and all actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature that
may be imposed on, asserted against or incurred or suffered by the Agent or the
Purchasers (including fees and expenses of legal counsel, accountants and
experts) in any way relating to or arising out of any Transaction Document.
Notwithstanding the foregoing (and with respect to CLAUSE (x) below,
without prejudice to the rights that an Indemnitee may have pursuant to the
other provisions of the Transaction Documents), in no event shall any Indemnitee
be indemnified against any amounts (w) resulting from gross negligence or
willful misconduct by it or on the part of any of its officers,
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<PAGE>
directors, employees or agents, (x) to the extent they include amounts in
respect of Receivables and reimbursement therefor that would constitute credit
recourse to Servicer for the amount of any Receivable or Related Transferred
Asset not paid by the related Obligor, (y) to the extent they are or result from
lost profits or (z) to the extent they would constitute consequential, special
or punitive damages.
If for any reason the indemnification provided in this section is
unavailable to an Indemnitee or is insufficient to hold it harmless, then
Transferor and Big Flower jointly and severally shall contribute to the amount
paid by the Indemnitee as a result of any loss, claim, damage or liability in a
proportion that is appropriate to reflect not only the relative benefits
received by the Indemnitee on the one hand and Transferor and Big Flower on the
other hand, but also the relative fault of the Indemnitee (if any), Transferor
and Big Flower and any other relevant equitable considerations; PROVIDED that
Transferor's obligations under this section shall be paid by Transferor only to
the extent that funds are available to make the payments pursuant to Article IV
of the Supplement, and there shall be no recourse to Transferor for all or any
part of any amounts payable pursuant to this section if the funds are at any
time insufficient to make all or part of any such payments. Any amount which
Transferor does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim (as defined in Section 101 of the Bankruptcy Code)
against or corporate obligation of Transferor for any such insufficiency.
SECTION 10.6 ENTIRE AGREEMENT. This Agreement, together with the documents
delivered pursuant to SECTION 7.1 and the other Transaction Documents, including
the exhibits and schedules thereto, contains a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, superseding all previous oral statements
and other writings with respect thereto.
SECTION 10.7 NOTICES. All communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered, sent by
overnight courier or mailed by registered mail, postage prepaid and return
receipt requested, or transmitted by facsimile transmission and confirmed by a
similar mailed writing to any party at the address for that party set forth (a)
on the signature page to this Agreement or (b) to another address as that party
may designate in writing to the Agent and Transferor.
SECTION 10.8 NO THIRD-PARTY BENEFICIARIES. Nothing expressed herein is
intended or shall be construed to give any Person (other than the parties hereto
and the Participants and Assignees described in SECTION 10.3 and, solely to the
extent provided in SECTION 10.3, the other Affected Parties)
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<PAGE>
any legal or equitable right, remedy or claim under or in respect of this
Agreement.
SECTION 10.9 SEVERABILITY OF PROVISIONS. Any covenant, provision, agreement
or term of this Agreement that is prohibited or is held to be void or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the prohibition or unenforceability without invalidating the
remaining provisions of this Agreement.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts (which may include facsimile) and by the different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original, and all of which together shall constitute one and the same
instrument.
SECTION 10.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
SECTION 10.12 TAX CHARACTERIZATION. Each party to this Agreement (a)
acknowledges that it is the intent of the parties to this Agreement that, for
purposes of Federal, applicable state and local income and franchise and other
taxes measured by or imposed on income, the Certificates will be treated as
evidence of indebtedness secured by the Transferred Assets and the Trust will
not be characterized as an association (or publicly traded partnership) taxable
as a corporation, (b) agrees that the provisions of the Transaction Documents be
construed to further that intent, and (c) agrees to treat the Certificates, for
purposes of Federal, state and local income and franchise and other taxes
measured by or imposed on income, as indebtedness.
SECTION 10.13 NO PROCEEDINGS. (a) Notwithstanding any prior termination of
this Agreement, each of Servicer, the Agent (solely in its capacity as such) and
each Purchaser (solely in its capacity as such) hereby agrees that it will not
institute against Transferor, or join any other Person in instituting against
Transferor, any insolvency proceeding (namely, any proceeding of the type
referred to in the definition of "Bankruptcy Event") so long as any Certificates
shall be outstanding or there shall not have elapsed one year plus one day since
the last day on which any Certificates shall have been outstanding. The
foregoing shall not limit the right of Servicer, the Agent or any Purchaser to
file any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted against Transferor by any other Person.
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<PAGE>
(b) Notwithstanding any prior termination of this Agreement, each of
Servicer, the Agent (solely in its capacity as such), and each Purchaser (solely
in its capacity as such) hereby agrees that it will not institute against
Greenwich Funding Corporation or any other Structured Lender, or join any other
Person in instituting against Greenwich Funding Corporation or any other
Structured Lender, any insolvency proceeding (namely, any proceeding of the type
referred to in the definition of "Bankruptcy Event") for one year plus one day
after the latest maturing commercial paper note, medium tern note or other debt
security issued by such Structured Lender is paid. The foregoing shall not limit
the right of Servicer, the Agent or any Purchaser to file any claim in or
otherwise take any action with respect to any insolvency proceeding that was
instituted against such Structured Lender by any other Person.
SECTION 10.14 OBLIGATION AND FAILURE TO REFINANCE. (a) Transferor and Big
Flower each severally covenant and agree that it will (i) use best efforts to
cause Trustee to issue one or more additional Series or Purchased Interests (or
otherwise refinance the Certificates) in order to repay in full the Invested
Amount and all other amounts and obligations owed in respect of the Certificates
as soon as practicable, and (ii) not cause Trustee to issue any other Series or
Purchased Interest except for the purposes described in CLAUSE (i); PROVIDED,
that contemporaneously with the issuance of any such Series or Purchased
Interest, the Invested Amount and all other amounts and obligations owed in
respect of the Certificates shall be paid in full. In connection with the
foregoing, Big Flower and Transferor will assist BT Securities Corporation and
CS First Boston Corporation, as financial advisors for Transferor (the
"FINANCIAL ADVISORS") in the marketing of any additional Series and Purchased
Interests to be issued and (promptly upon request) provide all the information
necessary to the Financial Advisors to market such facilities. In addition, Big
Flower and Transferor will use their best efforts to make appropriate officers
and representatives of Big Flower and its Subsidiaries and Transferor available
to participate in the information meetings for potential investors at such times
and places as may reasonably be requested.
(b) If the initial Purchasers shall not have been repaid in full and their
Stated Amount reduced to zero within six months of the First Issuance Date,
then:
(i) Transferor and Big Flower will cooperate in good faith with the
Agent to either refinance the Certificates in full or facilitate the
complete assignment by the initial Purchasers of their Credit Exposure to
other Purchasers, which may include restructuring the transactions
contemplated by the Transaction Documents and designing instruments to be
issued by the Trust. Such restructuring and design may include,
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<PAGE>
but not be limited to, (A) the creation of senior and subordinated classes
of instruments, (B) the creation of principal and/or variable principal
instruments with varying maturities and interest rates, it being understood
that no specified proportion of instruments with fixed versus variable
principal or fixed versus floating interest rates need be maintained, (C)
changes to the number and type of lenders and/or purchasers required to
take or omit to take a particular action (such as a waiver, amendment or
instruction to Trustee), (D) the imposition of make-whole payments or other
prepayment premiums, (E) any changes or modification necessary to enable a
lender or purchaser to qualify for the portfolio interest exemption, thus
permitting the instruments to be syndicated to lenders and/or purchasers
who do not have a place of business in the United States, (F) at the
Purchasers' sole discretion, the inclusion of a cross-default to any
agreement pursuant to which Big Flower or any of the Sellers has incurred
any indebtedness, and (G) any changes or modifications necessary to satisfy
then current requirements of the Rating Agencies for trade receivables
securitizations rated "AAA," and
(ii) if requested to do so by any Purchaser, the Agent shall exercise
its rights under SECTION 8.1 to conduct a Receivables Review (at the
expense of the requesting Purchaser).
(c) Transferor and Big Flower shall enter into the amendments to the
Transaction Documents as may be requested by the Agent as necessary or desirable
to effect the restructuring and design of securities as contemplated in this
Section; PROVIDED, that, notwithstanding the foregoing, neither Transferor nor
Big Flower shall be required to consent to any amendment to any Transaction
Document that changes the aggregate principal amount of the Certificates or the
pricing thereon or that (as determined by Transferor or Big Flower in its
reasonable discretion) is materially adverse to the interests of Transferor or
Big Flower in respect of the facilities provided by the Transaction Documents.
(d) Transferor and Big Flower agree to assist the Agent in any marketing of
the designed securities issued or sold in the restructuring as contemplated in
this Section and (promptly upon request) to provide all information reasonably
requested by the Agent in connection with such marketing. In addition,
Transferor and Big Flower will use their best efforts to make appropriate
officers and representatives of Transferor and Big Flower available to
participate in the information meetings for potential investors at such times
and places as the Agent may reasonably request.
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<PAGE>
SECTION 10.15 REFERENCE BANKS. By its execution of this Agreement, each
Purchaser identified as "Reference Bank" in the Supplement agrees to act as a
Reference Bank for purposes of the Supplement. The Agent shall notify Servicer
of the Reserve-Adjusted Eurodollar Rate applicable to each Interest Period and
of each change in the Alternate Base Rate.
[Remainder of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers and delivered as of the day and year
first above written.
BFP RECEIVABLES CORPORATION
By: /s/ Rick Frier
Name: Rick Frier
Title: Vice President
Address: 250 W. Pratt
Baltimore, Maryland 21201
Attention: Rick Frier
Telephone: 410-361-8352
Facsimile: 410-528-9287
BIG FLOWER PRESS HOLDINGS, INC.
By: /s/ David Mait
Name: David Mait
Title: Vice President
Address: 3 East 54th Street, 19th Floor
New York, New York 10022
Attention: David Mait
Telephone: 212-521-1611
Facsimile: 212-223-4074
<PAGE>
BANKERS TRUST COMPANY,
as Agent and as a Purchaser
By: /s/ Fernando Guerrero
Title: Managing Director
Address: One Bankers Trust Plaza
New York, New York 10006
Attention: John Maylsa
Telephone: 212-250-7410
Facsimile: 212-250-7590
CREDIT SUISSE,
as Co-Agent
By: /s/ Thomas Meier
Title: Associate
By: /s/ Roger W. Saylor
Title: Associate
Address: 12 East 49th Street
New York, New York 10017
Attention: Roger W. Saylor
Telephone: 212-238-5378
Facsimile: 212-238-5332
<PAGE>
GREENWICH FUNDING CORPORATION,
as a Purchaser
By Credit Suisse, New York Branch,
attorney-in-fact
By: /s/ Thomas Meier
Title: Associate
By: /s/ Roger W. Saylor
Title: Associate
Address: 12 East 49th Street
New York, New York 10017
Attention: Roger W. Saylor
Telephone: 212-238-5378
Facsimile: 212-238-5332
<PAGE>
SCHEDULE I
to Certificate Purchase
Agreement Series 1996-1
<TABLE>
<CAPTION>
AMOUNT OF EACH INITIAL PURCHASER'S CERTIFICATE
<S> <C>
Stated Amount of Certificate
----------------------------
Bankers Trust Company $71,250,000
Greenwich Funding Corporation $53,750,000
Percentage
----------
Bankers Trust Company 57%
Greenwich Funding Corporation 43%
</TABLE>
page 39
<PAGE>
EXHIBIT A
to Certificate Purchase
Agreement Series 1996-1
FORM OF POOLING AND SERVICING AGREEMENT
<PAGE>
----------------------------------------------------------
BIG FLOWER RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
dated as of March 19, 1996
among
BFP RECEIVABLES CORPORATION,
as Transferor,
BIG FLOWER PRESS HOLDINGS, INC.,
as Servicer,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
---------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II CONVEYANCE OF ASSETS
SECTION 2.1 Creation of the Trust; Conveyance of Certain Assets. 1
SECTION 2.2 Acceptance by Trustee. . . . . . . . . . . . . . . . 3
SECTION 2.3 Representations and Warranties of Transferor
Relating to the Transferred Assets . . . . . . . . . 3
SECTION 2.4 No Assumption of Obligations Relating to
Receivables, Related Transferred Assets or Contracts 5
SECTION 2.5 Conveyance of Purchased Interests. . . . . . . . . . 5
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment; Other Matters . . . . . . 5
SECTION 3.2 Duties of Servicer and Transferor. . . . . . . . . . 6
SECTION 3.3 Lockbox, Concentration and Blocked Accounts. . . . . 10
SECTION 3.4 Servicing Compensation . . . . . . . . . . . . . . . 13
SECTION 3.5 Records of Servicer and Reports to be Prepared by
Servicer . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.6 Monthly Servicer's Certificate . . . . . . . . . . . 16
SECTION 3.7 Servicing Report of Independent Public Accountants;
Forms 10-Q and 10-K. . . . . . . . . . . . . . . . . 16
SECTION 3.8 Rights of Trustee. . . . . . . . . . . . . . . . . . 17
SECTION 3.9 Ongoing Responsibilities of Big Flower . . . . . . . 19
SECTION 3.10 Further Action Evidencing Transfers . . . . . . . . 20
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS;
ALLOCATIONS
SECTION 4.1 Rights of Certificateholders . . . . . . . . . . . . 20
SECTION 4.2 Establishment of Transaction Accounts. . . . . . . . 21
SECTION 4.3 Trust-Level Calculations and Funds Allocations . . . 23
SECTION 4.4 Investment of Funds in Transaction Accounts. . . . . 23
SECTION 4.5 Attachment of Transaction Accounts . . . . . . . . . 24
ARTICLE V DISTRIBUTIONS AND REPORTS
<PAGE>
ARTICLE VI THE CERTIFICATES
SECTION 6.1 The Certificates . . . . . . . . . . . . . . . . . . 24
SECTION 6.2 Authentication of Certificates . . . . . . . . . . . 25
SECTION 6.3 Registration of Transfer and Exchange of Certificates 25
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. . 28
SECTION 6.5 Persons Deemed Owners. . . . . . . . . . . . . . . . 28
SECTION 6.6 Appointment of Paying Agent. . . . . . . . . . . . . 29
SECTION 6.7 Access to List of Certificateholders' Names and
Addresses. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.8 Authenticating Agent . . . . . . . . . . . . . . . . 30
SECTION 6.9 Tax Treatment. . . . . . . . . . . . . . . . . . . . 31
SECTION 6.10 Issuance of Additional Series of Certificates and
Sales of Purchased Interests . . . . . . . . . . . . 32
SECTION 6.11 Book-Entry Certificates . . . . . . . . . . . . . . 37
SECTION 6.12 Notices to Clearing Agency. . . . . . . . . . . . . 42
SECTION 6.13 Definitive Certificates . . . . . . . . . . . . . . 42
SECTION 6.14 Letter of Representations . . . . . . . . . . . . . 42
ARTICLE VII TRANSFEROR
SECTION 7.1 Representations and Warranties of Transferor
Relating to Transferor and the Transaction
Documents. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2 Covenants of Transferor. . . . . . . . . . . . . . . 46
SECTION 7.3 Indemnification by Transferor. . . . . . . . . . . . 53
ARTICLE VIII SERVICER
SECTION 8.1 Representations and Warranties of Servicer . . . . . 55
SECTION 8.2 Covenants of Servicer. . . . . . . . . . . . . . . . 57
SECTION 8.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . 58
SECTION 8.4 Indemnification by Servicer. . . . . . . . . . . . . 58
SECTION 8.5 Servicer Liability . . . . . . . . . . . . . . . . . 59
SECTION 8.6 Limitation on Liability of Servicer and Others . . . 59
ARTICLE IX EARLY AMORTIZATION EVENTS;
TERMINATION BY SELLERS
SECTION 9.1 Early Amortization Events. . . . . . . . . . . . . . 60
SECTION 9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.3 Additional Rights Upon the Occurrence of Certain
Events . . . . . . . . . . . . . . . . . . . . . . . 60
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<PAGE>
SECTION 9.4 Termination By Sellers . . . . . . . . . . . . . . . 62
ARTICLE X SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults . . . . . . . . . . . . . . . . . 62
SECTION 10.2 Trustee to Act; Appointment of Successor. . . . . . 64
SECTION 10.3 Notification of Servicer Default; Notification of
Appointment of Successor Servicer. . . . . . . . . . 67
ARTICLE XI TRUSTEE
SECTION 11.1 Duties of Trustee . . . . . . . . . . . . . . . . . 67
. SECTION 11.2 Certain Matters Affecting Trustee . . . . . . . . . 70
SECTION 11.3 Limitation on Liability of Trustee. . . . . . . . . 72
SECTION 11.4 Trustee May Deal with Other Parties . . . . . . . . 74
SECTION 11.5 Servicer To Pay Trustee's Fees and Expenses . . . . 74
SECTION 11.6 Eligibility Requirements for Trustee. . . . . . . . 74
SECTION 11.7 Resignation or Removal of Trustee . . . . . . . . . 75
SECTION 11.8 Successor Trustee . . . . . . . . . . . . . . . . . 76
SECTION 11.9 Merger or Consolidation of Trustee. . . . . . . . . 76
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee. . . 77
SECTION 11.11 Tax Returns. . . . . . . . . . . . . . . . . . . . 78
SECTION 11.12 Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.13 Suits for Enforcement. . . . . . . . . . . . . . . 79
SECTION 11.14 Rights of Transferor To Direct Trustee . . . . . . 79
SECTION 11.15 Representations and Warranties of Trustee. . . . . 80
SECTION 11.16 Maintenance of Office or Agency. . . . . . . . . . 81
ARTICLE XII TERMINATION
SECTION 12.1 Termination of Trust. . . . . . . . . . . . . . . . 81
SECTION 12.2 Final Distribution. . . . . . . . . . . . . . . . . 82
SECTION 12.3 Rights Upon Termination of the Trust. . . . . . . . 83
SECTION 12.4 Optional Repurchase of Investor Interests . . . . . 84
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment, Waiver, Etc. . . . . . . . . . . . . . . 84
SECTION 13.2 Actions by Certificateholders and Purchasers. . . . 87
SECTION 13.3 Limitation on Rights of Certificateholders. . . . . 88
SECTION 13.4 Limitation on Rights of Purchasers. . . . . . . . . 89
SECTION 13.5 Governing Law . . . . . . . . . . . . . . . . . . . 90
-iii-
<PAGE>
SECTION 13.6 Notices . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 13.7 Severability of Provisions. . . . . . . . . . . . . 91
SECTION 13.8 Certificates Nonassessable and Fully Paid . . . . . 91
SECTION 13.9 Nonpetition Covenant. . . . . . . . . . . . . . . . 91
SECTION 13.10 No Waiver; Cumulative Remedies . . . . . . . . . . 92
SECTION 13.11 Counterparts . . . . . . . . . . . . . . . . . . . 92
SECTION 13.12 Third-Party Beneficiaries. . . . . . . . . . . . . 92
SECTION 13.13 Integration. . . . . . . . . . . . . . . . . . . . 93
SECTION 13.14 Binding Effect; Assignability; Survival of
Provisions . . . . . . . . . . . . . . . . . . . . . 93
SECTION 13.15 Recourse to Transferor . . . . . . . . . . . . . . 93
SECTION 13.16 Recourse to Transferred Assets . . . . . . . . . . 93
SECTION 13.17 Submission to Jurisdiction . . . . . . . . . . . . 94
SECTION 13.18 Waiver of Jury Trial . . . . . . . . . . . . . . . 94
SECTION 13.19 Certain Partial Releases . . . . . . . . . . . . . 94
-iv-
<PAGE>
EXHIBITS
EXHIBIT A-1 Form of Lockbox Account Letter Agreement
EXHIBIT A-2 Form of Blocked Account Letter Agreement
EXHIBIT B Form of Concentration Account Letter Agreement
EXHIBIT C Form of Monthly Servicer's Certificate
EXHIBIT D Annual Agreed-Upon Procedures
EXHIBIT E Form of Transferor Certificate
EXHIBIT F Form of Certificate to be Given by Certificate Owner
EXHIBIT G Form of Certificate to be Given by Euroclear or Cedel
EXHIBIT H Form of Certificate to be Given by Transferee of
Beneficial Interest in a Regulation S Temporary
Book-Entry Certificate
EXHIBIT I Form of Transfer Certificate for Exchange or
Transfer from 144A Book-Entry Certificate to Regulation
S Book-Entry Certificate
EXHIBIT J Form of Placement Agent Exchange Instructions
EXHIBIT K Form of Annual Servicer Certificate
SCHEDULES
SCHEDULE 1 Account Banks - Lockbox Banks/Blocked Account
Banks/Concentration Banks
APPENDIX
APPENDIX A Definitions
-v-
<PAGE>
This POOLING AND SERVICING AGREEMENT, dated as of March 19, 1996 (this
"AGREEMENT"), is made among BFP RECEIVABLES CORPORATION, a Delaware corporation
("TRANSFEROR"), BIG FLOWER PRESS HOLDINGS, INC., a Delaware corporation ("BIG
FLOWER"), and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking
corporation, as Trustee.
ARTICLE I DEFINITIONS
SECTION 1.1 DEFINITIONS. Capitalized terms used in this Agreement have the
meanings that APPENDIX A assigns to them, and this Agreement shall be
interpreted in accordance with PART B of APPENDIX A.
ARTICLE II CONVEYANCE OF ASSETS
SECTION 2.1 CREATION OF THE TRUST; CONVEYANCE OF CERTAIN ASSETS. (a)
Transferor hereby transfers, assigns, sets over, grants and otherwise conveys to
Trustee, in its capacity as representative of the Certificateholders and the
Purchasers, without recourse (except as expressly provided herein), all of its
right, title and interest in, to and under, (i) all Receivables that have been
or are hereafter transferred (whether by sale or contribution) by the Sellers to
Transferor, (ii) all Related Assets, (iii) all of Transferor's rights under the
Seller Transaction Documents (the property described in CLAUSES (ii) and (iii)
being called the "RELATED TRANSFERRED ASSETS"), (iv) all funds from time to time
on deposit in each of the Transaction Accounts (including funds deposited in a
Transaction Account in connection with the issuance of any prefunded Series) and
all funds from time to time on deposit in each of the Bank Accounts representing
Collections on, or other proceeds of, the foregoing and, in each case, all
certificates and instruments, if any, from time to time evidencing such funds,
all investments made with such funds, all claims thereunder or in connection
therewith and all interest, dividends, monies, instruments, securities and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing, (v) any Enhancement
obtained for the benefit of any Series or Purchased Interest and (vi) all moneys
due or to become due and all amounts received or receivable with respect to any
of the foregoing and all proceeds of the foregoing. Such property, whether now
existing or hereafter acquired, shall constitute the assets of the Trust
(collectively, the "TRANSFERRED ASSETS"). The foregoing transfer, assignment,
setover, grant and conveyance to the Trust shall be made to Trustee, on behalf
of the Trust, and each reference in this Agreement to such transfer, assignment,
setover and conveyance shall be construed accordingly.
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(b) In connection with the transfer described in SUBSECTION (a), Transferor
and Servicer shall record and file or cause to be recorded and filed, as an
expense of Servicer paid out of the Servicing Fee, financing statements with
respect to the Transferred Assets meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect the
transfer and assignment of the Transferred Assets to the Trust. In connection
with the transfer described in SUBSECTION (a), Transferor and Servicer further
agree to deliver to Trustee each Transferred Asset (including any original
documents or instruments included in the Transferred Assets as are necessary to
effect such transfer) in which the transfer of an interest is perfected under
the UCC or otherwise by possession. Transferor or Servicer shall deliver each
such Transferred Asset to Trustee, as an expense of Servicer paid out of the
Servicing Fee, immediately upon the transfer of any such Transferred Asset to
Trustee pursuant to SUBSECTION (a).
(c) In connection with the transfer described above in SUBSECTION
(a), Servicer shall, on behalf of Transferor, as an expense of Servicer paid out
of the Servicing Fee, on or prior to the First Issuance Date, mark the master
data processing records evidencing the Receivables with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO BFP RECEIVABLES
CORPORATION ("BFP") PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS
OF MARCH 19, 1996, AMONG TREASURE CHEST ADVERTISING COMPANY, INC., CERTAIN
OTHER SUBSIDIARIES OF BIG FLOWER PRESS HOLDINGS, INC. ("BIG FLOWER"), AS
SELLERS, BIG FLOWER, AS SERVICER, AND BFP, AS BUYER; AND SUCH RECEIVABLES
HAVE BEEN TRANSFERRED TO THE BIG FLOWER RECEIVABLES MASTER TRUST PURSUANT
TO A POOLING AND SERVICING AGREEMENT, DATED AS OF MARCH 19, 1996, AMONG
BFP, AS TRANSFEROR, BIG FLOWER, AS SERVICER, AND MANUFACTURERS AND TRADERS
TRUST COMPANY, AS TRUSTEE."
(d) Upon the request of Transferor, Trustee will cause Certificates in
authorized denominations evidencing the entire interest in the Trust to be duly
authenticated and delivered to or upon the order of Transferor pursuant to
SECTION 6.2. Pursuant to the Transferor Certificate, Transferor shall be
entitled to receive current and deferred transfer payments at the times and in
the amounts specified in the various Supplements and PI Agreements executed from
time to time.
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(e) If the transfer, assignment, set-over, grant and conveyance described
in SUBSECTION (a) of this SECTION 2.1 are deemed to create a security interest
in the property described in that Section, Transferor hereby grants to the
Trustee, for the benefit of the Trustee, the Certificateholders and the
Purchasers, a security interest in that property (which shall be deemed to be a
first perfected security interest and shall secure Transferor's obligations
under the Transaction Documents, the Certificates and the Purchased Interests),
and agrees that this Agreement shall constitute a security agreement under
applicable law.
SECTION 2.2 ACCEPTANCE BY TRUSTEE. Trustee hereby acknowledges its
acceptance on behalf of the Trust of all right, title and interest to the
Transferred Assets and declares that it shall maintain such right, title and
interest, upon the trust herein set forth, for the benefit of all
Certificateholders and Purchasers, on the terms and subject to the conditions
hereinafter set forth.
SECTION 2.3 REPRESENTATIONS AND WARRANTIES OF TRANSFEROR RELATING TO THE
TRANSFERRED ASSETS.
(a) REPRESENTATIONS AND WARRANTIES. At the time that any Receivable
or Related Asset is transferred by Transferor to the Trust, Transferor hereby
represents and warrants that:
(i) QUALITY OF TITLE. (A) Immediately before each transfer to
be made by Transferor hereunder, each Receivable and Related Transferred
Asset that was then to be transferred to the Trust hereunder was owned by
Transferor free and clear of any Adverse Claim (other than any Permitted
Adverse Claim); and, within two Business Days after the First Issuance
Date, Transferor and Servicer made, or caused to be made, all filings and
took all other action under applicable law in each relevant jurisdiction in
order to protect and perfect the Trust's interest in such Receivables, such
Related Transferred Assets and the funds in the Transaction Accounts
against all creditors of, and purchasers from, Transferor and the Sellers.
(B) Each transfer of Receivables and other Transferred Assets
by Transferor to the Trust pursuant to this Agreement constitutes a valid
transfer and assignment to the Trust of all right, title and interest of
Transferor in the Receivables and the Related Transferred Assets, free and
clear of any Adverse Claim (other than any Permitted Adverse Claim), and
constitutes either an absolute transfer of such property to the Trust or a
grant of a first priority perfected security interest in such
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property to the Trust. Whenever the Trust accepts a transfer of a
Receivable or a Related Transferred Asset hereunder, it shall have acquired
a valid and perfected first priority interest in such Receivable or Related
Transferred Asset free and clear of any Adverse Claim (other than any
Permitted Adverse Claim).
(C) No effective financing statement or other instrument
similar in effect that covers all or part of any Transferred Asset or any
interest in any proceeds thereof is on file in any recording office except
financing statements as to which termination statements or releases are
filed within three Business Days after the First Issuance Date and except
filings relating to any Permitted Adverse Claim.
(D) No acquisition of any Receivable or Related Transferred
Asset by Transferor or the Trust constitutes a fraudulent transfer or
fraudulent conveyance under the United States Bankruptcy Code or applicable
state bankruptcy or insolvency laws or is otherwise void or voidable or
subject to subordination under similar laws or principles or for any other
reason.
(ii) GOVERNMENTAL APPROVALS. With respect to each Receivable
and Related Transferred Asset, all consents, licenses, approvals or
authorizations of, or notices to or registrations, declarations or filings
with, any Governmental Authority required to be obtained, effected or made
by the Sellers, Servicer or Transferor in connection with the conveyance of
the Receivable and Related Transferred Asset by the Sellers to Transferor,
or by Transferor to the Trust, have been duly obtained, effected or given
and are in full force and effect.
(iii) ELIGIBLE RECEIVABLES. (A) On the date on which the
applicable Seller transfers a Receivable to Transferor, and Transferor transfers
such Receivable to the Trust, unless otherwise identified by Servicer in the
Daily Report for such date, such Receivable is an Eligible Receivable, and
(B) on the date of each Daily Report or Monthly Report that identifies a
Receivable as an Eligible Receivable, such Receivable is an Eligible Receivable.
(b) NOTICE OF BREACH. The representations and warranties set forth in
SUBSECTION (a) shall survive the transfer of the Receivables and the Related
Transferred Assets to the Trust. Upon discovery by Transferor, Servicer or
Trustee of a breach of any of the representations and warranties set forth in
SUBSECTION (a), the party discovering the breach shall give written notice to
the others within four Business Days following the discovery; PROVIDED, HOWEVER,
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that if such breach arises from a Seller's failure to perform its obligations
under the Purchase Agreement and such failure is of the type that may be cured
by settlement of a Seller Non-Complying Receivables Adjustment or Seller
Dilution Adjustment under SECTIONS 3.1 and 3.5 of the Purchase Agreement, and
such settlement shall have (in fact) been made, then no breach shall be deemed
to have occurred under this Agreement. Trustee's obligations in respect of
discovering any breach are limited as provided in SECTION 11.2(g).
SECTION 2.4 NO ASSUMPTION OF OBLIGATIONS RELATING TO RECEIVABLES, RELATED
TRANSFERRED ASSETS OR CONTRACTS. The transfer, assignment, set over, grant and
conveyance described in SECTION 2.1 does not constitute and is not intended to
result in a creation or an assumption by the Trust, Trustee or any Investor
Certificateholder of any obligation of Servicer, Transferor, the applicable
Seller or any other Person in connection with the Receivables or the Related
Transferred Assets or under the related Contracts or any other agreement or
instrument relating thereto. None of Trustee, the Trust or any Investor
Certificateholder shall have any obligation or liability to any Obligor.
SECTION 2.5 CONVEYANCE OF PURCHASED INTERESTS. Pursuant to the terms of a
PI Agreement, Trustee, on behalf of the Trust, from time to time may sell,
transfer, assign, set over and otherwise convey Purchased Interests to a
Purchaser or an Agent for the account of a Purchaser; and Trustee, on behalf of
the Trust, is authorized and directed (subject to the applicable terms of
SECTION 6.10), upon the written request of Transferor, to enter into one or more
PI Agreements in the form annexed to each such written request. Pursuant to a
PI Agreement, Collections allocated to Purchased Interests may be reinvested and
such Purchased Interests may be recomputed, each from time to time as provided
therein.
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.1 ACCEPTANCE OF APPOINTMENT; OTHER MATTERS.
(a) DESIGNATION OF SERVICER. The servicing, administering and collection of
the Receivables and the Related Transferred Assets shall be conducted by the
Person designated as Servicer hereunder from time to time in accordance with
this section. Until Transferor gives a Termination Notice to Big Flower pursuant
to SECTION 10.1, Big Flower is designated (and agrees to act) as Servicer.
(b) DELEGATION OF CERTAIN SERVICING ACTIVITIES. In the ordinary course of
business, Servicer may at any time delegate its duties hereunder with respect to
the Receivables and the Related Transferred Assets to any Person. Each
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Person to whom any such duties are delegated in accordance with this Section is
called a "SUB-SERVICER". Notwithstanding any such delegation, Servicer shall
remain liable for the performance of all duties and obligations of Servicer
pursuant to the terms of this Agreement and the other Transaction Documents.
The fees and expenses of any Sub-Servicers shall be as agreed between Servicer
and the Sub-Servicers from time to time and none of the Trust, Trustee or the
Certificateholders shall have any responsibility therefor. Upon any termination
of a Servicer pursuant to SECTION 10.1, all Sub-Servicers designated pursuant to
this subsection by such Servicer shall automatically also be terminated.
(c) TERMINATION. (i) The designation of Servicer (and each Sub-Servicer)
under this Agreement shall automatically terminate upon termination of the Trust
pursuant to SECTION 12.1.
(ii) Provided that no Servicer Default or Early Amortization Event shall
have occurred which is continuing, Transferor (with the prior written consent of
the Required Investors) may terminate all of the rights and obligations of
Servicer as servicer hereunder. No termination of any Person acting as Servicer
pursuant to this CLAUSE (ii) above shall become effective until the Trustee or
another Successor Servicer shall have assumed the responsibilities and
obligations of Servicer in accordance with SECTION 10.2. Trustee shall give
prompt notice to the Rating Agencies of the appointment of any Successor
Servicer.
(d) RESIGNATION OF SERVICER. Big Flower shall not resign as Servicer unless
it determines that (i) the performance of its duties is no longer permissible
under applicable law and (ii) there is no reasonable action that it could take
to make the performance of its duties permissible under applicable law. If Big
Flower determines that it must resign for the reasons stated above, it shall,
prior to the tendering of its resignation, deliver to Trustee an Opinion of
Counsel confirming the satisfaction of the conditions set forth in CLAUSE (i) of
the preceding sentence. No resignation by Big Flower shall become effective
until Trustee or another Successor Servicer shall have assumed the
responsibilities and obligations of Servicer in accordance with SECTION 10.2.
Trustee shall give prompt notice to the Rating Agencies of the appointment of
any Successor Servicer.
SECTION 3.2 DUTIES OF SERVICER AND TRANSFEROR.
(a) DUTIES OF SERVICER IN GENERAL. Servicer shall service the
Receivables and the Related Transferred Assets and, subject to the terms and
provisions of this Agreement, shall have full power and authority, acting
alone
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or through any Sub-Servicer, to do any and all things in connection with such
servicing that it may deem necessary or appropriate. Trustee shall execute and
deliver to Servicer any powers of attorney or other instruments or documents
that are prepared by Servicer and stated in an Officer's Certificate to be, and
shall furnish Servicer with any documents in its possession, necessary or
appropriate to enable Servicer to carry out its servicing duties. Servicer shall
exercise the same care and apply the same policies with respect to the
collection and servicing of the Receivables and the Related Transferred Assets
that it would exercise and apply if it owned such Receivables and the Related
Transferred Assets, all in substantial compliance with applicable law and in
accordance with the Credit and Collection Policy.
Servicer shall take or cause to be taken (and shall cause each Sub-
Servicer (if any) to take or cause to be taken) all such actions as Servicer
deems necessary or appropriate to collect each Receivable and Related
Transferred Asset, all in accordance with applicable law and the Credit and
Collection Policy.
Without limiting the generality of the foregoing and subject to the
next preceding paragraph and SECTION 10.1, Servicer or its designee is hereby
authorized and empowered, unless such power and authority is revoked by Trustee
on account of the occurrence of a Servicer Default, (i) to instruct Trustee to
make withdrawals and payments from the Transaction Accounts as set forth in this
Agreement, (ii) to execute and deliver, on behalf of the Trust for the benefit
of the Certificateholders and Purchasers, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and the
Related Transferred Assets, (iii) to make any filings, reports, notices,
applications and registrations with, and to seek any consents or authorizations
from, the Securities and Exchange Commission and any state securities authority
on behalf of the Trust as may be necessary or appropriate to comply with any
federal or state securities laws or reporting requirements or other laws or
regulations, and (iv) to the extent permitted under and in compliance with the
Credit and Collection Policy and with all applicable laws, rules, regulations,
judgments, orders and decrees of courts and other governmental authorities
(whether federal, state, local or foreign) and all other tribunals, to commence
or settle collection proceedings with respect to the Receivables and otherwise
to enforce the rights and interests of the Trust and the Certificateholders and
Purchasers in, to and under the Receivables or Related Transferred Assets (as
applicable).
(b) IDENTIFICARION AND TRANSFER OF COLLECTIONS. Servicer shall cause
Collections and all other Transferred Assets that consist of cash or cash
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equivalents to be deposited into the Bank Accounts and the Transaction Accounts
pursuant to the terms and provisions of SECTION 3.3 and ARTICLE IV. Following
notification from any Seller to Servicer or discovery by Servicer that
collections of any receivable or other asset that is not a Collection of a
Receivable or a Related Transferred Asset have been deposited into a Bank
Account or the Master Collection Account, Servicer shall cause all such
collections to be segregated, apart and in different accounts, from the Bank
Accounts and the Transaction Accounts. Servicer and, to the extent applicable,
Trustee shall hold all such funds in trust, separate and apart from such
Person's other funds. On each Business Day, after such misapplied collections
have been reasonably identified by Servicer to Trustee, Servicer shall instruct
Trustee to, and Trustee shall, turn over to the appropriate Lockbox Bank,
applicable Seller or other applicable Big Flower Person (or their designees) all
such misapplied collections less all reasonable and appropriate out-of-pocket
costs and expenses, if any, incurred by Servicer in collecting such receivables.
All payments made by an Obligor that is obligated to make payments with
respect to both Receivables included in the Transferred Assets and Receivables
not included in the Transferred Assets shall be applied against the Receivables,
if any, that are designated by such Obligor by reference to the applicable
invoice as the Receivables with respect to which such payments should be
applied. In the absence of such designation, such payments shall be applied
first against the oldest outstanding Receivables owed by such Obligor.
Following notification from a Lockbox Bank that any item has been
returned or is uncollected and that such Lockbox Bank has not been otherwise
reimbursed pursuant to the terms of the applicable Lockbox Agreement for any
amounts it credited to the relevant Lockbox Account (and then transferred to the
Master Collection Account), Servicer shall instruct Trustee to, and Trustee
shall, turn over to such Lockbox Bank Collections in such amount from
Collections on deposit in the Master Collection Account.
(c) MODIFICATION OF RECEIVABLES, ETC. So long as no Servicer Default shall
have occurred and be continuing, Servicer may adjust, and may permit each Sub-
Servicer to adjust, in accordance with SECTION 3.2(a) and the Credit and
Collection Policy, the Unpaid Balance of any Receivable, or otherwise modify the
terms of any Receivable or amend, modify or waive any term or condition of any
Contract related thereto, all as it may determine to be appropriate to maximize
collection thereof. Servicer shall, or shall cause the applicable Sub-Servicer
to, write off Receivables from time to time in accordance with the Credit and
Collection Policy.
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(d) DOCUMENTS AND RECORDS. At any time when Big Flower is not Servicer,
Transferor, to the extent that it is entitled to do so under the Purchase
Agreement, shall, upon the request of the then-acting Servicer, cause the
applicable Seller to deliver to Servicer, and Servicer shall hold in trust for
Transferor and Trustee in accordance with their respective interests, all
Records that evidence or relate to the Receivables and Related Transferred
Assets of the applicable Seller.
(e) CERTAIN DUTIES TO THE SELLERS. Servicer, if other than Big Flower,
shall, as soon as practicable after a demand by any Seller, deliver to the
Seller all documents, instruments and records in its possession that evidence or
relate to accounts receivable of the Seller or other Big Flower Persons that are
not Receivables or Related Transferred Assets, and copies of all documents,
instruments and records in its possession that evidence or relate to Receivables
and Related Transferred Assets.
(f) IDENTIFICATION OF ELIGIBLE RECEIVABLES. The initial Servicer will (i)
establish and maintain such procedures as are necessary for determining no less
frequently than each Business Day whether each Receivable qualifies as an
Eligible Receivable, and for identifying, on any Business Day, all Receivables
that are not Eligible Receivables, and (ii) include in each Daily Report
information that shows whether, and to what extent, the Receivables described in
such Daily Report are Eligible Receivables.
(g) AUTHORIZATION TO ACT AS TRANSFEROR'S AGENT. Without limiting the
generality of subsection (a), Transferor hereby appoints Servicer as its agent
for the following purposes: (i) specifying accounts to which payments are to be
made to Transferor, (ii) making transfers among, and deposits to and withdrawals
from, all deposit accounts of Transferor for the purposes described in the
Transaction Documents, and (iii) arranging payment by Transferor of all fees,
expenses and other amounts payable by Transferor pursuant to the Transaction
Documents. Transferor irrevocably agrees that (A) it shall be bound by all
actions taken by Servicer pursuant to the preceding sentence, and (B) Trustee
and the banks holding all deposit accounts of Transferor are entitled to accept
submissions, determinations, selections, specifications, transfers, deposits and
withdrawal requests, and payments from Servicer on behalf of Transferor.
(h) GRANT OF POWER OF ATTORNEY. Transferor and Trustee hereby each grant to
Servicer a power of attorney, with full power of substitution, to take in the
name of Transferor and Trustee all steps that are necessary or appropriate to
endorse, negotiate, deposit or otherwise realize on any writing of any kind held
or transmitted by Transferor or transmitted or received by
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Trustee (whether or not from Transferor) in connection with any Receivable or
Related Transferred Asset. The power of attorney that Transferor and Trustee
have granted to Servicer may be revoked by Trustee, and shall be revoked by
Transferor, on the date on which Trustee shall be entitled to exercise the
powers granted to Trustee pursuant to SECTION 3.8(b). In exercising its power
granted hereby, Servicer shall take directions from Trustee, if any, arising out
of the exercise of the rights granted under SECTION 11.14.
(i) TURNOVER OF COLLECTIONS. If Servicer, Transferor or any of their
respective agents or representatives shall at any time receive any cash, checks
or other instruments constituting Collections, such recipient shall segregate
such payments and hold such payments in trust for Trustee and shall, promptly
upon receipt (and in any event within two Business Days following receipt),
remit all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to a Bank Account or the Master Collection Account.
(j) ANNUAL STATEMENT AS TO COMPLIANCE. Servicer will deliver to Trustee and
each Rating Agency on or before March 31 of each year, beginning with March 31,
1997 an Officer's Certificate, in substantially the form of EXHIBIT K, stating,
as to each signer thereof, that (i) a review of the activities of the Servicer
during the preceding calendar year and of performance under this Agreement has
been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof and remedies therefor
being pursued.
SECTION 3.3 LOCKBOX, CONCENTRATION AND BLOCKED ACCOUNTS. (a)Each Lockbox
Account shall be subject to a Lockbox Agreement substantially in the form of
EXHIBIT A-l, and each Blocked Account shall be subject to a Blocked Account
Agreement substantially in the form of EXHIBIT A-2. Unless instructed otherwise
by Servicer (or, after the occurrence and continuance of an Early Amortization
Event, Trustee), each Lockbox Bank and Blocked Account Bank shall be instructed
by Servicer to remit, on a daily basis (but subject to such bank's customary
funds availability schedule), all amounts deposited in the Lockbox Accounts or
Blocked Accounts maintained with it to a Concentration Account or the Master
Collection Account. Any Concentration Account shall be maintained in the name of
Trustee on behalf of the Trust pursuant to a Concentration Account Agreement
substantially in the form of EXHIBIT B. Except as provided in this Agreement and
the applicable Account Agreements, none of any Seller, Transferor, Servicer, or
any Person claiming
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by, through or under any Seller, Transferor or Servicer shall have any control
over the use of, or any right to withdraw any item or amount from, any Lockbox
Account, Blocked Account or Concentration Account. Servicer and Trustee are each
hereby irrevocably authorized and empowered, as Transferor's attorney-in-fact,
to endorse any item deposited in a lockbox or presented for deposit in any
Lockbox Account, Blocked Account or Concentration Account requiring the
endorsement of Transferor, which authorization is coupled with an interest and
is irrevocable. Each Lockbox Account, Blocked Account and Concentration Account
shall be an Eligible Deposit Account.
(b) Servicer shall instruct (or shall cause the applicable Seller to
instruct) all Obligors to make all payments due to Transferor or the applicable
Seller relating to or constituting Collections (or any proceeds thereof) (i) to
lockboxes maintained at the Lockbox Banks for deposit in a Lockbox Account or a
Concentration Account or (ii) directly to a Lockbox Account; PROVIDED that the
Sellers need not direct Obligors in respect of Direct Pay Receivables to make
payments to a Lockbox Account or a Concentration Account if the following
conditions are satisfied: (w) the aggregate Unpaid Balance of Direct Pay
Receivables at any time shall not exceed 15% of the aggregate Unpaid Balance of
Receivables in the Receivables Pool at such time; (x) on each Business Day such
Seller shall deposit all checks, money orders and other items delivered in
payment of such Direct Pay Receivables on the day such items are received (or if
such day is not a Business Day, on the next Business Day) in a Blocked Account
that contains no funds other than proceeds of Direct Pay Receivables; and prior
to such deposit, such Seller shall hold such items in trust for the benefit of
the Trustee in the form received; (y) each Blocked Account Bank for such Seller
shall have executed and delivered a Blocked Account Agreement to the Trustee;
and (z) all available funds in each Blocked Account for such Seller shall be
transferred (by wire transfer or other means reasonably acceptable to the
Trustee) on each Business Day to either a Concentration Account or the Master
Collection Account. If Transferor or the applicable Seller receives any
Collections or any other payment of proceeds of any other Related Transferred
Asset, Servicer shall cause such recipient to (x) segregate such payment and
hold it in trust for the benefit of Trustee, and (y) as soon as practicable, but
no later than the second Business Day following receipt of such item by such
Person, deposit such payment in a Bank Account or the Master Collection Account.
Servicer shall, and shall cause Transferor and the applicable Seller to, use
reasonable efforts to prevent the deposit of any amounts other than Collections
in any Bank Account. If Servicer is notified by the applicable Seller that any
amount other than Collections has been deposited in any Bank Account, Servicer
shall promptly instruct the appropriate Account Bank and Trustee to segregate
such amount, and shall
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direct such Account Bank or Trustee (as appropriate) to turn over such amounts
to the applicable Seller or other Big Flower Person (or their designees) to whom
such amounts are owed.
(c)(i) Servicer may, from time to time after the First Issuance Date,
designate a new account as a Lockbox Account, Blocked Account or a Concentration
Account, and such account shall become a Lockbox Account, Blocked Account or
Concentration Account (and the bank at which such account is maintained shall
become a Lockbox Bank, Blocked Account Bank or a Concentration Account Bank for
purposes of this Agreement); PROVIDED that Trustee shall have received not less
than 15 Business Days' (or such shorter number of days as is acceptable to
Trustee) prior written notice of the account and/or the bank that are proposed
to be added as a Bank Account or an Account Bank (as applicable) and, not less
than ten Business Days (or such shorter number of days as is acceptable to
Trustee) prior to the effective date of any such proposed addition, Trustee
shall have received (x) counterparts of a Lockbox Agreement, Blocked Account
Agreement or a Concentration Account Agreement, as applicable, with each new
Account Bank, duly executed by such new Account Bank and all other parties
thereto and (y) copies of all other agreements and documents signed by the new
Account Bank or such other parties with respect to any new Lockbox Account,
Blocked Account or Concentration Account, as applicable.
(ii) Servicer may, from time to time after the First Issuance Date,
terminate an account as a Lockbox Account, Blocked Account or a Concentration
Account or a bank as an Account Bank; PROVIDED that (x) no such termination
shall occur unless Trustee shall have received not less than ten Business
Days' (or such shorter number of days as is acceptable to Trustee) prior
written notice of the account and/or the bank that are proposed to be
terminated as a Bank Account or an Account Bank (as applicable) and, not less
than ten Business Days (or such shorter number of days as is acceptable to
Trustee) prior to the effective date of any such proposed termination,
Trustee shall have received counterparts of an agreement, duly executed by
the applicable Account Bank and reasonably satisfactory in form and substance
to Trustee, pursuant to which such Account Bank agrees that, if it receives
any funds or items that constitute Collections on or after the effective date
of the termination of the applicable Bank Account or the effective date of
its termination as an Account Bank (as the case may be), such Account Bank or
former Account Bank (as applicable) shall cause such funds and items to be
delivered in the form received to another lockbox or transferred to another
Lockbox Account, Blocked Account, Concentration Account or the Master
Collection Account promptly after such Account Bank or former Account Bank
(as applicable) discovers that it has received any such
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funds or items, and (y) notwithstanding CLAUSE (x), Transferor and Servicer may
at any time establish alternative collection procedures that do not require the
use of Lockbox Accounts or Blocked Accounts with the consent of each Agent and
any Enhancement Provider and upon satisfaction of the Modification Condition.
(d) Servicer shall instruct each Concentration Account Bank (if any), to
transfer on a daily basis (subject to such Concentration Account Bank's
customary funds availability schedule) in same day funds to the Master
Collection Account all collected funds on deposit in the Concentration Account
maintained with such Concentration Account Bank. All such transfers shall be
made in accordance with the relevant Concentration Account Agreement.
SECTION 3.4 SERVICING COMPENSATION. As full compensation for its servicing
activities hereunder and under any Supplement or PI Agreement, and as
reimbursement for any expense incurred by it in connection therewith, Servicer
shall be entitled to receive a monthly servicing fee (the "SERVICING FEE") in
respect of each Series and Purchased Interest, payable in arrears on each
Distribution Date in respect of each Distribution Period (or portion thereof)
during which that Series or Purchased Interest is outstanding. The Servicing Fee
in respect of any Series or Purchased Interest shall be payable solely as
provided in the related Supplement or PI Agreement.
Unless otherwise provided in the applicable Supplement or PI
Agreement, the Servicing Fee payable with respect to any Series or Purchased
Interest shall be calculated as follows. At any time when Big Flower or any
of its Affiliates is Servicer, the Servicing Fee for any Distribution Period
shall be equal to one-twelfth of the product of (a) 2%, multiplied by (b) the
aggregate Unpaid Balance of the Receivables as measured on the first Business
Day of that Distribution Period, multiplied by (c) the applicable Series
Collection Allocation Percentage. If Big Flower ceases to be Servicer, the
Servicing Fee for a Successor Servicer that is not a Big Flower Person shall
be an amount equal to the greater of (i) the amount calculated pursuant to
the preceding sentence and (ii) an alternative amount specified by such
Servicer not exceeding the sum of (x) 110% of the aggregate reasonable costs
and expenses incurred by such Servicer during such Distribution Period in
connection with the performance of its obligations under this Agreement and
the other Transaction Documents, and (y) the other costs and expenses that
are to be paid out of the Servicing Fee, as described in the next sentence;
PROVIDED that the amount provided for in CLAUSE (x) shall not exceed
one-twelfth of 2% of the aggregate Unpaid Balance of the Receivables as
measured on the first Business Day of the Distribution Period. The fees,
costs and expenses of Trustee, the Paying Agent, any authenticating agent,
the Lockbox Banks, the
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Concentration Account Banks and the Transfer Agent and Registrar, and certain
other costs and expenses payable from the Servicing Fee pursuant to other
provisions of this Agreement, and all other fees and expenses that are not
expressly stated in this Agreement, any Series Supplement or any PI Agreement to
be payable by the Trust or Transferor, other than Federal, state, local and
foreign income and franchise taxes, if any, or any interest or penalties with
respect thereto, of the Trust, shall be paid out of the Servicing Fee and shall
be paid by Servicer from the funds that constitute the Servicing Fee.
SECTION 3.5 RECORDS OF SERVICER AND REPORTS TO BE PREPARED BY SERVICER.
(a) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Servicer shall maintain at all
times accurate and complete books, records and accounts relating to the
Receivables, Related Transferred Assets and Contracts of each Seller and all
Collections thereon in which timely entries shall be made. Servicer shall
maintain and implement administrative and operating procedures (including an
ability to generate duplicates of Records evidencing Receivables and the Related
Transferred Assets in the event of the destruction of the originals thereof),
and shall keep and maintain all documents, books, records and other information
that Servicer deems reasonably necessary for the collection of all Receivables
and Related Transferred Assets.
(b) RECEIVABLES REVIEWS. Servicer shall provide Trustee access to the
documentation regarding the Receivables when Trustee is required, in connection
with the enforcement of the rights of Certificateholders or the Purchasers or by
applicable statutes or regulations, to review such documentation, such access
being afforded without charge but only (i) upon reasonable request, (ii) during
normal business hours, (iii) subject to Servicer's normal security and
confidentiality procedures, (iv) at reasonably accessible offices in the
continental United States of America designated by Servicer and (v) upon five
Business Days' prior notice; PROVIDED that no notice shall be required if an
Early Amortization Event shall have occurred and be continuing; and PROVIDED,
FURTHER that no more than one such review during any calendar year shall be
conducted unless an Early Amortization Event shall have occurred and be
continuing.
(c) DAILY REPORTS. Prior to 2:00 p.m., New York City time, on each Business
Day, Servicer shall prepare and deliver to Trustee and any Agent a report
relating to each outstanding Series and Purchased Interest, substantially in the
form specified by the applicable Supplement or PI Agreement or in such other
form as is reasonably acceptable to Trustee and Servicer (each such
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report being a "DAILY REPORT") setting out, among other things, the Base Amount
and Series Collection Allocation Percentage for that Series or Purchased
Interest as of the end of business on the preceding Business Day; PROVIDED that
if, on any Business Day, Servicer is unable to prepare and deliver a Daily
Report to Trustee because of acts of God or the public enemy, riots, acts of
war, acts of terrorism, epidemics, fire, failure of communication lines,
equipment or power failure, computer systems failure, flood, embargoes, weather,
earthquakes or other unanticipated disruptions of Servicer's ability to monitor
the origination and/or preparation of Receivables, then (x) the Base Amount for
purposes of each outstanding Series and Purchased Interest shall be the lowest
Base Amount shown in the related Daily Reports delivered during the immediately
preceding month (such amount, an "ESTIMATED BASE AMOUNT") and (y) the Series
Collection Allocation Percentage for that Series or Purchased Interest shall be
the one most recently reported. Servicer may use an Estimated Base Amount and
the most recently reported Series Collection Allocation Percentage to prepare
the Daily Report until the earlier to occur of (i) the day upon which disruption
no longer prevents Servicer from preparing the Daily Report using the actual
data required by the Daily Report and delivering it to Trustee, and (ii) the
sixth Business Day following the commencement of such disruption.
(d) MONTHLY REPORT. On each Report Date, Servicer shall prepare and deliver
to Trustee and the Rating Agencies a report relating to each outstanding Series
and Purchased Interest, substantially in the form specified by the applicable
Supplement or PI Agreement or in such other form as is reasonably acceptable to
Trustee and Servicer (each such report being a "MONTHLY REPORT").
(e) NOTICE OF SELLER CHANGE EVENTS; SUPPLEMENTS TO MONTHLY REPORTS.
SECTIONS 1.7 and 1.8 of the Purchase Agreement describe circumstances under
which (i) additional Sellers may be added to the Program and (ii) a Seller may
terminate its status as Seller under the Program (each such event being a
"SELLER CHANGE EVENT"). Those Sections of the Purchase Agreement require Big
Flower to give written notice to Transferor of the occurrence of a Seller Change
Event not less than 30 days prior to the occurrence thereof, and Transferor
hereby agrees to give prompt written notice of its receipt of any such notice to
Trustee and the Rating Agencies. If the notice is given to Trustee, within five
Business Days after the receipt of the notice by Trustee (or such later date, as
specified in the notice, on which the applicable Seller Change Event shall
become effective), Servicer shall deliver to Trustee and the Rating Agencies a
supplement to the Monthly Report then in effect for each outstanding Series or
Purchased Interest, which supplement shall show the calculation (complete with
the historical and/or pro forma receivables data
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necessary to do such calculation) of (A) the Required Receivables and the
applicable reserve ratios (as described in each Supplement or PI Agreement) to
reflect the addition of accounts receivable originated by any Person that is
being added to the Program as a Seller, and the exclusion of any Receivables
originated by any such Person that is terminating its status as a Seller (as
applicable), and (B) the Loss Discount and the Purchase Discount for any such
Person that is being added to the Program as a Seller. For purposes of all
calculations hereunder and under the Purchase Agreement, the Required
Receivables, such reserve ratios and (if applicable) the Loss Discount and the
Purchase Discount for the relevant Person shown in such supplement shall
supersede and/or supplement the calculation of such items in the then
outstanding Monthly Report, effective as of the fifth Business Day following
Trustee's receipt of such notice (or such later date, as specified in such
notice, on which the applicable Seller Change Event shall become effective).
SECTION 3.6 MONTHLY SERVICER'S CERTIFICATE. On each Report Date, Servicer
shall deliver to Trustee, the Paying Agent, Transferor and the Rating Agencies a
certificate of an Authorized Officer of Servicer substantially in the form of
EXHIBIT C, with such additions as may be required by any Supplement.
SECTION 3.7 SERVICING REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS; FORMS 10-Q
AND 10-K. (a)(i) On or before 120 days after the end of each fiscal year of
Transferor beginning with the end of Transferor's fiscal year 1996, Servicer
shall, as an expense of Servicer paid out of the Servicing Fee, cause Deloitte &
Touche or another firm of recognized independent public accountants that is
generally recognized as being among the "big six" (which may also render other
services to Servicer, the Sellers or Transferor) to furnish a report to Trustee,
Servicer, the Rating Agencies and Transferor (which report shall be addressed to
Trustee and shall relate to Transferor's most recently ended fiscal year). The
accountants' report shall set forth the results of their performance of the
procedures described in EXHIBIT D with respect to the Monthly Reports and Daily
Reports delivered to Trustee pursuant to SECTION 3.5 during the prior fiscal
year.
(ii) Each accountants' report shall state that the accountants have
compared the amounts contained in the Monthly Reports and a sample randomly
selected from all Daily Reports delivered to Trustee during the period
covered by the report with the records (including computer records) from
which the amounts were derived and that, on the basis of such comparison, the
amounts are in agreement with the documents and records, except for such
exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in the report. Except as provided otherwise in a
Supplement, a copy of the report may be obtained by any Investor
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Certificateholder by a request in writing to Trustee addressed to the Corporate
Trust Office.
(b) Promptly after the filing of such reports with the Securities and
Exchange Commission, Servicer shall provide each of the Rating Agencies with
copies of each Quarterly Report on Form 10-Q and each Annual Report on Form 10-K
of Servicer.
SECTION 3.8 RIGHTS OF TRUSTEE.
(a) Trustee has the exclusive dominion and control over the Bank Accounts,
and, until such time as the Trust shall have been terminated pursuant to SECTION
12.1 and all amounts owed under the Transaction Documents have been paid in
full, Transferor shall take any action that Trustee may reasonably request to
effect or evidence such dominion and control. At any time following the
occurrence of a Servicer Default, Trustee is hereby authorized to give notice to
the Account Banks, as provided in the Account Agreements, of the revocation of
Servicer's authority to give instructions or take any other actions with respect
to the Bank Accounts that Servicer would otherwise be authorized to give or to
take.
(b) At any time following the occurrence of a Servicer Default and the
termination of the then acting Servicer (until a Successor Servicer (if other
than Trustee) has been appointed):
(i) Trustee may direct any Obligors of Receivables to pay all
amounts payable under any Receivable or any Related Transferred Assets
directly to Trustee or its designee; PROVIDED that Trustee shall
provide the applicable Seller with a copy of such notice at least one
Business Day prior to sending it to any Obligor and consult in good
faith with the applicable Seller as to the text of the notice.
(ii) Trustee may direct any Seller to make payment of all amounts
payable to Transferor under any Transaction Document to which the
Seller is a party directly to Trustee or its designee.
(iii) Transferor and Servicer shall, at Trustee's request and as an
expense of Servicer paid out of the Servicing Fee, give notice of the
Trust's ownership of the Receivables and the Related Transferred Assets
to each Obligor and direct that payments be made directly to Trustee or
its designee.
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(iv) Transferor shall, and shall cause the Sellers to, at
Trustee's request, (A) assemble all of the Records that are necessary or
appropriate to collect the Receivables and Related Transferred Assets, and
shall make the same available to Trustee at one or more places selected by
Trustee or its designee, (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections in a
manner acceptable to Trustee and shall, promptly upon receipt (and, subject
to SECTION 3.2(i), in no event later than the second Business Day following
receipt), remit all such cash, checks and instruments, duly endorsed or
with duly executed instruments of transfer, to a Bank Account or the Master
Collection Account and (C) permit, upon not less than two Business Days'
prior written notice, any Successor Servicer and its agents, employees and
assignees access to their respective facilities and their respective
Records.
(c) Each of Transferor and Servicer hereby authorizes Trustee, from time
to time after the occurrence of a Servicer Default and the termination of the
then acting Servicer (until a Successor Servicer (if other than Trustee) has
been appointed), to take any and all steps in Transferor's name and on behalf of
Transferor and Servicer that are necessary or appropriate, in the reasonable
determination of Trustee, to collect all amounts due under any and all
Receivables or Related Transferred Assets, including endorsing the name of
Transferor or the applicable Seller on checks and other instruments representing
Collections and enforcing such Receivables and the Related Transferred Assets.
(d) Transferor hereby irrevocably appoints Trustee to act as Transferor's
attorney-in-fact, with full authority in the place and stead of Transferor and
in the name of Transferor or otherwise, from time to time after the occurrence
of a Servicer Default and the termination of the then acting Servicer (until a
Successor Servicer (if other than Trustee) has been appointed), to take (subject
to SECTION 11.14) any action and to execute any instrument or document that
Trustee, in its reasonable determination, may deem necessary to accomplish the
purposes of this Agreement, including:
(i) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any Receivable or any Related Transferred Asset;
(ii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with CLAUSE (i);
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(iii) to file any claims or take any action or institute any proceedings
that Trustee in its reasonable determination may deem necessary or appropriate
for the collection of any of the Receivables or any Related Transferred Asset or
otherwise to enforce the rights of Trustee and the Certificateholders with
respect to any of the Receivables or any Related Transferred Asset; and
(iv) to perform the affirmative obligations of Transferor under any
Transaction Document.
Transferor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 3.9 ONGOING RESPONSIBILITIES OF BIG FLOWER. Anything herein to the
contrary notwithstanding:
(a) If at any time Big Flower shall not be Servicer, Big Flower shall
deliver all Collections received or deemed received by it or its
Subsidiaries to Trustee no later than two Business Days after receipt or
deemed receipt thereof and Trustee shall distribute such Collections to the
same extent as if such Collections had actually been received from the
related Obligor on the applicable dates. So long as Big Flower or any of
its Subsidiaries shall hold any Collections or deemed Collections required
to be paid to Trustee, each of them shall hold such amounts intrust (and
separate and apart from its own funds) and shall clearly mark its records
to reflect such trust. Big Flower hereby grants to Trustee an irrevocable
power of attorney, with full power of substitution, coupled with an
interest, upon the occurrence of a Servicer Default, to take in the name of
Big Flower all steps necessary or appropriate to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or
transmitted by Big Flower or transmitted and received by Trustee (whether
or not from Big Flower) in connection with any Receivable or Related
Transferred Asset.
(b) In addition, if at any time Big Flower shall not be Servicer, Big
Flower shall act (if the Successor Servicer so requests) as the data
processing agent of Servicer and, in such capacity, Big Flower shall
conduct (and shall cause any other necessary Persons to conduct) the data
processing functions of the administration of the Receivables, the Related
Transferred Assets and the Collections thereon in substantially the same
way that Big Flower (or its Sub-Servicers) conducted such data processing
functions while Big Flower acted as Servicer. Big
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Flower and each such other Person shall be entitled to reasonable
compensation for such service to be paid from the Servicing Fee.
(c) Notwithstanding any termination of Big Flower as Servicer
hereunder, Big Flower shall continue to indemnify Trustee on the terms set
out in SECTION 11.5 with respect to circumstances existing, or actions
taken or omitted, prior to such termination.
SECTION 3.10 FURTHER ACTION EVIDENCING TRANSFERS. Servicer shall cause all
financing statements and continuation statements and any other necessary
documents relating to the right, title and interest of Trustee in and to the
Transferred Assets to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
right, title and interest of Trustee hereunder in and to all property comprising
the Transferred Assets. Servicer shall deliver to Trustee file-stamped copies
of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration or
filing. Transferor shall cooperate fully with Servicer in connection with the
obligations set forth above and will execute any and all documents that are
reasonably required to fulfill the intent of this section.
If Transferor or Servicer fails to perform any of its agreements or
obligations under any Transaction Document and does not remedy such failure
within the applicable cure period, if any, then Trustee or its designee may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of Trustee or its designee
incurred in connection therewith shall be payable by Servicer as provided in
SECTION 11.5 and (if applicable) by Transferor as provided in Section 7.3.
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS
SECTION 4.1 RIGHTS OF CERTIFICATEHOLDERS. Each Series of Investor
Certificates shall collectively represent a fractional undivided beneficial
interest (as to any Series, the "Series Interest") in the Trust, and the amount
of that undivided beneficial interest shall equal the Series Collection
Allocation Percentage for that Series from time to time. Each Certificate
within a Series shall represent a partial ownership interest in the related
Series Interest, representing the right to receive, to the extent necessary to
make the required payments with respect to that Certificate at the times and in
the amounts specified in this Article IV and in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and such Supplement, funds on deposit in the
Transaction
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Accounts allocable to Investor Certificateholders of such Series and funds
available pursuant to any related Enhancement. Unless the applicable Supplement
or PI Agreement provides otherwise, the Investor Certificates of any Series or
class shall not represent any interest in any funds allocable to, or Enhancement
for the benefit of, any other Series or Purchased Interest. The Transferor
Certificate shall represent an interest in the Trust (the "TRANSFEROR
INTEREST") consisting of the right to receive current and deferred transfer
payments in respect of the various Series and Purchased Interests outstanding
from time to time at the times and in the amounts specified in the related
Supplements and PI Agreements.
SECTION 4.2 ESTABLISHMENT OF TRANSACTION ACCOUNTS. (a) On or prior to the
date of this Agreement, Trustee has established, and until the Trust is
terminated Trustee shall (except as expressly permitted or required below)
maintain, in the name of Trustee and for the benefit of the Certificate holders
and Purchasers, the following accounts:
(i) account no. 185611860, which shall be called the "MASTER
COLLECTION ACCOUNT" and into which all Collections and all other
Transferred Assets consisting of cash or cash equivalents shall be
transferred on a daily basis from the Bank Accounts;
(ii) account no. 185611951, which shall be called the "CARRYING COST
ACCOUNT" and into which funds shall be allocated from time to time to cover
carrying costs of each Series and Purchased Interest (including interest
payable on, and the Servicing Fee allocated to, each Series and Purchased
Interest);
(iii) account no. 185612041, which shall be called the "EQUALIZATION
ACCOUNT" and into which funds will from time to time be transferred from
the Master Collection Account to compensate for fluctuations in the Base
Amounts for the outstanding Series and Purchased Interests; and
(iv) account no. 185612132, which shall be called the "PRINCIPAL
FUNDING ACCOUNT" and into which funds will from time to time be transferred
in anticipation of distributions to the Holders of Investor Certificates or
Purchasers on account of their respective principal investments.
(b) In addition, if an Early Amortization Period occurs with respect to
any Series or Purchased Interest, Trustee shall establish an additional account
which shall be called the "HOLDBACK ACCOUNT" and into which funds that would
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otherwise be remitted by Trustee to the Transferor in respect of the Transferor
Certificate will be deposited to the extent so provided in the related
Supplement or PI Agreement.
(c) The Master Collection Account, the Carrying Cost Account, the
Equalization Account, the Principal Funding Account, any Holdback Account and
any additional accounts required by any Supplement or PI Agreement to be
established (unless otherwise indicated in such Supplement or PI Agreement) are
collectively called the "TRANSACTION ACCOUNTS." Each of the Transaction
Accounts shall be established and maintained as an Eligible Deposit Account and
shall bear a designation clearly indicating that funds deposited therein are
held for the benefit of the Certificateholders and the Purchasers. If any
Transaction Account ceases to be an Eligible Deposit Account, Servicer shall
cause Trustee to open a substitute Transaction Account that is an Eligible
Deposit Account and transfer the funds in the existing Transaction Account to
the substitute Transaction Account, and thereafter all references in any
Transaction Document to the original Transaction Accout shall be deemed
instead to refer to the substitute Transaction Account.
(d) The Master Collection Account, the Carrying Cost Account, the
Equalization Account, the Principal Funding Account and any Holdback Account
shall be held by Trustee for the benefit of all Certificate holders and
Purchasers. However, there shall be established within each of the Carrying Cost
Account, the Equalization Account, the Principal Funding Account and any
Holdback Account an administrative sub-account for each outstanding Series and
Purchased Interest. Funds allocated to the Carrying Cost Account, the
Equalization Account, the Principal Funding Account and any Holdback Account
pursuant to any Supplement or PI Agreement shall be allocated to the applicable
Series' or Purchased Interest's sub-account and shall be available solely to
the holders of the Certificates in that Series or the Purchaser of that
Purchased Interest, as applicable, except to the extent that such funds are
subsequently reallocated to another Series or Purchased Interest, or the
Transferor, in accordance with the terms of the applicable Supplement or
Purchase Agreement and this Agreement. Any additional Transaction Accounts
established pursuant to any Supplement or PI Agreement shall be held by Trustee
for the benefit of only the related Series or Purchased Interest.
(e) Trustee shall possess (for its benefit and for the benefit of the
Certificate holders and the Purchasers) all right, title and interest in and to
all funds on deposit from time to time in each of the Transaction Accounts and
in all proceeds thereof. The Transaction Accounts shall be under the sole
dominion and control of Trustee for the benefit of the applicable Certificate
holders and/or Purchasers. Each of Servicer and Trustee agrees that
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it shall have no right of setoff against, and no right otherwise to deduct
from, any funds held in any of the Transaction Accounts or the Bank Accounts for
any amount owed to it by the Trust, any party hereto or any Certificateholder or
Purchaser.
SECTION 4.3 TRUST-LEVEL CALCULATIONS AND FUNDS ALLOCATIONS.
(a) ALLOCATION OF DAILY COLLECTIONS. On each Business Day, Servicer shall
determine the amount of collected funds received in the Master Collection
Account (other than funds that are required to be returned to Big Flower Persons
(or their designees) pursuant to SECTIONS 3.2(b) and 3.3(b)) since the preceding
Business Day and shall allocate to each outstanding Series and Purchased
Interest a share of such funds in an amount equal to the product of the
applicable Series Collection Allocation Percentage and the amount of such funds.
The portion of such funds allocated to any Series or Purchased Interest shall be
further allocated and otherwise dealt with in accordance with the terms of the
related Supplement or PI Agreement. In addition, funds initially allocated to a
Series or Purchased Interest on any Business Day that are designated as Shared
Investor Collections shall be reallocated to other Series or Purchased Interests
PRO RATA based upon the respective Shortfalls (if any) of the other Series and
Purchased Interests.
(b) ALLOCATION OF WRITE-OFFS AND DILUTION. In each Monthly Report relating
to a Series or Purchased Interest that is in an Early Amortization Period,
Servicer shall calculate the amount of (i) Write-Offs (net of Recoveries) and
(ii) Dilutions as to which no settlement payment has been made pursuant to
Section 3.3 of the Purchase Agreement, in each case during the related
Calculation Period (or the portion of that Calculation Period falling in the
Early Amortization Period) and shall allocate to such Series or Purchased
Interest a portion of the amounts referred to in CLAUSES (I) and (II) equal
to the product of each such amount and the related Series Loss Allocation
Percentage.
SECTION 4.4 INVESTMENT OF FUNDS IN TRANSACTION ACCOUNTS. On any day when
there are any funds on deposit in any Transaction Account (after giving effect
to the allocations of such funds required by this Article IV and the various
Supplements and PI Agreements), and at such other times as investment is
practicable, Trustee, at the direction of Transferor (or Servicer on its
behalf) shall invest and reinvest monies on deposit in such Transaction Account
(in the name of Trustee) in such Eligible Investments as are specified in a
notice from Servicer, subject to the restrictions set forth hereinafter;
PROVIDED; HOWEVER, that whenever an Early Amortization Event shall be existing,
such investments shall be made at the direction of Servicer. All
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Eligible Investments made from funds in any Transaction Account, and the
interest, dividends and income received thereon and therefrom and the net
proceeds realized on the sale thereof, shall be deposited in such Transaction
Account. Trustee may liquidate an Eligible Investment prior to maturity if such
liquidation would not result in a loss of all or part of the principal portion
of such Eligible Investment or if, prior to the maturity of such Eligible
Investment, a default occurs in the payment of principal, interest or any other
amount with respect to such Eligible Investment. In the absence of negligence of
Trustee or willful misconduct by Trustee, Trustee shall have no liability in
connection with investment losses incurred on Eligible Investments. It is
intended for income tax purposes that the income earned through investment of
funds in the Transaction Accounts shall be treated as income of Transferor.
SECTION 4.5 ATTACHMENT OF TRANSACTION ACCOUNTS. If Trustee receives written
notice that any Transaction Account has or will become subject to any writ,
judgment, warrant of attachment, execution or similar process, Trustee shall
(notwithstanding any other provision of the Transaction Documents) promptly
notify Transferor, Servicer and the Certificateholders thereof, and shall not
deposit or transfer funds into such Transaction Account but shall cause funds
otherwise required to be deposited into such Transaction Account to be held in
another account pending distribution of such funds in the manner required by
the Transaction Documents.
ARTICLE V DISTRIBUTIONS AND REPORTS
DISTRIBUTIONS SHALL BE MADE, AND REPORTS SHALL BE PROVIDED, TO
CERTIFICATE HOLDERS AS SET FORTH IN THE APPLICABLE SUPPLEMENT.
ARTICLE VI THE CERTIFICATES
SECTION 6.1 THE CERTIFICATES. The Investor Certificates in each Series
shall be substantially in the forms contemplated by the Supplements pursuant to
which the Investor Certificates are issued, and the Transferor Certificate shall
be substantially in the form of Exhibit E. Upon issuance, all Certificates shall
be executed and delivered by Transferor to Trustee for authentication and
redelivery as provided in SECTIONS 6.2 and 6.10. Except to the extent provided
otherwise in an applicable Supplement, Investor Certificates shall be issued in
minimum denominations of $2,000,000 and in integral multiples of $100,000 and
shall not be subdivided for resale into Certificates smaller than a Certificate,
the initial offering price for which would have been at least $2,000,000.
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Each Certificate issued as a Definitive Certificate shall be executed by
manual or facsimile signature on behalf of Transferor by its President or any
Vice President or by any attorney-in-fact duly authorized to execute the
Definitive Certificate on behalf of any such officer. The Definitive
Certificates shall be authenticated on behalf of the Trust by manual signature
of a duly authorized signatory of Trustee. Definitive Certificates bearing the
manual or facsimile signature of the individual who was, at the time when the
signature was affixed, authorized to sign on behalf of Transferor or the Trust
(as applicable) shall be valid and binding, notwithstanding that the individuals
or any of them ceased to be so authorized prior to the authentication and
delivery of the Definitive Certificates or does not hold such office on the date
of issuance of such Definitive Certificates. No Definitive Certificates shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on the Definitive Certificate a certificate of
authentication substantially in the form provided for herein executed by or on
behalf of Trustee by the manual signature of a duly authorized signatory, and
the certificate of authentication upon any Definitive Certificate shall be
conclusive evidence, and the only evidence, that the Definitive Certificate has
been duly authenticated and delivered hereunder and is entitled to the benefits
of this Agreement. Except as otherwise provided in the applicable Supplement,
all Definitive Certificates shall be dated the date of their authentication.
As provided in any Supplement, Investor Certificates of any Series may be
offered and sold pursuant to an offering registered under the Securities Act or
issued and sold pursuant to an exemption from the Securities Act. Any Series
sold pursuant to a public offering registered under the Securities Act, Rule
144A, Regulation S or another exemption under the Securities Act may be
delivered in book-entry form as provided in SECTIONS 6.12 and 6.13.
SECTION 6.2 AUTHENTICATION OF CERTIFICATES. Contemporaneously with the
initial assignment and transfer of Receivables and other Transferred Assets to
the Trust, Trustee shall authenticate and deliver the Transferor Certificate to
Transferor. On each Issuance Date, upon the order of Transferor, Trustee shall
authenticate and deliver to Transferor the Series of Certificates that are to be
issued originally on such Issuance Date pursuant to the applicable Supplement.
SECTION 6.3 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a)
Trustee, as agent for Transferor, shall keep, or shall cause to be kept, at the
office or agency to be maintained in accordance with the provisions of SECTION
11.16, a register in written form or capable of being converted into written
form within a reasonable time (the "CERTIFICATE REGISTER") in which, subject to
such reasonable regulations as it may prescribe, a transfer agent and
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registrar (which may be Trustee) (the "TRANSFER AGENT AND REGISTRAR") shall
provide for the registration of the Certificates and of transfers and exchanges
of the Certificates as herein provided. Transferor hereby appoints Trustee as
the initial Transfer Agent and Registrar.
Transferor, or Trustee as agent for Transferor, may revoke the appointment
as Transfer Agent and Registrar and remove the then-acting Transfer Agent and
Registrar if Trustee or Transferor (as applicable) determines in its sole
discretion that the then-acting Transfer Agent and Registrar has failed to
perform its obligations under this Agreement in any material respect. The then-
acting Transfer Agent and Registrar shall be permitted to resign as Transfer
Agent and Registrar upon 30 days' prior written notice to Trustee, Transferor
and Servicer; PROVIDED that such resignation shall not be effective and the
then-acting Transfer Agent and Registrar shall continue to perform its duties as
Transfer Agent and Registrar until Trustee has appointed a successor Transfer
Agent and Registrar reasonably acceptable to Transferor and the Person so
appointed has given Trustee written notice that it accepts the appointment. The
provisions of SECTIONS 11.1 through 11.5 shall apply to the Transfer Agent and
Registrar as if all references to "Trustee" in the applicable provisions of
SECTIONS 11.1 through 11.5 were references to the Transfer Agent and Registrar.
It is intended that the registration of Certificates that is described in
this Section comply with the registration requirements contained in SECTION 163
of the Internal Revenue Code.
(b) No transfer of all or any part of the Transferor Certificate shall be
made unless (i) Transferor shall have given the Rating Agencies and Trustee
prior written notice of the proposed transfer, (ii) the Modification Condition
shall have been satisfied in connection with the proposed transfer and (iii)
Transferor shall have delivered to Trustee, the Rating Agencies, each Purchaser
and each Enhancement Provider a Tax Opinion for each outstanding Series of
Investor Certificates, Purchased Interest and Enhancement.
(c) Subject to the requirements of SUBSECTION (e), if applicable, having
been fulfilled, upon surrender for registration of transfer of any Certificate,
and, in the case of Investor Certificates, at any office or agency of the
Transfer Agent and Registrar maintained for such purpose, Transferor shall
execute, and Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the
appropriate class and Series that are in authorized denominations of like
aggregate fractional interest in the related Series Interest that bear numbers
that are not contemporaneously outstanding.
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At the option of an Investor Certificateholder, its Investor Certificates
may be exchanged for other Investor Certificates of the same class and Series
(and bearing the same interest rate as the Investor Certificate surrendered
for registration of exchange) of authorized denominations of like aggregate
fractional interests in the related Series Interest and bearing numbers that
are not contemporaneously outstanding, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any
Investor Certificates are so surrendered for exchange, Transferor shall
execute, and Trustee shall authenticate and deliver, the appropriate number
of Investor Certificates of the class and Series that the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form
satisfactory to Trustee or the Transfer Agent and Registrar duly executed by
the Certificateholder thereof or his attorney-in-fact duly authorized in a
writing delivered to the Transfer Agent and Registrar.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Transfer Agent and Registrar may require the
Certificateholder to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Investor Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be canceled and disposed of in a manner satisfactory to Trustee.
(d) Certificates may be surrendered for registration of transfer or
exchange at the office of the Transfer Agent and Registrar designated in
SECTION 13.6.
(e) Unless otherwise provided in the applicable Supplement,
Certificateholders holding Definitive Certificates shall not sell, transfer or
otherwise dispose of the Certificates unless the sale, transfer or disposition
is being made pursuant to an exemption from the registration requirements of the
Securities Act and applicable state securities laws and, prior to the proposed
sale, transfer or disposition, the Certificateholder and the proposed transferee
each provide Trustee and Transferor with representations and, if requested by
Trustee or Transferor, an Opinion of Counsel concerning the proposed sale,
transfer or disposition and the availability of the exemption.
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(f) The Investor Certificates shall bear such restrictive legends as shall
be set forth in the applicable Supplements.
SECTION 6.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any
mutilated Certificate is surrendered to the Transfer Agent and Registrar, or
the Transfer Agent and Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to
the Transfer Agent and Registrar and Trustee such security or indemnity as
may be required by them and Transferor to hold each of them, the Trust and
Transferor harmless, then, in the absence of notice to Trustee that such
Certificate has been acquired by a BONA FIDE purchaser, Transferor shall
execute and, upon the request of Transferor, Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like class, Series, tenor, terms and
principal amount and bearing a number that is not contemporaneously
outstanding. In connection with the issuance of any new Certificate under
this section, Trustee or the Transfer Agent and Registrar may require the
payment by the Certificateholder 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 reasonable fees and expenses of Trustee and
Transfer Agent and Registrar) connected therewith. Any duplicate Certificate
issued pursuant to this section shall constitute conclusive and indefeasible
evidence of ownership of an interest in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be enforceable
by anyone, and shall be entitled to all the benefits of this Agreement
equally and proportionately with any and all Certificates of the same class
and Series that are duly issued hereunder.
SECTION 6.5 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, Transferor, Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to ARTICLE V and
for all other purposes whatsoever, and none of Transferor, Trustee, the Paying
Agent, the Transfer Agent and Registrar or any agent of any of them shall be
affected by any notice to the contrary; PROVIDED that, in determining whether
the Holders of the requisite principal amount or stated amount (as applicable)
of Certificates or Purchased Interests have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates and
Purchased Interests owned by Transferor, Servicer or any Affiliate thereof shall
be disregarded and deemed not to be outstanding, except that, in determining
whether Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only
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Certificates and Purchased Interests that Trustee knows to be so owned shall be
so disregarded. Certificates and Purchased Interests so owned that have been
pledged in good faith shall not be disregarded and may be regarded as
outstanding if the pledgee establishes to the satisfaction of Trustee the
pledgee's right so to act with respect to such Certificates or Purchased
Interests and that the pledgee is not Transferor, Servicer or an Affiliate
thereof.
SECTION 6.6 APPOINTMENT OF PAYING AGENT. The Paying Agent initially shall
be Trustee. Transferor hereby appoints the Paying Agent as its agent to make
distributions to Certificateholders pursuant to the applicable Supplements and
to report the amounts of the distributions to Trustee. Any Paying Agent shall
have the revocable power to withdraw funds from the Master Collection Account
for the purpose of making the distributions. Trustee or, at any time when
Trustee is also the Paying Agent, Transferor may revoke such power of the Paying
Agent and remove the Paying Agent if Trustee or Transferor (as applicable)
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' prior written
notice to Trustee, Transferor, Servicer and the Rating Agencies. Any resignation
or removal of the Paying Agent, and appointment of a successor Paying Agent,
shall not become effective until the appointment has been accepted by the
successor Paying Agent. If no successor Paying Agent shall have been appointed
and shall have accepted appointment within 30 days after the giving of the
notice of resignation, the resigning Paying Agent may petition any court of
competent jurisdiction to appoint a successor Paying Agent. In the event that
Trustee shall no longer be the Paying Agent, Trustee shall appoint a successor
Paying Agent (which shall be a bank or trust company) reasonably acceptable to
Transferor, which appointment shall be effective on the date on which the Person
so appointed gives Trustee written notice that it accepts the appointment.
Trustee shall cause the successor Paying Agent or any additional Paying Agent
appointed by Trustee to execute and deliver to Trustee an instrument in which it
shall agree with Trustee that, as Paying Agent, it will hold all sums, if any,
held for payment to the Certificateholders and Purchasers in trust for the
benefit of the Certificateholders and Purchasers entitled thereto until the sums
shall be paid to the Certificateholders and Purchasers. The Paying Agent shall
return all unclaimed funds to Trustee, and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to Trustee. The
provisions of SECTIONS 11.1 through 11.5 shall apply to the Paying Agent as if
all references in the applicable provisions thereof to "Trustee" were references
to the Paying Agent.
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SECTION 6.7 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
Trustee will furnish or cause to be furnished by the Transfer Agent and
Registrar to Transferor, Servicer, any Seller or the Paying Agent, within two
Business Days after receipt by Trustee of a written request therefor from
Servicer or the Paying Agent, a list in the form Servicer or the Paying Agent
may reasonably require of the names and addresses of the Certificateholders as
of the most recent Distribution Date. If any Holder or group of Holders of
Investor Certificates in any Series evidencing not less than 10% of the
aggregate unpaid principal amount of the Series (the "APPLICANT") applies in
writing to Trustee, and the application states that the Applicant desires to
communicate with other Certificateholders with respect to their rights under
this Agreement, any Supplement or the Certificates and is accompanied by a copy
of the communication that the Applicant proposes to transmit, then Trustee,
after having been adequately indemnified by the Applicant for its costs and
expenses, shall afford or shall cause the Transfer Agent and Registrar to afford
the Applicant access during normal business hours to the most recent list of
Certificateholders held by Trustee, within five Business Days after the receipt
of the application and indemnification. The list shall be as of a date no more
than 45 days prior to the date of receipt of the Applicant's request.
Every Certificateholder, by receiving and holding a Certificate, agrees
with Trustee that neither Trustee, the Transfer Agent and Registrar, Transferor,
Servicer, any Seller nor any of their respective agents shall be held
accountable by reason of the disclosure of any information as to the names and
addresses of the Certificateholders hereunder, regardless of the sources from
which the information was derived.
SECTION 6.8 AUTHENTICATING AGENT. (a) Trustee may appoint one or more
authenticating agents with respect to the Certificates that shall be authorized
to act on behalf of Trustee in authenticating the Certificates in connection
with the issuance, delivery, registration of transfer, exchange or repayment of
the Certificates. Either Trustee or the authenticating agent, if any, then
appointed and acting on behalf of Trustee shall authenticate the Certificates.
Whenever reference is made in this Agreement to the authentication of
Certificates by Trustee or Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of Trustee by an
authenticating agent and a certificate of authentication executed on behalf of
Trustee by an authenticating agent. Each authenticating agent must be acceptable
to Transferor.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
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execution or filing of any document or any further act on the part of Trustee,
the authenticating agent or any other Person.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to Trustee and Transferor. Trustee may at any time
terminate the agency of an authenticating agent by giving notice of termination
to the authenticating agent and Transferor. Upon receiving a notice of
resignation or upon a termination, or in case at any time an authenticating
agent shall cease to be acceptable to Trustee or Transferor, Trustee may
promptly appoint a successor authenticating agent. Any successor authenticating
agent, upon acceptance of its appointment, shall become vested with all the
rights, powers and duties of its predecessor, with like effect as if originally
named as an authenticating agent. No successor authenticating agent shall be
appointed unless acceptable to Trustee and Transferor.
(d) Servicer agrees to pay to each authenticating agent (if any), as an
expense of Servicer paid out of the Servicing Fee, reasonable compensation from
time to time for services performed under this section.
(e) The provisions of SECTIONS 11.1, 11.2 and 11.3 shall be applicable to
any authenticating agent as if the references in the applicable provisions
thereof to "Trustee" were references to the authenticating agent.
(f) Pursuant to an appointment made under this section, the Certificates
may have endorsed thereon, in lieu of Trustee's certificate of authentication,
an alternate certificate of authentication in substantially the following form:
"This is one of the Certificates described in the
Supplement dated as of , 199 .
---------- ---- ---
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
-----------------------------
as Authenticating Agent
for Trustee,
By:
-----------------------------
Authorized Officer."
SECTION 6.9 Tax Treatment. It is the intent of Transferor and the Investor
Certificateholders that, for purposes of Federal, state and local
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income and franchise taxes and other taxes measured by or imposed on income,
the Investor Certificates will be treated as evidence of indebtedness secured by
the Transferred Assets and the Trust will not be characterized as an association
taxable as a corporation. Transferor, by entering into this Agreement, and each
Investor Certificateholder, by its acceptance of its Investor Certificate, agree
to treat the Investor Certificates as indebtedness (or, if so provided in the
applicable Supplement, an interest in a partnership) for purposes of Federal,
state and local income and franchise taxes and any other taxes measured by or
imposed on income. The provisions of this Agreement and all related Transaction
Documents shall be construed to further these intentions of the parties. In
accordance with the foregoing, Transferor agrees that it will report its income
for purposes of Federal, state and local income or franchise taxes, and any
other taxes measured by or imposed on income, on the basis that it is the owner
of the Receivables. Except to the extent otherwise required by applicable law or
any Governmental Authority, Trustee hereby agrees to treat the Trust as a
security device only, and shall not file tax returns or obtain an employer
identification number on behalf of the Trust.
SECTION 6.10 ISSUANCE OF ADDITIONAL SERIES OF CERTIFICATES AND SALES OF
PURCHASED INTERESTS. (a) Transferor may from time to time issue and direct
Trustee to authenticate one or more classes of any newly issued Series of
Investor Certificates (a "NEW ISSUANCE"). In addition, to the extent permitted
for any Series of Investor Certificates as specified in the related Supplement,
the Investor Certificate holders of the Series may tender their Investor
Certificates to Trustee, and Transferor may allocate a portion of the Transferor
Interest pursuant to the terms and conditions set forth in the Supplement, in
exchange for one or more newly issued Series of Investor Certificates (an
"INVESTOR EXCHANGE"). New Issuances and Investor Exchanges collectively are
referred to as "ISSUANCES".
(b) Transferor may direct Trustee to authenticate an Issuance by
notifying Trustee, in writing, at least five Business Days (or such shorter
period as shall be acceptable to Trustee) in advance (an "ISSUANCE NOTICE")
of the date upon which the Issuance is to occur (an "ISSUANCE DATE"). Any
Issuance Notice shall state the designation of any Series to be issued on the
Issuance Date and, with respect to each class or Series: (i) its initial
invested amount (or the method for calculating the initial invested amount),
(ii) its interest rate (or the method for allocating interest payments or
other cash flows to the Series), if any, and (iii) the Enhancement Provider,
if any, with respect to the Series.
(c) On the Issuance Date, Transferor shall deliver to Trustee for
authentication under SECTION 6.2, and Trustee shall authenticate and deliver any
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such class or classes of Series of Investor Certificates only upon delivery to
it (and, in the case of item (iv) below, each Rating Agency, Purchaser and any
Enhancement Provider) of the following:
(i) a Supplement satisfying the criteria set forth in SUBSECTION (d)
and in form reasonably satisfactory to Trustee executed by Transferor and
Servicer and specifying the principal terms of the Series;
(ii) the applicable Enhancement, if any;
(iii) the agreement, if any, pursuant to which the Enhancement
Provider agrees to provide the Enhancement, if any;
(iv) a Tax Opinion for each outstanding Series of Investor
Certificates, Purchased Interest and Enhancement with respect to such
Issuance;
(v) evidence that the Modification Condition has been satisfied with
respect to such Issuance (unless such Issuance occurs on the First Issuance
Date);
(vi) for any Issuance other than an Issuance occurring on the First
Issuance Date, an Officer's Certificate of Transferor that on the Issuance
Date, after giving effect to the Issuance (and the repayment, on the date
of the Issuance, of any existing Investor Certificates with funds
(including proceeds of sale of the new Series) on deposit in the Principal
Funding Account), any requirements set out in the Supplement with respect
to any then-outstanding Series with respect to the amount of Certificates
that may not, by their terms, be transferred has been satisfied;
(vii) an Officer's Certificate of Servicer stating that no Early
Amortization Event or Unmatured Early Amortization Event has occurred and
is continuing and that there is not a substantial likelihood that the
Issuance would result in an Early Amortization Event or an Unmatured Early
Amortization Event at any time in the future;
(viii) in the case of an Investor Exchange, any Investor Certificates
that are being exchanged in connection therewith;
(ix) any other documents, certificates and Opinions of Counsel as may
be required by the applicable Supplement; and
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(x) an Officer's Certificate of Servicer to the effect that all
conditions specified in CLAUSES (i) through (ix) have been satisfied.
Upon satisfaction of the conditions, Trustee shall cancel any applicable
Investor Certificates and issue, as provided above, the new Series of Investor
Certificates dated the Issuance Date. Any such Series of Investor Certificates
shall be substantially in the form specified in the related Supplement and shall
bear, upon its face, the designation for the Series to which it belongs, as
selected by Transferor. There is no limit to the number of Issuances that may be
made under this Agreement.
(d) In conjunction with an Issuance, the parties hereto shall execute a
Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor Certificates, which may include: (i) its name or
designation, (ii) the initial invested amount or the method of calculating the
initial invested amount, (iii) the applicable interest rate (or formula for the
determination thereof), (iv) the Issuance Date, (v) the rating agency or
agencies rating the Series, if any, (vi) the name of the Clearing Agency, if
any, (vii) the interest payment date or dates and the date or dates from which
interest shall accrue, (viii) the method of allocating Collections with respect
to Receivables for the Series and, if applicable, with respect to any paired
Series and the method by which the principal amount of Investor Certificates of
the Series shall amortize or accrete and the method for allocating write-offs,
(ix) the names of any accounts to be used by the Series and the terms governing
the operation of any such account, (x) the terms of any Enhancement with
respect to the Series, (xi) the Enhancement Provider, if applicable, (xii) the
base rate applicable to the Series, (xiii) the terms on which the Certificates
of the Series may be repurchased or remarketed to other investors, (xiv) any
deposit into any account provided for the Series, (xv) the number of classes of
the Series, and if more than one class, the rights and priorities of each class,
(xvi) whether any fees, breakage payments or early termination payments will
be included in the funds available to be paid for the Series, (xvii) the
subordination of the Series to any other Series, (xviii) whether the Series
will be a part of a group or subject to being paired with any other Series,
(xix) whether the Series will be prefunded and (xx) any other relevant terms
of the Series. The terms of the Supplement may modify or amend the terms of this
Agreement or the Purchase Agreement (including the related definitions) solely
as applied to the new Series.
(e) Except as specified in any Supplement for the related Series, all
Investor Certificates of any Series shall rank PARI PASSU and be equally and
ratably entitled as provided herein to the benefits hereof (except that the
Enhancement provided for any Series shall not be available for any other
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Series) without preference, priority or distinction on account of the actual
time or times of authentication and delivery, all in accordance with the terms
and provisions of this Agreement and the related Supplement.
(f) Transferor may from time to time direct Trustee, on behalf of the
Trust, to sell one or more Purchased Interests pursuant to, and direct Trustee
to enter into, a PI Agreement. No Purchased Interest shall represent any
interest in any Enhancement for the benefit of any Series, any class of Investor
Certificates or any other Purchased Interest, any Transaction Account
established pursuant to any Supplement or the PI Agreement relating to any other
Purchased Interest except to the extent set forth in the PI Agreement with
respect to such other Purchased Interest. Each PI Agreement may provide that no
Investor Certificate holder, Purchaser under any other PI Agreement or
Enhancement Provider shall be a third-party beneficiary thereof or have any
benefit or any legal or equitable right, remedy or claim under the PI
Agreement.
(g) On or before the date of the initial sale of a Purchased Interest
pursuant to a particular PI Agreement, the parties hereto and the related
Purchaser will execute and deliver a PI Agreement that will specify the terms of
the Purchased Interest. The terms of the PI Agreement may modify or amend the
terms of this Agreement solely as applied to the Purchased Interest. The
obligation of Trustee to execute and deliver the related PI Agreement is
subject to the satisfaction of the following conditions:
(i) on or before the tenth Business Day (or a shorter period as shall
be acceptable to the parties) immediately preceding the related Issuance
Date, Transferor shall have given Trustee, Servicer, each Rating Agency,
each Purchaser and each Enhancement Provider (if any) written notice of the
sale of the Purchased Interest and the Issuance Date;
(ii) Transferor shall have delivered to Trustee the related PI
Agreement, in form satisfactory to Trustee, each executed by each party
thereto other than Trustee;
(iii) the Modification Condition shall have been satisfied with
respect to the sale;
(iv) the sale will not (A) contravene any provision of this
Agreement, any Supplement, any agreement pursuant to which any Enhancement
is provided or any PI Agreement (or any agreement related thereto) or
(B) constitute, or result in (or have a substantial
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likelihood that it will result, at any time in the future, in) the
occurrence of, an Early Amortization Event or an Unmatured Early
Amortization Event;
(v) Transferor shall have delivered to Trustee, each Rating Agency,
each Purchaser and any Enhancement Provider, a Tax Opinion for each
outstanding Series of Investor Certificates, Purchased Interest and
Enhancement, dated the Issuance Date, with respect to the sale; and
(vi) Transferor shall have delivered to Trustee an Officer's
Certificate, dated the Issuance Date for such Purchased Interest, to the
effect that all conditions set forth in CLAUSES (i) and (iv) of this
Section for the sale of the Purchased Interest and the execution and
delivery of the related PI Agreement has been satisfied.
Upon satisfaction of the above conditions, Trustee shall execute and, at the
written direction of Transferor, deliver the related PI Agreement and any
related documents that Transferor shall reasonably request. The terms of the PI
Agreement may modify or amend the terms of this Agreement or the Purchase
Agreement (including the related definitions) solely as applied to the new
Purchased Interest.
(h) Transferor may from time to time direct Trustee to extend any PI
Agreement, subject to the satisfaction of the following conditions:
(i) on or before the tenth Business Day (or a shorter period as shall
be acceptable to the parties) immediately preceding the date of the
extension, Transferor shall have given Trustee, Servicer, the Rating Agency
and any Enhancement Provider written notice of the extension and the date
on which the extension shall occur,
(ii) Transferor shall have delivered to Trustee the required
agreements, certificates, documents and filings, in form satisfactory to
Trustee, executed by each party thereto other than Trustee;
(iii) the extension wi11 not (A) contravene any provision of this
Agreement, any Supplement, any agreement pursuant to which any Enhancement
is provided or any PI Agreement (or any agreement related thereto) or (B)
constitute, or result in the occurrence of, an Early Amortization Event or
an Unmatured Early Amortization;
(iv) Transferor shall have delivered to Trustee, the Rating Agency,
each Purchaser and any Enhancement Provider a Tax Opinion
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for each outstanding Series of Investor Certificates, Purchased Interest and
Enhancement, dated the date of the extension, with respect to the extension;
(v) Transferor shall have delivered to Trustee an Officer's
Certificate, dated the date of the extension, to the effect that all
conditions set forth in CLAUSES (i) and (iii) of this Section for the
extension of such PI Agreement and the execution and delivery of the
related documents has been satisfied; and
(vi) the Modification Condition shall have been satisfied.
SECTION 6.11 BOOK-ENTRY CERTIFICATES. (a) If provided in any Supplement,
the Investor Certificates of any Series, upon original issuance, will be issued
in the form of one or more Book-Entry Certificates, to be delivered to the
applicable Clearing Agency, by, or on behalf of, Transferor. The Investor
Certificates of the Series initially shall be registered on the Certificate
Register in the name of the nominee of the Clearing Agency, and no Certificate
Owner will receive a Definitive Certificate representing such Certificate
Owner's interest in the Investor Certificates, except as provided in SECTION
6.13. To the extent a Supplement provides that the Investor Certificates of a
Series will originally be issued in the form of one or more Book-Entry
Certificates, then unless and until Definitive Certificates have been issued to
Certificate Owners pursuant to Section 6.13:
(i) the provisions of this section shall be in full force and effect;
(ii) Transferor, Servicer, the Paying Agent, the Transfer Agent and
Registrar and Trustee may deal with the Clearing Agency and the Clearing
Agency Participants for all purposes (including the making of distributions
on the Investor Certificates) as the authorized representatives of the
Certificate Owners;
(iii) to the extent that the provisions of this section conflict with
any other provisions of this Agreement, the provisions of this section
shall control; and
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between the Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued
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pursuant to SECTION 6.13, the initial Clearing Agency will make book-
entry transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Investor
Certificates to the Clearing Agency Participants.
(b) Certificates sold to Qualified Institutional Buyers in reliance on
Rule 144A under the Securities Act shall be represented by one or more Book-
Entry Certificates (the "144A BOOK-ENTRY CERTIFICATES"), in registered form,
without coupons, which will be deposited upon the order of Transferor on the
Issuance Date with Trustee as custodian for and registered in the name of Cede &
Co., as nominee of the Clearing Agency.
(c) Certificates sold in offshore transactions in reliance on Regulation
S shall be represented initially by temporary Book-Entry Certificates (the
"REGULATION S TEMPORARY BOOK-ENTRY CERTIFICATES"). The Regulation S Temporary
Book-Entry Certificates shall be exchanged on the later of (i) 40 days after
the later of (A) the Issuance Date and (B) the completion of the distribution
of the Certificates, as certified by the Lead Placement Agent and (ii) the date
on which the requisite certifications are due to and provided to Trustee (the
later of CLAUSES (i) and (ii) is referred to as the "EXCHANGE DATE") for
permanent Book-Entry Certificates (the "UNRESTRICTED BOOK-ENTRY CERTIFICATES,"
and together with the Regulation S Temporary Book-Entry Certificates, the
"REGULATION S BOOK-ENTRY CERTIFICATES"). The Regulation S Temporary Book-Entry
Certificates shall be issued in registered form, without coupons, and deposited
upon the order of Transferor with Trustee as custodian for and registered in
the name of a nominee of the Clearing Agency for credit to the account of the
depositaries for Euroclear and Cedel, which depositaries shall, on behalf of
Euroclear and Cedel, hold the interests on behalf of account holders (each a
"MEMBER ORGANIZATION"), which have rights in respect of the Certificates
credited to their securities accounts with Euroclear or Cedel from time to time.
(d) A Certificate Owner holding an interest in a Regulation S Temporary
Book-Entry Certificate may receive payments in respect of the Certificates on
the Regulation S Temporary Book-Entry Certificate only after delivery to
Euroclear or Cedel, as the case may be, of a written certification substantially
in the form of a certification in the form set forth in EXHIBIT F, and upon
delivery by Euroclear or Cedel, as the case may be, to the Transfer Agent and
Registrar of a certification or certifications substantially in the form set
forth in EXHIBIT G. The delivery by a Certificate Owner of the certification
referred to above shall constitute its irrevocable instruction to Euroclear or
Cedel, as the case may be, to arrange for the exchange of the Certificate
Owner's interest in the Regulation S Temporary Book-Entry Certificate for a
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beneficial interest in the Unrestricted Book-Entry Certificate after the
Exchange Date in accordance with the paragraph below.
After (i) the Exchange Date and (ii) receipt by the Transfer Agent and
Registrar of written instructions from Euroclear or Cedel, as the case may be,
directing the Transfer Agent and Registrar to credit or cause to be credited to
either Euroclear's or Cedel's, as the case may be, depositary's account a
beneficial interest in the Unrestricted Book-Entry Certificate in a principal
amount not greater than that of the beneficial interest in the Regulation S
Temporary Book-Entry Certificate, the Transfer Agent and Registrar shall
instruct the Clearing Agency to reduce the principal amount of the Regulation S
Temporary Book-Entry Certificate and increase the principal amount of the
Unrestricted Book-Entry Certificate, by the principal amount of the beneficial
interest in the Regulation S Temporary Book-Entry Certificate to be so
transferred, and to credit or cause to be credited to the account of Euroclear,
Cedel or a Person who has an account with the Clearing Agency (a "CLEARING
AGENCY PARTICIPANT"), as the case may be, a beneficial interest in the
Unrestricted Book-Entry Certificate having a principal amount of the Regulation
S Temporary Book-Entry Certificate that was reduced upon the transfer.
Upon return of the entire principal amount of the Regulation S Temporary
Book-Entry Certificate to Trustee in exchange for beneficial interests in the
Unrestricted Book-Entry Certificate, Trustee shall cancel the Regulation S
Temporary Book-Entry Certificate by perforation and shall forthwith destroy it.
(e) Transfers within a single Series between different Book-Entry
Certificates shall be made in accordance with this Section.
(i) For transfer of an interest in an Unrestricted Book-Entry
Certificate for an interest in the 144A Book-Entry Certificate, if the
Certificate holder of a beneficial interest in an Unrestricted Book-Entry
Certificate deposited with the Clearing Agency wishes at any time to
exchange its interest in the Unrestricted Book-Entry Certificate, or to
transfer its interest in the Unrestricted Book-Entry Certificate to a
Person who wishes to take delivery thereof in the form of an interest in
the 144A Book-Entry Certificate, the Certificate holder may, subject to the
rules and procedures of Euroclear or Cedel and the Clearing Agency, as the
case may be, give directions for the Transfer Agent and Registrar to
exchange or cause the exchange or transfer or cause the transfer of the
interest for an equivalent beneficial interest in the 144A Book-Entry
Certificate. Upon receipt by the Transfer Agent and
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Registrar of instructions from Euroclear or Cedel (based on instructions
from a Member Organization) or from a Clearing Agency Participant, as
applicable, or the Clearing Agency, as the case may be, directing the
Transfer Agent and Registrar to credit or cause to be credited a beneficial
interest in the 144A Book-Entry Certificate equal to the beneficial
interest in the Unrestricted Book-Entry Certificate to be exchanged or
transferred (such instructions to contain information regarding the
Clearing Agency Participant account to be credited with the increase, and,
with respect to an exchange or transfer of an interest in the Unrestricted
Book-Entry Certificate, information regarding the Clearing Agency
Participant account to be debited with the decrease), the Transfer Agent
and Registrar shall instruct the Clearing Agency to reduce the Unrestricted
Book-Entry Certificate by the aggregate principal amount of the beneficial
interest in the Unrestricted Book-Entry Certificate to be exchanged or
transferred, and the Transfer Agent shall instruct the Clearing Agency,
concurrently with the reduction, to increase the principal amount of the
144A Book-Entry Certificate by the aggregate principal amount of the
beneficial interest in the Unrestricted Book-Entry Certificate to be so
exchanged or transferred, and to credit or cause to be credited to the
account of the Person specified in the instructions a beneficial interest
in the 144A Book-Entry Certificate equal to the reduction in the principal
amount of the Unrestricted Book-Entry Certificate.
(ii) For transfers of an interest in the 144A Book-Entry Certificate
for an interest in a Regulation S Book-Entry Certificate, if a Certificate
Owner holding a beneficial interest in the 144A Book-Entry Certificate
wishes at any time to exchange its interest in the 144A Book-Entry
Certificate for an interest in a Regulation S Book-Entry Certificate, or to
transfer its interest in the 144A Book-Entry Certificate to a Person who
wishes to take delivery thereof in the form of an interest in the
Regulation S Book-Entry Certificate, the Certificate holder may, subject to
the rules and procedures of the Clearing Agency, give directions for the
Transfer Agent and Registrar to exchange or cause the exchange or transfer
or cause the transfer of the interest for an equivalent beneficial interest
in the Regulation S Book-Entry Certificate. Upon receipt by the Transfer
Agent and Register of (A) instructions given in accordance with the
Clearing Agency's procedures from a Clearing Agency Participant directing
the Transfer Agent and Registrar to credit or cause to be credited a
beneficial interest in the Regulation S Book-Entry Certificate in an amount
equal to the beneficial interest in the 144A Book-Entry Certificate to be
exchanged or transferred, (B) a written order given in
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accordance with the Clearing Agency's procedures containing information
regarding the account of the depositaries for Euroclear or Cedel or another
Clearing Agency Participant, as the case may be, to be credited with the
increase and the name of the account and (C) certificates in the forms of
EXHIBITS H and I, respectively, given by the Certificate Owner and the
proposed transferee of the interest, the Transfer Agent and Registrar shall
instruct the Clearing Agency to reduce the 144A Book-Entry Certificate by
the aggregate principal amount of the beneficial interest in the 144A
Book-Entry Certificate to be so exchanged or transferred and the Transfer
Agent and Registrar shall instruct the Clearing Agency, concurrently with
the reduction, to increase the principal amount of the Regulation S Book-
Entry Certificate by the aggregate principal amount of the beneficial
interest in the 144A Book-Entry Certificate to be so exchanged or
transferred, and to credit or cause to be credited to the account of the
Person specified in the instructions a beneficial interest in the
Regulation S Book-Entry Certificate equal to the reduction in the principal
amount of the 144A Book-Entry Certificate.
(iii) Notwithstanding any other provisions of this section, a
placement agent for the Investor Certificates may exchange beneficial
interests in the Regulation S Temporary Book-Entry Certificate held by it
for interests in the 144A Book-Entry Certificate only after delivery by the
placement agent of instructions for the exchange substantially in the form
of EXHIBIT J. Upon receipt of the instructions provided in the preceding
sentence, the Transfer Agent and Registrar shall instruct the Clearing
Agency to reduce the principal amount of the Regulation S Temporary Book-
Entry Certificate to be so transferred and shall instruct the Clearing
Agency to increase the principal amount of the 144A Book-Entry Certificate
and credit or cause to be credited to the account of the placement agent a
beneficial interest in the 144A Book-Entry Certificate having a principal
amount equal to the amount by which the principal amount of the Regulation
S Temporary Book-Entry Certificate was reduced upon the transfer pursuant
to the instructions provided in the first sentence of this subclause.
(iv) If a Book-Entry Certificate is exchanged for a Definitive
Certificate, the Certificates may be exchanged or transferred for one
another only in accordance with such procedures as are substantially
consistent with the provisions of CLAUSES (i) through (iii) above
(including the certification requirements intended to ensure that the
exchanges or transfers comply with Rule 144 or Regulation S under the
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Securities Act, as the case may be) and as may be from time to time
adopted by Trustee.
SECTION 6.12 NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Investor Certificate holders of any Series represented by
Book-Entry Certificates is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant to
SECTION 6.13, Trustee, Servicer and the Paying Agent shall give all such notices
and communications specified herein to be given to the Investor Certificate
holders of the Series to the Clearing Agency.
SECTION 6.13 DEFINITIVE CERTIFICATES. If (a)(i) Transferor advises Trustee
in writing that the Clearing Agency is no longer willing or able to discharge
its responsibilities under any Letter of Representations properly, and (ii)
Transferor is unable to locate a qualified successor, (b) Transferor, at its
option, advises Trustee in writing that, with respect to any Series, it elects
to terminate the book-entry system through the Clearing Agency or (c) after the
occurrence of a Servicer Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Invested Amount of the Series
advise Trustee and the Clearing Agency through the Clearing Agency Participants
in writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the Certificate Owners of the
Series, Trustee shall notify the Clearing Agency of the occurrence of any such
event and of the availability of Definitive Certificates of the Series to
Certificate Owners of the Series requesting the same. Upon surrender to Trustee
of the Investor Certificates of the Series by the Clearing Agency accompanied by
registration instructions from the Clearing Agency for registration, Trustee
shall authenticate and deliver Definitive Certificates of the Series. Neither
Transferor, the Transfer Agent and Registrar nor Trustee shall be liable for any
delay in delivery of the instructions and may conclusively rely on, and shall
be protected in relying on, the instructions. Upon the issuance of Definitive
Certificates of any Series, all references herein to obligations with respect to
the Series imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by Trustee, to the extent applicable
with respect to the Definitive Certificates and Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
SECTION 6.14 LETTER OF REPRESENTATIONS. Notwithstanding anything to the
contrary in this Agreement or any Supplement, the parties hereto shall comply
with the terms of each Letter of Representations.
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ARTICLE VII TRANSFEROR
SECTION 7.1 REPRESENTATIONS AND WARRANTIES OF TRANSFEROR RELATING TO
TRANSFEROR AND THE TRANSACTION DOCUMENTS. On the date hereof and on each
Issuance Date, Transferor hereby represents and warrants that:
(a) ORGANIZATION AND GOOD STANDING. Transferor is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to acquire, own and transfer the Receivables and the Related
Transferred Assets.
(b) DUE QUALIFICATION. Transferor is duly qualified to do business
and is in good standing as a foreign corporation (or is exempt from such
requirements), and has obtained all necessary licenses and approvals, in
all jurisdictions in which the ownership or lease of property or the
conduct of its business requires qualification, licenses or approvals and
where the failure so to qualify, to obtain the licenses and approvals or to
preserve and maintain the qualification, licenses or approvals would have a
substantial likelihood of having a Material Adverse Effect.
(c) POWER AND AUTHORITY. Transferor has (i) all necessary corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and the other Transaction Documents to which it is a party.
(d) BINDING OBLIGATIONS. This Agreement constitutes, and each other
Transaction Document to which Transferor is a party when executed and
delivered will constitute, a legal, valid and binding obligation of
Transferor, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether enforceability
is considered in a proceeding in equity or at law.
(e) AUTHORIZATION; NO CONFLICT OR VIOLATION. The execution, delivery
and performance of, and the consummation of the transactions contemplated
by, this Agreement and the other Transaction Documents to be signed by
Transferor and the fulfillment of the terms hereof and thereof have been
duly authorized by all necessary action and will not (i) conflict with,
violate, result in any breach of any of the terms and
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provisions of, or constitute (with or without notice or lapse of time or
both) a default under, (A) its Certificate of Incorporation or Bylaws or
(8) any indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which Transferor is a party or by which
it or any of its properties is bound, (ii) result in the creation or
imposition of any Adverse Claim upon any of its properties pursuant to the
terms of any such contract, indenture, loan agreement, mortgage, deed of
trust, or other agreement or instrument, other than this Agreement and the
other Transaction Documents, or (iii) conflict with or violate any
federal, state, local or foreign law or any decision, decree, order, rule
or regulation applicable to it or any of its properties of any court or of
any federal, state, local or foreign regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over it or any of
its properties, which conflict, violation, breach, default or Adverse
Claim, individually or in the aggregate, would have a substantial
likelihood of having a Material Adverse Effect.
(f) LITIGATION AND OTHER PROCEEDINGS. (i) There is no action, suit,
proceeding or investigation pending or, to the best knowledge of
Transferor, threatened against it before any court, regulatory body,
arbitrator, administrative agency or other tribunal or governmental
instrumentality and (ii) it is not subject to any order, judgment, decree,
injunction, stipulation or consent order of or with any court or other
government authority that, in the case of CLAUSES (i) and (ii), (A)
asserts the invalidity of this Agreement or any other Transaction Document,
(B) seeks to prevent the transfer of any Receivables or Related Transferred
Assets to the Trust, the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement or any other
Transaction Document, (C) seeks any determination or ruling that would
materially and adversely affect theperformance by Transferor of its
obligations under this Agreement or any other Transaction Document or the
validity or enforceability of this Agreement or any other Transaction
Document, (D) seeks to affect materially and adversely the income tax
attributes of the transfers hereunder or the Trust under the United States
Federal income tax system or any state income tax system or (E)
individually or in the aggregate for all such actions, suits, proceedings
and investigations would have a substantial likelihood of having a Material
Adverse Effect.
(g) GOVERNMENTAL APPROVALS. All authorizations, consents, orders and
approvals of, or other action by, any Governmental
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Authority that are required to be obtained by Transferor, and all notices
to and filings with any Governmental Authority, that are required to be
made by it, in the case of each of the foregoing in connection with the
transfer of Receivables and Related Transferred Assets to the Trust or the
execution, deliver and performance by it of this Agreement and any other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement, have been obtained or made
and are in full force and effect, except where the failure to obtain or
make any such authorization, consent, order, approval, notice or filing,
individually or in the aggregate for all such failures, would not
reasonably be expected to have a Material Adverse Effect.
(h) OFFICES. Transferor's principal place of business and chief
executive office is, and since the date of its incorporation has been,
located at the address set forth under Transferor's signature hereto (or at
such other locations, notified to Servicer and Trustee in accordance with
SECTION 7.2(c), in jurisdictions where all action required by SECTION
7.2(c) has been taken and completed).
(i) ACCOUNT BANKS. The names and addresses of all the Account Banks
are specified in SCHEDULE 1 or, after the First Issuance Date, have been
provided by Servicer to Trustee pursuant to SECTION 3.3(C), and the
account numbers of the Bank Accounts at such Account Banks have been
specified in a letter provided on or prior to the First Issuance Date to
Trustee or, after the First Issuance Date, have been provided by Servicer
to Trustee pursuant to SECTION 3.3(c). The Account Agreements to which
Transferor is a party constitute the legal, valid and binding obligations
of the parties thereto enforceable against such parties in accordance with
their respective terms subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally
and general equitable principles.
(j) INVESTMENT COMPANY ACT. Transferor is not, and is not controlled
by, an "investment company" registered or required to be registered under
the Investment Company Act of 1940, as amended.
The representations and warranties set forth in this section shall survive
the transfer and assignment of the Receivables and the other Transferred Assets
to the Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of
any of the foregoing representations and warranties, the party discovering the
breach shall give written notice to the other parties to this Agreement within
three Business Days following the discovery; PROVIDED,
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HOWEVER, that if such breach arises from a Seller's failure to perform its
obligations under the Purchase Agreement and such failure is of the type that
may be cured by settlement of a Seller Non-Complying Receivables Adjustment or
Seller Dilution Adjustment under SECTIONS 3.1 and 3.5 of the Purchase Agreement,
and such settlement shall have (in fact) been made, then no breach shall be
deemed to have occurred under this Agreement. Trustee's obligations in respect
of discovering any breach are limited as provided in SECTION 11.2(G).
SECTION 7.2 COVENANTS OF TRANSFEROR. So long as any Investor Certificates
or Purchased Interests remain outstanding (other than any Investor Certificates
or Purchased Interests payment for which has been duly provided for in
accordance with this Agreement), Transferor shall:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with
all applicable laws, rules, regulations, judgments, decrees and orders
(including those relating to the Receivables, the Related Transferred
Assets, the funds in the Transaction Accounts and the related Contracts and
any other agreements related thereto), in each case to the extent the
failure to comply, individually or in the aggregate for all such failures,
would have a substantial likelihood of having a Material Adverse Effect.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualifications would have a substantial likelihood of having a Material
Adverse Effect.
(c) LOCATION OF OFFICES. Keep its principal place of business and
chief executive office at the address referred to in SECTION 7.1(H) or, upon
not less than 30 days' (or such shorter number of days as is acceptable to
the Servicer and Trustee) prior written notice given by Transferor to
Servicer and Trustee, at such other location in a jurisdiction where all
action required pursuant to SECTION 3.10 shall have been taken and
completed. Transferor will at all times maintain its chief executive offices
within the United States of America.
(d) REPORTING REQUIREMENTS OF TRANSFEROR. Unless Trustee and the
Required Investors shall otherwise consent in writing, furnish to Trustee,
the Investor Certificate holders and the Rating Agencies:
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(i) EARLY AMORTIZATION EVENTS. As soon as possible, and in any
event within five Business Days after an Authorized Officer of
Transferor has obtained knowledge of the occurrence of any Early
Amortization Event or any Unmatured Early Amortization Event, a written
statement of an Authorized Officer of Transferor describing the event
and the action that Transferor proposes to take with respect thereto,
in each case in reasonable detail,
(ii) MATERIAL ADVERSE EFFECT. As soon as possible and in any
event within five Business Days after an Authorized Officer of
Transferor has knowledge thereof, written notice that describes in
reasonable detail any Adverse Claim, other than any Permitted Adverse
Claim, against the Transferred Assets or any other event or occurrence
that, individually or in the aggregate for all such events or
occurrences, has had, or would have a substantial likelihood of having,
in the reasonable, good faith judgment of Transferor, a Material
Adverse Effect,
(iii) PROCEEDINGS. As soon as possible and in any event within
five Business Days after an Authorized Officer of Transferor has
knowledge thereof, written notice of (A) any litigation, investigation
or proceeding of the type described in SECTION 7.1 (f) not previously
disclosed to Trustee and (B) any material adverse development that has
occurred with respect to any such previously disclosed litigation,
investigation or proceeding,
(iv) OTHER. Promptly, from time to time, any other information,
documents, records or reports respecting the Receivables or the Related
Transferred Assets or any other information respecting the condition or
operations, financial or otherwise, of Transferor, in each case as
Trustee may from time to time reasonably request in order to protect
the interests of Trustee, the Trust or the Investor Certificate holders
under or as contemplated by this Agreement.
(e) ADVERSE CLAIMS. Except for any conveyances under the Transaction
Documents, not permit to exist any Adverse Claim (other than Permitted
Adverse Claims) to or in favor of any Person upon or with respect to, or
cause to be filed any financing statement or equivalent document relating
to perfection that covers, any Transferred Asset or any interest therein.
Transferor shall defend the right, title and
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interest of the Trust in, to and under the Transferred Assets, whether now
existing or hereafter created, against all claims of third parties claiming
through or under Transferor.
(f) EXTENSION OR AMENDMENT OF RECEIVABLES; CHANGE IN CREDIT AND
COLLECTION POLICY OR CONTRACTS. Not (i) extend, amend or otherwise modify
the terms of any Receivable or Contract (except as permitted by the Credit
and Collection Policy) in a manner that would have a material adverse
effect on the Investor Certificateholders or the Purchasers, or (ii) permit
any Seller to make any change in its Credit and Collection Policy that
would have a material adverse effect on the Investor Certificateholders or
the Purchasers; PROVIDED that Transferor or Servicer, as applicable, may
change the terms and provisions of the Credit and Collection Policy if (A)
with respect to any material change of collection policies, the change is
made with the prior written approval of each Agent, if any, and the
Modification Condition is satisfied with respect thereto, (B) with respect
to any material change of collection procedures, the change is made with
prior written notice to each Agent and no material adverse effect on any
Series or Purchased Interest would result, and (C) with respect to any
material change in accounting policies relating to Write-Offs, the change
is made in accordance with GAAP.
(g) MERGERS, ACQUISITIONS, SALES, ETC. Not:
(i) except pursuant to the Transaction Documents (A) be a party
to any merger or consolidation, or directly or indirectly purchase or
otherwise acquire all or substantially all of the assets or any stock
of any class of, or any partnership or joint venture interest in, any
other Person, or (B) directly or indirectly, sell, transfer, assign,
convey or lease, whether in one transaction or in a series of
transactions, all or substantially all of its assets, or sell or
assign with or without recourse any Receivables or Related Transferred
Assets (other than pursuant hereto) unless:
(x)(1) the corporation formed by the consolidation or into
which Transferor is merged or the Person that acquires by
conveyance or transfer the properties and assets of Transferor
substantially as an entirety shall be, if Transferor is not the
surviving entity, organized and existing under the laws of the
United States of America or any state thereof or the District of
Columbia, and
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shall expressly assume, by an agreement supplemental hereto,
executed and delivered to Trustee, in form satisfactory to
Trustee and each Agent, the performance of every covenant and
obligation of Transferor hereunder, including its obligations
under SECTION 7.3, under each Supplement and under each PI
Agreement, and (2) Transferor has delivered to Trustee an
Officer's Certificate stating that the consolidation, merger,
conveyance or transfer and the supplemental agreement comply with
this section and an Opinion of Counsel stating that the
supplemental agreement is a valid and binding obligation of the
surviving entity enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time to
time in effect and except as such enforceability may be limited
by general principles of equity (whether considered in a suit at
law or in equity), and
(y) the Modification Condition shall have been satisfied with
respect to the consolidation, merger, conveyance or transfer, and
the Transferor's independent director shall have approved such
consolidation, merger, conveyance or transfer, and
(z) Transferor shall have delivered to Trustee, each Rating
Agency, each Purchaser and each Enhancement Provider a Tax
Opinion for each outstanding Series of Investor Certificates,
Purchased Interest and Enhancement, dated the date of the
consolidation, merger, conveyance or transfer, with respect
thereto, or
(ii) except as contemplated in the Purchase Agreement in
connection with Transferor's purchases of Receivables and Related
Assets from the Sellers, (A) except as permitted in CLAUSE (B), make,
incur or suffer to exist an investment in, equity contribution to, or
payment obligation in respect of the deferred purchase price of
property or services from, any Person, or (B) make any loan or advance
to any Person other than for reasonable and customary operating
expenses provided that notwithstanding (A) or (B), the Transferee
shall be permitted to declare and pay dividends on its capital stock
and
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make loans and/or suffer to exist an investment in Treasure Chest or
Big Flower.
(h) CHANGE IN NAME. Not change its corporate name or the name under
or by which it does business, or permit any Seller to change its corporate
name or the name under or by which it does business, unless prior to the
change in name, Transferor shall have filed (or shall have caused to be
filed) any financing statements or amendments as Servicer or Trustee
determines may be necessary to continue the perfection of the Trust's
interest in the Receivables, the Related Transferred Assets and the
proceeds thereof.
(i) AMENDMENT OF CERTIFICATE OF INCORPORATION; CHANGE IN BUSINESS.
Not amend any of Articles III, IV, XII(g), XII(h) or XIV of its Certificate
of Incorporation, or engage in any business other than as contemplated by
the Transaction Documents, unless the Modification Condition has been
satisfied in connection with the amendment or change in Transferor's
business.
(j) AMENDMENTS TO PURCHASE AGREEMENT. Except as expressly provided
otherwise in this Agreement, make no amendment to the Purchase Agreement
that would adversely affect in any material respect the interests of the
Investor Certificateholders, the Purchasers or any Enhancement Provider.
(k) ENFORCEMENT OF PURCHASE AGREEMENT. Perform all its obligations
under and otherwise comply with the Purchase Agreement in all material
respects and, if requested by Trustee, enforce, for the benefit of the
Trust, the covenants and agreements of any Seller in the Purchase
Agreement.
(l) OTHER INDEBTEDNESS. Not (i) create, incur or permit to exist any
Indebtedness, Guaranty or liability or (ii) cause or permit to be issued
for its account any letters of credit or bankers' acceptances, except for
(A) Indebtedness incurred pursuant to the Buyer Notes, (B) other
liabilities specifically permitted to be created, incurred or owed by
Transferor pursuant to or in connection with the Transaction Documents, and
(C) liabilities for reasonable and customary operating expenses in an
aggregate amount that do not exceed $15,000 in any of its fiscal quarters.
(m) SEPARATE CORPORATE EXISTENCE. Hereby acknowledge that Trustee and
the Investor Certificateholders are, and will be, entering
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into the transactions contemplated by the Transaction Documents in reliance
upon Transferor's identity as a legal entity separate from any Seller,
Servicer and any other Person. Therefore, from and after the First
Issuance Date, Transferor shall take all reasonable steps to maintain its
existence as a corporation separate and apart from Servicer, each Seller
and any other Big Flower Person. Without limiting the generality of the
foregoing, Transferor shall take such actions as shall be reasonably
required in order that:
(i) Transferor will not incur any material indirect or overhead
expenses for items shared between Transferor and any Big Flower Person
that are not reflected in the Servicing Fee, other than shared items
of expenses not reflected in the Servicing Fee, such as legal,
auditing and other professional services, that will be allocated to
the extent practical on the basis of actual use or the value of
services rendered, and otherwise on a basis reasonably related to the
actual use or the value of services rendered, it being understood that
any Big Flower Person will pay all expenses owing by Transferor or any
Big Flower Person relating to the preparation, negotiation, execution
and delivery of the Transaction Documents, including, without
limitation, legal, commitment, agency and other fees.
(ii) Transferor will account for and manage its liabilities
separately from those of every other Big Flower Person, including
payment of all payroll and administrative expenses and taxes (other
than taxes that are determined or required to be determined on a
consolidated or combined basis) from its own assets.
(iii) Transferor will conduct its business at an office
segregated from the offices of each Big Flower Person, which office of
Transferor may consist of office space shared with a Big Flower
Person, a portion of which is allocated solely to Transferor.
(iv) Transferor will maintain corporate records, books of account
and stationery separate from those of every Big Flower Person.
(v) Any annual financial statements of any Big Flower Person that
are made publicly available and which are consolidated to include
Transferor will contain footnotes stating
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that Treasure Chest and certain other Subsidiaries of Big Flower have
sold Receivables and indicating that the assets of Transferor will not
be available to Big Flower or such Subsidiaries unless Transferor's
liabilities have been paid in full.
(vi) Transferor's assets will be maintained in a manner that
facilitates their identification and segregation from those of any Big
Flower Person.
(vii) Transferor shall not, directly or indirectly, be named and
shall not enter into an agreement to be named as a direct or contingent
beneficiary or loss payee on any insurance policy with respect to any
loss relating to the property of a Big Flower Person.
(viii) Any transaction between Transferor and any Big Flower
Person will be the type of transaction which would be entered into by
a prudent Person in the position of Transferor with a Big Flower
Person, and will be on terms that are at least as favorable as may be
obtained from a Person that is not a Big Flower Person (it being
understood and agreed that the transactions contemplated in the
Transaction Documents meet the requirements of this clause).
(ix) Neither Transferor nor any Big Flower Person will be or will
hold itself out to be responsible for the debts of the other.
(x) Transferor will operate, conduct its business and otherwise
act in a manner which is consistent with the factual assumptions in
each of the opinions of Skadden, Arps, Slate, Meagher & Flom dated the
date hereof regarding certain substantive consolidation and true sale
issues.
(n) TAXES. File or cause to be filed, and cause each Person with whom
it shares consolidated tax liability to file, all Federal, state and local
tax returns that are required to be filed by it, except where the failure
to file such returns would not have a substantial likelihood of having a
Material Adverse Effect, and pay or cause to be paid all taxes shown to be
due and payable on such returns or on any assessments received by it, other
than any taxes or assessments, the validity of which are being contested in
good faith by appropriate proceedings and with respect to which Transferor
shall have set aside adequate reserves
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on its books in accordance with GAAP and which proceedings would not have a
substantial likelihood of having a Material Adverse Effect.
(o) MAXIMUM EXPOSURE AMOUNT. Not permit the aggregate outstanding
principal amounts of the Buyer Notes to exceed the Maximum Exposure Amount.
(p) WEBCRAFT ACCOUNT AGREEMENTS. By no later than 5:00 p.m., New York
City time, on Friday, March 22, 1996, cause (i) a Lockbox Agreement to be
executed with a Lockbox Bank for payments by Obligors in respect of all
Receivables originated by Webcraft Technologies, Inc. and (ii) a Blocked
Account Agreement to be executed with a Blocked Account Bank for the
remittance of payments by Webcraft Chemicals, Inc. and by Obligors in
respect of all Receivables originated by Webcraft Chemicals, Inc.
The covenants set forth in this section shall survive the transfer and
assignment of the Receivables and the other Transferred Assets to the Trust.
Upon discovery by Transferor, Servicer or Trustee of a breach of any of the
foregoing covenants, the party discovering the breach shall give written notice
to the other parties to this Agreement within three Business Days following such
discovery; PROVIDED, HOWEVER that if such breach arises from a Seller's failure
to perform its obligations under the Purchase Agreement and such failure is of
the type that may be cured by settlement of a Seller Non-Complying Receivables
Adjustment or Seller Dilution Adjustment under SECTIONS 3.1 and 3.5 of the
Purchase Agreement, and such settlement shall have (in fact) been made, then no
breach shall be deemed to have occurred under this Agreement. Trustee's
obligations in respect of discovering any breach are limited as provided in
SECTION 11.2(G).
SECTION 7.3 INDEMNIFICATION BY TRANSFEROR. (a) Transferor hereby agrees to
indemnify the Trust, Trustee and each of the successors, permitted transferees
and assigns of any such Person and all officers, directors, shareholders,
controlling Persons, employees, affiliates and agents of any of the foregoing
(each of the foregoing Persons individually being called an "INDEMNIFIED
PARTY"), forthwith on demand, from and against any and all damages, losses,
claims (whether on account of settlement or otherwise, and whether or not the
relevant Indemnified Party is a party to any action or proceeding that gives
rise to any Indemnified Losses (as defined below)), judgments, liabilities and
related reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) (all of the foregoing collectively being called "INDEMNIFIED
LOSSES") awarded against or incurred by any of them that arise out of or relate
to Transferor's performance of, or failure to
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perform, any of its obligations under or in connection with any Transaction
Document.
Notwithstanding the foregoing, in no event shall any Indemnified Party be
indemnified against any Indemnified Losses (a) resulting from gross negligence
or willful misconduct on the part of such Indemnified Party (or the gross
negligence or willful misconduct on the part of any of its officers, directors,
employees, affiliates or agents), (b) to the extent they include Indemnified
Losses in respect of Receivables and reimbursement therefor that would
constitute credit recourse to Transferor for the amount of any Receivable or
Related Transferred Asset not paid by the related Obligor, (c) to the extent
they are or result from lost profits, (d) to the extent they are or result from
taxes (including interest and penalties thereon) asserted with respect to (i)
distributions on the Investor Certificates, (ii) franchise or withholding taxes
imposed on any Indemnified Party other than the Trust or Trustee in its capacity
as Trustee or (iii) federal or other income taxes on or measured by the net
income of the Indemnified Party and costs and expenses in defending against the
same, or (e) to the extent that they constitute consequential, special or
punitive damages.
If for any reason the indemnification provided in this Section is
unavailable to an Indemnified Party or is insufficient to hold it harmless, then
Transferor shall contribute to the amount paid by the Indemnified Party as a
result of any loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnified Party on the one hand and Transferor on the other hand, but also the
relative fault of the Indemnified Party (if any) and Transferor and any other
relevant equitable consideration.
Notwithstanding any provisions contained in any Transaction Document to the
contrary, Transferor shall not, and shall not be obligated to, pay any amount
pursuant to this SECTION 7.3(A) unless funds are allocated for such payment
pursuant to the provisions of a Supplement or PI Agreement governing the
allocation of funds in the Master Collection Account. Any amount which
Transferor does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim (as defined in Section 101 of the Bankruptcy Code)
against or corporate obligation of Transferor for any such insufficiency.
(b) Transferor shall be directly liable to all creditors of the Trust (but
not to the Trust, Trustee, Investor Certificateholders or Purchasers in such
capacities, or, to the extent of any indemnities arising under the Transaction
Documents, any other Person identified as a Person to be indemnified by
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Transferor pursuant to the Transaction Documents) for all liabilities of the
Trust to the same extent as it would be if the Trust constituted a partnership
under Delaware law and Transferor were a general partner thereof (to the extent
Transferred Assets remaining after Investor Certificateholders and Purchasers
have been paid in full are insufficient to pay such losses, claims, damages or
liabilities). Notwithstanding anything to the contrary herein, any such
creditor shall be a third party beneficiary of this SECTION 7.3. Nothing in
this provision shall be construed as waiving any rights or claims (including
rights of recoupment or subrogation) which the Transferor may have against any
third party under this Agreement or applicable laws.
ARTICLE VIII SERVICER
SECTION 8.1 REPRESENTATIONS AND WARRANTIES OF SERVICER. On the date hereof
and on each Issuance Date, Servicer hereby makes, and any Successor Servicer
also shall be deemed to make by its acceptance of its appointment hereunder, the
following representations and warranties for the benefit of Trustee and the
Certificateholders and the Purchasers:
(a) ORGANIZATION AND GOOD STANDING. Servicer is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to own its properties and to conduct its business as the
properties presently are owned and as the business presently is conducted.
(b) DUE QUALIFICATION. Servicer is duly qualified to do business and
is in good standing as a foreign corporation (or is exempt from such
requirements), and has obtained all necessary licenses and approvals, in
all jurisdictions in which the servicing of the Receivables and the Related
Transferred Assets as required by this Agreement requires qualification,
licenses or approvals and where the failure so to qualify, to obtain the
licenses and approvals or to preserve and maintain the qualification,
licenses or approvals would have a substantial likelihood of having a
material adverse effect on its ability to perform its obligations as
Servicer under this Agreement or a Material Adverse Effect.
(c) POWER AND AUTHORITY. Servicer has all necessary corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party.
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(d) BINDING OBLIGATIONS. This Agreement constitutes, and each other
Transaction Document to which Servicer is a party when executed and
delivered will constitute, a legal, valid and binding obligation of
Servicer, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether enforceability
is considered in a proceeding in equity or at law.
(e) AUTHORIZATION; NO CONFLICT OR VIOLATION. The execution and
delivery by Servicer of this Agreement and the other Transaction Documents
to which it is a party, the performance by it of its obligations hereunder
and thereunder and the fulfillment by it of the terms hereof and thereof
that are applicable to it have been duly authorized by all necessary action
and will not (i) conflict with, violate, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, (A) its Certificate of Incorporation or
Bylaws or (B) any indenture, loan agreement, mortgage, deed of trust, or
other material agreement or instrument to which it is a party or by which
it or any of its properties is bound (excluding any such agreement that is
terminated on or before the First Issuance Date or under which Servicer has
obtained all necessary consents) or (ii) conflict with or violate any
federal, state, local or foreign law or any decision, decree, order, rule
or regulation applicable to it or any of its properties of any court or of
any federal, state, local or foreign regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over it or any of
its properties, which conflict, violation, breach or default described,
individually or in the aggregate, would have a substantial likelihood of
having a Material Adverse Effect.
(f) GOVERNMENTAL APPROVALS. All authorizations, consents, orders and
approvals of, or other action by, any Governmental Authority that are
required to be obtained by Servicer, and all notices to and filings with
any Governmental Authority that are required to be made by it, in the case
of each of the foregoing in connection with the execution, delivery and
performance by it of this Agreement and any other Transaction Documents to
which it is a party and the consummation of the transactions contemplated
by this Agreement, have been obtained or made and are in full force and
effect (other than the filing of the UCC financing statements referred to
in SECTION 2.3(a)(II)(A), all of which, at the time required in SECTION
2.3(a)(II)(A), will be duly made), except where the failure to obtain or
make such
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authorization, consent, order, approval, notice or filing, individually or
in the aggregate for all such failures, would not reasonably be expected to
have a Material Adverse Effect.
(g) LITIGATION AND OTHER PROCEEDINGS. (i) There is no action, suit,
proceeding or investigation pending or, to the best knowledge of Servicer,
threatened against it before any court, regulatory body, arbitrator,
administrative agency or other tribunal or governmental instrumentality and
(ii) it is not subject to any order, judgment, decree, injunction,
stipulation or consent order of or with any court or other government
authority that, in the case of CLAUSES (i) and (ii), (A) seeks to affect
adversely the income tax attributes of the transfers hereunder or the Trust
under the United States federal income tax system or any state income tax
system or (B) individually or in the aggregate for all such actions, suits,
proceedings and investigations would have a substantial likelihood of
having a Material Adverse Effect.
The representations and warranties set forth in this section shall survive
the transfer and assignment of the Receivables and the other Transferred Assets
to the Trust. Upon discovery by Transferor, Servicer or Trustee of a breach of
any of the foregoing representations and warranties, the party discovering the
breach shall give written notice to the other parties to this Agreement within
three Business Days following the discovery. Trustee's obligations in respect
of discovering any breach are limited as provided in SECTION 11.2(g).
SECTION 8.2 COVENANTS OF SERVICER. So long as any Investor Certificates or
Purchased Interests remain outstanding (other than any Investor Certificates or
Purchased Interests payment for which has been duly provided for in accordance
with this Agreement), Servicer shall:
(a) COMPLIANCE WITH LAWS, ETC. Maintain in effect all qualifications
required under applicable law in order to service properly the Receivables
and shall comply in all material respects with all applicable laws, rules,
regulations, judgments, decrees and orders, in each case to the extent the
failure to comply, individually or in the aggregate for all such failures,
would have a substantial likelihood of having a Material Adverse Effect.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the
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failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would have a substantial likelihood of having
a Material Adverse Effect.
(c) NOTICE. As soon as possible (and in any event within five
Business Days after an Authorized Officer has knowledge thereof), furnish
to Transferor, Trustee, the Investor Certificateholders and the Rating
Agencies notice of any of the events described in CLAUSES (i), (ii) and
(iii) of SECTION 7.2(d).
(d) LOCATION OF OFFICES. Maintain at all times its chief executive
offices within the United States of America.
The covenants set forth in this section shall survive the transfer and
assignment of the Transferred Assets to the Trust. Upon discovery by
Transferor, Servicer or Trustee of a breach of any of the foregoing covenants,
the party discovering the breach shall give written notice to the other parties
to this Agreement within three Business Days following the discovery. Trustee's
obligations in respect of discovering any breach are limited as provided in
SECTION 11.2(g).
SECTION 8.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SERVICER. Servicer shall not consolidate with or merge into any other
Person or convey, transfer or sell all or substantially all of its properties
and assets to any Person, unless (a) Servicer is the surviving entity or, if it
is not the surviving entity, the Person formed by the consolidation or into
which Servicer is merged or the Person that acquires by conveyance, transfer or
sale all or substantially all of the properties and assets of Servicer shall be
a corporation organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia and such corporation
shall expressly assume, by an agreement supplemental hereto, executed and
delivered to Trustee and in form and substance satisfactory to Trustee, the
performance of every covenant and obligation of Servicer hereunder and under the
other Transaction Documents to which Servicer is a party, and (b) Servicer shall
have delivered to Trustee an Officer's Certificate stating that the
consolidation, merger, conveyance, transfer or sale and the supplemental
agreement comply with this Section and an Opinion of Counsel stating that the
supplemental agreement is a valid and binding obligation of the surviving entity
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity.
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SECTION 8.4 INDEMNIFICATION BY SERVICER. Servicer hereby agrees to
indemnify each Indemnified Party forthwith on demand, from and against any and
all Indemnified Losses awarded against or incurred by any of them that arise out
of or relate to Servicer's performance of, or failure to perform, any of its
obligations under or in connection with any Transaction Document.
Notwithstanding the foregoing, in no event shall any Indemnified Party be
indemnified against any Indemnified Losses (a) resulting from gross negligence
or willful misconduct on the part of such Indemnified Party (or the gross
negligence or willful misconduct on the part of any of its officers, directors,
employees, affiliates or agents), (b) to the extent they include Indemnified
Losses in respect of Receivables and reimbursement therefor that would
constitute credit recourse to Servicer for the amount of any Receivable or
Related Transferred Asset not paid by the related Obligor, (c) to the extent
they are or result from lost profits, (d) to the extent they are or result from
taxes (including interest and penalties thereon) asserted with respect to (i)
distributions on the Investor Certificates, (ii) franchise or withholding taxes
imposed on any Indemnified Party other than the Trust or Trustee in its capacity
as Trustee or (iii) federal or other income taxes on or measured by the net
income of the Indemnified Party and costs and expenses in defending against the
same, or (e) to the extent that they constitute consequential, special or
punitive damages.
If for any reason the indemnification provided in this section is
unavailable to an Indemnified Party or is insufficient to hold it harmless, then
Servicer shall contribute to the amount paid by the Indemnified Party as a
result of any loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnified Party on the one hand and Servicer on the other hand, but also the
relative fault of the Indemnified Party (if any) and Servicer and any other
relevant equitable consideration.
SECTION 8.5 SERVICER LIABILITY. Servicer shall be liable in accordance
with this Agreement only to the extent of the obligations specifically
undertaken by Servicer in such capacity herein and as set forth herein.
SECTION 8.6 LIMITATION ON LIABILITY OF SERVICER AND OTHERS. No recourse
under or upon any obligation or covenant of this Agreement, any Supplement, any
Certificate or any other Transaction Document, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of Servicer
or of any successor corporation, either directly or through Servicer, whether by
virtue of any constitution, statute or rule of law, or by
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the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Agreement, any Supplement, all other relevant Transaction
Documents and the obligations incurred hereunder or thereunder are solely
corporate obligations, and that no such personal liability whatsoever shall
attach to, or is or shall be incurred by the incorporators, shareholders,
officers or directors, as such, of Servicer or of any successor corporation, or
any of them, by reason of the obligations, covenants or agreements contained in
this Agreement, any Supplement, any of the Certificates or any other Transaction
Documents, or implied therefrom; and that any and all such personal liability
of, either at common law or in equity or by constitution or statute, and any and
all, such rights and claims against, every such incorporator, shareholder,
officer or director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations or covenants contained in
this Agreement, any Supplement, any of the Certificates or any other Transaction
Documents, or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Agreement and
any Supplement. Servicer and any director, officer, employee or agent of
Servicer may rely in good faith on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising hereunder.
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties to service the Receivables in
accordance with this Agreement or any Supplement that in its reasonable opinion
may involve it in any expense or liability. Servicer may, in its sole
discretion, undertake any legal action relating to the servicing, collection or
administration of Receivables and Related Transferred Assets that it may
reasonably deem necessary or appropriate for the benefit of the
Certificateholders and the Purchasers with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder.
ARTICLE IX EARLY AMORTIZATION EVENTS; TERMINATION BY SELLERS
SECTION 9.1 EARLY AMORTIZATION EVENTS. The Early Amortization Events with
respect to each Series and Purchased Interest shall be specified in the related
Supplement or PI Agreement.
SECTION 9.2 REMEDIES. Upon the occurrence of an Early Amortization Event,
Trustee shall have, in addition to all other rights and remedies available to
Trustee under this Agreement or otherwise, (a) the right to apply Collections to
the payment of the obligations of Transferor and Servicer under the Transaction
Documents, as provided herein, and (b) all rights and remedies provided under
all other applicable laws, which rights, in
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the case of each and all of the foregoing, shall be cumulative. Trustee shall
exercise the rights at the direction of the Investor Certificateholders pursuant
to (and subject to the limitations specified in) SECTION 11.14.
SECTION 9.3 ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN EVENTS. (a)
If a Bankruptcy Event shall occur with respect to Transferor or if the
Transferor Retained Percentage shall be equal to or less than 2% on any day (a
"Transferor Event"; and either a Bankruptcy Event or a Transferor Event being a
"Trigger Event"), this Agreement (other than this SECTION 9.3) and the Trust
shall be deemed to have terminated on the day of the Trigger Event. Within
seven Business Days of the date of written notice to Trustee of the Trigger
Event, Trustee shall:
(i) publish a notice in an Authorized Newspaper that a Bankruptcy Event has
occurred with respect to Transferor, that the Trust has terminated, and that
Trustee intends to sell, dispose of or otherwise liquidate the Receivables and
the Related Transferred Assets pursuant to this Agreement in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids (a "DISPOSITION"), and
(ii) send written notice to the Investor Certificateholders and Purchasers
describing the provisions of this section and requesting each Investor
Certificateholder and Purchaser to advise Trustee in writing whether (A) it
wishes Trustee to instruct Servicer not to effectuate a Disposition, (B) it
refuses to advise Trustee as to the specific action Trustee shall instruct
Servicer to take or (C) it wishes Servicer to effect a Disposition.
If, after 60 days from the day notice pursuant to SUBSECTION (a)(i) is
first published (the "PUBLICATION DATE"), Trustee shall not have received the
written instruction described in SUBSECTION (a)(ii)(a) from Holders representing
at least a majority in interest within the meaning of Internal Revenue Service
Revenue Procedure 94-46 (or subsequent authority promulgated by the Internal
Revenue Service), determined as if the Trust were classified as a partnership
for Federal income tax purposes (a "majority in interest"), of all outstanding
Series of Investor Certificates and Purchased Interests, Trustee shall instruct
Servicer to effectuate a Disposition, and Servicer shall proceed to consummate a
Disposition and approve the appointment of an entity to acquire an interest in
the Trust and to assume the obligations of Transferor provided in SECTION 7.3(b)
and to act as Transferor for purposes of this SECTION 9.3. If, however, Holders
representing at least a majority of interest of all Series of Investor
Certificates and Purchased Interests instruct Trustee not to effectuate a
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Disposition, the Trust shall be reconstituted and continue pursuant to the terms
of this Agreement; PROVIDED the Trustee obtains a Tax Opinion in connection with
such reconstitution and continuation.
(b) Notwithstanding the termination of this Agreement and the Trust
pursuant to SUBSECTION (a), the proceeds from any Disposition of the Receivables
and the Related Transferred Assets pursuant to SUBSECTION (a) shall be treated
as Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions of ARTICLE IV.
(c) Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this section with respect to competitive bids.
(d) Transferor or any of its Affiliates shall be permitted to bid for the
Receivables and the Related Transferred Assets. Trustee may obtain a prior
determination from any bankruptcy trustee, receiver or liquidator that the terms
and manner of any proposed Disposition are commercially reasonable.
(e) Notwithstanding the termination of this Agreement and the Trust
pursuant to SUBSECTION (a), Trustee shall continue to have the rights described
in SECTION 9.2 and ARTICLE XI, and be subject to direction on terms consistent
with those set out in SECTION 11.14, pending the completion of any Disposition
and/or the reconstitution of the Trust.
SECTION 9.4 TERMINATION BY SELLERS. If the Sellers have notified the
Trustee in writing of their election to terminate their agreements to sell
Receivables under the Purchase Agreement (as provided in Section 8.1 of the
Purchase Agreement), (i) the Trustee shall notify the Certificateholders of all
Series and all Purchasers within five Business Days of its receipt of such
notice and (ii) Transferor shall cause each Series of Certificates and Purchased
Interest to be repaid out of Collections as early as is practicable in
accordance with the applicable Series Supplement or Purchase Agreement.
ARTICLE X SERVICER DEFAULTS
SECTION 10.1 SERVICER DEFAULTS. Any of the following events shall
constitute a "SERVICER DEFAULT":
(a) any failure by Servicer in its capacity as Servicer to make any
payment, transfer or deposit required by any Transaction Document to be
made by it or to give instructions or to give notice to Trustee to make
such payment, transfer or deposit, which failure continues unremedied for
three Business Days,
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(b) failure on the part of Servicer in its capacity as Servicer
duly to observe or perform in any material respect any other covenants
or agreements of Servicer set forth in this Agreement or any other
Transaction Document, which failure has a material adverse effect on
the Holders of any Series or Purchased Interest and continues
unremedied for a period of 30 days after the date on which written
notice of the failure, requiring the same to be remedied, shall have
been given to Servicer by Trustee, or to Servicer and Trustee by any
Investor Certificateholder or Purchaser or, subject to the prior
written approval of the Required Investors, Transferor,
(c) Servicer shall assign its duties under this Agreement, except
as permitted by SECTIONS 3.1(b) and 8.3,
(d) any Daily Report or Monthly Report shall fail to have been
correct in any material respect when made or delivered, or shall not
have been delivered when required under the terms hereof, and in
either case such condition continues unremedied for a period of three
Business Days; or any other representation, warranty or certification
made by Servicer in any Transaction Document or in any certificate or
other document or instrument delivered pursuant to any Transaction
Document shall fail to have been correct in any material respect when
made or delivered, which failure has a materially adverse effect on the
Certificateholders or any Purchased Interest and which materially
adverse effect continues unremedied for a period of 15 Business Days
after the date on which written notice of failure, requiring the same
to be remedied, shall have been given to Servicer and Trustee by any
Investor Certificateholder or Purchaser or, subject to the prior
written approval of the Required Investors, Transferor, or
(e) any Bankruptcy Event shall occur with respect to Servicer.
In the event of any Servicer Default, so long as such Servicer Default
shall not have been remedied, Transferor shall, at the direction of the
Trustee or the Required Investors, by notice then given in writing to
Servicer (a "TERMINATION NOTICE"), terminate all (but not less than all) the
rights and obligations of Servicer as Servicer under this Agreement and in
and to the Receivables, the Related Transferred Assets and the proceeds
thereof.
As soon as possible, and in any event within five Business Days, after
an Authorized Officer of Servicer has obtained knowledge of the occurrence of
any Servicer Default, Servicer shall furnish Transferor, Trustee, each Agent
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and the Rating Agencies, and Trustee shall promptly furnish each Investor
Certificateholder, notice of such Servicer Default.
Notwithstanding the foregoing, a delay in or failure in performance
referred to in SUBSECTION (a) for a period of ten Business Days after the
applicable grace period, or in SUBSECTION (b) or (d) for a period of 30
Business Days after the applicable grace period, shall not constitute a
Servicer Default if the delay or failure could not have been prevented by the
exercise of reasonable diligence by Servicer and the delay or failure was
caused by an act of God or the public enemy, riots, acts of war, acts of
terrorism, epidemics, flood, embargoes, weather, landslides, fire, earthquakes
or similar causes. The preceding sentence shall not relieve Servicer from using
its best efforts to perform its obligations in a timely manner in accordance
with the terms of the Transaction Documents, and Servicer shall promptly give
Transferor, Trustee, each Agent and Transferor an Officer's Certificate
notifying them of its failure or delay.
SECTION 10.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) On and after
Servicer's receipt of a Termination Notice pursuant to SECTION 10.1, Servicer
shall continue to perform all servicing functions under this Agreement until
the date specified in the Termination Notice or otherwise specified by
Transferor (acting upon the instruction of the Trustee or the Required
Investors) in writing or, if no such date is specified in the Termination
Notice, or otherwise specified by Transferor (acting upon the instruction of
the Trustee or the Required Investors), until a date mutually agreed upon by
Servicer and Transferor (acting upon the instruction of the Trustee or the
Required Investors). Transferor (acting upon the instruction of the Trustee or
the Required Investors) shall, as promptly as possible after the giving of a
Termination Notice, nominate an Eligible Servicer as successor servicer (the
"SUCCESSOR SERVICER"); PROVIDED that (a) in so appointing any Successor
Servicer, Trustee shall give due consideration to any Successor Servicer
proposed by any Agent and (b) the Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to Transferor (acting
upon instruction from the Trustee) and each Agent. Any Person who is nominated
to be a Successor Servicer shall accept its appointment by a written assumption
in form and substance acceptable to Transferor (acting upon instruction from the
Trustee). In the event that a Successor Servicer has not been appointed or has
not accepted its appointment at the time when Servicer ceases to act as
Servicer, Trustee without further action shall automatically be appointed the
Successor Servicer. Trustee may delegate any of its servicing obligations to an
affiliate or agent in accordance with SECTION 3.1(b). If Trustee is prohibited
by applicable law from performing the duties of Servicer hereunder, Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
Successor Servicer hereunder. Trustee shall give
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prompt notice to the Rating Agencies and each Investor Certificateholder upon
the appointment of a Successor Servicer.
(b) After Servicer's receipt of a Termination Notice, and on the date that
a Successor Servicer shall have been appointed by Transferor (acting upon the
instruction of the Trustee or the Required Investors) and shall have accepted
the appointment pursuant to SUBSECTION (a), all authority and power of Servicer
under this Agreement shall pass to and be vested in the Successor Servicer (a
"SERVICE TRANSFER"); and, without limitation, Trustee is hereby authorized and
empowered to execute and deliver, on behalf of Servicer, as attorney-in-fact or
otherwise, all documents and instruments, and to do and accomplish all other
acts or things that Trustee reasonably determines are necessary or appropriate
to effect the purposes of the Service Transfer. Upon the appointment of the
Successor Servicer and its acceptance thereof, Servicer agrees that it will
terminate its activities as Servicer hereunder in a manner that Trustee
indicates will facilitate the transition of the performance of such activities
to the Successor Servicer. Servicer agrees that it shall use reasonable efforts
to assist the Successor Servicer in assuming the obligations to service and
administer the Receivables and the Related Transferred Assets, on the terms and
subject to the conditions set forth herein, and to effect the termination of
the responsibilities and rights of Servicer to conduct servicing hereunder,
including the transfer to such Successor Servicer of all authority of Servicer
to service the Receivables and Related Transferred Assets provided for under
this Agreement and all authority over all cash amounts that shall thereafter be
received with respect to the Receivables or the Related Transferred Assets.
Servicer shall, within five Business Days after the designation of a Successor
Servicer, transfer its electronic records (and any related software and
software licenses, appropriately assigned and prepaid) relating to the
Receivables, the related Contracts and the Related Transferred Assets to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables and the Related Transferred Assets in the manner
and at such times as the Successor Servicer shall request. To the extent that
compliance with this Section shall require Servicer to disclose to the Successor
Servicer information of any kind that Servicer reasonably deems to be
confidential, prior to the transfer contemplated by the preceding sentence the
Successor Servicer shall be required to enter into such licensing and
confidentiality agreements as Servicer shall reasonably deem necessary to
protect its interest. All reasonable costs and expenses (including attorneys'
fees and disbursements) incurred in connection with transferring the
Receivables, the Related Transferred Assets and a11 related Records (including
the related Contracts) to the Successor Servicer and amending this Agreement
and the
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other Transaction Documents to reflect the succession as Servicer pursuant to
this SECTION shall be paid by the predecessor Servicer (or, if Trustee serves as
Successor Servicer on an interim basis, the initial Servicer) within 15 days
after presentation of reasonable documentation of the costs and expenses.
(c) Upon its appointment and acceptance thereof, the Successor Servicer
shall be the successor in all respects to Servicer with respect to servicing
functions under this Agreement and shall be subject to all the responsibilities
and duties relating thereto placed on Servicer by the terms and provisions
hereof (and shall carry out such responsibilities and duties in accordance with
standards of reasonable commercial prudence), and all references in this
Agreement to Servicer shall be deemed to refer to the Successor Servicer.
(d) All authority and power granted to Servicer or the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to SECTION 12.1, and shall pass to and be vested in
Transferor and, without limitation, Transferor is hereby authorized and
empowered, on and after the effective date of such termination, to execute and
deliver, on behalf of the Servicer or the Successor Servicer, as attorney-in-
fact or otherwise, all documents and other instruments and to do and accomplish
all other acts or things that Transferor reasonably determines are necessary or
appropriate to effect the purposes of such transfer of servicing rights. He
Servicer or Successor Servicer agrees to cooperate with Transferor in effecting
the termination of the responsibilities and rights of the Servicer or Successor
Servicer to conduct servicing of the Receivables and the Related Transferred
Assets. The Successor Servicer shall, within five Business Days after such
termination, transfer its electronic records relating to the Receivables and
the Related Transferred Assets to Transferor in such electronic form as
Transferor may reasonably request and shall transfer all other records,
correspondence and documents relating to the Receivables and the Related
Transferred Assets to Transferor in the manner and at such times as Transferor
shall reasonably request. To the extent that compliance with this Section shall
require the Successor Servicer to disclose to Transferor information of any kind
that the Successor Servicer deems to be confidential, Transferor shall be
required to enter into such customary licensing and confidentiality agreements
as the Successor Servicer shall reasonably deem necessary to protect its
interests. All reasonable costs and expenses (including attorneys' fees and
disbursements) incurred by Trustee, in its capacity as Successor Servicer, in
connection with the termination shall be paid by Transferor within 15 days
after presentation of reasonable documentation of the costs and expenses.
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Notwithstanding any provisions contained in any Transaction Document to
the contrary, Transferor shall not, and shall not be obligated to, pay any
amount pursuant to this Section unless funds are allocated for such payment
pursuant to the provisions of a Supplement or PI Agreement governing the
allocation of funds in the Master Collection Account. Any amount which
Transferor does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim (as defined in Section 101 of the Bankruptcy
Code) against or corporate obligation of Transferor for any such
insufficiency.
SECTION 10.3 NOTIFICATION OF SERVICER DEFAULT; NOTIFICATION OF APPOINTMENT
OF SUCCESSOR SERVICER. Within four Business Days after an Authorized Officer of
Servicer becomes aware of any Servicer Default, Servicer shall give written
notice thereof to Transferor, Trustee and the Rating Agencies, and Trustee
shall, promptly upon receipt of the written notice, give notice to the Investor
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Purchasers. Upon any termination or appointment of a
Successor Servicer pursuant to this ARTICLE X, Trustee shall give prompt
written notice thereof to the Investor Certificateholders at their respective
addresses appearing in the Certificate Register and to the Purchasers and the
Rating Agencies.
SECTION 10.4 WAIVER OF SERVICER DEFAULTS. The Required Investors or
Transferor, acting at the direction of the Required Investors, may, on behalf of
Transferor and all Holders of each Series, waive in writing any Servicer Default
hereunder and its consequences. Upon any such waiver of a Servicer Default, such
Servicer Default shall cease to exist, and shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other Servicer Default or impair any right consequent thereon
except to the extent expressly so waived.
ARTICLE XI TRUSTEE
SECTION 11.1 DUTIES OF TRUSTEE. (a) Trustee undertakes to perform the
duties and only the duties as are specifically set forth in this Agreement. The
provisions of this ARTICLE XI shall apply to Trustee solely in its capacity as
Trustee, and not to Trustee in its capacity as Servicer if it is acting as
Servicer. Following the occurrence of a Servicer Default of which a Responsible
Officer has actual knowledge, Trustee shall exercise such of the rights and
powers vested in it by this Agreement 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 or her own affairs; PROVIDED that if
Trustee shall assume the duties of Servicer pursuant to SECTION 10.2, Trustee in
performing the duties shall use the degree of skill and attention customarily
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exercised by a servicer with respect to trade receivables that it services for
itself or others. Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in, or incidental to the performance of its duties under, the
Transaction Documents.
(b) Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to Trustee
that are specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they are substantially in the
form required by this Agreement. Trustee shall give written notice to the
Person who furnished any item of the type listed in the preceding sentence of
any lack of substantial conformity of any such item to the applicable
requirements of this Agreement. In addition, Trustee shall give prompt written
notice to the Investor Certificateholders and each Agent of any lack of
substantial conformity of any such instrument to the applicable requirements of
this Agreement discovered by Trustee that would entitle a specified percentage
of the Investor Certificateholders or the Holders of any Series of Certificates
or Purchasers or Agents to take any action pursuant to this Agreement. Within
two Business Days of its receipt of any Monthly Report, Trustee shall verify the
mathematical computations contained therein and shall notify Servicer and each
of the Rating Agencies of the accuracy of such computations or of any
discrepancies therein (provided that the rounding of numbers will not constitute
a discrepancy), whereupon Servicer shall deliver to the Rating Agencies within 5
Business Days thereafter a certificate describing the nature and cause of such
discrepancies and the action that Servicer proposes to take with respect
thereto. During the first week of each year, Trustee shall provide the Rating
Agencies with a certificate, signed by a Responsible Officer, to the effect
that Trustee is not aware of any Early Amortization Event (or, if it is aware of
any Early Amortization Event, specifying the nature of that event).
(c) Subject to SUBSECTION (a), no provision of this Agreement shall be
construed to relieve Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; PROVIDED that:
(i) Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
Trustee, unless it shall be proved that Trustee was negligent in
as certain in the pertinent facts,
(ii) Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction (as applicable) of the Majority Investors, the
Required
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Investors, all Investors, any Agent, or the Required Series Holders
relating to the time, method and place of conducting any proceeding for
any remedy available to Trustee, or exercising any trust or power
conferred upon Trustee, under this Agreement,
(iii) Trustee shall not be charged with knowledge of (A) any
failure by Servicer to comply with the obligations of Servicer referred
to in SUBSECTIONS (a), (b) or (c) of SECTION 10.1, (B) any breach of
the representations and warranties of Transferor set forth in SECTION
2.3 or 7.1 or the representations and warranties of Servicer set forth
in SECTION 8.1, (C) any breach of the covenants of Transferor set
forth in SECTION 7.2 or the covenants of Servicer set forth in SECTION
8.2 or (D) the ownership of any Certificate or Purchased Interest for
purposes of SECTION 6.5, in each case unless a Responsible Officer of
Trustee obtains actual knowledge of the matter or Trustee receives
written notice of the matter from Servicer or from any Holder,
(iv) the duties and obligations of Trustee shall be determined
solely by the express provisions of this Agreement, Trustee shall not
be liable except for the performance of the duties and obligations that
specifically shall be set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against Trustee and,
in the absence of bad faith on the part of Trustee, Trustee may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed in any certificates or opinions that are
furnished to Trustee and that conform to the requirements of this
Agreement, and
(v) without limiting the generality of this section or SECTION
11.2, Trustee shall have no duty (A) to see to any recording, filing,
or depositing of this Agreement or any agreement referred to herein or
any financing statement evidencing a security interest in the
Receivables or the Related Transferred Assets, or to see to the
maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof (except that
Trustee (x) shall note in its records the date of filing of each UCC
financing statement identified to it in writing as having been filed in
connection with the Transaction Documents, or filed in connection with
a predecessor receivables securitization and amended and/or assigned in
connection with the Transaction Documents, and naming Trustee as
secured party or assignee of the secured party and (y) shall, unless
it shall have received an Opinion of Counsel to the effect that no such
filing is necessary to continue the perfection of Transferor's or
Trustee's interests in the Receivables and the Related Assets, cause
continuation statements to be
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filed with respect to each such financing statement not less than four
years and six months and not more than five years after (1) its
filing date and (2) the date of filing of any prior continuation
statement), (B) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any Adverse Claim or
encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, (C) to confirm or verify the contents
of any reports or certificates of Servicer delivered to Trustee
pursuant to this Agreement that are believed by Trustee to be genuine
and to have been signed or presented by the proper party or parties or
(D) to ascertain or inquire as to the performance or observance of any
of Transferor's or Servicer's representations, warranties or covenants
or Servicer's duties and obligations as Servicer.
(d) Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if Trustee
reasonably believes that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it, and none of the
provisions contained in this Agreement shall in any event require Trustee to
perform, or be responsible for the manner of performance of, any obligations of
Servicer under this Agreement except during the time, if any, that Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, Trustee
shall take no action reasonably likely to impair the interests of the Trust
in any Transferred Asset now existing or hereafter created or to impair the
value of any Transferred Asset now existing or hereafter created.
(f) Except to the extent expressly provided otherwise in this Agreement,
Trustee shall have no power to vary the Transferred Assets.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day on which such obligation, duty or agreement is required to be
performed by the Paying Agent or the Transfer Agent and Registrar, as the case
may be, under this Agreement, Trustee shall be obligated, promptly upon its
actual knowledge thereof, to perform the obligation, duty or agreement in the
manner so required.
SECTION 11.2 CERTAIN MATTERS AFFECTING TRUSTEE. Except as otherwise
provided in SECTION 11.1:
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(a) Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accordance with, any resolution, Officer's
Certificate, opinion of counsel, certificate of auditors or any other
certificate, statement, instrument, instruction, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or
document and any information contained therein believed by it to be
genuine and to have been signed or presented to it pursuant to this
Agreement by the proper party or parties including, but not limited to,
reports and records required by ARTICLE III,
(b) Trustee may consult with counsel and any opinion of counsel
rendered by counsel reasonably satisfactory to Transferor shall be full
and complete authorization and protection in respect of any action taken
or permitted or omitted by it hereunder in good faith and in accordance
with such opinion of counsel,
(c) Trustee (including in its role as Successor Servicer, if it
ever acts in that capacity) shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation or other proceeding
hereunder or in relation hereto, at the request, order or direction of
any of the Certificateholders, the Purchasers or any Agent, pursuant to
the provisions of this Agreement, unless such Certificateholders, the
Purchasers or Agent shall have offered to Trustee reasonable security
or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby; PROVIDED that nothing contained herein
shall relieve Trustee of the obligations, upon the occurrence and
continuance of a Servicer Default that has not been cured, to exercise
such of the rights and powers vested in it by this Agreement and to 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 or
her own affairs,
(d) Trustee shall not be personally liable for any action taken,
permitted or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement,
(e) Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by the Required Investors; PROVIDED that if the payment within a
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reasonable time to Trustee of the costs, expenses, or liabilities
likely to be incurred by it in connection with making such investigation
shall be, in the opinion of Trustee, not reasonably assured to Trustee
by the security afforded to it by the terms of this Agreement, Trustee
may require reasonable indemnity against such cost, expense, or
liability as a condition to proceeding with the investigation. The
reasonable expense of every examination shall be paid by Servicer or,
if paid by Trustee, shall be reimbursed by Servicer upon demand,
(f) Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
representatives, attorneys or a custodian, and Trustee shall not be
responsible for any misconduct or negligence on the part of any agent,
representative, attorney or custodian appointed with due care by it
hereunder,
(g) except as may be required by SECTION 11.1(b) hereof, Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Transferred Assets for the purpose
of establishing the presence or absence of defects or for any other
purpose,
(h) whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of
or affording protection to Trustee shall be subject to the provisions of
this section,
(i) Trustee shall have no liability with respect to the acts or
omissions of Servicer (except and to the extent Servicer is Trustee),
including, but not limited to, acts or omissions in connection with: (A)
the servicing, management or administration of the Receivables or the
Related Transferred Assets, (B) calculations made by Servicer whether
or not reported to Trustee, and (C) deposits into or withdrawals from
any Bank Accounts or Transaction Accounts established pursuant to the
terms of this Agreement, and
(j) in the event that Trustee is also acting as Paying Agent
or Transfer Agent and Registrar hereunder, the rights and
protections afforded to Trustee pursuant to this ARTICLE XI shall also be
afforded to Trustee acting as Paying Agent or as Transfer Agent and
Registrar.
SECTION 11.3 LIMITATION ON LIABILITY OF TRUSTEE. Trustee shall at no time
have any responsibility or liability for or with respect to the correctness
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of the recitals contained herein or in the Certificates (other than the
certificate of authentication on the Certificates) or the Purchased Interests.
Except as set forth in SECTION 11.15, Trustee makes no representations as to
the validity or sufficiency of this Agreement, any PI Agreement, any
Supplement, the Certificates (other than the certificate of authentication on
the Certificates) or the Purchased Interests, any other Transaction Document
or any Transferred Asset or related document. Trustee shall not be accountable
for the use or application (i) by Transferor of any of the Certificates or the
Purchased Interests or of the proceeds of such Certificates or the Purchased
Interests, or (ii) for the use or application of any funds paid to Transferor
or to Servicer (other than to Trustee in its capacity as Servicer) in respect
of the Transferred Assets or deposited by Servicer in or withdrawn by Servicer
from the Bank Accounts, the Transaction Accounts or any other accounts hereafter
established to effectuate the transactions contemplated herein or in the other
Transaction Documents and in accordance with the terms hereof or thereof.
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity, or enforceability of any ownership or
security interest in any Transferred Asset, or the perfection or priority of
such a security interest or the maintenance of any such perfection or priority,
or for the generation of the payments to be distributed to Certificateholders
or Purchasers under this Agreement, including: (a) the existence and substance
of any Transferred Asset or any related Record or any computer or other record
thereof, (b) the validity of the transfer of any Transferred Asset to the Trust
or of any preceding or intervening transfer, (c) the performance or
enforcement of any Transferred Asset, (d) the compliance by Transferor or
Servicer with any warranty or representation made under this Agreement or in any
other Transaction Document and the accuracy of any such warranty or
representation prior to Trustee's receipt of actual notice of any noncompliance
therewith or any breach thereof, (e) any investment of monies pursuant to
SECTION 4.4 or any loss resulting therefrom, (f) the acts or omissions of
Transferor, Servicer or any Obligor, (g) any action of Servicer taken in the
name of Trustee, or (h) any action by Trustee taken at the instruction of
Servicer; PROVIDED that the foregoing shall not relieve Trustee of its
obligation to perform its duties (including but not limited to its duties, if
any, to act as Servicer in accordance with SECTION 10.2) under the Agreement
in accordance with the terms hereof.
Except with respect to a claim based on the failure of Trustee to perform
its duties under this Agreement or based on Trustee's negligence or willful
misconduct, no recourse shall be had against Trustee in its individual capacity
for any claim based on any provision of this Agreement, any other Transaction
Document, the Certificates, the Purchased Interests, any Transferred Asset or
any assignment thereof. Trustee shall not have any
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personal obligation, liability, or duty whatsoever to any Certificateholder,
any Purchaser or any other Person with respect to any such claim, and any such
claim shall be asserted solely against the Trust or any indemnitor who shall
furnish indemnity to the Trust or Trustee as provided in this Agreement.
SECTION 11.4 TRUSTEE MAY DEAL WITH OTHER PARTIES. Subject to any
restrictions that may otherwise be imposed by SECTION 406 of ERISA or SECTION
4975(e) of the Internal Revenue Code, Trustee in its individual or any other
capacity may deal with the other parties hereto (other than Transferor) and
their respective affiliates, with the same rights as it would have if it were
not Trustee.
SECTION 11.5 SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES. (a) To the
extent not paid by Servicer to Trustee from funds constituting the Servicing
Fee, Servicer covenants and agrees to pay to Trustee from time to time, and
Trustee shall be entitled to receive, such reasonable compensation as is agreed
upon in writing between Trustee and Servicer (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by it in connection with the Transaction Documents and
in the exercise and performance of any of the powers and duties hereunder of
Trustee, and Servicer will pay or reimburse Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by Trustee in
accordance with any of the provisions of the Transaction Documents to which it
is a party (including the reasonable fees and expenses of its agents, any co-
Trustee and counsel) except any expense, disbursement or advance that may
arise from Trustee's negligence or willful misconduct.
(b) In addition, Servicer agrees to indemnify Trustee from, and hold it
harmless against, any and all losses, liabilities, damages, claims or expenses
incurred by Trustee in connection with the Transaction Documents or in the
exercise or performance of any of the powers or duties of Trustee hereunder,
other than those resulting from the negligence or willful misconduct of Trustee.
(c) If Trustee is appointed Successor Servicer pursuant to SECTION 10.2,
the provisions of this section shall not apply to expenses, disbursements and
advances made or incurred by Trustee in its capacity as Successor Servicer,
which shall be paid out of the Servicing Fee. Servicer's covenant to pay the
fees, expenses, disbursements and advances provided for in this section shall
survive the resignation or removal of Trustee and the termination of this
Agreement.
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(d) Trustee shall look solely to Servicer for payment of amounts
described in this SECTION 11.5, and Trustee shall have no claim for payment
of such amounts against Transferor or the Transferred Assets.
SECTION 11.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. Trustee hereunder shall
at all times: (a) be (i) a banking institution organized under the laws of the
United States, (ii) a member bank of the Federal Reserve System or (iii) any
other banking institution or trust company, incorporated and doing business
under the laws of any State or of the United States, a substantial portion of
the business of which consists of receiving deposits or exercising fiduciary
powers similar to those permitted to national banks under the authority of the
Comptroller of the Currency, and that is supervised and examined by a state or
federal authority having supervision over banks, (b) not be an Enhancement
Provider or an Affiliate of BT Securities Corporation, (c) have, in the case of
an entity that is subject to risk-based capital adequacy requirements, risk-
based capital of at least $250,000,000 or, in the case of an entity that is not
subject to risk-based capital adequacy requirements, a combined capital and
surplus of at least $250,000,000 and (d) have an unsecured long-term debt
rating of at least "A" or its equivalent from each Rating Agency. If such
corporation or association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then, for the purpose of this section, the combined capital and
surplus of the corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time Trustee shall cease to be eligible in accordance with
the provisions of this section, Trustee shall resign immediately in the manner
and with the effect specified in SECTION 11.7.
SECTION 11.7 RESIGNATION OR REMOVAL OF TRUSTEE. (a) Trustee may at any
time resign and be discharged from its obligations hereunder by giving 30 days'
prior written notice thereof to Transferor, Servicer, the Rating Agencies, the
Investor Certificateholders and the Agents. Upon receiving the notice of
resignation, Transferor shall promptly appoint, subject to satisfaction of the
Modification Condition, a successor Trustee who meets the eligibility
requirements set forth in SECTION 11.6 by written instrument, in duplicate, one
copy of which shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and
shall have accepted appointment within 30 days after the giving of the notice of
resignation, the resigning Trustee, upon notice to each Agent, may petition any
court of competent jurisdiction to appoint a successor Trustee.
(b) If at any time Trustee shall cease to be eligible to be Trustee
hereunder in accordance with the provisions of SECTION 11.6 hereof and shall
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fail to resign promptly after its receipt of a written request therefor by
Transferor, or if at any time Trustee shall be legally unable to act, or shall
be adjudged bankrupt or insolvent, or if a receiver for Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then Transferor may remove Trustee and, subject to
the consent of each Agent (which consent shall not be unreasonably withheld or
delayed) and satisfaction of the Modification Condition, promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which shall
be delivered to Trustee so removed and one copy to the successor Trustee.
(c) Any resignation or removal of Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this section shall not become
effective until (i) acceptance of appointment by the successor Trustee as
provided in SECTION 11.8 hereof, and (ii) such successor Trustee shall have
agreed in writing to be bound by any Intercreditor Agreements then in effect.
SECTION 11.8 SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed as
provided in SECTION 11.7 shall execute, acknowledge and deliver to Transferor,
Servicer, the Investor Certificateholders, the Purchasers and the predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall, upon payment of its
fees and expenses and other amounts owed to it pursuant to SECTION 11.5, become
effective and the successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
Trustee, at the expense of Servicer, all documents or copies thereof and
statements held by it hereunder; and Transferor and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully vesting and confirming in the successor Trustee
all such rights, powers, duties and obligations. Servicer shall promptly give
notice to the Rating Agencies upon the appointment of a successor Trustee.
(b) No successor Trustee shall accept appointment as provided in this
section unless at the time of the acceptance the successor Trustee shall be
eligible to become Trustee under the provisions of SECTION 11.6.
(c) Upon acceptance of appointment by a successor Trustee as provided in
this section, the successor Trustee shall mail notice of the succession
hereunder to all Investor Certificateholders at their addresses as shown in the
Certificate Register and to each Rating Agency.
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SECTION 11.9 MERGER OR CONSOLIDATION OF TRUSTEE. Any Person into which
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which Trustee
shall be a party, or any Person succeeding to all or substantially all of the
corporate trust business of Trustee, shall be the successor of Trustee
hereunder, if the Person meets the requirements of SECTION 11.6, 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. Servicer shall
promptly give notice to the Rating Agencies upon any merger or consolidation of
Trustee.
SECTION 11.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons (who may be
an employee or employees of Trustee) to act as a co-Trustee or co-Trustees, or
separate Trustee or separate Trustees, with respect to all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders and the Purchasers, such title to the Trust,
or any part thereof, and, subject to the other provisions of this section, such
powers, duties, obligations, rights and trusts as Trustee may consider necessary
or appropriate; PROVIDED, that such appointment shall be subject to the prior
written consent of Transferor unless an Early Amortization Event or Servicer
Termination Event is continuing; and PROVIDED FURTHER, that in any event Trustee
will give Transferor and Servicer prior written notice of such appointment. No
co-Trustee or separate Trustee shall be required to meet the terms of
eligibility as a successor Trustee under SECTION 11.6 and no notice to
Certificateholders, Agents or Purchasers of the appointment of any co-Trustee or
separate Trustee shall be required under SECTION 11.8.
(b) Every separate Trustee and co-Trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon Trustee shall be conferred or imposed upon and exercised
or performed by Trustee and the separate Trustee or co-Trustee jointly
(it being understood that the separate Trustee or co-Trustee is not
authorized to act separately without Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to Servicer hereunder), Trustee shall
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be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title
to the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate Trustee or co-Trustee, but
solely at the direction of Trustee,
(ii) no Trustee hereunder shall be personally liable by reason of any
act or omission of any other Trustee hereunder, and
(iii) Trustee may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
(c) Any notice, request or other writing given to Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this ARTICLE XI. Each separate Trustee and co-Trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection or indemnity to,
Trustee. Every such instrument shall be filed with Trustee and a copy thereof
given to Servicer.
(d) Any separate Trustee or co-Trustee may at any time constitute
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement or any other Transaction Document on its behalf and in its name. If
any separate Trustee or co-Trustee shall die, become incapable of acting,
resign or be removed, all its estates, properties, rights, remedies and trusts
shall vest in and be exercised by Trustee, to the extent permitted by law,
without the appointment of a new or successor Trustee.
SECTION 11.11 TAX RETURNS. No Federal income tax return shall be filed on
behalf of the Trust unless required by applicable law or any Governmental
Authority. In the event the Trust shall be required to file tax returns,
Servicer shall prepare or shall cause to be prepared any tax returns required to
be filed by the Trust and shall remit the returns to Trustee for signature at
least five Business Days before the returns are due to be filed. Trustee shall
promptly sign and deliver the returns to Servicer and Servicer shall promptly
file the returns. Subject to the responsibilities of Trustee set forth in any
Supplement, Servicer, in accordance with that Supplement, shall
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also prepare or shall cause to be prepared all tax information required by law
to be made available to Certificateholders and Purchasers and shall deliver the
information to Trustee at least five Business Days prior to the date it is
required by law to be made available to the Certificateholders and Purchasers.
Trustee, upon request, will furnish Servicer with all the information known to
Trustee as may be reasonably required in connection with the preparation of all
tax returns of the Trust and shall, upon request, execute such returns as
Trustee determines are appropriate.
SECTION 11.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement, the
Certificates, the Purchased Interests or the other Transaction Documents may be
prosecuted and enforced by Trustee without the possession of any of the
Certificates or Purchased Interests or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by Trustee shall be brought
in its own name as Trustee. Any recovery of judgment shall, after provision for
the payment of the reasonable compensation, expenses, disbursements and
advances of Trustee, its agents and counsel, be distributed to the
Certificateholders or Purchasers in respect of which such judgment has been
obtained in accordance with the related Supplement or PI Agreement.
SECTION 11.13 SUITS FOR ENFORCEMENT. If an Early Amortization Event or a
Servicer Default shall occur and be continuing, Trustee, in its discretion may,
subject to the provisions of SECTIONS ll.1 and 11.14, proceed to protect and
enforce its rights and the rights of the Certificateholders or Purchasers under
this Agreement by suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or any other Transaction Document or in aid of the execution of
any power granted in this Agreement or any other Transaction Document or for
the enforcement of any other legal, equitable or other remedy as Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of Trustee or the Certificateholders or Purchasers. Nothing herein
contained shall be deemed to authorize Trustee to authorize or consent to or
accept or adopt on behalf of any Certificateholder or Purchaser any plan of
reorganization, arrangement, adjustment or composition affecting the Investor
Certificates or the rights of any Holder thereof, or the Purchasers, or to
authorize Trustee to vote in respect of the claim of any Investor
Certificateholder or Purchaser in any such proceeding.
SECTION 11.14 RIGHTS OF TRANSFEROR TO DIRECT TRUSTEE. Transferor, acting
with the prior written consent of the Required Investors if no Early
Amortization Event shall have occurred, and acting only upon the direction of
the Required Investors if an Early Amortization Event shall have occurred,
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shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to Trustee, or exercising any trust or
power conferred on Trustee, or exercising any trust or power conferred on
Trustee (other than any rights of the Trustee under SECTION 3.8, the exercise of
which rights shall be subject to direction by the Required Investors); provided
that:
(i) subject to SECTION 11.1, Trustee may decline to follow any such
direction if Trustee, being advised by counsel, determines that the action
so directed may not be taken lawfully, or if a Responsible Officer or
Responsible Officers of Trustee shall determine, in good faith, that the
proceedings so directed would be illegal or involve Trustee in personal
liability or be unduly prejudicial to the rights of the Investor
Certificateholders not giving such direction;
(ii) nothing in this Agreement shall impair the right of Trustee to
take any action deemed proper by Trustee and that is not inconsistent with
such direction of Transferor;
(iii) the Required Investors shall have the right to request
Transferor to direct the Trustee to take any action related to or
concerning the Transferred Assets (provided that such action, or the power
to take such action, is not specifically delegated to or reserved by
Transferor pursuant to any other Section of this Agreement or any
Supplement) and otherwise within the scope of this Section;
(iv) in the event that, pursuant to CLAUSE (iii) above (whether
before or after the occurrence of an Early Amortization Event), the
Required Investors shall request Transferor to direct the Trustee to take
any action and Transferor fails to do within 5 Business Days (in the case
of any direction given prior to the occurrence of an Early Amortization
Event) or one Business Day (in the case of any other direction) the
Required Investors shall have the right to direct the Trustee to take such
requested action; and
(v) the Trustee shall be entitled to rely exclusively on a
certification from the Required Investors as to the existence of
circumstances described in CLAUSE (iv) above, and shall have no liability
to any Person arising out of or relating to the inaccuracy of such
certification or actions taken by the Trustee at such direction.
SECTION 11.15 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. Trustee represents
and warrants that:
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(a) it is a banking corporation organized, existing and in good
standing under the laws of the State of New York,
(b) it has full power, authority and right to execute, deliver and
perform the Transaction Documents to which it is a party, and has taken
all necessary action to authorize the execution, delivery and performance
by it of the Transaction Documents, and
(c) the Transaction Documents to which it is a party have been duly
executed and delivered by Trustee and, in the case of all such Transaction
Documents, are legal, valid and binding obligations of Trustee,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
SECTION 11.16 MAINTENANCE OF ONCE OR AGENCY. Trustee will maintain, at its
address designated pursuant to SECTION 13.6, an office, offices, agency or
agencies where notices and demands to or upon Trustee in respect of the
Certificates, the Purchased Interests and the Transaction Documents to which it
is a party may be served. Trustee will give prompt written notice to Servicer
and to the Certificateholders and Agents of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE XII TERMINATION
SECTION 12.1 TERMINATION OF TRUST. (a) If not earlier terminated pursuant
to SECTION 9.3, the Trust and the respective obligations and responsibilities
of Transferor, Servicer and Trustee created hereby (other than the obligation of
Trustee to make payments to Certificateholders or Purchasers as hereinafter set
forth and the obligations of Servicer contained in SECTIONS 11.11) shall
terminate, except with respect to the duties and obligations described in
SECTIONS 3.9(c), 7.3, 8.4, 11.5, 12.2(5), 13.9, 13.15 and 13.16 upon the
earliest to occur of (i) the day on which the Investor Certificateholders, the
Purchasers and Trustee shall have been paid all amounts required to be paid to
them pursuant to this Agreement and Trustee has disposed of all property held
hereunder (including pursuant to SECTION 12.3) and (ii) the day which is 21
years less one day after the death of the officers and the last survivor of all
the lineal descendants of every officer of the Trustee who are living on the
date hereof.
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(b) Notwithstanding the foregoing, the last payment of the principal of
and interest on the Investor Certificates of any Series shall be due and payable
no later than the Final Scheduled Payment Date for that Series. If, on the
Distribution Date immediately prior to the Final Scheduled Payment Date for any
Series, Servicer determines that the Invested Amount for the Series on the
applicable Final Scheduled Payment Date (after giving effect to all changes
therein on such date) wi11 exceed zero, Servicer shall solicit bids for the
sale of interests in the Transferred Assets in an amount equal to 110% of the
Base Amount for the Series on the Final Scheduled Payment Date for the Series
(after giving effect to all distributions required to be made on the Final
Scheduled Payment Date for the Series), but in no event more than the Series
Collection Allocation Percentage for that Series of the Receivables held by the
Trust on that day. Transferor shall be entitled to participate in and to receive
notice of each bid submitted in connection with the bidding process. Upon the
expiration of the period, Servicer shall determine (x) the Highest Bid and (y)
the Available Final Distribution Amount for the Series. Servicer shall sell the
interests in the Transferred Assets on the Final Scheduled Payment Date for the
applicable Series to the bidder with the Highest Bid and shall deposit the
proceeds of such sale in the Master Collection Account for allocation (together
with the Available Final Distribution Amount for such Series) to the
Certificateholders of such Series.
SECTION 12.2 FINAL DISTRIBUTION. (a) Servicer shall give Trustee at least
ten days' prior written notice of the date on which the Trust is expected to
terminate in accordance with SECTION 12.1(a). The notice shall be accompanied
by a certificate of an Authorized Officer of Servicer setting forth the
information specified in SECTION 3.6 covering the period during the then current
calendar year through the date of the notice. Upon receiving the notification
from Servicer, Trustee shall give the Certificateholders and/or the Agents (as
applicable) written notice as soon as practicable after Trustee's receipt of
notice from Servicer, which notice shall specify (i) the Distribution Date upon
which final payment with respect to the Certificates is expected to be made and
(ii) the amount of any such final payment. Trustee shall give the notice to the
Transfer Agent and Registrar and the Paying Agent at the time such notice is
given to Certificateholders. On the Distribution Date specified in the notice,
Trustee shall, based upon the Daily Report relating to such Distribution Date,
cause to be distributed to the Certificateholders the amounts distributable to
them on such Distribution Date pursuant to the applicable Supplement. Each
Certificateholder shall present its Certificate to Trustee and surrender its
Certificate for cancellation at the address of Trustee set forth in SECTION 13.6
not more than ten Business Days after the Distribution Date upon which final
payment with respect to the Certificates has been made.
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(b) Notwithstanding the termination of the Trust pursuant to SECTION
12.1(A), all funds then on deposit in the Master Collection Account shall
continue to be held in trust for the benefit of the Certificateholders and the
Purchasers and the Paying Agent or Trustee shall pay such funds to the
Certificateholders and the Purchasers at the time set forth in SECTION 12.1(A).
If any Certificateholder or Purchaser does not claim the portion of such funds
to which it is entitled at such time, interest shall cease to accrue on its
Certificate or Purchased Interest (as applicable) and Trustee shall hold such
funds in trust for such Person, subject to the further provisions of this
Section. In the event that any of the Certificateholders shall not have claimed
their final payment with respect to their Certificates within six months after
the date specified in the above-mentioned written notice from Trustee, Trustee
shall give a second written notice to the remaining Certificateholders
concerning payment of the final distribution with respect thereto and surrender
of their Certificates for cancellation. If within one year after the second
notice all the Certificates shall not have been surrendered for cancellation,
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds in the Master
Collection Account held for the benefit of such Certificateholders. Trustee and
the Paying Agent shall pay to Transferor any monies held by them for the payment
of principal of or interest on the Certificates that remains unclaimed for two
years after the termination of the Trust pursuant to SECTION 12.1(A). After
payment of the monies to Transferor, Certificateholders entitled to the money
must look to Transferor for payment as unsecured general creditors unless an
applicable abandoned property law designates another Person.
SECTION 12.3 RIGHTS UPON TERMINATION OF THE TRUST. Upon the termination of
the Trust pursuant to SECTION 12.1 and the surrender of the Transferor
Certificate by Transferor to Trustee, Trustee shall transfer, assign, set over
and otherwise convey to Transferor (without recourse, representation or
warranty), all right, title and interest of the Trust in the Receivables,
whether then existing or thereafter created, the Related Transferred Assets and
all of the other property and rights previously conveyed to Trustee hereunder,
except for amounts held by Trustee pursuant to SECTION 12.2b) and except for
the rights of RPA Indemnified Parties (other than Transferor and its officers,
directors, shareholders, controlling Persons, employees and agents) to
indemnification and contribution under SECTION 9.1 of the Purchase Agreement.
Trustee shall execute and deliver the instruments of transfer and assignment
(including any document necessary to release the security interest in favor of
Trustee (for the benefit of the Certificateholders or the Purchasers) in such
Receivables and Related Transferred Assets, to release any filing evidencing or
perfecting such security interest and to terminate all powers of attorney
created
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by the Transaction Documents), in each case without recourse, representation or
warranty, that shall be reasonably requested by Transferor to vest in Transferor
all right, title and interest that Trustee had in the Transferred Assets.
SECTION 12.4 OPTIONAL REPURCHASE OF INVESTOR INTERESTS. Any Supplement may
provide that on any Distribution Date occurring on or after the date that the
aggregate Unpaid Balance of the Receivables then included in the Receivables
Pool is 10% or less of the aggregate Unpaid Balance of the Receivables included
in the Receivables Pool as of the commencement of any Amortization Period,
Transferor shall have the option, upon the giving of ten days' prior written
notice by Transferor to Servicer, Trustee and the Rating Agencies, to repurchase
the undivided interest of the Series in the Trust by depositing into the
Principal Funding Account, on such Distribution Date (the "Repurchase
Distribution Date") an amount (the "Repurchase Amount") equal to the unpaid
Invested Amount of the Series plus accrued and unpaid interest on the unpaid
principal amount of the Series (and accrued and unpaid interest with respect to
interest amounts that were due but not paid on a prior Distribution Date)
through the day preceding the Distribution Date at the Certificate Rate
applicable to such Series. Upon tender of all outstanding Certificates of the
Series by the Certificateholders, Trustee shall then distribute such amounts,
together with all other amounts on deposit in the Principal Funding Account
with respect to that Series to the Certificateholders of the Series on the next
Distribution Date in repayment of the principal amount and all accrued and
unpaid interest owing to the Certificateholders. Following the Repurchase
Distribution Date, the Certificateholders of the Series shall have no further
rights with respect to the Receivables and Trustee shall execute and deliver the
instruments of transfer and assignment (including any document necessary to
release the security interest in favor of Trustee (for the benefit of the
Certificateholders) in the Receivables and Related Transferred Assets and to
release any filing evidencing or perfecting the security interest), in each
case without recourse, representation or warranty, as shall be reasonably
requested by Transferor to vest in Transferor all right, title and interest that
Trustee had in the Transferred Assets. In the event that Transferor fails for
any reason to deposit the Repurchase Amount for any Series, payments shall
continue to be made to the Certificateholders of the Series in accordance with
the terms of this Agreement.
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.1 AMENDMENT, WAIVER, ETC. (a) This Agreement and any Supplement
may be amended from time to time by Servicer, Transferor and Trustee by a
written instrument signed by each of them, without the consent of
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any of the Certificateholders, the Purchasers or the Agents; PROVIDED that such
action shall not adversely affect in any material respect the interests of any
Certificateholder or Purchaser; and PROVIDED FURTHER, that any amendment of
this Agreement to effect any modification of the Bank Account arrangements
pursuant to SECTION 3.3(c)(ii)(y) shall not require the consent of any of the
Certificateholders or the Purchasers. This Agreement and any Supplement may not
be amended unless Transferor shall have delivered the proposed amendment to each
Agent and the Rating Agencies at least ten Business Days (or such shorter period
as shall be acceptable to each of them) prior to the execution and delivery
thereof and the Modification Condition has been satisfied with respect to such
amendment; PROVIDED, HOWEVER, that the Modification Condition shall not apply
to proposed amendments the purpose of which is to correct any ambiguities or
inconsistencies in this Agreement or such Supplement.
(b) Any PI Agreement may be amended from time to time by the parties
thereto but without the consent of the Investor Certificateholders; PROVIDED
that any amendment will not adversely affect in any material respect the
interests of the Certificateholders, as evidenced by an Officer's Certificate of
Servicer, PROVIDED FURTHER, that any amendment of this Agreement to effect any
modification of the Bank Account arrangements pursuant to SECTION 3.3(C)(II)(Y)
shall not require the consent of any of the Certificateholders or the
Purchasers. No PI Agreement may be amended unless Transferor shall have
delivered the proposed amendment to each Agent and the Rating Agencies at least
ten Business Days (or such shorter period as shall be acceptable to each of
them) prior to the execution and delivery thereof and the Modification
Condition has been satisfied with respect to such amendment; PROVIDED, however,
that the Modification Condition shall not apply to proposed amendments the
purpose of which is to correct any ambiguities or inconsistencies in such PI
Agreement.
(c) The provisions of this Agreement, any Supplement and any PI Agreement
may also be amended, modified or waived from time to time by Servicer,
Transferor and Trustee with the consent of: (i) in the case of this Agreement
or any Supplement, (A) the Required Series Holders of each affected Series and
(B) if any Purchased Interest shall or would be adversely affected, each Agent
of a Purchaser, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or any Supplement
or of modifying in any manner the rights of the Certificateholders or the
Purchasers; PROVIDED that no amendment shall (w) reduce in any manner the
amount of or delay the timing of any distributions to be made to Investor
Certificateholders or deposits of amounts to be so distributed or the amount
available under any Enhancement without the consent
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of each affected Certificateholder, (x) change the definition of or the manner
of calculating the interest of any Investor Certificateholder without the
consent of each affected Investor Certificateholder, (y) reduce the aforesaid
percentage required to consent to any amendment without the consent of each
Investor Certificateholder or (z) adversely affect the rating of any Series or
class by any Rating Agency without the consent of the Holders of Investor
Certificates of the Series or class evidencing not less than 66 2/3% of the
aggregate unpaid principal amount of the Investor Certificates of the Series or
class or (ii) in the case of any PI Agreement, (A) each Agent of a Purchaser
and the other parties thereto and (B) if any Series of Investor Certificates
shall or would be adversely affected, the Required Series Holders of each such
adversely affected Series. It is understood that the consent of the Required
Series Holders of any Series or the Agent of a Purchaser shall not be required
for any amendment, modification or waiver if all amounts owed to the Holders of
such Series or such Purchaser (as the case may be) will be paid (and any
commitments of such Holders or Purchaser will terminate) prior to, or
contemporaneously with, the effectiveness of such amendment, modification or
waiver; PROVIDED FURTHER, that any amendment of this Agreement to effect any
modification of the Bank Account arrangements pursuant to SECTION 3.3(C)(II)(Y)
shall not require the consent of any of the Certificateholders or the
Purchasers. No PI Agreement may be amended unless Transferor shall have
delivered the proposed amendment to the Agent and the Rating Agencies at least
ten Business Days (or such shorter period as shall be acceptable to each of
them) prior to the execution and delivery thereof and the Modification
Condition has been satisfied with respect to such amendment; PROVIDED, however,
that the Modification Condition shall not apply to proposed amendments the
purpose of which is to correct any ambiguities or inconsistencies in such PI
Agreement.
Transferor or Trustee shall establish a record date for determining which
Certificateholders may give such waivers and consents. No waiver of any Early
Amortization Event or other default hereunder given at any time shall apply to
any other prior or subsequent Early Amortization Event or default.
(d) Promptly after the execution of any amendment, consent or waiver
described in SUBSECTION (B) or (C), Trustee shall furnish written notification
of the substance of the amendment or consent to each Investor
Certificateholder, and Servicer shall furnish written notification of the
substance of the amendment or consent to the Rating Agency and each Enhancement
Provider.
(e) It shall not be necessary for any waiver or consent given by the
Certificateholders under this section to approve the particular form of any
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proposed amendment, but it shall be sufficient if the consent shall approve the
substance thereof. The manner of obtaining such waivers and consents and of
evidencing the authorization of the execution thereof by the Certificateholders
shall be subject to such reasonable requirements as Trustee may prescribe.
(f) Notwithstanding anything in this section to the contrary, no amendment
may be made to this Agreement, any Supplement or any PI Agreement that would
adversely affect in any material respect the interests of any Enhancement
Provider without the consent of the Enhancement Provider.
(g) Any Supplement or PI Agreement executed in accordance with the
provisions of SECTION 6.10 shall not be considered an amendment to this
Agreement for the purposes of this section.
(h) Prior to the execution of any amendment to this Agreement, Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of the amendment is authorized or permitted by this Agreement and
that all conditions precedent to the execution and delivery have been satisfied.
Trustee may, but shall not be obligated to, enter into any amendment that
affects Trustee's own rights, duties or immunities under this Agreement.
(i) Notwithstanding anything in this Section to the contrary, no amendment
may be made to this Agreement unless Transferor shall have delivered to
Trustee, the Rating Agencies, each Purchaser and each Enhancement Provider a
Tax Opinion with respect to such amendment.
SECTION 13.2 ACTIONS BY CERTIFICATEHOLDERS AND PURCHASERS. (a) By its
acceptance of Certificates pursuant to this Agreement and the applicable
Supplement, each Certificateholder (other than Transferor and any Big Flower
Person) acknowledges and agrees that, wherever in this Agreement a provision
states that an action may be taken or a notice, demand or instruction given by
any Series of Investor Certificateholders, any class of Investor
Certificateholders or the Investor Certificateholders, the action, notice or
instruction may be taken or given by any Holder of an Investor Certificate of
the Series or class or by any Investor Certificateholder, respectively, unless
the provision requires a specific percentage of the Series or class of Investor
Certificateholders or of all Investor Certificateholders.
(b) By its acceptance of Certificates pursuant to this Agreement and the
applicable Supplement, each Certificateholder (other than Transferor and any Big
Flower Person) acknowledges and agrees that any request, demand,
authorization, direction, notice, consent, waiver or other act by the Holder of
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a Certificate shall bind the Holder and every subsequent Holder of the
Certificate and of any Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by Trustee or Servicer in reliance thereon, whether or not
notation of the action is made upon such Certificate.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement, any Supplement or any PI Agreement
to be given or taken by Certificateholders or any Agent for a Purchaser may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by the Certificateholders or any Agent for a Purchaser in person or
by agent duly appointed in writing; and except as herein otherwise expressly
provided, the action shall become effective when the instrument or instruments
are delivered to Trustee and, when required, to Servicer. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement, any Supplement or any PI Agreement
and conclusive in favor of Trustee and Servicer, if made in the manner provided
in this section.
(d) The fact and date of the execution by any Certificateholder or any
Agent for a Purchaser of any such instrument or writing may be proved in any
reasonable manner that Trustee deems sufficient.
SECTION 13.3 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall the death or incapacity entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except as expressly
provided otherwise in this Agreement) or in any manner otherwise to control
the operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provisions
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to the Transaction Documents
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(except to the extent any Supplement or related certificate purchase agreement
creates independent and non-duplicative rights), unless the Certificateholder
previously shall have given to Trustee, and unless the Required Investors shall
have made, written request upon Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and Trustee, for 30 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder, every Purchaser and
Trustee, that no one or more Certificateholders or Purchasers shall have any
right in any manner whatever by virtue of, or by availing itself or themselves
of, any provisions of a Transaction Document to affect, disturb or prejudice
the rights of any other Investor Certificateholder or Purchaser, or to obtain or
seek to obtain priority over or preference to any such other Investor
Certificateholder or Purchaser, except to the extent provided in the Transaction
Documents, or to enforce any right under the Transaction Documents, except in
the manner herein provided and for the equal, ratable and common benefit of, all
Investor Certificateholders and Purchasers (subject to the priorities set forth
in the Transaction Documents). For the protection and enforcement of the
provisions of this section, each and every Certificateholder, each and every
Purchaser and Trustee shall be entitled to such relief as can be given either at
law or in equity.
(d) By their acceptance of Certificates pursuant to this Agreement and the
applicable Supplement, the Certificateholders agree to the provisions of this
section.
SECTION 13.4 LIMITATION ON RIGHTS OF PURCHASERS. (a) The death or
incapacity of any Purchaser shall not operate to terminate this Agreement or
the Trust, nor shall the death or incapacity entitle such Purchaser's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Purchaser shall have any right to vote, (except provided otherwise
in this Agreement) or in any manner otherwise to control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Purchased Interests,
be construed so as to constitute the Purchasers from time to time as partners or
members of an association, nor shall any Purchaser be
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under any liability to any third Person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
(c) No Purchaser shall have any right by virtue of any provisions of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to any Transaction Document (except to the extent a PI
Agreement creates independent and non-duplicative rights, unless such Purchaser
previously shall have given to Trustee, and unless such Purchaser shall have
made, written request upon Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and Trustee, for 30 days after
its receipt of such notice, request and offer of indemnity, shall have neglected
or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each Purchaser with
every other Purchaser, every Certificateholder and Trustee, that no one or more
Purchasers or Certificateholders shall have any right in any manner whatever by
virtue of, or by availing itself or themselves of, any provisions of a
Transaction Document to affect, disturb or prejudice the rights of any other
Investor Certificateholder or a Purchaser, or to obtain or seek to obtain
priority over or preference to any such other Investor Certificateholder or
Purchaser, except to the extent provided in the Transaction Documents, or to
enforce any right under the Transaction Documents, except in the manner herein
provided and for the ratable and common benefit of all Investor
Certificateholders or Purchasers (subject to the priorities set forth in the
Transaction Documents). For the protection and enforcement of the provisions of
this section, each and every Certificateholder, each and every Purchaser and
Trustee shall be entitled to such relief as can be given either at law or in
equity.
(d) By their acceptance of Purchased Interests pursuant to this Agreement
and the applicable Supplement, the Purchasers agree to the provisions of this
Section.
SECTION 13.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 13.6 NOTICES. All demands, notices, instructions and communications
hereunder shall be in writing and shall be deemed to have
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<PAGE>
been duly given if personally delivered, four Business Days after mailing if
mailed by registered mail, return receipt requested, or sent by facsimile
transmission (a) in the case of Transferor, to its address set forth below its
signature hereto, (b) in the case of Big Flower, to its address set forth below
its signature hereto, and (c) in the case of Trustee, the Paying Agent or the
Transfer Agent and Registrar, to the address of Trustee set forth on the
signature pages hereof; or, as to each party, at such other address or facsimile
number as shall be designated by it in a written notice to each other party
given in accordance with this section. Except to the extent expressly provided
otherwise in an applicable Supplement, any notice required or permitted to be
mailed to a Certificateholder shall be sent by first-class mail, postage
prepaid, to the address of the Certificateholder as shown in the Certificate
Register. Except to the extent expressly provided otherwise in an applicable
Supplement, any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given on the fourth Business
Day after the notice is so mailed, whether or not the Certificateholder
receives the notice. Servicer shall deliver or make available to the Rating
Agencies each certificate and report required to be prepared, forwarded or
delivered pursuant to SECTION 3.5 (excluding the Daily Reports) or 3.6 and a
copy of any amendment, consent or waiver to this Agreement, at the address of
the Rating Agency set forth above or at the other address as shall be designated
by the Rating Agency in a written notice to Servicer.
SECTION 13.7 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any of the
other Transaction Documents shall for any reason whatsoever be held invalid,
then the unenforceable covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants, agreements, provisions or terms
of this Agreement or the other Transaction Documents (as applicable) and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement, the Certificates, the Purchased Interests or any of the other
Transaction Documents or the rights of the Certificateholders or the
Purchasers.
SECTION 13.8 CERTIFICATES NONASSESSABLE AND FULLY PAID. Except to the
extent otherwise expressly provided in SECTION 7.3 with respect to Transferor,
it is the intention of the parties to this Agreement that the Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever and that
Certificates upon authentication thereof by Trustee pursuant to SECTION 6.2 are
and shall be deemed fully paid.
page 91
<PAGE>
SECTION 13.9 NONPETITION COVENANT. Notwithstanding any prior termination
of this Agreement, each of Trustee, Servicer, Transferor, the Paying Agent, the
Authenticating Agent and the Transfer Agent and Registrar (and each Investor
Certificateholder or Purchaser by its acceptance of a Certificate or Purchased
Interest) agrees that it shall not, with respect to the Trust or Transferor,
institute or join any other Person in instituting any proceeding of the type
referred to in the definition of "BANKRUPTCY EVENT" so long as any Certificates
issued by the Trust shall be outstanding or there shall not have elapsed one
year plus one day since the last day on which any such Certificates shall have
been outstanding. The foregoing shall not limit the right of Servicer,
Transferor, the Paying Agent, the Authenticating Agent and the Transfer Agent
and Registrar to file any claim in or otherwise take any action with respect to
any such insolvency proceeding that was instituted against Transferor or the
Trust by any Person other than Servicer, Transferor, the Paying Agent, the
Authenticating Agent or the Transfer Agent and Register. In addition, each of
Servicer, the Paying Agent, the Authenticating Agent, the Transfer Agent and
Registrar and (as to the Trust) Transferor agree that all amounts owed to them
by the Trust or Transferor shall be payable solely from amounts that become
available for such payment pursuant to this Agreement and the Receivables
Purchase Agreement, and no such amounts shall constitute a claim against the
Trust or Transferor to the extent that they are in excess of the amounts
available for their payment.
SECTION 13.10 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of Transferor, Trustee, the Investor
Certificateholders, the Purchasers or the Holders of any Series of Investor
Certificates, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and are
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 13.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
SECTION 13.12 THIRD-PARTY BENEFICIARIES. This Agreement will inure to the
benefit of and be binding upon the parties hereto and the Certificateholders,
the Purchasers, the Enhancement Providers and their
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<PAGE>
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, nothing contained in this Agreement shall confer
any rights upon any Person that is not a party to, or a permitted assignee of a
party to, this Agreement.
SECTION 13.13 INTEGRATION. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
SECTION 13.14 BINDING EFFECT; ASSIGNABILITY; SURVIVAL OF PROVISIONS.
This Agreement shall be binding upon and inure to the benefit of Transferor,
Servicer and Trustee and their respective successors and permitted assigns;
PROVIDED, that Transferor shall not delegate any of its obligations
hereunder. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall
remain in full force and effect until the termination of the Trust pursuant
to SECTION 12.1. The rights and remedies with respect to (a) any breach of
any representation and warranty made by Transferor in SECTION 2.3 or SECTION
7.1, (b) any breach of any representation and warranty made by Servicer in
SECTION 8.1 and (c) the indemnification and payment provisions in SECTIONS
3.9, 7.3, 8.4, 11.5 and 12.2(b) shall be continuing and shall survive any
termination of this Agreement.
SECTION 13.15 RECOURSE TO TRANSFEROR. Except to the extent expressly
provided otherwise in the Transaction Documents, the obligations of Transferor
under the Transaction Documents to which it is a party are solely the
obligations of Transferor, and no recourse shall be had for payment of any fee
payable by or other obligation of or claim against Transferor that arises out of
any Transaction Document to which Transferor is a party against any director,
officer or employee of Transferor. Payments to be made by Transferor pursuant
to this Agreement shall be paid to the extent that funds are available to make
the payments after all amounts to be paid to the Certificateholders and the
Purchasers pursuant to the applicable Supplement and PI Agreement shall have
been paid, and there shall be no recourse to Transferor for all or any part of
any amounts payable pursuant to any Transaction Document if the funds are at
any time insufficient to make all or part of any such payments. The provisions
of this section shall survive the termination of this Agreement.
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<PAGE>
SECTION 13.16 RECOURSE TO TRANSFERRED ASSETS. The Certificates do not
represent an obligation of, or an interest in, Transferor, any Seller,
Servicer, Trustee or any Affiliate of any of them. Except as expressly
provided otherwise in this Agreement, the Certificates and Purchased
Interests are limited in right of payment to the Transferred Assets.
SECTION 13.17 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK, NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THE TRANSACTION DOCUMENTS, (B) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN THE STATE OR
FEDERAL COURT, (C) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF THE ACTION OR PROCEEDING, AND (D) IN THE CASE OF TRANSFEROR AND BIG
FLOWER, IRREVOCABLY APPOINTS THE PROCESS AGENT AS ITS AGENT TO RECEIVE ON
BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT
AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY ACTION OR PROCEEDING. THE
SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF THE PROCESS TO
TRANSFEROR OR BIG FLOWER IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S
ADDRESS, AND TRANSFEROR HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS
AGENT TO ACCEPT THE SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF
SERVICE, EACH OF TRANSFEROR AND SERVICER ALSO IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY ACTION OR PROCEEDING BY THE MAILING OF
COPIES OF THE PROCESS TO TRANSFEROR OR SERVICER (AS APPLICABLE) AT ITS
ADDRESS SPECIFIED HEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING
AGAINST ANY OR ALL OF THE OTHER PARTIES HERETO OR ANY OF THEIR RESPECTIVE
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 13.18 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR RELATING TO THE TRANSACTION DOCUMENTS, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF ANY OF
THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THE
TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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<PAGE>
SECTION 13.19 CERTAIN PARTIAL RELEASES. If any Seller is discontinued as
a Seller pursuant to SECTION 1.8(a) of the Purchase Agreement, Trustee
shall, upon the request (and at the expense) of Big Flower, execute and
deliver to Big Flower such statements of partial release and/or amendment
relating to the UCC-1 financing statements filed against such Seller
pursuant to the Purchase Agreement as shall be prepared by Big Flower and
provided to Trustee to evidence such termination; PROVIDED that Trustee shall
have received (i) an Officer's Certificate of Servicer to the effect that
all conditions to such termination specified in SUBCLAUSES (i), (ii) and
(iii) of such SECTION 1.8(a) have been satisfied (and shall not have
received notice from any Investor Certificateholder or Agent to the contrary)
and (ii) an Opinion of Counsel to the effect that the filing of such
statements of partial release and/or amendment will not impair the validity,
perfection or priority of Transferor's or Trustee's rights in and to (A) any
Receivables or Related Assets conveyed prior to the effective date of such
termination or (B) any Receivables or Related Assets generated by any
remaining Seller on or after the effective date of such termination. In
addition, after a termination that complies with the requirements set out in
the preceding sentence, Trustee shall, upon the request (and at the expense)
of Big Flower, execute and deliver to Big Flower the termination statements
relating to the UCC-1 financing statements filed against the Seller pursuant
to the Purchase Agreement as shall be prepared by Big Flower and provided to
Trustee to evidence the termination; PROVIDED that Trustee shall have
received an Officer's Certificate of Servicer to the effect that Trustee no
longer holds any right, title or interest in the Receivables generated by the
terminated Seller.
[Remainder of page intentionally left blank.]
page 95
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
BFP RECEIVABLES CORPORATION,as Transferor
By: /s/ Rick Frier
Name: Rick Frier
Title: Vice President
Address: 250 W. Pratt Street
Baltimore, Maryland 21201
Attention: Rick Frier
Facsimile: 410-528-9287
BIG FLOWER PRESS HOLDINGS, INC.,
as initial Servicer
By: /s/ David Mait
Name: David Mait
Title: Vice President
Address: 3 East 54th Street, 19th Floor
New York, New York 10022
Attention: David Mait
Facsimile: 212-223-4074
MANUFACTURERS AND TRADERS TRUST COMPANY
as Trustee
By: /s/ Anita K. Spann
Title: Trust Officer
Address: 1 M&T Plaza, 7th Floor
Buffalo, New York 14203-2399
Attention: Russell Whitley
Telephone: (716) 842-5602
Facsimile: (716) 842-4474
<PAGE>
STATE OF NEW YORK )
)SS.
COUNTY OF NEW YORK)
On March 18, 1996 before me personally came Rick Frier, who, being by me
duly sworn, did depose and say that he resides at Ellicott City, Maryland; that
he is the Vice President of BFP RECEIVABLES CORPORATION, a Delaware
corporation, the corporation described in and that executed the foregoing
instrument; and that he signed his name thereto by order of the board of
directors of the corporation.
Given under my hand and notarial seal, this March 18, 1996.
/s/ Helen B. Kaplan
---------------------
Notary Public
Type or
Print Name: Helen B. Kaplan
My commission expires:
April 18, 1997
STATE OF NEW YORK )
)SS.
COUNTY OF NEW YORK)
On March 18, 1996 before me personally came David Mait, who, being by me
duly sworn, did depose and say that he resides at Wyckoff, New Jersey; that he
is the Vice President of BIG FLOWER PRESS HOLDINGS, INC., a Delaware
corporation, the corporation described in and that executed the foregoing
instrument; and that he signed his name thereto by order of the board of
directors of the corporation.
Given under my hand and notarial seal, this March 18, 1996.
/s/ Patrick J. Kennedy
------------------------
Notary Public
Type or
Print Name: Patrick J. Kennedy
My commission expires:
August 1, 1996
STATE OF NEW YORK)
)SS.
COUNTY OF ERIE )
On March 18, 1996 before me personally came Anita Spann, who, being by me
duly sworn, did depose and say that he resides at Buffalo, New York; that he is
the Trust Officer of MANUFACTURERS AND TRADERS TRUST COMPANY, a New York
banking corporation, the corporation described in and that executed the
foregoing instrument; and that he signed his name thereto by order of the board
of directors of the corporation.
Given under my hand and notarial seal, this March 18, 1996.
/s/ Steven J. Wattie
---------------------
Notary Public
Type or
Print Name: Steven J. Wattie
My commission expires:
July 20, 1996
<PAGE>
EXHIBIT A-1
FORM OF LOCKBOX ACCOUNT LETTER AGREEMENT
, 1996
[NAME OF LOCKBOX BANK]
[ADDRESS OF LOCKBOX BANK]
Ladies and Gentlemen:
By this letter agreement, (a) _________ ("SELLER") irrevocably transfers
exclusive ownership and control of its lockbox[es] numbered ___________([each,
a] [the] "LOCKBOX"[and collectively referred to herein as the "LOCKBOXES"])
and the corresponding demand deposit account[s] numbered ________________
([each, a] [the] "LOCKBOX ACCOUNT" [and collectively referred to herein as the
"LOCKBOX ACCOUNTS"]) maintained with you to BFP Receivables Corporation
("Transferor"), and (b) Transferor irrevocably transfers all of its rights and
title to and interest in the Lockbox[es] and the Lockbox Account[s] acquired
hereby to Manufacturers and Traders Trust Company, as trustee (the "TRUSTEE")
for the benefit of certain holders of certificates and purchased interests
(collectively, the "HOLDERS") issued by the Trustee under a Pooling and
Servicing Agreement, dated as of March 19, 1996 (the "POOLING AGREEMENT"), among
Transferor, Big Flower Press Holdings, Inc. Corporation ("PARENT") as initial
Servicer, and the Trustee. Seller acknowledges and agrees that Transferor is
transferring to the Trustee the rights, titles and interests transferred by
Seller to Transferor as provided above, and each of Seller and Transferor agrees
to cooperate fully with the Trustee and its agents and representatives
(including, without limitation, the Servicer referred to hereinafter) in the
exercise of such rights. The transfers described in this paragraph are effective
on and as of the date of this letter agreement.
By executing this letter agreement, you acknowledge the existence of the
Trustee's right to dominion and control over the Lockbox[es] and the Lockbox
Account[s] and its ownership of and security interest in the Lockbox[es], all
moneys and instruments delivered to the Lockbox[es], the Lockbox Account[s] and
the amounts from time to time on deposit therein, and agree that, from and
after the date hereof, you shall maintain the Lockbox[es] and the Lockbox
Account[s] and shall hold all such moneys and instruments and such amounts for
the benefit and subject to the interests of the Trustee (for the benefit of
itself and the Holders). You also acknowledge that your execution of this letter
agreement is a condition precedent to continued maintenance of the Lockbox
Account[s] with you. The Lockbox Account[s] [is] [are] to be maintained in the
name of "Manufacturers and Traders Trust Company, as Trustee."
<PAGE>
Seller and Transferor hereby irrevocably instruct you, and the Trustee,
by its acknowledgement hereof, hereby instructs you, at all times from and
after the date hereof until your receipt of contrary and/or terminating
instructions from the Trustee, to remit, on a daily basis, in immediately
available funds, all available amounts deposited in the Lockbox Account[s] to
the following account (the "MASTER COLLECTION ACCOUNT") or such other
account as the Trustee or the Servicer may specify:
Manufacturers and Traders Trust Company
Attn: R. Whitley, Trust Division
One M&T Plaza, Seventh Floor
Buffalo, NY 14203-2399
ABA # 022000046
CC # 880
For credit to the
Manufacturers and Traders Trust Company, as Trustee
Account No. 185611860
Ref: Big Flower Master Collection Account
By executing this letter agreement, you irrevocably waive and agree not to
assert any right to setoff against, or otherwise deduct from, any items
collected from the Lockbox[es], the Lockbox Account[s] or any funds from time to
time therein or in transit thereto; PROVIDED, HOWEVER, that you may (i) debit
[a] [the] Lockbox Account for any items deposited in [such] [the] Lockbox
Account that are returned or otherwise not collected in accordance with your
customary practices for the chargeback of returned items, (ii) charge the
Lockbox Account[s] for any erroneous crediting of funds by you to such Lockbox
Account[s] and (iii) apply funds in the Lockbox Account[s] for reimbursement of
any fees and expenses owed to you under the terms of this letter agreement, to
the extent that such fees and expenses are not paid or reimbursed by Seller.
All transfers referred to above shall be made by you irrespective of, and
without deduction for, any counterclaim, defense, recoupment or set-off (except
as expressly permitted otherwise by this letter agreement) and shall be final,
and you agree that you will not seek to recover any amount from the Trustee,
Transferor, or the Servicer for any reason once any payment or transfer has been
made.
Seller shall pay, or reimburse you for, customary and reasonable fees and
expenses incurred by you in the maintenance and operation of the Lockbox
Account[s] in accordance with this letter agreement. The Trustee and Transferor
will have no liability to you or the Servicer for any costs, fees or charges
under your usual and customary procedures or this letter agreement. You hereby
agree to promptly notify the Trustee of your failure to receive timely payment
of any fee under this letter agreement.
The Trustee's instructions with respect to the Lockbox[es] and the Lockbox
Account[s] may be given through a Servicer that the Trustee may appoint from
time to time
-2-
<PAGE>
and will notify you thereof in writing, and you agree to follow the
instructions of such Servicer with the same effect as if such instructions were
given by the Trustee directly (subject to any limitations on such appointment
imposed by the Trustee that are communicated in writing to you) until such time
as the Trustee notifies you of the revocation of the Servicer's authority to
act for the Trustee. The initial servicer will be Parent. The Trustee and the
Servicer shall each provide to you a list of their respective employees
authorized to issue instructions and give notices with respect to the
Lockbox[es] and the Lockbox Account[s], which lists may be revised from time to
time, and you shall be entitled to rely on (and to assume) the authority of any
employee of the Trustee or the Servicer identified on such lists, and are hereby
authorized to act on any notice given on behalf of the Trustee or the Servicer
by any such employee, subject to any limitations on the appointment of the
Servicer and the revocation of the Servicer's authority as provided above.
Seller and Transferor also hereby irrevocably notify you that, at all times
from and after the date hereof until your receipt of contrary and/or terminating
instructions from the Trustee, the Trustee shall be entitled (subject to your
rights set forth herein) to exercise in the place and stead of Seller and
Transferor (or either of them) any and all rights of Seller and Transferor in
respect of or in connection with the Lockbox[es], this letter agreement and the
Lockbox Account[s], including, without limitation (i) the right to specify that
payments are to be made out of or in connection with the Lockbox Account[s] to
different accounts or at different times than those specified above (subject to
your customary and then-current procedures for lockbox processing) and (ii)
the right to require preparation of duplicate monthly bank statements on the
Lockbox Account[s] for mailing directly to an address specified by the Trustee.
By executing this letter agreement you acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other person asserting, claiming or exercising, any right of set-off, banker's
lien or other purported form of claim with respect to the items collected from
the Lockbox[es], the Lockbox Account[s] or any funds from time to time therein
or in transit thereto, and agree to promptly inform the Trustee in writing of
any such action in the future.
Except as otherwise provided herein, the Lockbox[es] and the Lockbox
Account[s] shall be subject to the customary terms and conditions adopted by you
from time to time and generally applicable to lockboxes and lockbox accounts.
Your duties and functions under this letter agreement shall continue to be that
of a debtor/creditor and you shall not by reason of this letter agreement be
deemed to have a fiduciary obligation or relationship of trust in respect of
Transferor or the Trustee. You shall not be deemed to have knowledge of or
liability under any agreements among the parties to this letter agreement to
which you are not a party.
You may terminate this letter agreement by cancelling the Lockbox
Account[s] and Lockbox[es], which cancellation and termination shall become
effective only upon sixty days' prior written notice thereof from you to the
Trustee. Upon the termination
-3-
<PAGE>
of this letter agreement, you will close the Lockbox Account[s] and, subject to
your rights to charge the Lockbox Account[s] as set forth herein, transfer any
monies remaining therein to the Master Collection Account. You agree that you
shall forward all incoming mail addressed to [any of] the Lockbox[es] or [the]
Lockbox Account[s] and all wire transfers and deposits to [any of] the Lockbox
Account[s] that you receive after such cancellation in the form received to
another lockbox or to another lockbox account or the Concentration Account or to
such other address or account as the Trustee (or the Servicer on behalf of the
Trustee) shall specify, promptly after you discover that you have received any
such mail or transfers. This letter agreement may also be terminated upon
written notice to you by the Trustee. Except as expressly set forth in this
paragraph, this letter agreement may not be terminated or amended without the
prior written consent of the Trustee.
You will use due care in performing your duties and responsibilities and
shall only be responsible for any liability, loss, cost or expense which Seller,
Transferor or the Trustee sustains to the extent that (i) such loss is a
direct result of your mishandling of a deposit or (ii) such loss is
proximately caused by your negligence or wilful misconduct. In no event shall
you be liable to Seller, Transferor or the Trustee for liabilities, losses,
costs or expenses resulting from actions beyond your control or for any
consequential or special damages. Except to the extent of the liability assumed
by you, Seller hereby agrees to indemnify and hold you harmless against any and
all reasonable costs, losses, liabilities or expenses including attorneys' fees
and disbursements, which may be imposed upon you in connection with your duties
hereunder. This paragraph shall survive termination of the Lockbox[es], the
Lockbox Account[s], or this letter agreement.
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including facsimile communication) and
shall be personally delivered or sent by certified mail, postage prepaid, by
facsimile or by overnight courier, to the intended person at the address or
facsimile number of such person set forth under its name on the signature pages
hereof or at such other address or facsimile number as shall be designated by
such person in a written notice to the other parties hereto given in accordance
with the requirements of this paragraph. All notices and other communications
hereunder shall also be provided to the Trustee and shall be addressed as
follows until you receive written notice from the Trustee to the contrary:
Manufacturers and Traders Trust Company
Attn: R. Whitley, Trust Division
Telephone: 716-842-5602
Facsimile: 716-842-4474
All notices and communications provided for hereunder shall be
effective, (i) if personally delivered, when received, (ii) if sent by
certified mail, four business days after having been deposited in the mail,
postage prepaid and properly addressed, (iii) if transmitted by facsimile,
when sent, receipt confirmed by telephone or electronic means and (iv) if
sent
-4-
<PAGE>
by overnight courier, two business days after having been given to such courier
unless sooner received by the addressee.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of Seller, Transferor, and the Trustee
and their respective successors, transferees and assigns; PROVIDED, HOWEVER,
that you may not assign your rights and duties under this letter agreement
without the prior written consent of the Trustee.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York, not including the choice of law rules
thereof.
-5-
<PAGE>
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing five (5) copies of this letter agreement in the space
provided below and returning such copies to us at the address indicated below
for Seller.
Very truly yours,
[NAME OF SELLER]
By:
--------------------------------------
Title:
-----------------------------------
Address:
Attention:
Telephone:
Facsimile:
BFP RECEIVABLES CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
Address:
Attention:
Telephone:
Facsimile:
<PAGE>
The undersigned hereby acknowledges and agrees to the foregoing letter
agreement as of the date of the letter agreement.
[NAME OF LOCKBOX BANK]
By:
--------------------------------------
Title:
-----------------------------------
Address:
---------------------------------
---------------------------------
Attention:
--------------------------------
Telephone:
--------------------------------
Facsimile:
--------------------------------
The undersigned hereby acknowledges and agrees to the foregoing letter
agreement as of the date of the letter agreement.
Manufacturers and Traders Trust Company,as Trustee
By:
--------------------------------------
Title:
-----------------------------------
<PAGE>
EXHIBIT A-2
FORM OF BLOCKED ACCOUNT AGREEMENT
March , 1996
[Blocked Account Bank]
[Address]
Ladies and Gentlemen:
By this letter agreement, (a) _______________________ ("SELLER")
irrevocably transfers exclusive ownership and control of its demand deposit
account numbered ________________ (the "BLOCKED ACCOUNT") maintained with you to
BFP Receivables Corporation ("BFP"), and (b) BFP irrevocably transfers all of
its rights and title to and interest in the Blocked Account acquired hereby to
Manufacturers and Traders Trust Company, as trustee (the "TRUSTEE") for the
benefit of certain holders of certificates and purchased interests
(collectively, the "HOLDERS") issued by the Trustee under a Pooling and
Servicing Agreement, dated as of ________________ ___, 1996 (the "POOLING
AGREEMENT"), among BFP, Big Flower Press Holdings, Inc., ("BIG FLOWER"), as
initial Servicer, and the Trustee. Seller acknowledges and agrees that BFP is
transferring to the Trustee the rights, titles and interests transferred by
Seller to BFP as provided above, and each of Seller and BFP agrees to cooperate
fully with the Trustee and its agents and representatives (including, without
limitation, the Servicer referred to hereinafter) in the exercise of such
rights. The transfers described in this paragraph are effective on and as of
the date of this letter agreement.
By executing this letter agreement, you acknowledge the existence of the
Trustee's right to dominion and control over the Blocked Account and its
ownership of and security interest in the Blocked Account, all moneys and
instruments delivered to the Blocked Account and the amounts from time to time
on deposit therein, and agree that, from and after the date hereof, you shall
maintain the Blocked Account and shall hold all such moneys and instruments and
such amounts for the benefit and subject to the interests of the Trustee (for
the benefit of itself and the Holders). You also acknowledge that your
execution of this letter agreement is a condition precedent to continued
maintenance of the Blocked Account with you. The Blocked Account is to be
maintained in the name of "Manufacturers and Traders Trust Company, as Trustee."
Seller and BFP hereby irrevocably instruct you, and the Trustee, by its
acknowledgement hereof, hereby instructs you, at all times from and after the
date hereof until your receipt of contrary and/or terminating instructions from
the Trustee, to remit, on a daily basis, in immediately available funds, all
available amounts deposited in the Blocked
-1-
<PAGE>
Account to the following account (the "MASTER COLLECTION ACCOUNT") or such other
account as the Trustee or the Servicer may specify:
Manufacturers and Traders Trust Company
Attn: R. Whitley, Trust Division
One M&T Plaza, 7th Floor
Buffalo, New York 14203-2399
ABA # 022000046
CC # 880
For credit to the
Manufacturers and Traders Trust Company, as Trustee
Account No. 185611860
Ref: Big Flower Master Collection Account
By executing this letter agreement, you irrevocably waive and agree not to
assert any right to setoff against, or otherwise deduct from, any items
collected from the Blocked Account or any funds from time to time therein or in
transit thereto; PROVIDED, HOWEVER, that you may (i) debit the Blocked Account
for any items deposited in the Lockbox Account that are returned or otherwise
not collected in accordance with your customary practices for the chargeback of
returned items, (ii) charge the Blocked Account for any erroneous crediting of
funds by you to such Blocked Account and (iii) apply funds in the Blocked
Account for reimbursement of any fees and expenses owed to you under the terms
of this letter agreement, to the extent that such fees and expenses are not paid
or reimbursed by Seller.
All transfers referred to above shall be made by you irrespective of, and
without deduction for, any counterclaim, defense, recoupment or set-off (except
as expressly permitted otherwise by this letter agreement) and shall be final,
and you agree that you will not seek to recover any amount from the Trustee, BFP
or the Servicer for any reason once any payment or transfer has been made,
provided that you shall have the right to recover from Seller the amount of any
item so transferred which is returned, made in error, or otherwise not collected
in accordance with your customary practices in the event that you are unable to
recover such amount by debiting the Lockbox Account.
Seller shall pay, or reimburse you for, customary and reasonable fees and
expenses incurred by you in the maintenance and operation of the Blocked Account
in accordance with this letter agreement. The Trustee and Transferor will have
no liability to you or the Servicer for any costs, fees or charges under your
usual and customary procedures or this letter agreement. You hereby agree to
promptly notify the Trustee of your failure to receive timely payment of any fee
under this letter agreement.
The Trustee's instructions with respect to the Blocked Account may be given
through a Servicer that the Trustee may appoint from time to time and will
notify you thereof in
-2-
<PAGE>
writing, and you agree to follow the instructions of such Servicer with the same
effect as if such instructions were given by the Trustee directly (subject to
any limitations on such appointment imposed by the Trustee that are communicated
in writing to you) until such time as the Trustee notifies you of the revocation
of the Servicer's authority to act for the Trustee. The initial servicer will
be Big Flower. The Trustee and the Servicer shall each provide to you a list of
their respective employees authorized to issue instructions and give notices
with respect to the Blocked Account, which lists may be revised from time to
time, and you shall be entitled to rely on (and to assume) the authority of any
employee of the Trustee or the Servicer identified on such lists, and are hereby
authorized to act on any notice given on behalf of the Trustee or the Servicer
by any such employee, subject to any limitations on the appointment of the
Servicer and the revocation of the Servicer's authority as provided above.
Seller and BFP also hereby irrevocably notify you that, at all times from
and after the date hereof until your receipt of contrary and/or terminating
instructions from the Trustee, the Trustee shall be entitled (subject to your
rights set forth herein) to exercise in the place and stead of Seller and BFP
(or either of them) any and all of the rights of Seller and BFP in respect of or
in connection with this letter agreement and the Blocked Account, including,
without limitation (i) the right to specify that payments are to be made out of
or in connection with the Blocked Account to different accounts or at different
times than those specified above (subject to your customary and then-current
procedures for account processing) and (ii) the right to require preparation of
duplicate monthly bank statements on the Blocked Account for mailing directly to
an address specified by the Trustee.
By executing this letter agreement you acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other person asserting, claiming or exercising any right of set-off, banker's
lien or other purported form of claim with respect to the items collected from
the Blocked Account or any funds from time to time therein or in transit
thereto, and agree to immediately inform the Trustee in writing of any such
action in the future.
Except as otherwise provided herein, the Blocked Account shall be subject
to the customary terms and conditions adopted by you from time to time and
generally applicable to demand deposit accounts. Your duties and functions
under this letter agreement shall continue to be that of a debtor/creditor and
you shall not by reason of this letter agreement be deemed to have a fiduciary
obligation or relationship of trust in respect of Transferor or the Trustee.
You shall not be deemed to have knowledge of or liability under any agreements
among the parties to this letter agreement to which you are not a party.
You may terminate this letter agreement by cancelling the Blocked Account,
which cancellation and termination shall become effective only upon thirty days'
prior written notice thereof from you to the Trustee. Upon the termination of
this letter agreement, you will close the Blocked Account and, subject to your
rights to change the Lockbox Account as set forth herein, transfer any monies
remaining therein to the Master Collection Account. You agree that you shall
forward all wire transfers and deposits to the Blocked Account that you
-3-
<PAGE>
receive after such cancellation in the form received to the Master Collection
Account or to such other address or account as the Trustee (or the Servicer on
behalf of the Trustee) shall specify, promptly after you discover that you have
received any such transfers. This letter agreement may also be terminated upon
written notice to you by the Trustee. Except as expressly set forth in this
paragraph, this letter agreement may not be terminated or amended without the
prior written consent of the Trustee.
You will use due care in performing your duties and responsibilities and
shall only be responsible for any liability, loss, cost or expense which Seller,
Transferor or the Trustee sustains to the extent that (i) such loss is a direct
result of your mishandling of a deposit or (ii) such loss is proximately caused
by your gross negligence or wilful misconduct. In no event shall you be liable
to Seller, Transferor or the Trustee for liabilities, losses, costs or expenses
resulting from actions beyond your control or for any consequential or special
damages. Except to the extent of the liability assumed by you, Seller hereby
agrees to indemnify and hold you harmless against any and all reasonable costs,
losses, liabilities or expenses including attorneys' fees and disbursements,
which may be imposed upon you in connection with your duties hereunder. This
paragraph shall survive termination of the Blocked Account, or this letter
agreement.
All notices and other communications provided for hereunder (other than
duplicate monthly bank statements and returned items) shall, unless otherwise
stated herein, be in writing (including facsimile communication) and shall be
personally delivered or sent by certified mail, postage prepaid, by facsimile or
by overnight courier, to the intended person at the address or facsimile number
of such person set forth under its name on the signature pages hereof or at such
other address or facsimile number as shall be designated by such person in a
written notice to the other parties hereto given in accordance with the
requirements of this paragraph. All notices and other communications hereunder
shall also be provided to the Trustee and shall be addressed as follows until
you receive written notice from the Trustee to the contrary:
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Attention: R. Whitley, Trust Division
Telephone: 716/842-5602
Facsimile: 716/842-4474
All notices and communications provided for hereunder shall be effective,
(i) if personally delivered, when received, (ii) if sent by certified mail, four
business days after having been deposited in the mail, postage prepaid and
properly addressed, (iii) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means and (iv) if sent by overnight
courier, two business days after having been given to such courier unless sooner
received by the addressee.
-4-
<PAGE>
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of Seller, BFP and the Trustee and their
respective successors, transferees and assigns; PROVIDED, HOWEVER, that you may
not assign your rights and duties under this letter agreement without the prior
written consent of the Trustee except for assignments to subsidiaries wholly-
owned by you or to successors by acquisition or merger so long as the Blocked
Account number does not change.
The parties hereto consent to the non-exclusive jurisdiction of the courts
of the State of New Jersey; PROVIDED, HOWEVER, that this letter agreement shall
be governed by and construed in accordance with the laws of the State of New
York, not including the choice of law rules thereof.
-5-
<PAGE>
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing five (5) copies of this letter agreement in the space
provided below and returning such copies to us at the address indicated below
for Seller.
Very truly yours,
[SELLER]
By:
----------------------------------
Title:
--------------------------
Address:
Attention:
Telephone:
Facsimile:
BFP RECEIVABLES CORPORATION
By:
----------------------------------
Title:
--------------------------
Address:
Attention:
Telephone:
Facsimile:
-6-
<PAGE>
The undersigned hereby acknowledges and agrees to the foregoing letter
agreement as of this _______ day of March, 1996.
[BLOCKED ACCOUNT BANK]
By:
----------------------------------
Title:
--------------------------
Address:
Attention:
--------------------------
Telephone:
--------------------------
Facsimile:
--------------------------
-7-
<PAGE>
The undersigned hereby acknowledges and agrees to the foregoing letter
agreement dated as of the ______ day of March, 1996.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
----------------------------------
Title:
--------------------------
-8-
<PAGE>
EXHIBIT B
FORM OF CONCENTRATION ACCOUNT AGREEMENT
--------------------
[NAME OF CONCENTRATION BANK]
[ADDRESS OF CONCENTRATION BANK]
Ladies and Gentlemen:
By this letter agreement, (a)____________ ("SELLER") irrevocably transfers
exclusive ownership and control of its demand deposit account numbered
______________ the "CONCENTRATION ACCOUNT" maintained with you to BFP
Receivables Corporation ("BRC"), and (b) BRC irrevocably transfers all of its
rights and title to and interest in the Concentration Account acquired hereby to
Manufacturers and Traders Trust Company, as trustee (the "TRUSTEE") for the
benefit of (i) certain holders of certificates and purchased interests
(collectively, the "HOLDERS") issued by the Trustee under a Pooling and
Servicing Agreement, dated as of March 19, 1996 (the "POOLING AGREEMENT"), among
BRC, Big Flower Press Holdings, Inc. ("Big Flower") as initial Servicer, and the
Trustee and (ii) BRC (to the extent of BRC's residual interest in the
Transferred Assets (as defined in the Pooling Agreement). Seller acknowledges
and agrees that BRC is transferring to the Trustee the rights, titles and
interests transferred by Seller to BRC as provided above, and each of Seller and
BRC agrees to cooperate fully with the Trustee and its agents and
representatives (including, without limitation, the Servicer referred to
hereinafter) in the exercise of such rights. The transfers described in this
paragraph are effective on and as of the date of this letter agreement.
By executing this letter agreement, you acknowledge the existence of the
Trustee's right to dominion and control over the Concentration Account and its
ownership of and security interest in the Concentration Account, all moneys and
instruments delivered to the Concentration Account and the amounts from time to
time on deposit therein, and agree that, from and after the date hereof, you
shall maintain the Concentration Account and shall hold all such moneys and
instruments and such amounts for the benefit and subject to the interests of the
Trustee. You also acknowledge that your execution of this letter agreement is a
condition precedent to continued maintenance of the Concentration Account with
you. The Concentration Account is to be maintained in the name of
"Manufacturers and Traders Trust Company, as Trustee."
Seller and BRC hereby irrevocably instruct you, and the Trustee, by its
acknowledgement hereof, hereby instructs you, at all times from and after the
date hereof until your receipt of contrary and/or terminating instructions from
the Trustee, to remit, on a
<PAGE>
daily basis, in immediately available funds, all available amounts deposited in
the Concentration Account to the following account (the "MASTER COLLECTION
ACCOUNT") or such other account as the Trustee or the Servicer may specify:
Manufacturers and Traders Trust Company
One M&T Plaza, 7th Floor
Buffalo, New York 14203-2399
ABA # 022000046
CC # 880
For credit to the
MANUFACTURERS AND TRADERS TRUST COMPANY,
AS TRUSTEE
Account No.
----------
No such transfer of funds shall either reflect the rounding off of any funds so
transferred or constitute a partial remittance except for (i) amounts applied to
fees and expenses under the terms of this letter agreement, and (ii) amounts
deducted for returned checks that were previously deposited in the Concentration
Account and with respect to which funds were previously transferred to the
Master Collection Account.
All transfers referred to above shall be made by you irrespective of, and
without deduction for, any counterclaim, defense, recoupment or set-off (except
as expressly permitted otherwise by this letter agreement) and shall be final,
and you agree that you will not seek to recover any amount from the Trustee, BRC
or the Servicer for any reason once any payment or transfer has been made.
The Trustee's instructions with respect to the Concentration Account may be
given through a Servicer that the Trustee may appoint from time to time and will
notify you thereof in writing, and you agree to follow the instructions of such
Servicer with the same effect as if such instructions were given by the Trustee
directly (subject to any limitations on such appointment imposed by the Trustee
that are communicated in writing to you) until such time as the Trustee notifies
you of the revocation of the Servicer's authority to act for the Trustee. The
initial servicer will be Big Flower. The Trustee and the Servicer shall each
provide to you a list of their respective employees authorized to issue
instructions and give notices with respect to the Concentration Account, which
lists may be revised from time to time, and you shall be entitled to rely on
(and to assume) the authority of any employee of the Trustee or the Servicer
identified on such lists, and are hereby authorized to act on any notice given
on behalf of the Trustee or the Servicer by any such employee, subject to any
limitations on the appointment of the Servicer and the revocation of the
Servicer's authority as provided above.
Seller and BRC also hereby irrevocably notify you that, at all times from
and after the date hereof until your receipt of contrary and/or terminating
instructions from the Trustee, the Trustee shall be entitled (subject to your
rights set forth herein) to exercise in the place
-2-
<PAGE>
and stead of Seller and BRC (or either of them) any and all of the rights of
Seller and BRC in respect of or in connection with this letter agreement and the
Concentration Account, including, without limitation (i) the right to specify
that payments are to be made out of or in connection with the Concentration
Account to different accounts or at different times than those specified above
(subject to your customary and then-current procedures for account processing)
and (ii) the right to require preparation of duplicate monthly bank statements
on the Concentration Account for mailing directly to an address specified by the
Trustee.
By executing this letter agreement you acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other person asserting, claiming or exercising any right of set-off, banker's
lien or other purported form of claim with respect to the items collected from
the Concentration Account or any funds from time to time therein or in transit
thereto, and agree to immediately inform the Trustee in writing of any such
action in the future.
By executing this letter agreement, you irrevocably waive and agree not to
assert any right to setoff against, or otherwise deduct from, any items
collected from the Concentration Account or any funds from time to time therein
or in transit thereto; PROVIDED, HOWEVER, that you may (i) debit the
Concentration Account for any items deposited in the Concentration Account that
are returned or otherwise not collected in accordance with your customary
practices for the chargeback of returned items, and (ii) apply funds in the
Concentration Account for reimbursement of any fees and expenses incurred by you
in connection with this letter agreement, to the extent that such fees and
expenses are not paid or reimbursed by Seller.
Seller shall pay, or reimburse you for, customary and reasonable fees and
expenses incurred by you in the maintenance and operation of the Concentration
Account in accordance with this letter agreement. The Trustee will have no
liability to you or the Servicer for any costs, fees or charges under your usual
and customary procedures or this letter agreement. You will not be liable for
any actions taken in accordance with the instructions of the Trustee or the
Servicer.
You also agree that, notwithstanding anything to the contrary herein, you
shall promptly notify the Trustee of your failure to receive timely payment of
any fee under this letter agreement.
You may terminate this letter agreement by cancelling the Concentration
Account, which cancellation and termination shall become effective only upon
sixty days' prior written notice thereof from you to the Trustee. Upon the
termination of this letter agreement, you will close the Concentration Account
and transfer any monies remaining therein to the Master Collection Account. You
agree that you shall forward all wire transfers and deposits to the
Concentration Account that you receive after such cancellation in the form
received to the
-3-
<PAGE>
Master Collection Account or to such other address or account as the Trustee (or
the Servicer on behalf of the Trustee) shall specify, promptly after you
discover that you have received any such transfers. This letter agreement may
also be terminated upon written notice to you by the Trustee. Except as
expressly set forth in this paragraph, this letter agreement may not be
terminated or amended without the prior written consent of the Trustee.
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including facsimile communication) and
shall be personally delivered or sent by certified mail, postage prepaid, by
facsimile or by overnight courier, to the intended person at the address or
facsimile number of such person set forth under its name on the signature pages
hereof or at such other address or facsimile number as shall be designated by
such person in a written notice to the other parties hereto given in accordance
with the requirements of this paragraph. All notices and other communications
hereunder shall also be provided to the Trustee and shall be addressed as
follows until you receive written notice from the Trustee to the contrary:
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
Attention: Corporate Trust and Agency Services
Telephone: (716) 842-5602
Facsimile: (716) 842-4474.
All notices and communications provided for hereunder shall be effective,
(i) if personally delivered, when received, (ii) if sent by certified mail, four
business days after having been deposited in the mail, postage prepaid and
properly addressed, (iii) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means and (iv) if sent by overnight
courier, two business days after having been given to such courier unless sooner
received by the addressee.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of Seller, BRC and the Trustee and their
respective successors, transferees and assigns; PROVIDED, HOWEVER, that you may
not assign your rights and duties under this letter agreement without the prior
written consent of the Trustee.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York, not including the choice of law rules
thereof.
-4-
<PAGE>
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing five (5) copies of this letter agreement in the space
provided below and returning such copies to us at the address indicated below
for Seller.
Very truly yours,
[NAME OF SELLER]
By:
----------------------------------
Title:
--------------------------
Address:
Attention:
Telephone:
Facsimile:
BFP RECEIVABLES CORPORATION
By:
----------------------------------
Title:
--------------------------
Address:
Attention:
Telephone:
Facsimile:
-5-
<PAGE>
The undersigned hereby acknowledges and agrees to the foregoing letter
agreement as of this ____ day of _______, 199__.
[NAME OF CONCENTRATION BANK]
By:
----------------------------------
Title:
--------------------------
Address:
Telephone:
Facsimile:
The undersigned hereby acknowledges and agrees to the foregoing letter
agreement dated as of the ____ day of ______, 199__.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------
Title:
----------------------------
-6-
<PAGE>
EXHIBIT C
to Pooling Agreement
FORM OF
MONTHLY SERVICER'S CERTIFICATION
TO: MANUFACTURERS AND TRADERS TRUST COMPANY
[Paying Agent]
BFP RECEIVABLES CORPORATION
[Name of Rating Agency]
BIG FLOWER PRESS HOLDINGS, INC. (the "SERVICER") hereby certifies that:
(A) This Certificate is being delivered pursuant to SECTION 3.6 of the
Pooling and Servicing Agreement, dated as of _________, 1996, (as the same may
be amended, supplemented or otherwise modified from time to time, the "POOLING
AGREEMENT"), among BFP RECEIVABLES CORPORATION, as Transferor, Servicer, and
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee.
(B) As of the date of this Certificate, the Authorized Officer (as defined
in the Pooling Agreement) that is executing this Certificate is not aware of the
occurrence and continuance of any Early Amortization Event or Unmatured Early
Amortization Event (each as defined in the Pooling Agreement). [If an Early
Amortization Event or Unmatured Early Amortization Event has occurred and is
continuing, specify each such Early Amortization Event or Unmatured Early
Amortization Event (as applicable) of which the Authorized Officer executing
this Certificate is aware and the nature and status thereof and further certify
that such information is true and accurate in all material respects.]
<PAGE>
IN WITNESS WHEREOF, Servicer has caused this Certificate to be executed by
its duly authorized officer this __ day of______________, 19__.
BIG FLOWER PRESS HOLDINGS, INC.
By:
--------------------------------
Title:
-----------------------------
<PAGE>
EXHIBIT D
to Pooling Agreement
ANNUAL AGREED UPON PROCEDURES
MONTHLY REPORTS
Select at random four Monthly Reports prepared during the fiscal year and:
1. Compare/reconcile the following Monthly Report items with the
Servicer's original source documents noted below for five selected
operating units (letters refer to the applicable section of the
Monthly Report):
A. MONTHLY RECEIVABLE ACTIVITY:
1. Monthly Sales Journal
2. Cash Application Journal
3. Aged Trial Balance
4. Journal entries and related support affecting cash
application or receivables
5. Receivable Write-off Approval List
6. Bank Account Statements and PC generated Bank Account
Reports
7. Credit Memo Report
D. LOSS RESERVE RATIO:
1. Schedule A of the Monthly Report
2. Applicable Daily Report for Cutoff Date
3. Previous Monthly Reports
E. DILUTION RESERVE RATIO:
1. Section A of the Monthly Report
2. Previous Monthly Reports
G. CARRYING COST RECEIVABLES RESERVE:
1. Section C of the Monthly Report
2. Carrying Cost Worksheet
H. LOSS TO LIQUIDATION RATIO:
1. Receivable Write-off Approval List
2. Aged Trial Balance
<PAGE>
3. Journal entries and related back-up on write-offs and
recoveries
4. Previous Monthly Reports
J. DISCOUNT RATE:
1. Carrying Cost Worksheet
Schedule A. AGED RECEIVABLES RATIO:
1. Section A of the Monthly Report
2. Previous Monthly Reports
3. Aged Trial Balance Summary - invoices only, and
2. Recalculate the mathematical accuracy of Sections A,B,C,D,E,F,G,H,J
and K and Schedule A.
For each quarter end date that a Monthly Report is obtained, obtain the accounts
receivable Write-Off Report for five selected operating units and randomly
select a total of five write-offs greater than $1000 individually. Then obtain
the write-off documentation and verify that the write-offs had been approved and
were deleted from the Aged Trial Balance Report.
DAILY REPORTS
Select at random ten Daily Reports prepared during the fiscal year (of which not
more than two shall relate to any single fiscal month) and:
1. Compare/reconcile the following Daily Report items with the Servicer's
original source documents noted below for five selected operating
units (letters refer to the applicable section of the Daily Report):
A. DAILY RECEIVABLE ACTIVITY:
1. Daily Sales Summary
2. Cash Application Journal
3. Aged Trial Balance
4. Journal entries and related support affecting cash
applications or receivables
5. Receivable Write-off Approval List
6. Bank Account Statement and PC generated Bank
Account Reports
B. NET ELIGIBLE RECEIVABLES CALCULATION (IF NOT CLOSING PERIOD):
1. Ineligible Receivables Program Reports
2
<PAGE>
C. EXCESS CONCENTRATION BALANCES:
l. Ineligible Receivables Program Reports
Schedule A (if settlement date):
1. Most recent Monthly Report
2. Daily Report last day prior to settlement date, and
2. Recalculate the mathematical accuracy of sections A-C and Schedule A.
CREDIT DOCUMENTATION
Select at random two fiscal month ends during the fiscal year and:
1. Direct the Servicer to prepare a Credit File Contents Schedule (the
"CREDIT SCHEDULE") that summarizes the contents of the credit files
for each customer we select for testing. The Credit Schedule will
include the following information as of the cut-off date selected:
customer name, customer account number, customer statement, approved
credit limit, date of credit limit approval, name and title of highest
authority that approved the credit limit and other supporting
documentation in support of extension of the credit limit (E.G., Dunn
& Bradstreet report, customer financial statement and bank or trade
references), and
2. For each customer selected:
A. Compare the customer's account receivables balance with the
approved credit limit to verify that the balance is less than or
equal to the approved limit
B. Compare the customer's account balance per the Credit Schedule
with the balance per the Account Receivable Aged Trial Balance
C. Compare the date of the customer's most recent invoice indicated
on the customer's statement to the date of the credit approval to
verify that the date of the invoice is the date of or subsequent
to, but within one year of the date of, credit approval
D. Note that at least one of the following items is included with
the credit documentation: Dun & Bradstreet Credit
3
<PAGE>
Report or other credit report, bank or trade reference, financial
statements or a memorandum or workpapers regarding credit
evaluation/justification.
For each of the ten Daily Reports selected:
l. INVOICES: Obtain the detail Aged Trial Balance Report for five selected
operating units and randomly select a total of 15 different invoices and verify
the invoice date, amount and customer name with a system generated copy of the
invoice;
2. DILUTIONS AND CREDITS: Obtain the detail Aged Trial Balance Report for
five selected operating units and randomly select a total of 15 different credit
names and verify the credit memo date, amount and customer name with a system
generated copy of the credit memo;
3. CASH APPLICATION: Randomly select a total of 15 individual cash
receipts comprising the cash collection amount and verify the bank receipt date
with the receipt date and application amount on the Daily Report, adjusted for
available balances;
4. INELIGIBLE RECEIVABLES: Obtain the Aged Trial Balance for five selected
operating units and randomly select a total of ten customers that have balances
over 90 days past due and calculate the customer balances over 90 days past due
as a percentage of the customer's total balance. If this calculated percentage
is more than 50%, determine if the customer is classified as part of the
Ineligible Receivables;
5. AGING REPORTS: Using the 15 invoices selected in paragraph 1 above,
find that the invoice is in the appropriate aging category on the Aged Trial
Balance; and
6. PURCHASE OPTIONS: Using the 15 invoices selected in paragraph 1 above,
verify the purchase order reference number on the invoice with the purchase
order (if available).
4
<PAGE>
EXHIBIT E
to Pooling Agreement
FORM OF
TRANSFEROR CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE
OR THE LAWS OF ANY FOREIGN COUNTRY. THIS CERTIFICATE MAY NOT BE RESOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH RESALE, TRANSFER OR DISPOSITION
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS AND FOREIGN LAWS. IN ADDITION TO THE
RESTRICTIONS SET FORTH ABOVE, RESALE, TRANSFER OR DISPOSITION OF THIS
CERTIFICATE IS PROHIBITED TO THE EXTENT SET FORTH IN THE POOLING AGREEMENT (AS
DEFINED BELOW).
BIG FLOWER RECEIVABLES MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFIES THAT BFP RECEIVABLES CORPORATION is the registered owner
of an interest in the Big Flower Receivables Master Trust (the "TRUST"),
which was created pursuant to the Pooling and Servicing Agreement, dated as
of __________, 1996 (as the same may be amended, supplemented or otherwise
modified from time to time, the "POOLING AGREEMENT"), by and among BFP
Receivables Corporation, a Delaware corporation, as Transferor
("TRANSFEROR"), Big Flower Press Holdings, Inc., as initial Servicer (in such
capacity, the "SERVICER"), and MANUFACTURERS AND TRADERS TRUST COMPANY,
Trustee (in such capacity, together with its successors and assigns in such
capacity, the "TRUSTEE"). This Certificate is the duly authorized Transferor
Certificate designated and issued under the Pooling Agreement. To the extent
not otherwise defined herein, capitalized terms have the meanings assigned to
them in Appendix A to the Pooling Agreement. This Certificate is subject to
the terms, provisions and conditions of, and is entitled to the benefits
afforded by, the Pooling Agreement, to which terms, provisions and conditions
the holder of this Certificate by virtue of the acceptance hereof assents and
by which the holder is bound.
<PAGE>
This Certificate shall not bear interest.
The Pooling Agreement may be amended and the rights and obligations of the
parties thereto and of the holder of this Certificate modified as set forth in
the Pooling Agreement.
Unless the certificate of authentication hereon shall have been executed by
or on behalf of Trustee by the manual signature of a duly authorized signatory,
this Certificate shall not entitle the holder hereof to any benefit under the
Pooling Agreement or under any other Transaction Document or be valid for any
purpose.
This Certificate is limited in right of payment to the Transferred Assets.
Transferor may not transfer, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in this Certificate
or any interest represented hereby except in compliance with the terms,
conditions and restrictions set forth in the Pooling Agreement.
This Certificate shall be construed in accordance with the laws of the
State of New York, without reference to its conflict of laws principles, and all
obligations, rights and remedies under, or arising in connection with, this
Certificate shall be determined in accordance with the laws of the State of New
York.
<PAGE>
IN WITNESS WHEREOF, Transferor has caused this Certificate to be executed
by its officer thereunto duly authorized.
BFP RECEIVABLES CORPORATION
By:
----------------------------------
Title:
--------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Transferor Certificate referred to in the Pooling Agreement.
MANUFACTURERS AND TRADERS
TRUST COMPANY,
as Trustee
By:
----------------------------------
Title:
--------------------------
Dated: , 199
----------- -
3
<PAGE>
EXHIBIT F
to Pooling Agreement
FORM OF CERTIFICATE TO BE GIVEN BY CERTIFICATE OWNER
[Euroclear [Cedel, societe anonyme
151 Boulevard Jacqmain 67 Boulevard Grand-Duchesse Charlotte
B-1210 Brussels, Belgium] L-1331 Luxembourg]
Re: [Description of Certificates] issued pursuant to the Pooling and
Servicing Agreement dated as of , 1996, among BFP RECEIVABLES
CORPORATION, BIG FLOWER PRESS HOLDINGS, INC. and MANUFACTURERS AND
TRADERS TRUST COMPANY, as Trustee, (the "CERTIFICATES").
This is to certify that as of the date hereof, and except as set forth
below, the beneficial interest in the Certificates held by you for our account
is owned by persons that are not U.S. persons (as defined in Rule 901 under the
Securities Act of 1933, as amended).
The undersigned undertakes to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Certificates held by you in which the undersigned has acquired, or intends
to acquire, a beneficial interest in accordance with your operating procedures
if any applicable statement herein is not correct on such date. In the absence
of any such notification, it may be assumed that this certification applies as
of such date.
[This certification excepts beneficial interests in and does not relate to
U.S. $ _______________ principal amount of the Certificates appearing in your
books as being held for our account but that we have sold or as to which we are
not yet able to certify.]
We understand that this certification is required in connection with
certain securities laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings.
Dated: ,* By: ,
-------------------- -------------------------
Account Holder
* Certification must be dated on or after the 15th day before the date of the
Euroclear or Cedel certificate to which this certification relates.
<PAGE>
EXHIBIT G
to Pooling Agreement
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR OR CEDEL
[Trustee and Transfer Agent and Registrar]
Re: [Description of Certificates] issued pursuant to the Pooling and
Servicing Agreement dated as of , 1996 among BFP RECEIVABLES
CORPORATION, BIG FLOWER PRESS HOLDINGS, INC. and MANUFACTURERS AND
TRADERS TRUST COMPANY, as Trustee, (the "CERTIFICATES").
This is to certify that, based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below (our "MEMBER ORGANIZATIONS") as of the
date hereof, $ principal amount of the Certificates is owned by
persons (a) that are not U.S. persons (as defined in Rule 901 under the
Securities Act of 1933, as amended (the "SECURITIES ACT")) or (b) who
purchased their Certificates (or interests therein) in a transaction or
transactions that did not require registration under the Securities Act.
We further certify (a) that we are not making available herewith for
exchange any portion of the related Regulation S Temporary Book-Entry
Certificate excepted in such certifications and (b) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by them with respect to any portion of the
part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof.
<PAGE>
We understand that this certification is required in connection with
certain securities laws of the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy hereof to any interested party in such proceedings.
Date: * Yours faithfully,
--------------------
* To be dated no earlier By:
than the Effective Date. ----------------------
[Morgan Guaranty Trust Company of New
York, Brussels Office, as Operator of
the Euroclear Clearance System] [Cedel,
societe anonyme]
2
<PAGE>
EXHIBIT H
to Pooling Agreement
FORM OF CERTIFICATE TO BE GIVEN BY TRANSFEREE
OF BENEFICIAL INTEREST IN A REGULATIONS TEMPORARY
BOOK-ENTRY CERTIFICATE
[Euroclear [Cedel, societe anonyme
151 Boulevard Jacqmain 67 Boulevard Grand-Duchesse Charlotte
B-1210 Brussels, Belgium] L-1331 Luxembourg]
Re: [Description of Certificates] issued pursuant to the Pooling and
Servicing Agreement dated as of , 1996 among BFP RECEIVABLES
CORPORATION, BIG FLOWER PRESS HOLDINGS, INC. and MANUFACTURERS AND
TRADERS TRUST COMPANY, as Trustee, (the "CERTIFICATES").
This is to certify that as of the date hereof, and except as set forth
below, for purposes of acquiring a beneficial interest in the Certificates, the
undersigned certifies that it is not a U.S. person (as defined in Rule 901 under
the Securities Act of 1933, as amended).
The undersigned undertakes to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Certificates held by you in which the undersigned intends to acquire a
beneficial interest in accordance with your operating procedures if any
applicable statement herein is not correct on such date. In the absence of any
such notification, it may be assumed that this certification applies as of such
date.
We understand that this certification is required in connection with
certain securities laws in the United States of America. If administrative or
legal proceedings are commenced or threatened in connection with which this
certification is or would be relevant, we irrevocably authorize you to produce
this certification or a copy thereof to any interested party in such
proceedings.
Dated: By:
----------------- --------------------------------
<PAGE>
EXHIBIT I
to Pooling Agreement
FORM OF TRANSFER CERTIFICATE FOR EXCHANGE OR
TRANSFER FROM 144A BOOK-ENTRY CERTIFICATE TO
REGULATION S BOOK-ENTRY CERTIFICATE
[Trustee and Transfer Agent and Registrar]
Re: [Description of Certificates] issued pursuant to the Pooling and
Servicing Agreement dated as of ,1996 (the "AGREEMENT"), among
BFP RECEIVABLES CORPORATION, BIG FLOWER PRESS HOLDINGS, INC. and
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee, (the
"CERTIFICATES").
Capitalized terms used but not defined herein shall have the meanings
given to them in the Agreement.
This letter relates to U.S. $ principal amount of Certificates
that are held as a beneficial interest in the 144A Book-Entry Certificate (CUSIP
No. ) with DTC in the name of [insert name of transferor] (the
"TRANSFEROR"). The Transferor has requested an exchange or transfer of the
beneficial interest for an interest in the Regulation S Book-Entry Certificate
(CUSIP No. ) to be held with [Euroclear] [Cedel] through DTC.
In connection with the request and in receipt of the Certificates, the
Transferor does hereby certify that the exchange or transfer has been effected
in accordance with the transfer restrictions set forth in the Agreement and the
Certificates and:
(a) pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and accordingly
the Transferor does hereby certify that:
(i) the offer of the Certificates was not made to a person in
the United States of America,
[(ii) at the time the buy order was originated, the transferee
was outside the United States of America or the Transferor and any
person acting on its behalf reasonably
<PAGE>
believed that the transferee was outside the United States of America,
(ii) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States of
America,]*
(iii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable,
(iv) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act, and
(b) with respect to transfers made in reliance on Rule 144 under the
Securities Act, the Transferor does hereby certify that the Certificates
are being transferred in a transaction permitted by Rule 144 under the
Securities Act.
This certification and the statements contained herein are made for your
benefit and the benefit of the issuer and the [placement agent].
[Insert name of Transferor]
Dated: By:
-------------------- ------------------------
Title:
-------------------
* Insert one of these two provisions, which come from the definition of
"offshore transactions" in Regulation S.
<PAGE>
EXHIBIT J
to Pooling Agreement
FORM OF PLACEMENT AGENT EXCHANGE INSTRUCTIONS
Depository Trust Company
55 Water Street
50th Floor
New York, New York 10041
Re: [Description of Certificates] issued pursuant to the Pooling and
Servicing Agreement dated as of , 1996 (the "AGREEMENT"), among
BFP RECEIVABLES CORPORATION, BIG FLOWER PRESS HOLDINGS, INC. and
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee, (the
"CERTIFICATES").
Pursuant to SECTION 6.11 of the Agreement, (the
"PLACEMENT AGENT") hereby requests that $ aggregate principal amount of
the Certificates held by you for our account and represented by the Regulation S
Temporary Book-Entry Certificate (CUSIP No. ) (as defined in the
Agreement) be exchanged for an equal principal amount represented by the 144A
Book-Entry Certificate (CUSIP No. ) to be held by you for our account.
Dated:
---------------------- [placement agent]
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT K TO
POOLING AND SERVICING
AGREEMENT
FORM OF ANNUAL SERVICER'S CERTIFICATE
BIG FLOWER PRESS HOLDINGS, INC.
-------------------------------------
BIG FLOWER RECEIVABLES MASTER TRUST
-------------------------------------
The undersigned, a duly authorized representative of Big Flower Press
Holdings, Inc. ("Big Flower"), as Servicer pursuant to the Big Flower
Receivables Master Trust Pooling and Servicing Agreements dated as of March ,
1996 (the "Pooling and Servicing Agreement") by and among Big Flower, BFP
Receivables Corporation ("BFP") and Manufacturers and Traders Trust Company, as
trustee, (the "Trustee") does hereby certify that:
1. Big Flower is Servicer under the Pooling and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.
3. This Certificate is delivered pursuant to Section of the
Receivable Purchase Agreement, dated as of March , 1996, by and among Big
Flower, BFP and the Sellers named therein.
4. A review of the activities of the Servicer during (the period from
the Closing Date until) (the twelve month period ended) June 30, 19 was
conducted under our supervision.
5. Based on much review, the Servicer has, to the best of our knowledge,
fully performed all its obligations under the Pooling and Servicing Agreement
throughout such period and no default in the performance of such obligations has
occurred or is continuing except as set forth in paragraph 6 below.
6. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Pooling and Servicing
Agree-
<PAGE>
ment, including any Supplement, known to us to have been made during such period
which sets forth in detail (i)the nature of each such default, (ii) the action
taken by the Servicer, if any, to remedy each such default and (iii) the
current status of each such default:
(If applicable, insert "None.")
IN WITNESS WHEREOF, the undersigned has duly executed this certificate
this day of , .
Name:
Title:
2
<PAGE>
SCHEDULE 1
ACCOUNT BANKS
LOCKBOX BANKS
TREASURE CHEST ADVERTISING COMPANY, INC.
Citibank Delaware
399 Park Avenue
New York New York
c/o Citicorp North America, Inc.
725 South Figueroa Street
Los Angeles, California 90017
NationsBank, TX
444 South Flower Street
Suite 4100
Los Angeles, California 90071
LASER TECH COLOR, INC.
NationsBank of Texas, N.A.
Treasury Management
901 Main Street
Dallas, Texas 75202-2911
WEBCRAFT TECHNOLOGIES, INC.
[to be determined]
BLOCKED ACCOUNT BANKS
WEBCRAFT CHEMICALS, INC.
[to be determined]
CONCENTRATION ACCOUNT BANKS
[None]
<PAGE>
Big Flower
APPENDIX A
DEFINITIONS
A. DEFINED TERMS. As used in the Purchase Agreement, the Pooling Agreement
or any Supplement:
"ACCOUNT AGREEMENTS" means the Concentration Account Agreements, the
Blocked Account Agreements and the Lockbox Agreements.
"ACCOUNT BANKS" means the Concentration Account Banks, the Blocked Account
Banks and the Lockbox Banks.
"ADVERSE CLAIM" means any claim of ownership interest or any mortgage, deed
of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other) or other security interest.
"AFFECTED PARTY" shall mean, with respect to any Structured Lender, any
Support Bank of such Structured Lender.
"AFFILIATE" means, with respect to a Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
"AGENT" means, with respect to a Series or Purchased Interest, any
Person(s) designated as the agent(s) for the Certificateholders or the
Purchasers in the related Supplement or PI Agreement.
"AGGREGATE UNPAID BALANCE" is defined in SECTION 2.1(b) of the Purchase
Agreement.
"AMORTIZATION PERIOD" is defined, for purposes of any Series or Purchased
Interest, in the related Supplement or PI Agreement.
"APPLICANT" is defined in SECTION 6.7 of the Pooling Agreement.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
<PAGE>
"AUTHORIZED OFFICER" means, with respect to Transferor, Servicer or any
Seller, the Chief Executive Officer, the President, the Treasurer, the Chief
Financial Officer, any Vice President and any Assistant Treasurer.
"AVAILABLE FINAL DISTRIBUTION AMOUNT" means, with respect to any Series,
the amount that would be available in the Master Collection Account on the Final
Scheduled Payment Date for the Series for distribution to the Certificateholders
of such Series.
"BANK ACCOUNTS" means the Lockbox Accounts, the Blocked Accounts and the
Concentration Accounts.
"BANKRUPTCY EVENT" means, for any Person, any of the following events:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or any substantial part of its assets, or any similar
action with respect to such Person under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of
debts, and such case or proceeding shall continue undismissed, or unstayed
and in effect, for a period of (i) in the case of any Person other than
Transferor, 60 days and (ii) in the case of Transferor, 10 days; or an
order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws
now or hereafter in effect, or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or the like, for
such Person or any substantial part of its property, or shall make any
general assignment for the benefit of creditors, or shall fail to, or admit
in writing its inability to, pay its debts generally as they become due.
"BASE AMOUNT" is defined, for purposes of any Series or Purchased Interest,
in the applicable Supplement or PI Agreement.
"BIG FLOWER" means Big Flower Press Holdings, Inc., a Delaware corporation.
"BIG FLOWER PERSON" means Big Flower and each of its Affiliates (other than
Transferor).
page A-2
<PAGE>
"BLOCKED ACCOUNT AGREEMENT" means any of the letter agreements delivered in
connection with the Pooling Agreement and any other letter agreement,
substantially in the form of EXHIBIT A-2 to the Pooling Agreement (or such other
form as to which the Modification Condition is satisfied), among a Blocked
Account Bank, one or more Sellers, Servicer and Trustee that relates to one or
more Blocked Accounts, as they may be amended, supplemented or otherwise
modified from time to time.
"BLOCKED ACCOUNT BANK" means any of the banks at which one or more Blocked
Accounts are maintained from time to time.
"BLOCK ACCOUNTS" means the bank accounts maintained at those certain
locations described in Schedule I to the Pooling Agreement, into which
Collections from Receivables are deposited, and any bank account that is
hereafter created in accordance with, and to perform the functions contemplated
for "Blocked Accounts" in, Section 3.3 of the Pooling Agreement.
"BOOK-ENTRY CERTIFICATES" means certificates evidencing a beneficial
interest in the Investor Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in SECTION 6.11 of
the Pooling Agreement; PROVIDED that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to the Certificate Owners, such
certificates shall no longer be "Book-Entry Certificates".
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
commercial banks in New York, New York are not authorized or required to be
closed for business.
"BUYER" is defined in the preamble to the Purchase Agreement.
"BUYER NOTE" means the note defined in SECTION 3.2 of the Purchase
Agreement, substantially in the form of Exhibit A to the Purchase Agreement.
"CALCULATION PERIOD" means a fiscal month of Big Flower.
"CARRYING COST ACCOUNT" is defined in SECTION 4.2 of the Pooling Agreement.
"CARRYING COSTS" means, for any period, (a) interest or yield payable with
respect to any Series or Purchased Interest for that period, (b) the aggregate
Servicing Fee for the period in the applicable amount provided for in SECTION
3.4 of the Pooling Agreement, (c) the operating expenses described in SECTION
7.2(m) of the Pooling Agreement for the period and (d) other fees, costs and
expenses incurred by Transferor and Trustee for the period and paid to Persons
other than Big Flower Persons in connection with its duties under the
Transaction Documents (in the case of Trustee, to the extent not included in the
Servicing Fee).
page A-3
<PAGE>
"CERTIFICATE" means any Investor Certificate or the Transferor Certificate.
"CERTIFICATEHOLDER" means the Person in whose name a Certificate is
registered in the Certificate Register.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"CERTIFICATE REGISTER" means the register maintained pursuant to SECTION
6.3 of the Pooling Agreement.
"CLEARING AGENCY" means, with respect to any Book-Entry Certificate, any
Person designated as such by Transferor, which Person must be registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934.
"CLEARING AGENCY PARTICIPANT" is defined in SECTION 6.11(d) of the Pooling
Agreement.
"COLLECTIONS" means all funds that are received by any Seller, Transferor,
Servicer or Trustee from or on behalf of any Obligor in payment of any amounts
owed (including invoice prices, finance charges, interest and all other charges,
if any) in respect of any Receivable or Related Asset, or otherwise applied to
repay or discharge any Receivable (including insurance payments that any Seller,
Transferor or Servicer applies in the ordinary course of its business to amounts
owed in respect of such Receivable and net proceeds of sale or other disposition
of repossessed goods that were the subject of such Receivable).
"CONCENTRATION ACCOUNT" means any bank account that is maintained in
accordance with, and to perform the functions contemplated for Concentration
Accounts in, SECTION 3.3 of the Pooling Agreement.
"CONCENTRATION ACCOUNT AGREEMENT" means a letter agreement, substantially
in the form of EXHIBIT B to the Pooling Agreement (or such other form as to
which the Modification Condition has been satisfied), among Transferor,
Servicer, a Concentration Account Bank and Trustee that relates to one or more
Concentration Accounts, as it may be amended, supplemented or otherwise modified
from time to time.
"CONCENTRATION ACCOUNT BANKS" means any of the banks at which one or more
Concentration Accounts are maintained from time to time.
"CONTRACT" means an agreement between a Seller and any Person pursuant to
which such Person is obligated to make payments in respect of any Receivable or
Related Asset.
page A-4
<PAGE>
"CONTRIBUTED RECEIVABLES" means all right, title and interest of a Seller
in the Receivables (and Related Security in connection therewith) contributed by
such Seller to Buyer.
"CORPORATE TRUST OFFICE" means the principal office of Trustee in Buffalo,
New York, at which at any particular time its corporate trust business shall be
principally administered.
"CREDIT AND COLLECTION POLICY" means (a) so long as no Successor Servicer
has been appointed, with respect to any Seller, its credit and collection
policies and practices relating to the Contracts and Receivables of such
Seller that such Seller has provided to Transferor and Trustee prior to the
First Issuance Date, as such credit and collection policies may be modified
without violating SECTION 6.3(b) of the Purchase Agreement or SECTION 7.2(f)
of the Pooling Agreement or (b) with respect to any Successor Servicer, its
collection policies and practices with respect to receivables like the
Receivables.
"CUT-OFF DATE" means the last day of any Calculation Period.
"DAILY REPORT" is defined in SECTION 3.5 of the Pooling Agreement.
"DEFINITIVE CERTIFICATES" means any Certificate other than a Book-Entry
Certificate.
"DILUTION" means any reduction in the balance of a Receivable or check
issued by any Seller to an Obligor on account of discounts, incorrect billings,
credits, rebates, allowances, chargebacks, returned or repossessed goods,
allowances for early payments or any other reduction in the balance of a
Receivable for any other reason unrelated to the inability of the Obligor to pay
the Receivable.
"DIRECT PAY RECEIVABLE" means a Receivable originated by any Seller, the
Obligor of which has been instructed to make payments directly to such Seller in
accordance with the credit and collection policies of such Seller as in effect
at the time such Seller becomes a party to the Purchase Agreement.
"DISCOUNT RATE" is defined in SECTION 2.2(d) of the Purchase Agreement.
"DISPOSITION" is defined in SECTION 9.3 of the Pooling Agreement.
"DISTRIBUTION DATE" means the 15th day of each calendar month (or, if not a
Business Day, the next Business Day).
"DISTRIBUTION PERIOD" means each period from one Distribution Date to the
next Distribution Date.
"DOLLARS" means dollars in lawful money of the United States of America.
page A-5
<PAGE>
"DOMESTIC PERSON" means any Person that has a place of business located in
the United States or Puerto Rico or otherwise is subject to the jurisdiction of
one or more civil courts of the United States (other than by reason of
contractual submission to such jurisdiction).
"DOMESTIC SUBSIDIARY" means any direct or indirect Subsidiary of Big Flower
having its chief executive office and principal place of business located in the
United States.
"EARLY AMORTIZATION EVENT" means, with respect to any Series or Purchased
Interest, any event identified as an Early Amortization Event in the related
Supplement or PI Agreement.
"EARLY AMORTIZATION PERIOD" is defined, for purposes of any Series or
Purchased Interest, in the related Supplement or PI Agreement.
"ELIGIBLE DEPOSIT ACCOUNT" means (a) a segregated trust account maintained
at a national bank with a long-term debt rating of at least A (or, in the case
of a Bank Account, BBB) from S&P, (b) a deposit account maintained with a bank
that has an unsecured long-term debt rating of A, or a short-term rating of at
least A-1, from S&P or (c) another deposit account as to which the Modification
Condition has been satisfied.
"ELIGIBLE INVESTMENTS" means any of the following:
(a) deposit accounts that are established and maintained at a
financial institution, the short-term debt securities or certificates of
deposit of which have at the time of investment the highest short-term debt
or certificate of deposit rating (as the case may be) available from the
Rating Agencies, and that are held in the name of Trustee in trust for the
benefit of the Certificateholders, subject to the exclusive custody and
control of Trustee and for which Trustee has sole signature authority;
PROVIDED that this clause shall not apply to the Lockbox Accounts, the
Blocked Accounts or to the Transaction Accounts;
(b) marketable obligations of the United States of America, the full
and timely payment of principal and interest on which is backed by the full
faith and credit of the United States of America, that have a maturity date
not later than the next succeeding Distribution Date;
(c) marketable obligations directly and fully guaranteed by the United
States of America, the full and timely payment of principal and interest on
which is backed by the full faith and credit of the United States of
America, that have a maturity date not later than the next succeeding
Distribution Date;
page A-6
<PAGE>
(d) banker's acceptances, certificates of deposit and other interest-
bearing obligations denominated in Dollars (subject to the proviso at the end of
this definition), that have a maturity date not later than the next succeeding
Distribution Date;
(e) repurchase agreements (i) that are entered into with any financial
institution having the ratings referred to in CLAUSE (a) and (ii) that are
secured by a perfected first priority security interest in an obligation of
the type described in CLAUSE (b) or (c); PROVIDED that such obligation may
mature later than the next succeeding Distribution Date if such bank is
required to repurchase such obligation not later than the next succeeding
Distribution Date; and PROVIDED FURTHER, that (i) the market value of the
obligation with respect to which such bank has a repurchase obligation,
determined as of the date on which such obligation is originally purchased,
shall equal or exceed 102% of the repurchase price to be paid by such bank
and (ii) Trustee or a custodian acting on its behalf shall have possession
of the instruments or documents evidencing such obligations;
(f) guaranteed investment contracts entered into with any financial
institution, the short-term debt securities of which have the highest
short-term debt rating available from the Rating Agencies that, in each
case, have a maturity date not later than the next succeeding Distribution
Date;
(g) commercial paper (except for commercial paper issued by any Big
Flower Person) rated at the time of investment not less than "A-1+" or the
equivalent thereof by the Rating Agencies and having a maturity date not
later than the next succeeding Distribution Date; and
(h) freely redeemable shares in open-end money market mutual funds
(including such mutual funds that are offered by the Person who is acting
as Trustee or by any agent of such Person) that (i) maintain a constant
net-asset value and (ii) at the time of such investment have been rated not
less than "AAA(m)" or the equivalent thereof by S&P;
PROVIDED that (A) Trustee shall only acquire banker's acceptances and
certificates of deposit of, and enter into repurchase agreements with,
institutions whose short-term obligations have been rated not less than "A-1+"
or the equivalent thereof by the Rating Agencies and whose long-term obligations
have been rated not less than "AA-" by S&P, (B) the securities, banker's
acceptances, certificates of deposit, other obligations and repurchase
agreements described above shall only constitute "Eligible Investments" if and
to the extent that Servicer is satisfied that Trustee will have a perfected
security interest therein for the benefit of the Certificateholders and (C)
notwithstanding anything to the contrary herein or in the other
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<PAGE>
Transaction Documents, the term "Rating Agency," whenever used in this
definition of "Eligible Investments", shall be deemed to not include DCR to the
extent that an investment is rated by S&P, but not by DCR.
"ELIGIBLE OBLIGOR" means, for purposes of any Series (unless otherwise
specified in the related Supplement) at any time, an Obligor that satisfies the
following criteria:
(a) it is a Domestic Person and is not (except as otherwise specified
for any Series in the related Supplement) (i) the United States government
or any of its agencies or instrumentalities or (ii) a state or local
government agency or instrumentality;
(b) it is not a direct or indirect Subsidiary of Big Flower or any
other entity with respect to which Big Flower or any of its Subsidiaries
owns, directly or indirectly, more than 50% of the entity's equity
interests;
(c) with respect to which no Bankruptcy Event had occurred and was
continuing as of the end of the most recent Calculation Period and is
continuing; PROVIDED that this clause shall not apply if a bankruptcy court
has approved the Obligor's payment of its obligations on the Receivables;
(d) as of the end of the most recent Calculation Period, no more than
50% of all Receivables of the Obligor were (for reasons other than
disputes) aged more than 120 days past their respective invoice dates;
(e) as of the end of the most recent Calculation Period, none of the
Receivables of the Obligor were evidenced by promissory notes; and
(f) it is not an Obligor with whom the applicable Seller has a "cash
in advance" or "cash on account" arrangement (but may be an Obligor that
the applicable Seller bills in advance in accordance with that Seller's
customary practices, and not on account of concerns about the
creditworthiness of the Obligor).
"ELIGIBLE RECEIVABLE" means, for purposes of any Series (unless otherwise
specified in the related Supplement) at any time, a Receivable:
(a) that arises from the sale of goods or services by a Seller in the
ordinary course of its business;
(b) that represents a BONA FIDE obligation resulting from a sale of
goods that have been shipped or services that have been performed;
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<PAGE>
(c) that, as of that time, is not aged more than 90 days past its
original invoice date;
(d) that constitutes an account or a general intangible for the
payment of money and not an instrument or chattel paper;
(e) the Obligor of which is an Eligible Obligor,
(f) with regard to which both the representation and warranty of
Transferor in SECTION 2.3(a)(ii) of the Pooling Agreement and the
representation and warranty of the relevant Seller in SECTION 5.1 (k) of
the Purchase Agreement are true and correct;
(g) the transfer of which (including the sale by the applicable Seller
to Transferor and the transfer by Transferor to the Trust) does not
contravene or conflict with any law, rule or regulation or any contractual
or other restriction, limitation or encumbrance that applies to the
applicable Seller, Transferor or the Trust, and the sale, assignment or
transfer of which, and the granting of a security interest in which, does
not require the consent of the Obligor thereof or any other Person, other
than any such consent that has been obtained;
(h) that is denominated and payable only in Dollars in the United
States of America and is non-interest bearing; PROVIDED that a Receivable
shall not be deemed to be interest-bearing solely as a result of the
applicable Seller's imposition of an interest or other charge on any such
Receivable that remains unpaid for some specified period (but such interest
charge or other charge shall not be included in the Unpaid Balance of a
Receivable for purposes of calculating the Base Amount);
(i) that arises under a Contract that has been duly authorized and
that, together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or
at law;
(j) that is not subject to any asserted reduction, cancellation, or
refund or any dispute, offset, counterclaim, lien or defense whatsoever
(including any Permitted Adverse Claim or other potential reduction on
account of any offsetting account payable of Transferor or the applicable
Seller to an Obligor or funds of an Obligor held by Transferor or the
Seller); PROVIDED that a Receivable that is subject only in part to any of
the foregoing shall be an Eligible Receivable to the extent not subject to
reduction, cancellation, refund, dispute, offset, counterclaim, lien or
other defense;
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(k) that, together with the Contract related thereto, was created in
accordance with, and conforms in all material respects with, all applicable
laws, rules, regulations, orders, judgments, decrees and determinations of
all courts and other governmental authorities (whether Federal, state,
local or foreign and including usury laws);
(l) that satisfies all applicable requirements of the Credit and
Collection Policy of the applicable Seller, and
(m) that has not been compromised, adjusted, satisfied, subordinated,
rescinded or modified (including by extension of time or payment or the
granting of any discounts, allowances or credits), except as permitted by
SECTION 7.2(f) of the Pooling Agreement.
"ELIGIBLE Servicer" means (a) Big Flower, (b) Trustee or (c) an entity
that, at the time of its appointment as Servicer, (i) is servicing a portfolio
of trade receivables, (ii) is legally qualified and has the capacity to service
the Receivables, (iii) has demonstrated the ability to service professionally
and competently a portfolio of trade receivables similar to the Receivables in
accordance with high standards of skill and care, (iv) is qualified to use the
software that is then being used to service the Receivables or obtains the right
to use or has its own software that is adequate to perform its duties under the
Pooling Agreement and (v) as to which the Modification Condition has been
satisfied.
"ENHANCEMENT" means, with respect to any Series or Purchased Interest, any
surety bond, letter of credit, guaranteed rate agreement, maturity guaranty
facility, cash collateral account or guaranty, tax protection agreement,
interest rate swap or other contract or agreement for the benefit of
Certificateholders of the Series or Purchaser of the Purchased Interest.
"ENHANCEMENT PROVIDER" means the Person providing any Enhancement, other
than any Certificateholders, the Certificates of which are subordinated to any
Series or class of Certificates.
"EQUALIZATION ACCOUNT" is defined in SECTION 4.2 of the Pooling Agreement.
"ERISA." means the Employee Retirement Income Security Act of 1974.
"ESTABLISHED SECURITIES MARKET" means a national securities exchange that
is either registered under Section 6 of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") or exempt from registration because of the limited
volume of transactions, a foreign securities exchange that, under the law of the
jurisdiction where it is organized, satisfies regulatory requirements that are
analogous to the regulatory requirements of the Exchange Act, a regional or
local exchange, or an interdealer quotation system that regularly
page A-10
<PAGE>
disseminates firm buy or sell quotations by identified brokers or dealers by
electronic means or otherwise.
"ESTIMATED BASE AMOUNT" is defined in SECTION 3.5 of the Pooling Agreement.
"EXCHANGE DATE" is defined in SECTION 6.11(c) of the Pooling Agreement.
"EXEMPT OBLIGOR" means an Obligor that is specified as an "EXEMPT OBLIGOR"
in a notice from Servicer to the Trustee, the Rating Agencies and the Agent;
PROVIDED that each of the following requirements must be satisfied with respect
to such Obligor: (w) the Modification Condition shall have been satisfied, (x)
such Obligor has been instructed to make all payments in respect to its
receivables to a location other than to any of the Bank Accounts, (y) such
Obligor can reasonably be expected to follow such instructions, as certified by
the Servicer in the notice specifying such Obligor as an Exempt Obligor, and (z)
none of the data included in the Daily Reports, Monthly Reports or other
information supplied to the Trustee or Holders includes any information about
such Obligor or amounts owed by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve
System, or any successor thereto or to the functions thereof.
"FINAL SCHEDULED PAYMENT DATE" is defined, for purposes of any Series, in
the applicable Supplement.
"FIRST ISSUANCE DATE" means March 19, 1996.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" means the United States of America, any state or
other political subdivision thereof and any entity in the United States of
America or any applicable foreign jurisdiction that exercises executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTY" means any agreement or arrangement by which any Person directly
or indirectly guarantees, endorses, agrees to purchase or otherwise becomes
contingently liable upon any liability of any other Person (other than by
endorsements of instruments in the course of collection) or guarantees the
payment of distributions upon the shares of any other Person.
"HIGHEST BID" means the highest cash purchase offer for a Series received
by Servicer pursuant to SECTION 12.1 of the Pooling Agreement.
"HOLDBACK ACCOUNT" is defined in SECTION 4.2 of the Pooling Agreement.
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<PAGE>
"HOLDER" means the Person in whose name a Certificate is registered in the
Certificate Register or a Person who holds a Purchased Interest.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of Big Flower or Treasure Chest, any qualification or exception to such opinion
or certification that is of a "going concern" or similar nature.
"INDEBTEDNESS" of any Person means all of that Person's obligations for
borrowed money, obligations evidenced by bonds, debentures, notes or other
similar instruments, obligations as lessee under leases that are required by
GAAP to be recorded as capitalized leases and obligations to pay the deferred
purchase price of property or services.
"INDEMNIFIED LOSSES" is defined in SECTION 7.3 of the Pooling Agreement.
"INDEMNIFIED PARTY" is defined in SECTION 7.3 of the Pooling Agreement.
"INITIAL CUT-OFF DATE" means the Business Day immediately preceding the
First Issuance Date.
"INTERCREDITOR AGREEMENT" means an intercreditor agreement, in form and
substance satisfactory to the Trustee, between the Trustee and a secured
creditor of a Seller.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986.
"INVESTED AMOUNT" is defined, with respect to any Series or Purchased
Interest, in the related Supplement or PI Agreement.
"INVESTOR CERTIFICATEHOLDER" means the Person in whose name an Investor
Certificate is registered in the Certificate Register.
"INVESTOR CERTIFICATES" means the Certificates issued pursuant to any
Supplement.
"INVESTOR EXCHANGE" is defined in SECTION 6.10(a) of the Pooling Agreement.
"ISSUANCE" is defined in SECTION 6.10(a) of the Pooling Agreement.
"ISSUANCE DATE" is defined in Section 6.10(b) of the Pooling Agreement.
"ISSUANCE NOTICE" is defined in Section 6.10(b) of the Pooling Agreement.
"LEAD PLACEMENT AGENT" means any Person designated as such by Transferor in
connection with the issuance of any Investor Certificates.
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<PAGE>
"LETTER OF REPRESENTATIONS" means the agreement among Transferor, Trustee
and the applicable Clearing Agency, with respect to any Book-Entry Certificates,
as the same may be amended, supplemented or otherwise modified from time to
time.
"LOCKBOX ACCOUNTS" means the bank accounts, maintained at those certain
locations described in SCHEDULE 1 to the Pooling Agreement, into which
Collections from Receivables are deposited, and any bank account that is
hereafter created in accordance with, and to perform the functions contemplated
for "Lockbox Accounts" in, SECTION 3.3 of the Pooling Agreement.
"LOCKBOX AGREEMENT" means any of the letter agreements delivered in
connection with the Pooling Agreement and any other letter agreement,
substantially in the form of EXHIBIT A to the Pooling Agreement (or such other
form as to which the Modification Condition is satisfied), among a Lockbox Bank,
one or more Sellers, Servicer and Trustee that relates to one or more Lockbox
Accounts, as they may be amended, supplemented or otherwise modified from time
to time.
"LOCKBOX BANK" means any of the banks at which one or more Lockbox Accounts
are maintained from time to time.
"LOSS DISCOUNT" is defined in SECTION 2.2(b) of the Purchase Agreement.
"LOSS TO LIQUIDATION RATIO" means, as calculated in each Monthly Report, a
fraction (a) the numerator of which is the aggregate Unpaid Balance of
Receivables (net of recoveries) that were written off as uncollectible or
(without duplication) converted into promissory notes during the three preceding
Calculation Periods in accordance with the Credit and Collection Policy, and (b)
the denominator of which is the aggregate amount of Collections on the
Receivables received during such three Calculation Periods.
"MAJORITY INVESTORS" means Holders of Investor Certificates that
collectively evidence more than 50% of the outstanding principal amount of all
Investor Certificates.
"MASTER COLLECTION ACCOUNT" is defined in SECTION 4.2 of the Pooling
Agreement.
"MATERIAL ADVERSE EFFECT" means, with respect to any event or circumstance
at any time, a material adverse effect on any Series or Purchased Interest;
PROVIDED, that for the purpose of determining whether any Adverse Claim or other
event or circumstance results (or has a likelihood of resulting) in a Material
Adverse Effect, the effect of such event or circumstance shall be considered in
the aggregate with the effect of all other Adverse Claims (including Permitted
Adverse Claims) or other events and circumstances occurring or existing at the
time of such determination.
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<PAGE>
"MAXIMUM EXPOSURE AMOUNT" shall be the lowest amount specified in any
Supplement or PI Agreement as the "Maximum Exposure Amount."
"MEMBER ORGANIZATION" is defined in SECTION 6.11(c) of the Pooling
Agreement.
"MODIFICATION CONDITION" means, with respect to any action, that each
Rating Agency has confirmed in writing that such action will not result in a
reduction or withdrawal of the rating of any outstanding Series or Purchased
Interest that was rated by such Rating Agency, or if no outstanding Investor
Certificates or Purchased Interests have been rated, the Trustee shall have
consented in writing to such action.
"MONTHLY REPORT" is defined in SECTION 3.5(d) of the Pooling Agreement.
"NET INVESTED AMOUNT" is defined, for purposes of any Series, in the
applicable Supplement.
"NEW ISSUANCE" is defined in SECTION 6.10(a) of the Pooling Agreement.
"NONCOMPLYING RECEIVABLES AND DILUTION ADJUSTMENT" is defined in SECTION
3.1(b) of the Purchase Agreement.
"OBLIGATIONS" means (a) all obligations of Buyer, the Sellers and the
Servicer to the Trustee, the Trust, any other Indemnified Party, the Investor
Certificateholders and their respective successors, permitted transferees and
assigns, arising under or in connection with the Transaction Documents, and (b)
all obligations of a Seller to Buyer, any other RPA Indemnified Party and their
respective successors, transferees and assigns, arising under or in connection
with the Transaction Documents, in each case howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.
"OBLIGOR" means a Person obligated to make payments on a Receivable.
"OFFICER'S CERTIFICATE" means, unless otherwise specified in the Pooling
Agreement or in any Supplement, a certificate signed by an Authorized Officer of
Transferor or the initial Servicer, as the case may be, or, in the case of a
Successor Servicer, a certificate signed by the President, any Vice President,
Assistant Treasurer or the financial controller (or an officer holding an office
with equivalent or more senior responsibilities) of such Successor Servicer,
that, in the case of any of the foregoing, is delivered to Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who shall be
reasonably acceptable to Trustee and, if the Rating Agencies are addressees, the
Rating Agencies.
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"PAYING AGENT" means any paying agent appointed pursuant to SECTION 6.6 of
the Pooling Agreement and shall initially be Trustee.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED ADVERSE CLAIMS" means (a) ownership or security interests
arising under the Transaction Documents, (b) liens for taxes, assessments or
charges of any governmental authority (other than Tax or ERISA Liens) and liens
of landlords, carriers, warehousemen, mechanics and materialmen imposed by law
in the ordinary course of business, in each case (i) for amounts not yet due or
(ii) which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP, PROVIDED that the aggregate amount secured
by all liens referred to in this CLAUSE (ii) does not exceed $1,000,000 and (c)
any Tax or ERISA Lien, the existence of which does not give rise to an Early
Amortization Event with respect to any Series or Purchased Interest.
"PERMITTED TERMINATING SELLER" is defined in SECTION 1.8(a) of the Pooling
Agreement.
"PERSON" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.
"PI AGREEMENT" means an agreement or agreements executed and delivered in
connection with the sale of a Purchased Interest, as amended, supplemented or
otherwise modified from time to time.
"POOLING AGREEMENT" means the Pooling and Servicing Agreement, dated as of
March 19, 1996 among Transferor, as transferor, Big Flower, as Servicer, and
Trustee, as it may be amended, supplemented or otherwise modified from time to
time.
"PREVIOUSLY TERMINATED SELLER AMOUNT" is defined in SECTION 1.8 of the
Purchase Agreement.
"PRINCIPAL FUNDING ACCOUNT" is defined in SECTION 4.2 of the Pooling
Agreement.
"PRIVATE HOLDER" shall mean each holder of a right to receive interest or
principal with respect to a Certificate or Purchased Interest, other than
certificates (or other such interests) with respect to which an opinion is
rendered that such certificates (or other such interests) will be treated as
debt for federal income tax purposes and any holder of a right to receive any
amount in respect of the Transferor Certificate. A Person holding more than one
interest in the Trust each of which separately would cause such Person to be a
Private Holder shall be treated as a single Private Holder; a Private Holder
that would be a partnership, an S corporation or a grantor trust under the
Internal Revenue Code shall be treated as one or
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<PAGE>
more Private Holders in accordance with the provisions of Proposed Treasury
Regulation Section 1.7704-1 or any successor provision of law.
"PRO FORMA FINANCIAL DATA" means the projections referred to in SECTION
7.05(e) of the Big Flower Credit Agreement.
"PROCESS AGENT" is defined in SECTION 10.7 of the Purchase Agreement.
"PROGRAM" means the transactions contemplated in the Transaction Documents.
"PUBLICATION DATE" is defined in SECTION 9.3(a) of the Pooling Agreement.
"PURCHASE" means each purchase of Receivables and Related Assets by
Transferor from a Seller under the Purchase Agreement.
"PURCHASE AGREEMENT" means the Receivables Purchase Agreement, dated as of
March 19, 1996, among the Sellers and Transferor, as it may be amended,
supplemented or otherwise modified from time to time.
"PURCHASE DISCOUNT RESERVE RATIO" is defined in SECTION 2.2(c) of the
Purchase Agreement.
"PURCHASE PRICE" is defined in SECTION 2.1(b) of the Purchase Agreement.
"PURCHASE PRICE CREDIT" is defined in SECTION 3.1(d) of the Purchase
Agreement.
"PURCHASE PRICE PERCENTAGE" is defined in SECTION 2.2(a) of the Purchase
Agreement.
"PURCHASE TERMINATION DATE" means the earlier to occur of (a) the date
specified by the Sellers pursuant to SECTION 8.1 of the Purchase Agreement and
(b) any event referred to in SECTION 8.2 of the Purchase Agreement.
"PURCHASED ASSETS" is defined in SECTION 1.1 of the Purchase Agreement.
"PURCHASED INTEREST" means a fluctuating undivided ownership interest in
the Transferred Assets, purchased pursuant to the PI Agreement related thereto,
that shall include the right to receive, to the extent necessary to make
required payments to Purchasers at the time and in the amounts specified in the
related PI Agreement, the portion of Collections allocable to such Purchased
Interest pursuant to the Pooling Agreement and the related PI Agreement, funds
on deposit in the Master Collection Account allocable to the Purchased Interest
pursuant to the Pooling Agreement and the related PI Agreement and funds
available pursuant to any related Enhancement.
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"PURCHASED RECEIVABLES" is defined in SECTION 1.1 of the Purchase
Agreement.
"PURCHASER" means a purchaser, or any owner by permitted assignment, of a
Purchased Interest.
"RATING AGENCY" means each statistical rating agency that at the request of
Big Flower or Transferor, has rated any then-issued and outstanding Series of
Investor Certificates or Purchased Interest; PROVIDED that if at any time no
outstanding Series of Investor Certificates or Purchased Interest has been
rated, then for purposes of any provision of the Transaction Documents that
refers to a Person or instrument having a minimum rating, "Rating Agencies"
shall mean S&P.
"RECEIVABLE" means any right of any Seller to payment, whether constituting
an account, chattel paper, instrument, general intangible or otherwise, (i)
arising from the sale of goods, services or future services by such Seller (and
including the right to payment of any interest or finance charges and other
obligations with respect thereto) and (ii) any other right to payment recorded
as a receivable on a Seller's accounts receivable ledger, provided that (in the
case of either clause (i) or (ii)) the term "Receivable" shall not include any
such right to payment from an Exempt Obligor.
"RECEIVABLES POOL" means at any time all Receivables then held by the
Trust.
"RECORD DATE" means the Business Day that is three Business Days prior to a
Distribution Date.
"RECORDS" means all Contracts, purchase orders, invoices and other
agreements, documents, books, records and other media for the storage of
information (including tapes, disks, punch cards, computer programs and
databases and related property) maintained by Transferor, the Sellers or
Servicer with respect to the Transferred Assets and/or the related Obligors.
"RECOVERIES" means all Collections received by the Trust in respect of any
Write-Off held by the Trust.
"REGULATION S BOOK-ENTRY CERTIFICATE" is defined in SECTION 6.11(c) of the
Pooling Agreement.
"REGULATION S TEMPORARY BOOK-ENTRY CERTIFICATE" is defined in SECTION
6.11(c) of the Pooling Agreement.
"RELATED ASSETS" is defined in SECTION 1.1 of the Purchase Agreement.
"RELATED CONTRIBUTED ASSETS" is defined in SECTION 1.9 of the Purchase
Agreement.
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<PAGE>
"RELATED PURCHASED ASSETS" is defined in SECTION 1.1 of the Purchase
Agreement.
"RELATED SECURITY" means, with respect to any Receivable, (a) all of the
applicable Seller's right, title and interest in and to the goods, if any,
relating to the sale that gave rise to the Receivable, (b) all other security
interests or liens and property subject thereto from time to time purporting to
secure payment of the Receivable, whether pursuant to the Contract related to
the Receivable or otherwise, and (c) all letters of credit, guarantees and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of the Receivable, whether pursuant to the
Contract related to the Receivable or otherwise.
"RELATED TRANSFERRED ASSETS" is defined in SECTION 2.1(a) of the Pooling
Agreement.
"REPORT DATE" means the Business Day that is two Business Days prior to a
Distribution Date.
"REPURCHASE AMOUNT" is defined in SECTION 12.4 of the Pooling Agreement.
"REPURCHASE DISTRIBUTION DATE" is defined in SECTION 12.4 of the Pooling
Agreement.
"REQUIRED INVESTORS" means Holders of Investor Certificates and Purchasers
that evidence at least 66-2/3% of the total outstanding principal amount of
Investor Certificates and Purchased Interests.
"REQUIRED RECEIVABLES" is defined, for purposes of any Series or Purchased
Interest, in the applicable Supplement or PI Agreement.
"REQUIRED SERIES HOLDERS" means with respect to any action to be taken by
Investor Certificateholders of any Series, unless otherwise specified in the
related Supplement, Investor Certificateholders that evidence at least 66-2/3%
of the principal amount of those Certificates.
"RESPONSIBLE OFFICER" means, when used with respect to Trustee, (a) any
officer within the Corporate Trust Office (or any successor group of Trustee),
including any vice president, assistant vice president or any officer or
assistant trust officer of Trustee customarily performing functions similar to
those performed by the persons who hold the office of vice president, assistant
vice president, or assistant secretary and (b) any other officer within the
Corporate Trust Office with direct responsibility for the administration of the
Pooling Agreement or to whom any corporate trust matter is referred at Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.
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<PAGE>
"REVOLVING PERIOD" means, with respect to each Series, the period before
the commencement of the earliest of any applicable amortization period,
accumulation period or early amortization period.
"RPA INDEMNIFIED LOSSES" is defined in SECTION 9.1 of the Purchase
Agreement.
"RPA INDEMNIFIED PARTY" is defined in SECTION 9.1 of the Purchase
Agreement.
"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.
"SELLER" means each Person from time to time party to the Purchase
Agreement as a "Seller."
"SELLER ASSIGNMENT CERTIFICATE" means an assignment by a Seller,
substantially in the form of EXHIBIT B to the Purchase Agreement, evidencing
Transferor's acquisition of the Receivables (excluding the Contributed
Receivables) and Related Assets generated by the Seller, as it may be amended,
supplemented or otherwise modified from time to time.
"SELLER CHANGE EVENT" is defined in SECTION 3.5(e) of the Pooling
Agreement.
"SELLER DILUTION ADJUSTMENT" is defined in SECTION 3.5(b) of the Purchase
Agreement.
"SELLER GUARANTY" means the Guaranty, dated as of March 19, 1996, by Big
Flower of the Obligations of the Sellers, as it may be amended, supplemented or
otherwise modified from time to time.
"SELLER MATURITY DATE" is defined in SECTION 3.2 of the Purchase Agreement.
"SELLER NONCOMPLYING RECEIVABLE" means a Receivable that does not meet the
criteria set forth in the definition of Eligible Receivables.
"SELLER NONCOMPLYING RECEIVABLES ADJUSTMENT" is defined in SECTION 3.5(a)
of the Purchase Agreement.
"SELLER RECEIVABLES REVIEW" is defined in SECTION 6.1(c) of the Purchase
Agreement.
"SELLER TRANSACTION DOCUMENTS" means the Purchase Agreement, the Seller
Assignment Certificates and the Account Agreements.
"SENIOR INTEREST" is defined in the Buyer Notes.
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"SERIES" means any series of Investor Certificates issued pursuant to
SECTION 6.10 of the Pooling Agreement.
"SERIES COLLECTION ALLOCATION PERCENTAGE" means, for any Series or
Purchased Interest at any time, the percentage equivalent of a fraction the
numerator of which is the Required Receivables for that Series or Purchased
Interest and the denominator of which is the sum of the Required Receivables for
all then outstanding Series and Purchased Interests.
"SERIES INTEREST" is defined in SECTION 4.1 of the Pooling Agreement.
"SERIES LOSS ALLOCATION PERCENTAGE" means, for any Series or Purchased
Interest for purposes of any Monthly Report, the percentage equivalent of a
fraction the numerator of which is the Invested Amount of that Series or
Purchased Interest and the denominator of which is the sum of the Invested
Amounts of all then outstanding Series and Purchased Interests, in each case
determined as of the beginning of the related Calculation Period (or such other
date as may be specified in the related Supplement or PI Agreement).
"SERVICER" means at any time the Person then authorized pursuant to ARTICLE
III of the Pooling Agreement to service, administer and collect Receivables and
Related Transferred Assets.
"SERVICER DEFAULT" is defined in SECTION 10.1 of the Pooling Agreement.
"SERVICE TRANSFER" is defined in SECTION 10.2(b) of the Pooling Agreement.
"SERVICING FEE" is defined in SECTION 3.4 of the Pooling Agreement.
"SHARED INVESTOR COLLECTIONS" means any funds identified as such in any
Supplement or PI Agreement.
"SHORTFALL" is defined, for any Series or Purchased Interest, in the
related Supplement or PI Agreement.
"SPECIFIED ASSETS" is defined in SECTION 1.1 of the Purchase Agreement.
"STRUCTURED LENDER" shall mean Greenwich Funding Corporation and any other
Holder of a Certificate whose principal business consists of issuing commercial
paper, medium term notes or other securities to fund its acquisition and
maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets or interests therein and which is required
by any nationally recognized rating agency which is rating such securities to
obtain from its principal debtors an agreement such as that set forth in SECTION
13.9 of the Pooling Agreement in order to maintain such rating.
page A-20
<PAGE>
"SUB-SERVICER" is defined in Section 3.1 of the Pooling Agreement.
"SUBJECT INSTRUMENTS" means any Certificates or Purchased Interests with
respect to which Transferor shall not have received an Opinion of Counsel to the
effect that such Certificates or Purchased Interests will be treated as debt
for Federal income tax purposes.
"SUBSIDIARY" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person.
"SUCCESSOR SERVICER" is defined in SECTION 10.2(a) of the Pooling
Agreement.
"SUPPLEMENT" means each supplement to the Pooling Agreement executed by
Transferor, Servicer and Trustee to specify the terms of a Series of
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time.
"SUPPORT BANK" shall mean any bank or other financial institution extending
or having a commitment to extend funds to or for the account of Greenwich
Funding Corporation or any other Structured Lender (including by agreement to
purchase an assignment of, or participation in the Certificate held by such
Person) under a liquidity or credit support agreement which relates to the
Certificate purchased by such Structured Lender.
"TAX OR ERISA LIEN" means a lien arising under Section 6321 of the Internal
Revenue Code or Section 302(f) or 4068 of ERISA.
"TAX OPINION" means, with respect to any action, an Opinion of Counsel to
the effect that, for Federal and state income and franchise tax purposes, (a)
such action will not adversely affect the characterization of the Investor
Certificates of any outstanding Series or Class or any Purchased Interest as
debt or partnership interests, (b) following such action the Trust will not be
treated as an association (or publicly traded partnership) taxable as a
corporation, (c) such action will not be treated as a taxable event to any
Investor Certificateholder, Certificate Owner or holder of a Purchased Interest
and (d) in the case of the original issuance of any Series or Class of
Investor Certificates or any Purchased Interest, the Investor Certificates of
the new Series or any Purchased Interest will properly be characterized as debt
or partnership interests.
"TERMINATING SELLER" is defined in SECTION 1.8(a) of the Purchase
Agreement.
"TERMINATING SELLER NOTICE DATE" is defined in SECTION 1.8(a) of the
Purchase Agreement.
page A-21
<PAGE>
"TERMINATION NOTICE" is defined in SECTION 10.1 of the Pooling Agreement.
"TRANSACTION ACCOUNTS" is defined in SECTION 4.2 of the Pooling Agreement.
"TRANSACTION DOCUMENTS" means each Seller Transaction Document, the
Subscription Agreement, the Pooling Agreement, the Seller Guaranty, each
Supplement, each PI Agreement, each agreement to purchase Investor
Certificates, and each other agreement designated as a Transaction Document in
any Supplement or PI Agreement.
"TRANSFER AGENT AND REGISTRAR" means any transfer agent and registrar
appointed pursuant to SECTION 6.3 of the Pooling Agreement and shall initially
be Trustee.
"TRANSFEROR" means BFP Receivables Corporation, a Delaware corporation.
"TRANSFEROR CERTIFICATE" means a certificate substantially in the form of
EXHIBIT E to the Pooling Agreement, as described in SECTION 4.1 of the Pooling
Agreement.
"TRANSFEROR EVENT" is defined in SECTION 9.3(a) of the Pooling Agreement.
"TRANSFEROR INTEREST" is defined in SECTION 4.1 of the Pooling Agreement.
"TRANSFEROR RETAINED INTEREST" means, on any date of determination, the sum
of the Transferor Interest and the interest in the Trust represented by any
Investor Certificates (regardless of Series or class) or Purchased Interest
owned or otherwise retained by the Transferor.
"TRANSFEROR RETAINED PERCENTAGE" means, on any date of determination, the
percentage equivalent of a fraction the numerator of which is the Transferor
Retained Interest and the denominator of which is the aggregate Base Amounts for
all Series of Certificates or Purchased Interests at the end of the day
immediately prior to such date of determination plus all amounts on deposit in
the Carrying Cost Account, the Equalization Account and the Principal Funding
Account.
"TRANSFERRED ASSETS" is defined in SECTION 2.1 of the Pooling Agreement.
"TREASURE CHEST" means Treasure Chest Advertising Company, Inc., a Delaware
corporation.
"TRIGGER EVENT" is defined in SECTION 9.3(a) of the Pooling Agreement.
"TRUST" means the trust created by the Pooling Agreement, which shall be
known as the Big Flower Receivables Master Trust.
page A-22
<PAGE>
"TRUSTEE" means Manufacturers and Traders Trust Company, in its capacity as
agent for the Certificateholders, or its successor-in-interest, or any successor
trustee appointed as provided in the Pooling Agreement.
"TURNOVER DAYS " means, at any time, the quotient of:
(x) (i) the sum of the ending Unpaid Balances of Receivables as of
the Cut-Off Date for each of the two immediately preceding Calculation
Periods DIVIDED BY 2, MULTIPLIED BY (ii) 30; DIVIDED BY
(y) the aggregate amount payable pursuant to invoices giving rise to
Receivables that were generated during the immediately preceding
Calculation Period.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction or jurisdictions.
"UNMATURED EARLY AMORTIZATION EVENT" means any event that, with the giving
of notice or lapse of time, or both, would become an Early Amortization Event.
"UNPAID BALANCE" of any Receivable means at any time the unpaid amount
thereof as shown in the books of Servicer at such time.
"UNRESTRICTED BOOK-ENTRY CERTIFICATE" is defined in SECTION 6.11(c) of the
Pooling Agreement.
"WRITE-OFF" means any Receivable that, consistent with the applicable
Credit and Collection Policy, has been written off as uncollectible.
"144A BOOK-ENTRY CERTIFICATE" is defined in SECTION 6.11(b) of the Pooling
Agreement.
B. OTHER INTERPRETATIVE MATTERS. For purposes of any Transaction Document,
unless otherwise specified therein; (1) accounting terms used and not
specifically defined therein shall be construed in accordance with GAAP; (2)
terms used in Article 9 of the New York UCC, and not specifically defined in
that Transaction Document, are used therein as defined in such Article 9; (3)
the term "including" means "including without limitation," and other forms of
the verb "to include" have correlative meanings; (4) references to any Person
include such Person's permitted successors; (5) in the computation of a period
of time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding"; (6) the words "hereof", "herein" and "hereunder" and words of
similar import refer to such Transaction Document as a whole and not to any
particular provision of such Transaction Document; (7) references to "SECTION",
page A-23
<PAGE>
"SCHEDULE" and "EXHIBIT" in such Transaction Document are references to
Sections, Schedules and Exhibits in or to such Transaction Document; (8) the
various captions (including any table of contents) are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
such Transaction Document; and (9) references to any statute or regulation
refer to that statute or regulation as amended from time to time, and include
any successor statute or regulation of similar import.
page A-24
<PAGE>
EXHIBIT B
to Certificate Purchase
Agreement Series 1996-1
FORM OF RECEIVABLES PURCHASE AGREEMENT
<PAGE>
Big Flower
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RECEIVABLES PURCHASE AGREEMENT
dated as of March 19, 1996
among
BIG FLOWER PRESS HOLDINGS, INC.,
as initial Servicer
and
CERTAIN SUBSIDIARIES OF BIG FLOWER
PRESS HOLDINGS, INC.,
as Sellers
and
BFP RECEIVABLES CORPORATION,
as Buyer
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 AGREEMENT TO PURCHASE AND SELL. . . . . . . . . . . . . . 1
SECTION 1.2 TIMING OF PURCHASES . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3 CONSIDERATION FOR PURCHASES . . . . . . . . . . . . . . . 2
SECTION 1.4 NO RECOURSE . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5 NO ASSUMPTION OF OBLIGATIONS RELATING TO RECEIVABLES,
RELATED ASSESS OR CONTRACTS. . . . . . . . . . . . . . . . 3
SECTION 1.6 TRUE SALES. . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.7 ADDITION OF SELLERS . . . . . . . . . . . . . . . . . . . 3
SECTION 1.8 TERMINATION OF STATUS AS A SELLER . . . . . . . . . . . . 4
SECTION 1.9 CONTRIBUTION OF RECEIVABLES'. . . . . . . . . . . . . . . 6
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 CALCULATION OF PURCHASE PRICE . . . . . . . . . . . . . . 6
SECTION 2.2 DEFINITIONS AND CALCULATIONS RELATED TO PURCHASE
PRICE PERCENTAGE . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 PURCHASE PRICE PAYMENTS . . . . . . . . . . . . . . . . . 9
SECTION 3.2 THE BUYER NOTES . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 APPLICATION OF COLLECTIONS AND OTHER FUNDS. . . . . . . 12
SECTION 3.4 SERVICING OF RECEIVABLES AND RELATED ASSETS . . . . . . 13
SECTION 3.5 ADJUSTMENTS FOR NONCOMPLYING RECEIVABLES, DILUTION
AND CASH DISCOUNTS . . . . . . . . . . . . . . . . . . . 13
SECTION 3.6 PAYMENTS AND COMPUTATIONS, ETC. . . . . . . . . . . . . 14
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. . . . . . . . 14
SECTION 4.2 CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. . . 16
SECTION 4.3 EFFECT OF PAYMENT OF PURCHASE PRICE . . . . . . . . . . 16
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS . . . . . 16
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . 23
ARTICLE VI
GENERAL COVENANTS OF THE SELLERS
SECTION 6.1 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . 24
SECTION 6.2 REPORTING REQUIREMENTS. . . . . . . . . . . . . . . . . 27
SECTION 6.3 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 7.1 RIGHTS OF BUYER . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 RESPONSIBILITIES OF THE SELLERS . . . . . . . . . . . . 32
SECTION 7.3 FURTHER ACTION EVIDENCING PURCHASES . . . . . . . . . . 33
SECTION 7.4 COLLECTION OF RECEIVABLES; RIGHTS OF BUYER AND
ITS ASSIGNEES. . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION BY THE SELLERS. . . . . . . . . . . . . . . 35
SECTION 8.2 AUTOMATIC TERMINATION . . . . . . . . . . . . . . . . . 35
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNITIES BY THE SELLERS. . . . . . . . . . . . . . . 36
ARTICLE X
MISCELLANEOUS
SECTION 10.1 AMENDMENTS; WAIVERS, ETC.. . . . . . . . . . . . . . . 38
SECTION 10.2 NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . 39
SECTION 10.3 CUMULATIVE REMEDIES. . . . . . . . . . . . . . . . . . 39
SECTION 10.4 BINDING EFFECT; ASSIGNABILITY; . . . . . . . . . . . . 39
SECTION 10.5 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.6 COSTS, EXPENSES AND TAXES. . . . . . . . . . . . . . . 40
ii
<PAGE>
SECTION 10.7 SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . 40
SECTION 10.8 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 41
SECTION 10.9 INTEGRATION. . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.10 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.11 ACKNOWLEDGMENT AND CONSENT. . . . . . . . . . . . . . 41
SECTION 10.12 NO PARTNERSHIP OR JOINT VENTURE . . . . . . . . . . . 42
SECTION 10.13 NO PROCEEDINGS. . . . . . . . . . . . . . . . . . . . 42
SECTION 10.14 SEVERABILITY OF PROVISIONS. . . . . . . . . . . . . . 43
SECTION 10.15 RECOURSE SO BUYER . . . . . . . . . . . . . . . . . . 43
EXHIBITS
EXHIBIT A FORM OF BUYER NOTE
EXHIBIT B FORM OF SELLER ASSIGNMENT CERTIFICATE
SCHEDULES
SCHEDULE 1 LITIGATION AND OTHER PROCEEDINGS
SCHEDULE 2 CHANGES IN FINANCIAL CONDITION
SCHEDULE 3 OFFICES OF THE SELLERS WHERE RECORDS ARE MAINTAINED
SCHEDULE 4 LEGAL NAMES, TRADE NAMES AND NAMES UNDER WHICH
THE COMPANIES DO BUSINESS
SCHEDULE 5 SOFTWARE PROGRAMS AND LICENSES
APPENDIX
APPENDIX A DEFINITIONS
iii
<PAGE>
This RECEIVABLES PURCHASE AGREEMENT, dated as of March 19, 1996 (this
"AGREEMENT"), is made among BIG FLOWER PRESS HOLDINGS, INC., as initial Servicer
("BIG FLOWER" or "SERVICER"), certain direct or indirect domestic subsidiaries
of Big Flower that are listed on the signature pages hereto or that become party
hereto in accordance with the terms hereof (the "SELLERS"), and BFP RECEIVABLES
CORPORATION, a Delaware corporation ("BUYER"). Except as otherwise defined
herein, capitalized terms have the meanings that APPENDIX A assigns to them, and
this Agreement shall be interpreted in accordance with the conventions set forth
in PART B of APPENDIX A.
WHEREAS, pursuant to the Pooling Agreement, Buyer intends to transfer its
interests in the Receivables sold pursuant hereto, together with Receivables
contributed to Buyer by Treasure Chest from time to time, to the Trust in order
to, among other things, finance its purchases hereunder;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 AGREEMENT TO PURCHASE AND SELL. Each Seller hereby sells,
transfers, assigns, sets over and otherwise conveys to Buyer and Buyer agrees to
purchase from each Seller, at the times set forth in SECTION 1.2, all of such
Seller's right, title and interest in, to and under:
(a) all Receivables of such Seller (other than Contributed
Receivables) that existed and were owing to such Seller as at the closing
of such Seller's business on the Initial Cut-Off Date,
(b) all Receivables created by such Seller that arise during the
period from and including the closing of such Seller's business on the
Initial Cut-Off Date to but excluding the Purchase Termination Date,
(c) all Related Security with respect to such Receivables of such
Seller,
(d) all proceeds of the foregoing, including all funds received by any
Person in payment of any amounts owed (including invoice prices, finance
charges, interest and all other charges, if any) in respect of any
Receivable
<PAGE>
described above or Related Security with respect to any such Receivable, or
otherwise applied to repay or discharge any such Receivable (including
insurance payments that a Seller or Servicer applies in the ordinary course
of its business to amounts owed in respect of any such Receivable and net
proceeds of any sale or other disposition of repossessed goods that were
the subject of any such Receivable) or other collateral or property of any
Obligor or any other party directly or indirectly liable for payment of
such Receivables, and
(e) all Records relating to any of the foregoing.
As used herein, (i) "PURCHASED RECEIVABLES" means the items listed above in
CLAUSES (A) and (B), (ii) "RELATED PURCHASED ASSETS" means the items listed
above in CLAUSES (C), (D) and (E), (iii) "RELATED ASSETS" means the Related
Purchased Assets and the Related Contributed Assets, (iv) "PURCHASED ASSETS"
means the Purchased Receivables and the Related Purchased Assets, and (v)
"SPECIFIED ASSETS" means the Purchased Receivables, the Contributed Receivables
and the Related Assets.
SECTION 1.2 TIMING OF PURCHASES.
(a) INITIAL FIRST ISSUANCE DATE PURCHASES. All of the Purchased Assets of
each Seller that existed at the closing of such Seller's business on the Initial
Cut-Off Date shall be sold automatically to Buyer on the First Issuance Date.
(b) REGULAR PURCHASES. Except to the extent otherwise provided in SECTION
8.2 or (with respect to any Seller) SECTION 1.8, after the closing of a Seller's
business on the Initial Cut-Off Date until the closing of such Seller's business
on the Business Day immediately preceding the Purchase Termination Date, all
Receivables and the Related Assets of each Seller shall be sold automatically to
Buyer pursuant hereto immediately (and without further action by any Person)
upon the creation of the Receivable.
SECTION 1.3 CONSIDERATION FOR PURCHASES. On the terms and subject to the
conditions set forth in this Agreement, Buyer agrees to make Purchase Price
payments to the Sellers in accordance with ARTICLE III.
SECTION 1.4 NO RECOURSE. Except as specifically provided in this
Agreement, the sale and purchase of Purchased Assets under this Agreement shall
be without recourse to the Sellers; IT BEING UNDERSTOOD that (i) each Seller
shall be liable to Buyer for all representations, warranties, covenants and
indemnities made by such Seller pursuant to the terms of this Agreement, all of
which obligations are limited so as not to constitute recourse to such Seller
for the credit risk of the Obligors, and (ii) Big Flower shall be liable to
Buyer to the extent specified in the Seller Guaranty.
page 2
<PAGE>
SECTION 1.5 NO ASSUMPTION OF OBLIGATIONS RELATING TO RECEIVABLES, RELATED
ASSETS OR CONTRACTS. None of Buyer, the Servicer nor the Trustee shall have any
obligation or liability to any Obligor or other customer or client of a Seller
(including any obligation to perform any of the obligations of such Seller under
any Receivable, related Contracts or any other related purchase orders or other
agreements). No such obligation or liability is intended to be assumed by
Buyer, the Servicer or the Trustee hereunder, and any assumption is expressly
disclaimed.
SECTION 1.6 TRUE SALES. The Sellers and Buyer intend the transfers of
Receivables hereunder to be true sales by the Sellers to Buyer that are absolute
and irrevocable and that provide Buyer with the full benefits of ownership of
the Receivables, and none of the Sellers nor Buyer intends the transactions
contemplated hereunder to be, or for any purpose to be characterized as, loans
from Buyer to any Seller.
It is, further, not the intention of Buyer or any Seller that the
conveyance of the Specified Assets by such Seller be deemed a grant of a
security interest in the Specified Assets by such Seller to Buyer to secure a
debt or other obligation of such Seller. However, in the event that,
notwithstanding the intent of the parties, any Specified Assets are property of
any Seller's estate, then (i) this Agreement also shall be deemed to be and
hereby is a security agreement within the meaning of the UCC, and (ii) the
conveyance by such Seller provided for in this Agreement shall be deemed to be a
grant by such Seller to Buyer of, and such Seller hereby grants to Buyer, a
security interest in and to all of such Seller's right, title and interest in,
to and under the Specified Assets to secure (1) the rights of Buyer hereunder
and (2) a loan by Buyer to such Seller in the amount of the related Purchase
Price of the Purchased Assets sold by it or the Unpaid Balance of any
Contributed Receivables and the related Contributed Assets, as the case may be.
Each Seller and Buyer shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were deemed
to create a security interest in the Specified Assets, such security interest
would be deemed to be a perfected security interest of first priority (subject
to Permitted Adverse Claims) in favor of Buyer under applicable law and will be
maintained as such throughout the term of this Agreement.
SECTION 1.7 ADDITION OF SELLERS. Any Domestic Subsidiary of Big Flower may
become a Seller hereunder and sell its accounts receivable and property of the
types that constitute Related Assets hereunder to Buyer if (x) the last sentence
of this Section applies or (y) the Modification Condition is satisfied with
respect to such addition. Big Flower and such Domestic Subsidiary of Big Flower
that is proposed to be added as a Seller shall give to Buyer, the Trustee and
the Rating Agencies not less than 30 days' (or such shorter number of days as is
acceptable to Trustee) prior written notice of the effective date of the
addition of such Domestic Subsidiary as a Seller. Once the notice has been
given, any addition of a Domestic Subsidiary of Big
page 3
<PAGE>
Flower as a Seller pursuant to this section shall become effective on the first
Business Day following the expiration of the notice period (or such later date
as may be specified in the notice) on which (i) the Modification Condition has
been satisfied, (ii) the Servicer shall have delivered to the Trustee a
supplement to the Monthly Report then in effect as described in SECTION 3.5(e)
of the Pooling Agreement and shall have confirmed in writing to the Trustee that
the Seller Guaranty covers Obligations of such Seller, and (iii) such Domestic
Subsidiary and the parties hereto shall have executed and delivered the
agreements, instruments and other documents and the amendments or other
modifications to the Transaction Documents, in form and substance reasonably
satisfactory to Buyer and the Trustee, that Buyer or the Trustee reasonably
determines are necessary or appropriate to effect the addition. The
Modification Condition need not be satisfied as to any new Seller if (x) the new
Seller is in the same line of business as one or more existing Sellers or a
related line of business, (y) the aggregate Unpaid Balance of the new Seller's
outstanding Receivables on the last Cut-Off Date prior to the day that it
becomes a Seller is less than 5% of the aggregate Unpaid Balance of all
Receivables on such Cut-Off Date and (z) no more than two other Persons have
become Sellers during the preceding twelve months without satisfaction of the
Modification Condition (or, if no outstanding Investor Certificates are rated,
written approval of the Trustee).
SECTION 1.8 TERMINATION OF STATUS AS A SELLER. (a) At any time when more
than one Person is a Seller, a Seller may terminate its obligation to sell its
Receivables and Related Assets to Buyer if:
(i) the Seller (a "TERMINATING SELLER") shall have given Buyer not
less than 30 days' prior written notice of its intention to terminate the
obligations, which notice shall be given by Buyer to the Trustee and the
Rating Agencies (the date on which such notice is given being the
"TERMINATING SELLER NOTICE DATE"),
(ii) an Authorized Officer of the Terminating Seller shall have
certified that the termination by the Terminating Seller of its status as a
Seller will not have a Material Adverse Effect,
(iii) both immediately before and after giving effect to the
termination by the Terminating Seller, no Early Amortization Event or
Unmatured Early Amortization Event shall have occurred and be continuing or
shall reasonably be expected to occur; and
(iv) either the Terminating Seller will cease to be a Domestic
Subsidiary of Big Flower concurrently with the effectiveness of such
termination, or such Terminating Seller is a Permitted Terminating Seller;
PROVIDED that this SUBCLAUSE (IV) may be waived by Investor
Certificateholders
page 4
<PAGE>
that evidence more than 50% of the outstanding principal amount of the Investor
Certificates if the Modification Condition is satisfied.
"PERMITTED TERMINATING SELLER" means a Terminating Seller that satisfies
the following requirements:
(x) the aggregate Unpaid Balance of such Terminating Seller's
Receivables on the Cut-Off Date immediately preceding the Terminating
Seller Notice Date would not exceed 20% of the aggregate Unpaid Balance of
all Receivables, calculated as of such Cut-Off Date, and (y) the aggregate
Unpaid Balance of such Terminating Seller's Receivables on such Cut-Off
Date, together with the Previously Terminated Seller Amount, would not
exceed 25% of the sum of the Previously Terminated Seller Amount and the
aggregate Unpaid Balance of all Receivables (calculated as of such Cut-Off
Date).
"PREVIOUSLY TERMINATED SELLER AMOUNT" means, on any day, the aggregate
Unpaid Balance of Receivables originated by all Sellers previously terminated
pursuant to this SUBSECTION 1.8(A), calculated with respect to any Seller as of
the Cut-Off Date immediately preceding its Terminating Seller Notice Date.
(b) Any termination by a Seller shall become effective on the first
Business Day that follows the day on which the requirements of CLAUSE (A) shall
have been satisfied (or such later date specified in the notice or certificate
referred to in the clauses). Any termination by a Seller shall terminate its
rights and obligations to sell Receivables and Related Assets hereunder to Buyer
and Buyer's agreement, with respect to the Terminating Seller, to purchase the
Receivables and Related Assets; PROVIDED, HOWEVER, that the termination shall
not relieve the Terminating Seller of any of its other Obligations, to the
extent the Obligations relate to Receivables (and Related Assets with respect
thereto) originated by the Terminating Seller prior to the effective date of the
termination.
(c) Notwithstanding the foregoing, a Seller's rights and obligations to
sell its Receivables and Related Assets to Buyer shall terminate immediately if
such Seller ceases to be a Domestic Subsidiary of Big Flower; PROVIDED, HOWEVER,
that the termination shall not relieve such Seller of any of its other
Obligations, to the extent the Obligations relate to Receivables (and Related
Assets with respect thereto) originated by such Seller prior to the effective
date of the termination.
SECTION 1.9 CONTRIBUTION OF RECEIVABLES. Treasure Chest hereby transfers
to Buyer, as a contribution to the capital of Buyer, all its right, title and
interest in, to and under:
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(a) $43,794,245 of Receivables of Treasure Chest having, among the
existing Receivables, the oldest invoiced date as of the closing of
Treasure Chest's business on the Initial Cut-Off Date (the
"CONTRIBUTED RECEIVABLES"),
(b) all Related Security with respect to the Contributed Receivables,
(c) all proceeds of the foregoing, including all funds received by any
Person in payment of any amounts owed (including invoice prices,
finance charges, interest and all other charges, if any) in respect of
any Contributed Receivable or Related Security with respect to any
such Contributed Receivable, or otherwise applied to repay or
discharge any such Contributed Receivable (including insurance
payments that Treasure Chest or Servicer applies in the ordinary
course of its business to amounts owed in respect of any such
Contributed Receivable and net proceeds of any sale or other
disposition or repossessed goods that were the subject of any such
Contributed Receivable) or other collateral or property of any Obligor
or any other party directly or indirectly liable for payment of such
Contributed Receivables, and
(d) all Records relating to any of the foregoing (the items listed above
in CLAUSES (B), (C) and (D) being referred to herein as the "RELATED
CONTRIBUTED ASSETS."
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 CALCULATION OF PURCHASE PRICE. (a) On each Business Day
(including the First Issuance Date), the Servicer shall deliver to Buyer, the
Trustee, Big Flower and Treasure Chest a Daily Report with respect to Buyer's
purchases of Receivables from the Sellers:
(i) that are to be made on the First Issuance Date (in the case of the
Daily Report to be delivered on the First Issuance Date) or
(ii) that were made on the immediately preceding Business Day (in the
case of each subsequent Daily Report).
(b) On each day when Receivables are purchased by Buyer from a Seller
pursuant to ARTICLE I, the "PURCHASE PRICE" to be paid to such Seller on such
day for the Purchased Receivables and Related Purchased Assets that are to be
sold by such Seller on such day shall be determined in accordance with the
following formula:
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PP = AUB x PPP
WHERE:
PP = the aggregate Purchase Price for the Purchased Receivables and
Related Purchased Assets to be purchased from such Seller on such
day.
AUB = the "Aggregate Unpaid Balance" of the Purchased Receivables that
are to be purchased from such Seller on such day. For purposes
of this calculation, "AGGREGATE UNPAID BALANCE" shall mean (i)
for purposes of calculating the Purchase Price to be paid to such
Seller on the First Issuance Date, the sum of the Unpaid Balance
of each Receivable generated by such Seller, as measured as at
the closing of such Seller's business on the Initial Cut-Off
Date, and (ii) for purposes of calculating the Purchase Price on
each Business Day thereafter, the sum of the Unpaid Balance of
each Receivable to be purchased from such Seller on such day,
calculated at the time of the Receivable's sale to Buyer.
PPP = the Purchase Price Percentage applicable to the Receivables to be
purchased on such day, as determined pursuant to SECTION 2.2.
SECTION 2.2 DEFINITIONS AND CALCULATIONS RELATED TO PURCHASE PRICE
PERCENTAGE.
(a) "PURCHASE PRICE PERCENTAGE" for the Receivables to be sold by a Seller
on any day during a Distribution Period shall mean the percentage determined in
accordance with the following formula:
PPP = 100% - (LD + PDRR)
WHERE:
PPP = the Purchase Price Percentage in effect during such Distribution
Period.
LD = the Loss Discount (expressed as a percentage) in effect during
such Distribution Period, as determined pursuant to SUBSECTION(B)
below.
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PDRR = the Purchase Discount Reserve Ratio (expressed as a percentage)
in effect during such Distribution Period as determined on such
day pursuant to SUBSECTION (C) below.
The Purchase Price Percentage, the Loss Discount and the Purchase Discount
Reserve Ratio shall be recomputed by the Servicer on each Report Date, in each
case as of the then most recent Cut-Off Date, and shall become effective on the
next Distribution Date.
(b) "LOSS DISCOUNT" in effect during such Distribution Period means a
percentage equal to the Loss to Liquidation Ratio as in effect during such
Distribution Period (expressed as a percentage) as in effect on such day (it
being understood that the allocation of certain miscellaneous items will be
required to be estimated for this purpose).
(c) "PURCHASE DISCOUNT RESERVE RATIO" for the Receivables to be sold on any
day shall mean a percentage determined in accordance with the following formula:
PDRR = (TD/360 x DR) + PD
WHERE:
PDRR = the Purchase Discount Reserve Ratio in effect during such
Distribution Period.
TD = the Turnover Days during the Calculation Period preceding the
first day of such Distribution Period.
DR = the Discount Rate (expressed as a percentage) in effect during
such Distribution Period as determined pursuant to SUBSECTION (D)
below.
PD = a profit discount equal to .20%.
(d) "DISCOUNT RATE" for the Receivables to be sold on any day during a
Distribution Period shall mean a fraction (expressed as a percentage) having (i)
a numerator equal to 12, MULTIPLIED by an amount equal to the accrued Carrying
Costs for the Calculation Period preceding the first day of such Distribution
Period, and (ii) a denominator equal to the aggregate Unpaid Balance of the
Receivables as of the last day of the Calculation Period preceding the first day
of such Distribution Period.
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ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 PURCHASE PRICE PAYMENTS. (a) On the First Issuance Date and on
the Business Day following each day on which any Receivables and Related Assets
are purchased by Buyer pursuant to ARTICLE I, on the terms and subject to the
conditions of this Agreement, Buyer shall pay to the Sellers the Purchase Price
for the Receivables and Related Assets purchased on such day by Buyer by (i)
making a cash payment to Servicer (for the account of the Sellers) to the extent
that Buyer has cash available to make the payment pursuant to SECTION 3.3 and
(ii) if the Purchase Price to be paid for the Receivables and Related Assets of
any Seller exceeds the amount of any cash payment for the account of such Seller
on such day pursuant to CLAUSE (I), by (x) automatically increasing the
principal amount outstanding under the relevant Buyer Notes by the amount of the
excess or (y) at the option of Treasure Chest (as evidenced by notice to
Servicer), only in the case of Treasure Chest as Seller, such excess shall be
considered to have been contributed to Buyer by Treasure Chest as a capital
contribution.
The obligation of Buyer to pay the Purchase Price for Receivables that has
been deferred pursuant to the preceding paragraph shall be evidenced by Buyer
Notes. Each Seller agrees that, prior to the Seller Maturity Date, Buyer shall
be required to make payments in respect of the payment obligations evidenced by
the Buyer Notes only to the extent that it has cash available under SECTION 3.3.
(b) Except as provided in a Supplement or PI Agreement, on each Business
Day, the "NONCOMPLYING RECEIVABLES AND DILUTION ADJUSTMENT" shall be equal to
the difference (whether the difference is positive or negative) between (i) the
sum of (A) the aggregate Seller Dilution Adjustments in respect of all Sellers,
if any, for the immediately preceding Business Day, as shown in the Daily Report
for such day, PLUS (B) the aggregate Seller Noncomplying Receivables Adjustments
in respect of all Sellers, if any, for the immediately preceding Business Day,
as shown in the Daily Report for such day, in the case of each of CLAUSES (A)
and (B), as the amounts are determined pursuant to SECTION 3.5, MINUS (ii) the
amount of the payments (if any) that Buyer shall have received on the
immediately preceding Business Day on account of any Seller Noncomplying
Receivables that had been the subject of an earlier Seller Noncomplying
Receivables Adjustment. If the Noncomplying Receivables and Dilution Adjustment
is positive on any day, Buyer shall reduce the Purchase Price payable on such
day pursuant to SUBSECTION (A) above by the amount of the Noncomplying
Receivables and Dilution Adjustment. If instead the Noncomplying Receivables
and Dilution Adjustment is negative on any day, Buyer shall increase the
Purchase Price payable pursuant to SUBSECTION (A) above on such day by the
amount of the Noncomplying Receivables and Dilution Adjustment.
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(c) If on any day the sum of the Seller Dilution Adjustments and the
Seller Noncomplying Receivables Adjustments in respect of any Seller (as
determined pursuant to SECTION 3.5), less any amounts in CLAUSE (B)(II)
allocated to such Seller, exceeds the Purchase Price payable by Buyer to such
Seller pursuant to SUBSECTION (A) above on such day, or if such day falls on or
after the Purchase Termination Date, then the principal amount of such Seller's
Buyer Note shall be reduced automatically by the amount of such excess.
(d) If, on any day prior to the Purchase Termination Date, the principal
amount of a Seller's Buyer Note is zero and such Seller is not a Terminating
Seller, then the amount of the excess of the sum of the Seller Dilution
Adjustments and the Seller Noncomplying Receivables Adjustments in respect of
such Seller (as determined pursuant to SECTION 3.5), less any amounts in CLAUSE
(B)(II) allocated to such Seller, on such day over the Purchase Price payable by
Buyer to Servicer (for the account of such Seller) on such day pursuant to
SUBSECTION (A) above (the "PURCHASE PRICE CREDIT") shall be credited against the
Purchase Price payable by Buyer for subsequent Purchases of Receivables and
Related Assets of such Seller by Buyer. If any such Purchase Price Credit has
not been fully applied on or prior to the fifth Business Day (or a mutually
agreed upon earlier day) after the creation of such Purchase Price Credit, then,
on the Business Day that follows the end of the five Business Day (or shorter)
period, such Seller shall pay to Buyer in cash the remaining unapplied amount of
the Purchase Price Credit.
(e) If, on any day on or after the Purchase Termination Date, or, with
respect to any Seller, the date such Seller becomes a Terminating Seller, the
principal amount of any Seller's Buyer Note has been reduced to zero, an amount
equal to the sum of any Seller Dilution Adjustments and the Seller Noncomplying
Receivables Adjustments, if any, in respect of such Seller (as determined
pursuant to SECTION 3.5), less any amounts in CLAUSE (B)(II) allocated to such
Seller, shall be paid by such Seller to Buyer in cash on the next succeeding
Business Day.
(f) If, on any day, the amounts, if any, allocated to any Seller pursuant
to CLAUSE (B)(II) above exceed the sum of any Seller Dilution Adjustments and
the Seller Noncomplying Receivables Adjustments, if any, in respect of such
Seller (as determined pursuant to SECTION 3.5) for such day, then Buyer shall
either (i) pay Servicer (for the account of such Seller) in cash the amount of
such excess, or (ii) if Buyer does not have sufficient cash to pay such amount
in full, increase the principal amount of such Seller's Buyer Note by the amount
of such excess that is not paid in cash to Servicer.
(g) Amounts received by Servicer pursuant to this SECTION 3.1 shall be
allocated among the Sellers in accordance with SECTION 3.3, and the Seller
Dilution Adjustments and the Seller Noncomplying Receivables Adjustments in
respect of each
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such Seller (as determined pursuant to SECTION 3.5). Servicer shall maintain a
bookkeeping account (the "SELLER ACCOUNT") for purposes of tracking:
(i) the Purchase Price payable to each Seller in respect of
Receivables sold by it to Buyer (including the extent to which cash and
non-cash payments made by Buyer should be allocated to each Seller),
(ii) the extent to which such Purchase Price should be reduced on
account of such Seller's Seller Dilution Adjustments and Seller
Noncomplying Receivables Adjustments (including any allocation of a
Purchase Price Credit),
(iii) if a Seller makes cash payments in respect of the Noncomplying
Receivables and Dilution Adjustment (including any payment in respect of a
Purchase Price Credit), the obligation of each other Seller to reimburse
such Seller for its proportionate share thereof,
(iv) if Purchase Price payments attributable to a Seller's Receivables
have been reduced on account of another Seller's Seller Dilution Adjustment
or the Seller Noncomplying Receivables Adjustment, the obligation of such
other Seller to reimburse the Seller subject to such reduction,
(v) the extent to which payments (whether cash or non-cash) by Buyer
in respect of a negative Noncomplying Receivables and Dilution Adjustment
should be allocated to each Seller, and
(vi) cash payments made to and by each Seller in respect of the items
described above.
Servicer shall maintain sufficient records with respect to the Seller
Account such that, on any day, it would be able to calculate each of the items
set forth above. Intercompany accounts among Sellers resulting from the items
described above will be settled in accordance with the intercompany cash
management system customarily employed by Big Flower and its Subsidiaries.
SECTION 3.2 THE BUYER NOTES. (a) On the First Issuance Date, Buyer will
deliver to each Seller a promissory note, substantially in the form of EXHIBIT
A, payable to the order of such Seller (each such promissory note, as the same
may be amended, supplemented, endorsed or otherwise modified from time to time,
together with any promissory note issued from time to time in substitution
therefor or renewal thereof in accordance with the Transaction Documents, being
herein called a "BUYER NOTE"), that is subordinated to all Senior Interests now
or hereafter arising under or in connection with the Pooling Agreement. Each
Buyer Note is payable in full on the
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date that is one year and one day after the date on which all Investor
Certificates and Purchased Interests have been repaid in full and the Revolving
Periods for all Investor Revolving Certificates and Purchased Interests have
terminated (the "SELLER MATURITY DATE"). Each Buyer Note bears interest at a
rate per annum equal to the rate publicly announced by the Trustee from time to
time as its "reference" rate, determined as of each Cut-Off Date. Buyer may
prepay all or part of the outstanding balance of any Buyer Note from time to
time without any premium or penalty, unless the prepayment would result in a
default in Buyer's payment of any other amount required to be paid by it under
any Transaction Document.
(b) Big Flower (or its designee) shall hold all Buyer Notes for the benefit
of the Sellers and shall make all appropriate recordkeeping entries with respect
to the Buyer Notes or otherwise to reflect the payments on and adjustment of the
Buyer Notes. Big Flower's books and records shall constitute rebuttable
presumptive evidence of the principal amount of and accrued interest on each
Buyer Note at any time. Each Seller hereby irrevocably authorizes Big Flower to
mark its Buyer Note "CANCELLED" and return it to Buyer upon the final payment
thereof.
SECTION 3.3 APPLICATION OF COLLECTIONS AND OTHER FUNDS. If, on any day,
Buyer receives proceeds of transfers pursuant to the Pooling Agreement, Buyer
shall apply the funds as follows:
(a) FIRST, to pay its existing expenses and to set aside funds for the
payment of expenses that are then accrued (in each case to the extent such
expenses are permitted to exist under Section 7.2(m) of the Pooling
Agreement).
(b) SECOND, to pay the Purchase Price pursuant to SECTION 3.1 for
Receivables and Related Assets purchased by Buyer from the Sellers on such
day (in the case of the First Issuance Date) or the next preceding Business
Day, and
(c) THIRD, in such order as Buyer may elect, (A) to repay amounts owed
by Buyer to the Sellers under the Buyer Notes, (B) to pay amounts owed
pursuant to SECTION 3.1(F), or (C) to declare and pay dividends to Treasure
Chest to the extent permitted by law.
SECTION 3.4 SERVICING OF RECEIVABLES AND RELATED ASSETS. Consistent with
Buyer's ownership of the Receivables and the Related Assets, as between the
parties to this Agreement, Buyer shall have the sole right to service,
administer and collect the Receivables, to assign the right and to delegate the
right to others. Without limiting the generality of SECTION 10.11, each Seller
hereby acknowledges and agrees that Buyer shall assign to the Trustee for the
benefit of the Investor Certificateholders
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and Purchasers the rights and interests of Buyer hereunder and agrees to
cooperate fully with the Servicer and the Trustee in the exercise of the rights.
As more fully described in SECTION 7.4(B) and in the Pooling Agreement, the
Trustee may exercise the rights in the place of Buyer (as assignee or otherwise)
only after the designation of a Servicer other than Big Flower pursuant to
Section 10.2 of the Pooling Agreement.
At Trustee's request, each Seller will (A) assemble all of the Records that
are necessary or appropriate to collect the Receivables and Related Transferred
Assets, and shall make the same available to Trustee at one or more places
selected by Trustee or its designee, (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections in a
manner acceptable to Trustee and shall, promptly upon receipt (and in no event
later than the second Business Day following receipt), remit all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to a Bank Account or the Master Collection Account and (C) permit,
upon not less than two Business Days' prior written notice, any Successor
Servicer and its agents, employees and assignees access to their respective
facilities and their respective Records.
SECTION 3.5 ADJUSTMENT FOR NONCOMPLYING RECEIVABLES, DILUTION AND CASH
DISCOUNTS. (a) If at any time any of Buyer, Servicer, the Trustee or a Seller
shall determine that (i) any Receivable identified by Servicer as an Eligible
Receivable on the date of Purchase thereof by Buyer or the contribution thereof
to Buyer was in fact a Seller Noncomplying Receivable on such date, (ii) any of
the representations and warranties made by the related Seller in SECTION 5.1(K)
with respect to such Receivable was not true on such date, or (iii) the
representation and warranty made by the related Seller, in its capacity as Sub-
Servicer, in SECTION 5.3(B) with respect to such Receivable was not true on such
date, such Seller shall be deemed to have received on the date of such
determination a Collection of the Receivable in an amount equal to the Unpaid
Balance of the Receivable (the sum of all such amounts for such Seller on any
day being called the "SELLER NONCOMPLYING RECEIVABLES ADJUSTMENT" for such
Seller for such day), and such Seller Noncomplying Receivables Adjustment shall
be settled in the manner provided for in SECTION 3.1.
(b) If on any day the aggregate Unpaid Balance of the Receivables sold or
contributed to Buyer on or before such date by a Seller is reduced in any manner
described in the definition of "Dilution" (the total of the reductions being
called the "SELLER DILUTION ADJUSTMENT" for the Seller for such day), then such
Seller shall be deemed to have received on such day a Collection of Receivables
in the amount of the Seller Dilution Adjustment and such Seller Dilution
Adjustment shall be settled in the manner provided in SECTION 3.1.
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SECTION 3.6 PAYMENTS AND COMPUTATIONS. ETC. (a) All amounts to be paid by
a Seller to Buyer hereunder shall be paid in accordance with the terms hereof no
later than 1:00 p.m., New York City time, on the day when due in Dollars in
immediately available funds to an account that Buyer shall from time to time
specify in writing. Payments received by Buyer after such time shall be deemed
to have been received on the next Business Day. In the event that any payment
becomes due on a day that is not a Business Day, then the payment shall be made
on the next Business Day. Each Seller shall, to the extent permitted by law,
pay to Buyer, on demand, interest on all amounts not paid when due hereunder at
2% per annum above the interest rate on the applicable Buyer Note in effect on
the date the payment was due; PROVIDED, HOWEVER, that the interest rate shall
not at any time exceed the maximum rate permitted by applicable law. All
computations of interest payable hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first but excluding the
last day) elapsed.
(b) All amounts to be paid by Buyer to a Seller hereunder shall be paid to
Servicer (for the account of the applicable Seller) no later than 4:00 p.m., New
York City time, on the day when due in Dollars in immediately available funds to
an account that Big Flower shall from time to time specify in writing. Payments
received by Servicer after such time shall be deemed to have been received on
the next Business Day. Servicer shall promptly remit payments received by it in
immediately available funds to such account as the applicable Seller shall from
time to time specify in writing. In the event that any payment becomes due on a
day that is not a Business Day, then such payment shall be made on the next
Business Day in accordance with the terms of the applicable Buyer Note.
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
hereunder is subject to the conditions precedent that (i) each of the conditions
precedent to the execution, delivery and effectiveness of each other Transaction
Document (other than a condition precedent in any other Transaction Document
relating to the effectiveness of this Agreement) shall have been fulfilled to
the satisfaction of Buyer, and (ii) Buyer shall have received (or in the case of
SUBSECTION (F) below, shall have delivered) each of the following, on or before
the First Issuance Date, each (unless otherwise indicated) dated the date hereof
or the First Issuance Date and each in form and substance satisfactory to Buyer:
(a) SELLER ASSIGNMENT CERTIFICATES. A Seller Assignment Certificate
from each Seller in the form of EXHIBIT B, duly completed, executed and
delivered by such Seller,
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(b) RESOLUTIONS. A copy of the resolutions of the Board of Directors
of each Seller approving this Agreement and the other Transaction Documents
to be delivered by it hereunder and the transactions contemplated hereby
and thereby and addressing such other matters as may be required by Buyer,
certified by its Secretary or Assistant Secretary, each as of a recent date
acceptable to Buyer,
(c) GOOD STANDING CERTIFICATE OF EACH SELLER; CERTIFICATES AS TO
FOREIGN QUALIFICATION OF EACH SELLER. A good standing certificate for each
Seller, issued as of a recent date by the Secretary of State of the
jurisdiction of its incorporation and of each state in which such Seller
transacts business, is required to be in good standing and where the
failure to be in good standing would have a substantial likelihood of
having a Material Adverse Effect,
(d) INCUMBENCY, CERTIFICATE. A certificate of the Secretary or
Assistant Secretary of each Seller certifying, as of a recent date
reasonably acceptable to Buyer, the names and true signatures of the
officers authorized on such Seller's behalf to sign the Transaction
Documents to be delivered by such Seller (on which certificate Buyer, the
Trustee and the Servicer may conclusively rely until such time as Buyer
shall receive from such Seller (with a copy to the Trustee and the
Servicer), a revised certificate meeting the requirements of this
subsection),
(e) OTHER TRANSACTION DOCUMENTS. Original copies, executed by each of
the parties thereto in such reasonable number as shall be specified by
Buyer, of each of the other Transaction Documents to be executed and
delivered in connection herewith,
(f) BUYER NOTES. The Buyer Notes, executed by Buyer, and
(g) LICENSE AGREEMENTS. Duly executed and counterparts of (i)
software license agreements between each Seller or Servicer that uses its
own proprietary software in the origination or servicing of Receivables or
Related Assets and Buyer, and (ii) amendments to any license agreement
between a Seller or Servicer and any third party vendor, adding any
substitute Servicer as a licensee.
SECTION 4.2 CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. Each
Seller, by accepting the Purchase Price paid for each Purchase, shall be deemed
to have certified, with respect to the Receivables and Related Assets to be sold
by it on such day, that its representations and warranties contained in ARTICLE
V (excluding, with respect to any day after the First Issuance Date, SECTION
5.1(I)) are true and
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correct on and as of such day, with the same effect as though made on and as of
such day.
SECTION 4.3 EFFECT OF PAYMENT OF PURCHASE PRICE. Upon the payment of the
Purchase Price (whether in cash or by an increase in a Buyer Note or, in the
case of Treasure Chest as a Seller, by a capital contribution, in each case
pursuant to SECTION 3.1) for any Purchase, title to the Receivables and the
Related Assets included in the Purchase shall vest in Buyer, whether or not the
conditions precedent to the Purchase were in fact satisfied; PROVIDED, HOWEVER,
that Buyer shall not be deemed to have waived any claim it may have under this
Agreement for the failure by a Seller in fact to satisfy any such condition
precedent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. In order to
induce Buyer to enter into this Agreement and to make purchases hereunder, each
Seller hereby makes the representations and warranties set forth in this section
with respect to itself at the times and to the extent set forth in SECTION 4.2
(it being understood that only Treasure Chest makes the representations and
warranties set forth below with respect to any Contributed Receivables and
Related Assets with respect thereto).
(a) ORGANIZATION AND GOOD STANDING. Such Seller is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full power and authority to own
its properties and to conduct its business as the properties presently are
owned and the business presently is conducted. Such Seller had at all
relevant times, and now has, all necessary power, authority, and legal
right to own, sell and (if applicable) contribute its Receivables and the
Related Assets.
(b) DUE QUALIFICATION. Such Seller is duly qualified to do business
and is in good standing as a foreign corporation (or is exempt from such
requirements), and has obtained all necessary licenses and approvals, in
all jurisdictions in which the ownership or lease of property or the
conduct of its business requires qualification, licenses or approvals and
where the failure so to qualify, to obtain the licenses and approvals or to
preserve and maintain the qualification, licenses or approvals would have a
substantial likelihood of having a Material Adverse Effect.
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(c) POWER AND AUTHORITY; DUE AUTHORIZATION. Such Seller has (i) all
necessary power and authority to (A) execute and deliver this Agreement and
the other Transaction Documents to which it is a party, (B) perform its
obligations under this Agreement and the other Transaction Documents to
which it is a party, and (C) sell, assign and (if applicable) contribute
the Receivables and the Related Assets on the terms and subject to the
conditions herein and therein provided and (ii) duly authorized by all
necessary action such sale, assignment and (if applicable) contribution and
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party and the consummation of the
transactions provided for in this Agreement and the other Transaction
Documents to which it is a party.
(d) VALID SALE; BINDING OBLIGATIONS. Each sale of Receivables and
Related Assets made by such Seller pursuant to this Agreement, and each
contribution of Receivables and Related Assets made to Buyer, shall
constitute a valid sale (except in the case of Contributed Receivables and
Related Assets with respect to such Contributed Receivables), transfer, and
assignment of all of such Seller's right, title and interest in, to and
under such Receivables and the Related Assets of such Seller to Buyer that
is perfected and of first priority under the UCC and otherwise, enforceable
against creditors of, and purchasers from, such Seller and free and clear
of any Adverse Claim (other than any Permitted Adverse Claim or any Adverse
Claim arising solely as a result of any action taken by Buyer hereunder or
by the Trustee under the Pooling Agreement); and this Agreement
constitutes, and each other Transaction Document to which such Seller is a
party when duly executed and delivered will constitute, a legal, valid and
binding obligation of such Seller, enforceable against it in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity,
regardless of whether enforceability is considered in a proceeding in
equity or at law.
(e) NO CONFLICT OR VIOLATION. The execution, delivery and performance
of, and the consummation of the transactions contemplated by, this
Agreement and the other Transaction Documents to be signed by such Seller
and the fulfillment of the terms hereof and thereof will not (i) conflict
with, violate, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default
under, (A) its Certificate of Incorporation or Bylaws or (B) any indenture,
loan agreement, mortgage, deed of trust or other material agreement or
instrument to which such Seller is a party or by which it or any of its
properties is bound, (ii) result in the creation or imposition of any
Adverse Claim upon any of the
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Receivables or Related Assets other than pursuant to this Agreement and the
other Transaction Documents, or (iii) conflict with or violate any federal,
state, local or foreign law or any decision, decree, order, rule or
regulation applicable to it or any of its properties of any court or of any
federal, state, local or foreign regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over it or any of
its properties, which conflict, violation, breach, default or Adverse
Claim, individually or in the aggregate, would have a substantial
likelihood of having a Material Adverse Effect.
(f) LITIGATION AND OTHER PROCEEDINGS. Except as described in SCHEDULE
1, (i) there is no action, suit, proceeding or investigation pending or, to
the best knowledge of such Seller, threatened against it before any court,
regulatory body, arbitrator, administrative agency or other tribunal or
governmental instrumentality and (ii) it is not subject to any order,
judgment, decree, injunction, stipulation or consent order of or with any
court or other government authority that, in the case of each of CLAUSES
(I) and (II), (A) asserts the invalidity of this Agreement or any other
Transaction Document, (B) seeks to prevent the sale, assignment or
contribution of any Receivables or Related Assets by such Seller to Buyer,
the issuance of the applicable Seller Assignment Certificate or the
consummation of any of the transactions contemplated by this Agreement or
any other Transaction Document, (C) seeks any determination or ruling that
would materially and adversely affect the performance by such Seller of its
obligations under this Agreement or any other Transaction Document or the
validity or enforceability of this Agreement or any other Transaction
Document, (D) seeks to affect adversely the income tax attributes of the
purchases hereunder or the applicable Seller Assignment Certificate, in the
case of each of the foregoing whether under the United States Federal
income tax system or any state income tax system, or (E) individually or in
the aggregate for all such actions, suits, proceedings and investigations
would have a substantial likelihood of having a Material Adverse Effect.
(g) GOVERNMENT APPROVALS. All authorizations, consents, orders and
approvals of, or other action by, any Governmental Authority that are
required to be obtained by such Seller, and all notices to and filings
(except, in respect of enforceability against a Federal Obligor, any
filings under the Assignment of Claims Act and any consents required by
states with respect to any Receivables arising from State and Local
Obligors so long as such Receivables are not reported as Eligible
Receivables), with any Governmental Authority that are required to be made
by it, in the case of each of the foregoing in connection with the
conveyance of Receivables and Related Assets or the due execution, delivery
and performance by such Seller of this Agreement, such
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Seller's Seller Assignment Certificate or any other Transaction Document to
which it is a party and the consummation of the transactions contemplated
by this Agreement, have been obtained or made and are in full force and
effect, except where the failure to obtain or make any such authorization,
consent, order, approval, notice or filing, individually or in the
aggregate for all such failures, would not reasonably be expected to have a
Material Adverse Effect.
(h) BULK SALES ACT. No transaction contemplated by this Agreement or
any other Transaction Document requires compliance with, or will be subject
to avoidance under, any bulk sales act or similar law.
(i) FINANCIAL CONDITION. The representations and warranties contained
in SECTION 7.05 of the Big Flower Credit Agreement are true and correct as
of the date hereof, and such representations and warranties are
incorporated herein by reference; PROVIDED that references therein to the
"Banks" shall be deemed to include the Purchasers.
(j) MARGIN REGULATIONS. No use of any funds obtained by such Seller
under this Agreement will conflict with or contravene any of Regulations G,
T, U and X promulgated by the Federal Reserve Board from time to time.
(k) QUALITY, OF TITLE.
(i) Immediately before each purchase to be made by Buyer
hereunder and (in the case of Treasure Chest) each contribution to be
made hereunder to Buyer, each Receivable and Related Asset of such
Seller that is then to be transferred to Buyer thereunder, and the
related Contracts, shall be owned by such Seller free and clear of any
Adverse Claim (other than any Permitted Adverse Claim or any Adverse
Claim arising solely as the result of any action taken by Buyer
hereunder or by the Trustee under the Pooling Agreement); provided
that the existence of an Adverse Claim that is released on the First
Issuance Date (upon application of the proceeds of the issuance of
Certificates on that date) shall not constitute a breach of this
representation and warranty; and such Seller shall have made all
filings and shall have taken all other action under applicable law in
each relevant jurisdiction in order to protect and perfect the
ownership interest of Buyer and its successors in the Receivables and
Related Assets against all creditors of, and purchasers from, such
Seller.
(ii) Whenever Buyer makes a purchase hereunder from such Seller
or (in the case of Treasure Chest) accepts a contribution hereunder
from such Seller, it shall have acquired a valid and perfected
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first priority ownership interest in each Transferred Asset, free and
clear of any Adverse Claim (other than any Permitted Adverse Claim or
any Adverse Claim arising solely as the result of any action taken by
Buyer hereunder or by the Trustee under the Pooling Agreement).
(iii) No effective financing statement or other instrument
similar in effect that covers all or part of any Receivable originated
by such Seller, any interest therein or any Related Asset with respect
thereto is on file in any recording office except financing statements
as to termination statements or releases that are filed on the First
Issuance Date or first Business Day after the First Issuance Date and
(x) such as may be filed (A) in favor of such Seller in accordance
with the Contracts, (B) in favor of Buyer pursuant to this Agreement
and (C) in favor of the Trustee, for the benefit of the Investor
Certificateholders and Purchasers, in accordance with the Pooling
Agreement and (y) such as may have been identified to Buyer prior to
the First Issuance Date and termination statements relating to which
have been placed with LEXIS Document Services (or a similar service
acceptable to the Trustee) for filing within two Business Days of the
First Issuance Date. No effective financing statement or instrument
similar in effect relating to perfection that covers any inventory of
such Seller that might give rise to Receivables is on file in any
recording office except for (so long as an Intercreditor Agreement is
in effect) financing statements or instruments in favor of creditors
of such Seller bound by such Intercreditor Agreement.
(iv) No Purchase by Buyer from such Seller (and, in the case of
Treasure Chest, no capital contribution to Buyer whether or not made
in connection with a Purchase) constitutes a fraudulent transfer or
fraudulent conveyance under the United States Bankruptcy Code or
applicable state bankruptcy or insolvency laws or is otherwise void or
voidable or subject to subordination under similar laws or principles
or for any other reason.
(v) Each Purchase by Buyer from such Seller constitutes a true
and valid sale of the Receivables and Related Assets under applicable
state law and true and valid assignments and transfers for
consideration (and not merely a pledge of the Receivables and Related
Assets for security purposes), enforceable against the creditors of
such Seller, and no Receivables or Related Assets transferred to Buyer
hereunder shall constitute property of such Seller.
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(l) ELIGIBLE RECEIVABLES. On the date of each purchase of Receivables
hereunder from such Seller (or, in the case of Treasure Chest) contribution
from such Seller, each such Receivable, unless otherwise identified to
Buyer and the Trustee by the Servicer in the Daily Report for such date, is
an Eligible Receivable.
(m) ACCURACY OF INFORMATION. All written information furnished by or
on behalf of such Seller to Buyer, Servicer or the Trustee pursuant to or
in connection with any Transaction Document or any transaction contemplated
herein or therein shall not contain any untrue statement of a material fact
or omit to state material facts necessary to make the statements made not
misleading, in each case on the date the statement was made and in light of
the circumstances under which the statements were made or the information
was furnished.
(n) OFFICES. The principal place of business and chief executive
office of such Seller is located at the address set forth under such
Seller's signature hereto, and any other location which has been such
Seller's principal place of business or chief executive office during the
past four months or in which such Seller keeps (or has kept during the past
four months) Records, Contracts, purchase orders and agreements related to
the Receivables or Related Assets (and all original documents relating
thereto) is specified in SCHEDULE 3 (or at such other locations, notified
to the Servicer and the Trustee in accordance with SECTION 6.1(F), in
jurisdictions where all action required pursuant to SECTION 7.3 has been
taken and completed).
(o) ACCOUNT BANKS AND PAYMENT INSTRUCTIONS. The names and addresses
of all the banks, together with the account numbers of the accounts at the
banks, into which Collections are paid as of the First Issuance Date have
been accurately identified to Buyer in a letter from such Seller to Buyer
dated the First Issuance Date or have been specified in the notices as
shall have been delivered thereafter pursuant to SECTION 6.3(C). Each
Account Bank has executed and delivered an Account Agreement to Buyer and
the Trustee. Such Seller has instructed all Obligors to submit all
payments on the Receivables and Related Assets directly to one of the
Lockbox Accounts, subject to such exceptions as are permitted under SECTION
3.3 of the Pooling Agreement. Any payments not made directly to the
Account Banks will be forwarded to the Account Banks within two Business
Days.
(p) [intentionally omitted].
(q) COMPLIANCE WITH APPLICABLE LAWS. Such Seller is in compliance
with the requirements of all applicable laws, rules, regulations and orders
of
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all Governmental Authorities (federal, state, local or foreign, and
including environmental laws), a violation of any of which, individually
or in the aggregate for all such violations, would have a substantial
likelihood of having a Material Adverse Effect.
(r) LEGAL NAMES. Except as set forth in SCHEDULE 4, since January 1,
1990 such Seller has not been known by any legal name other than its
corporate name as of the date hereof, except to the extent permitted
otherwise pursuant to SECTION 6.3(E), nor has such Seller been the subject
of any merger or other corporate reorganization since January l, 1990 that
resulted in a change of name, identity or corporate structure. Such Seller
uses no trade names other than its actual corporate name and the trade
names set forth in SCHEDULE 4.
(s) INVESTMENT COMPANY ACT. Such Seller is not, and is not controlled
by, an "investment company" registered or required to be registered under
the Investment Company Act of 1940, as amended.
(t) TAXES. Such Seller has filed or caused to be filed all tax
returns and reports required by law to have been filed by it and has paid
all taxes, assessments and governmental charges thereby shown to be owing,
except any such taxes, assessments or charges (i) that are being diligently
contested in good faith by appropriate proceedings, (ii) for which adequate
reserves in accordance with GAAP shall have been set aside on its books and
(iii) with respect to which no Adverse Claim, except Permitted Adverse
Claims, has been imposed upon any Receivables or Related Assets.
(u) SOFTWARE PROGRAMS. Each software program, and any license or
other agreement relating to such program, used in the origination or
servicing of Receivables and Related Assets is described in Schedule 5.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF BUYER. From the date hereof
until the Purchase Termination Date, Buyer hereby represents and warrants that
(a)(i) this Agreement has been duly authorized, executed and delivered by Buyer
and (ii) constitutes the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law, and (b) the execution, delivery and performance
of this Agreement does not violate any applicable law or any agreement to which
Buyer is a party or by which its properties are bound.
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SECTION 5.3 REPRESENTATIONS AND WARRANTIES OF SERVICER. In order to induce
Buyer to enter into this Agreement and to make purchases hereunder:
(a) Servicer and each Seller, in its capacity as a Sub-Servicer,
hereby represents and warrants as to itself that all information furnished
by or on behalf of such Person to Buyer, Servicer or the Trustee pursuant
to or in connection with any Transaction Document or any transaction
contemplated herein or therein shall not contain any untrue statement of a
material fact or omit to state material facts necessary to make the
statements made not misleading in each case on the date the statement was
made and in light of the circumstances under which the statements were made
or the information was furnished; and
(b) without limiting the foregoing, each Seller, in its capacity as a
Sub-Servicer, hereby represents and warrants as to itself that on the date
of each Daily Report or Monthly Report that identifies a Receivable
originated by such Seller as an Eligible Receivable, such Receivable is an
Eligible Receivable.
ARTICLE VI
GENERAL COVENANTS OF THE SELLERS
SECTION 6.1 AFFIRMATIVE COVENANTS. From the First Issuance Date until the
first day following the Purchase Termination Date on which all Obligations of
the Sellers shall have been finally and fully paid and performed and the
Invested Amount for each Series or Purchased Interest shall have been reduced to
zero, unless Buyer shall otherwise give its prior written consent, each Seller
hereby agrees that it will perform the covenants and agreements set forth in
this section.
(a) COMPLIANCE WITH LAWS, ETC. Such Seller will comply in all
material respects with all applicable laws, rules, regulations, judgments,
decrees and orders (including those relating to the Receivables, the
Related Assets, the related Contracts of such Seller and any other
agreements related thereto), in each case to the extent the failure to
comply, individually or in the aggregate for all such failures, would have
a substantial likelihood of having a Material Adverse Effect.
(b) PRESERVATION OF CORPORATE EXISTENCE. Such Seller will preserve
and maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and
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qualifications would have a substantial likelihood of having a Material
Adverse Effect.
(c) RECEIVABLES REVIEWS. Such Seller shall, during regular business
hours upon not less than five Business Days' prior notice, permit Buyer and
its agents or representatives, at the expense of such Seller, (i) to
examine and make copies of and abstracts from, and to conduct accounting
reviews of, all Records in the possession or under the control of such
Seller relating to the Receivables or Related Assets generated by such
Seller, and (ii) to visit the offices and properties of such Seller for the
purpose of examining the materials described in CLAUSE (I) above, and to
discuss matters relating to any Receivables or any Related Assets of such
Seller or such Seller's performance hereunder with any of the Authorized
Officers of such Seller or, with the prior consent of an Authorized Officer
of such Seller, with employees of such Seller having knowledge of such
matters (the examinations set forth in the foregoing CLAUSES (I) and (II)
being herein called a "SELLER RECEIVABLES REVIEW"). Buyer and its agents
or representatives shall be entitled to conduct Seller Receivables Reviews
whenever Buyer, in its reasonable judgment, deems it appropriate; PROVIDED,
that prior to the occurrence and continuance of an Early Amortization
Event, Buyer (or its agent or representative) shall give such Seller at
least five Business Days' prior notice of any Seller Receivables Review,
and Buyer shall have the right to request a Seller Receivables Review not
more than once in any calendar year.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Such Seller shall
maintain and implement administrative and operating procedures (including
an ability to recreate records evidencing its Receivables and Related
Assets in the event of the destruction of the originals thereof), and shall
keep and maintain all documents, books, records and other information that,
in the reasonable determination of Buyer and the Trustee, are necessary or
advisable in accordance with prudent industry practice and custom for
transactions of this type for the collection of all Receivables and the
Related Assets. Upon the reasonable request of Buyer made at any time
after the occurrence and continuance of a Servicer Default, such Seller
will deliver copies of all books and records maintained pursuant to this
subsection to the Trustee. Such Seller shall maintain at all times
accurate and complete books, records and accounts relating to the
Receivables, Related Assets and Contracts and all Collections thereon in
which timely entries shall be made. Such books and records shall be marked
to indicate the sales of all Receivables and Related Assets hereunder and
shall include (i) all payments received and all credits and extensions
granted with respect to the Receivables and (ii) the return, rejection,
repossession, or stoppage in transit of any merchandise, the sale of
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which has given rise to a Receivable that has been purchased by or
contributed to Buyer.
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. Such
Seller will, at its expense, timely and fully perform and comply with all
provisions, covenants and other promises required to be observed by it
under the Contracts of such Seller related to the Receivables and Related
Assets, in each case to the extent failure to perform or comply would have
a substantial likelihood of having a Material Adverse Effect.
(f) LOCATION OF RECORDS AND OFFICES. Such Seller will keep its
principal place of business and chief executive office, and the offices
where it keeps all Records related to the Receivables and the Related
Assets (and all original documents relating thereto), at the addresses
referred to in SCHEDULE 3 or, upon not less than 30 days' prior written
notice given by such Seller to Buyer, the Trustee and the Rating Agencies,
at such other locations in jurisdictions where all action required by
SECTION 7.3 shall have been taken and completed.
(g) CREDIT AND COLLECTION POLICIES. Such Seller will comply in all
material respects with its Credit and Collection Policy in regard to each
Receivable of such Seller and the Related Assets and the Contracts related
to each such Receivable, where the failure so to comply, individually or in
the aggregate for all such failures, would have a substantial likelihood of
having a Material Adverse Effect.
(h) SEPARATE CORPORATE EXISTENCE OF BUYER. Such Seller hereby
acknowledges that the Trustee, on behalf of the Trust, is entering into the
transactions contemplated by the Transaction Documents in reliance upon
Buyer's identity as a legal entity separate from such Seller and the other
Big Flower Persons. Therefore, from and after the date hereof until the
first day following the Purchase Termination Date on which all Obligations
shall have been fully paid and performed and the Invested Amount for each
Series or Purchased Interest shall have been reduced to zero, such Seller
will, and will cause each other Big Flower Person to, take all reasonable
steps to continue their respective identities as separate legal entities
and to make it apparent to third Persons that each is an entity with assets
and liabilities distinct from those of Buyer and that Buyer is not a
division of the Servicer, such Seller, Big Flower or any other Person.
Without limiting the foregoing, Big Flower and each Seller will, and will
cause each other Big Flower Person to, operate, conduct their respective
businesses and otherwise act in a manner which is consistent with the
factual assumptions in each of the opinions of Skadden,
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Arps, Slate, Meagher & Flom dated the date hereof regarding certain
substantive consolidation and true sale issues.
(i) PAYMENT INSTRUCTIONS TO OBLIGORS. Such Seller will instruct all
Obligors to submit all payments either (i) to one of the lockboxes
maintained at the Lockbox Banks for deposit in a Lockbox Account or to a
Concentration Account or (ii) directly to one of the Lockbox Accounts,
subject in each case to such exceptions as are permitted under SECTION 3.3
of the Pooling Agreement.
(j) SEGREGATION OF COLLECTIONS. Such Seller shall use reasonable
efforts to minimize the deposit of any funds other than Collections into any
of the Lockbox Accounts and, to the extent that any such funds nevertheless
are deposited into any of the Lockbox Accounts, shall promptly identify any
such funds, or shall cause the funds to be so identified, to Buyer, the
Servicer and the Trustee (following which notice, Buyer shall cause the
Servicer to return all the funds to such Seller).
(k) IDENTIFICATION OF ELIGIBLE RECEIVABLES. Such Seller will (i)
establish and maintain such procedures as are necessary for determining no
less frequently than each Business Day whether each Receivable qualifies as
an Eligible Receivable, and for identifying, on any Business Day, all
Receivables to be sold on that date that are not Eligible Receivables, and
(ii) except as permitted in SECTION 3.5(c) of the Pooling Agreement, notify
Buyer prior to the occurrence of a Purchase if a Receivable to be sold
hereunder will, to such Seller's knowledge, not be an Eligible Receivable
as of the date of Purchase.
(1) ACCURACY OF INFORMATION. All written information furnished on and
after the First Issuance Date by or on behalf of such Seller to Buyer, the
Servicer or the Trustee pursuant to or in connection with any Transaction
Document or any transaction contemplated herein or therein shall not
contain any untrue statement of a material fact or omit to state material
facts necessary to make the statements made not misleading, in each case on
the date the statement was made and in light of the circumstances under
which the statements were made or the information was furnished.
(m) TAXES. File or cause to be filed, and cause each Person with whom
it shares consolidated tax liability to file, all Federal, state and local
tax returns that are required to be filed by it (except where the failure
to file such returns does not have a substantial likelihood of having a
Material Adverse Effect) and pay or cause to be paid all taxes shown to be
due and payable on taxes or assessments (except only such taxes or
assessments the validity of which are being contested in good faith by
appropriate proceedings and with
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respect to which such Seller shall have set aside adequate reserves on its
books in accordance with GAAP and which proceedings do not have a
substantial likelihood of having a Material Adverse Effect).
(n) SOFTWARE LICENSES. Cause all software licenses or similar
agreements used by the Sellers or Servicer in the origination or servicing
of Receivables to expressly permit use by any substitute Servicer of the
materials subject to such licenses or agreements.
(o) WEBCRAFT ACCOUNT AGREEMENTS. By no later than 5:00 p.m., New York
City time, on Friday, March 22, 1996, cause (i) a Lockbox Agreement to be
executed with a Lockbox Bank for payments by Obligors in respect of all
Receivables originated by Webcraft Technologies, Inc. and (ii) a Blocked
Account Agreement to be executed with a Blocked Account Bank for the
remittance of payments by Webcraft Chemicals, Inc. and by Obligors in
respect of all Receivables originated by Webcraft Chemicals, Inc.
SECTION 6.2 REPORTING REQUIREMENTS. From the First Issuance Date until the
first day following the Purchase Termination Date on which all Obligations of
the Sellers shall have been finally and fully paid and performed and the
Invested Amount for each Series or Purchased Interest shall have been reduced to
zero, such Seller agrees that it will, unless Buyer and the Trustee shall
otherwise give prior written consent, and (with respect to the notices described
below in SUBSECTIONS (C) and (D)) unless the Modification Condition has been
satisfied), furnish to Buyer and the Trustee (and in the case of the notices
described below in SUBSECTIONS (C), (D) and (F), to the Rating Agencies):
(a) QUARTERLY FINANCIAL STATEMENTS. Within 50 days after the end of
each of the first three fiscal quarters of each fiscal year of Big Flower,
copies of the unaudited consolidated balance sheets of Big Flower and its
consolidated Subsidiaries as at the end of the fiscal quarter and the
related unaudited statements of earnings and cash flows, in each case for
the fiscal quarter and for the period from the beginning of the fiscal year
through the end of such fiscal quarter, prepared in accordance with GAAP
consistently applied throughout the periods reflected therein and certified
(subject to year end adjustments and the omission of footnotes) by the
chief financial officer or chief accounting officer of Big Flower,
(b) ANNUAL FINANCIAL STATEMENTS. As soon as possible and in any event
within 95 days after the end of each fiscal year of Big Flower, a copy of
the audited consolidated balance sheet of Big Flower and its consolidated
Subsidiaries as at the end of the fiscal year and the related statements of
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earnings, stockholders' equity and cash flows of Big Flower and its
consolidated Subsidiaries for the fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal year
and prepared in accordance with GAAP consistently applied throughout the
periods reflected therein, certified, without Impermissible Qualification,
by Deloitte & Touche (or such other independent certified public
accountants of a nationally recognized standing in the United States of
America as shall be selected by Big Flower),
(c) EARLY AMORTIZATION EVENTS. As soon as possible, and in any event
within five Business Days after an Authorized Officer of such Seller has
obtained knowledge of the occurrence of any Early Amortization Event or any
Unmatured Early Amortization Event, a written statement of an Authorized
Officer of such Seller describing the event and the action that such Seller
proposes to take with respect thereto, in each case in reasonable detail,
(d) MATERIAL ADVERSE EFFECT. As soon as possible and in any event
within five Business Days after an Authorized Officer of such Seller has
knowledge thereof, written notice that describes in reasonable detail any
event or occurrence that, individually or in the aggregate for all such
events or occurrences, has had, or that would have a substantial likelihood
of having, a Material Adverse Effect,
(e) PROCEEDINGS. As soon as possible and in any event within five
Business Days after an Authorized Officer of such Seller has knowledge
thereof, written notice of (i) any litigation, investigation or proceeding
of the type described in SECTION 5.1 (f) not previously disclosed to Buyer
and (ii) any judgment, settlement or other final disposition with respect
to any such previously disclosed litigation, investigation or proceeding,
and
(f) OTHER. Promptly, from time to time, (i) such other information,
documents, records or reports respecting the Receivables or the Related
Assets or (ii) such other publicly available information respecting the
condition or operations, financial or otherwise, of such Seller, in each
case as Buyer may from time to time reasonably request in order to protect
the interests of Buyer, the Trustee or the Certificateholders under or as
contemplated by this Agreement.
SECTION 6.3 NEGATIVE COVENANTS. From the First Issuance Date until the
first day following the Purchase Termination Date on which all Obligations of
the Sellers shall have been finally and fully paid and performed and the
Invested Amount for each Series or Purchased Interest shall have been reduced to
zero, unless Buyer
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shall otherwise give its prior written consent, each Seller hereby agrees that
it will perform the covenants and agreements set forth in this SECTION.
(a) SALES, LIENS, ETC. Except as otherwise provided herein or in the
Pooling Agreement, such Seller will not (i)(A) sell, assign (by operation
of law or otherwise) or otherwise transfer to any Person, (B) pledge any
interest in, (C) grant, create, incur, assume or permit to exist any
Adverse Claim (other than Permitted Adverse Claims) to or in favor of any
Person upon or with respect to, or (D) cause to be filed any financing
statement or equivalent document relating to perfection with respect to any
Transferred Asset or any Contract related to any Receivable, or upon or
with respect to any lockbox or account to which any Collections of any such
Receivable or any Related Assets are sent or any interest therein, or (ii)
assign to any Person any right to receive income from or in respect of any
of the foregoing.
In the event that such Seller fails to keep any Specified Assets free
and clear of any Adverse Claim (other than a Permitted Adverse Claim, any
Adverse Claims arising hereunder, and other Adverse Claims permitted by any
other Transaction Document), Buyer may (without limiting its other rights
with respect to such Seller's breach of its obligations hereunder) make
reasonable expenditures necessary to release the Adverse Claim. Buyer
shall be entitled to indemnification for any such expenditures pursuant to
the indemnification provisions of ARTICLE IX. Alternatively, Buyer may
deduct such expenditures as an offset to the Purchase Price owed to such
Seller hereunder.
Such Seller will not pledge or grant any security interest in its
inventory, the Buyer Note or the capital stock of Buyer unless prior to any
pledge or grant such Seller, Buyer, the Trustee and the Person for whose
benefits the pledge or grant is being made have entered into an
Intercreditor Agreement; PROVIDED, HOWEVER, that any Buyer Note and/or the
capital stock of Buyer may be pledged pursuant to the Big Flower Credit
Agreement.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES; CHANGE IN CREDIT AND
COLLECTION POLICY OR CONTRACTS. Such Seller will not, (i) without the
prior written consent of Buyer and the Trustee, which consent will not be
unreasonably withheld, extend, amend or otherwise modify the terms of any
Receivable or Contract in a manner that would have a substantial likelihood
of having a Material Adverse Effect or (ii) change the terms and provisions
of the Credit and Collection Policy in any material respect unless (x) with
respect to collection policies, the change is made with the prior written
approval of the Trustee, Buyer and each Purchaser Agent and the
Modification Condition is satisfied with respect thereto, (y) with respect
to collection procedures, the change is made with prior written notice to
the Trustee, Buyer and each
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Purchaser Agent and no Material Adverse Effect would result and (z) with
respect to accounting policies relating to Receivables that have become
Write-Offs, the change is made in accordance with GAAP.
(c) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Such Seller will not
(i) add or terminate any bank as an Account Bank from those listed in the letter
referred to in SECTION 5.1(O) unless, prior to any such addition or termination,
Buyer, the Trustee and the Rating Agencies shall have received not less than ten
Business Days' prior written notice of the addition or termination and, not less
than ten Business Days prior to the effective date of any such proposed addition
or termination, Buyer and the Trustee shall have received (A) counterparts of
the applicable type of Account Agreement with each new Account Bank, duly
executed by such new Account Bank and all other parties thereto and (B) copies
of all other agreements and documents signed by the Account Bank and such other
parties with respect to any new Bank Account, all of which agreements and
documents shall be reasonably satisfactory in form and substance to Buyer and
the Trustee, or (ii) make any change in its instructions to Obligors, given in
accordance with SECTION 5.1(O), regarding payments to be made to such Seller or
payments to be made to any Account Bank, other than changes in the instructions
that direct Obligors to make payments to another Bank Account at such Account
Bank or another Account Bank or to the Master Collection Account.
(d) MERGERS, ACQUISITIONS, SALES, ETC. Except for (i) mergers or
consolidations in which such Seller is the surviving Person, (ii) mergers
or consolidations of a Subsidiary of Big Flower into such Seller or (iii)
mergers or consolidations in which the surviving Person expressly assumes
the performance of this Agreement and the Modification Condition shall have
been satisfied with respect to the consolidation or merger, the Seller will
not be a constituent corporation to any merger or consolidation. Such
Seller will give the Rating Agencies and the Trustee notice of any such
permitted merger or consolidation promptly following completion thereof.
Unless the Modification Condition is satisfied, such Seller will not,
directly or indirectly, transfer, assign, convey or lease, whether in one
transaction or in a series of transactions, all or substantially all of its
assets or sell or assign, with or without recourse, any Receivables or
Related Assets, in each case other than pursuant to this Agreement or the
Contribution Agreement.
(e) CHANGE IN NAME. Such Seller will not (i) change its corporate
name or (ii) change the name under or by which it does business in any
manner that would or may make any financing statement filed by such Seller
in accordance herewith seriously misleading within the meaning of SECTION
9- 402(7) of an applicable enactment of the UCC, in each case unless such
Seller
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shall have given Buyer, the Servicer, the Trustee and the Rating Agencies 30
days' prior written notice thereof and unless, prior to any change in name,
such Seller shall have taken and completed all action required by SECTION 7.3.
(f) CERTIFICATE OF INCORPORATION. Such Seller will not cause Buyer to
amend Articles III, IV, XII(g), XII(h) or XIV, of its Certificate of
Incorporation without the Trustee's prior written consent, which consent
will not be unreasonably withheld or delayed.
(g) AMENDMENTS TO TRANSACTION DOCUMENTS. Such Seller will not amend or
otherwise modify or supplement any Transaction Document to which it is a
party unless (i) Buyer shall have given its prior written consent to each
amendment, modification or supplement and (ii) the Modification Condition
shall have been satisfied.
(h) ACCOUNTING FOR PURCHASES. Such Seller shall prepare its financial
statements in accordance with GAAP, and any financial statements that are
made publicly available and which are consolidated to include Buyer will
contain footnotes stating that such Seller has sold or contributed its
Receivables to Buyer and that the assets of Buyer will not be available to
Big Flower and its subsidiaries unless Buyer's liabilities have been paid
in full. Such Seller shall not prepare any financial statements that
account for the transactions contemplated in this Agreement in any manner
other than as a sale of the Purchased Assets by such Seller to Buyer, or in
any other respect account for or treat the transactions contemplated in
this Agreement (including but not limited to accounting and, where taxes
are not consolidated, for tax reporting purposes) in any manner other than
as a sale of the Purchased Assets by such Seller to Buyer.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 7.1 RIGHTS OF BUYER. (a) Subject to SECTION 7.4(B), each Seller
hereby authorizes Buyer, the Servicer and/or their respective designees to take
any and all steps in such Seller's name and on behalf of such Seller that Buyer,
the Servicer and/or their respective designees determine are reasonably
necessary or appropriate to collect all amounts due under any and all Specified
Assets, including endorsing the name of such Seller on checks and other
instruments representing Collections and enforcing such Seller's rights under
such Specified Assets.
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(b) Except as set forth in SECTION 3.1 with respect to Seller Noncomplying
Receivables, Buyer shall have no obligation to account for any Specified Asset
to any Seller. Buyer shall have no obligation to account for, or to return
Collections, or any interest or other finance charge collected pursuant thereto,
to any Seller, irrespective of whether such Collections and charges are in
excess of the Purchase Price for the Purchased Assets.
(c) Buyer shall have the unrestricted right to further assign, transfer,
deliver, hypothecate, subdivide or otherwise deal with the Specified Assets, and
all of Buyer's right, title and interest in, to and under this Agreement, on
whatever terms Buyer shall determine, pursuant to the Pooling Agreement or
otherwise.
(d) Buyer shall have the sole right to retain any gains or profits created
by buying, selling or holding the Specified Assets and shall have the sole risk
of and responsibility for losses or damages created by such buying, selling or
holding.
SECTION 7.2 RESPONSIBILITIES OF THE SELLERS. Anything herein to the
contrary notwithstanding, each Seller hereby agrees:
(a) to deliver directly to the Servicer (for Buyer's account), within
two Business Days after receipt thereof, any Collections that it receives,
in the form so received, and agrees that all such Collections shall be
deemed to be received in trust for Buyer and shall be maintained and
segregated separate and apart from all other funds and moneys of such
Seller until delivery of such Collections to the Servicer,
(b) to perform all of its obligations hereunder and under the
Contracts related to the Receivables and Related Assets to the same extent
as if the Receivables had not been sold hereunder, and the exercise by
Buyer or its designee or assignee of Buyer's rights hereunder or in
connection herewith shall not relieve such Seller from any of its
obligations under the Contracts or Related Assets related to the
Receivables,
(c) that it hereby grants to Buyer an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take in the
name of such Seller all steps necessary or advisable to endorse, negotiate
or otherwise realize on any writing or other right of any kind held or
transmitted by such Seller or transmitted or received by Buyer (whether or
not from such Seller) in connection with any Transferred Asset, and
(d) to the extent that such Seller does not own the computer software
that such Seller uses to account for Receivables, such Seller shall provide
Buyer and the Trustee with such licenses, sublicenses and/or assignments of
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contracts as Buyer or the Trustee shall require with regard to all services
and computer hardware or software used by such Seller that relate to the
servicing of the Specified Assets.
SECTION 7.3 FURTHER ACTION EVIDENCING PURCHASES. Each Seller agrees that
from time to time, at its expense, it will promptly, upon reasonable request by
Buyer, Servicer or Trustee, execute and deliver all further instruments and
documents, and take all further action, in order to perfect, protect or more
fully evidence the purchase by Buyer or contribution to Buyer of the Receivables
and the Related Assets under this Agreement, or to enable Buyer to exercise or
enforce any of its rights under any Transaction Document. Each Seller further
agrees that from time to time, at its expense, it will promptly, upon request,
take all action that Buyer, the Servicer or the Trustee may reasonably request
in order to perfect, protect or more fully evidence the purchase or contribution
of the Receivables and the Related Assets or to enable Buyer or the Trustee (as
the assignee of Buyer) to exercise or enforce any of its rights hereunder or
under any other Transaction Document. Without limiting the generality of the
foregoing, upon the request of Buyer, each Seller will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as Buyer or the Trustee may reasonably determine to be necessary
or appropriate, and
(b) mark the master data processing records evidencing the Receivables
with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO BFP RECEIVABLES
CORPORATION ("BFP") PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT,
DATED AS OF MARCH 19, 1996, AMONG TREASURE CHEST ADVERTISING COMPANY,
INC., CERTAIN OTHER SUBSIDIARIES OF BIG FLOWER PRESS HOLDINGS, INC.
("BIG FLOWER") AND BFP; AND SUCH RECEIVABLES HAVE BEEN TRANSFERRED TO
THE BIG FLOWER MASTER TRUST PURSUANT TO A POOLING AND SERVICING
AGREEMENT, DATED AS OF MARCH 19, 1996, AMONG BFP, AS TRANSFEROR, BIG
FLOWER, AS THE INITIAL SERVICER, AND MANUFACTURERS AND TRADERS TRUST
COMPANY, AS TRUSTEE."
Each Seller hereby authorizes Buyer or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables and Related Assets of such
Seller, in
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each case whether now existing or hereafter generated by such Seller. Except for
material performance obligations of such Seller to any Obligor hereunder or
under any of the Contracts, if (i) such Seller fails to perform any of its
agreements or obligations under this Agreement and does not remedy the failure
within the applicable cure period, if any, and (ii) Buyer in good faith
reasonably believes that the performance of such agreements and obligations is
necessary or appropriate to protect its interests under this Agreement, then
Buyer or its designee may (but shall not be required to) perform, or cause
performance of, such agreement or obligation and the reasonable expenses of
Buyer or its designee or assignee incurred in connection with such performance
shall be payable by such Seller as provided in SECTION 9.1.
SECTION 7.4 COLLECTION OF RECEIVABLES: RIGHTS OF BUYER AND ITS ASSIGNEES.
(a) Each Seller hereby transfers to the Trustee (as transferee of Buyer's
interest in the Specified Assets) the ownership of, and the exclusive dominion
and control over, each of the Bank Accounts and all related lockboxes owned by
such Seller, and such Seller hereby agrees to take any further action that Buyer
or the Trustee may reasonably request in order to effect or complete the
transfer. Each Seller further agrees to use reasonable efforts to prevent funds
other than proceeds of the Specified Assets from being deposited in any Bank
Account.
(b) Buyer may, at any time after an Early Amortization Event or Servicer
Default, direct the Obligors of Receivables, or any of them, to pay all amounts
payable under any Transferred Asset directly to the Trustee or its designees.
Furthermore, each Seller shall, at the request of Buyer and at such Seller's
expense, promptly give notice of the Trust's interest in the Receivables of the
Obligor and the Related Assets to each such Obligor and direct that payments be
made directly to the Trustee or its designee, which notice shall be acceptable
in form and substance to Buyer. In addition, each Seller hereby authorizes Buyer
to take any and all steps in such Seller's name and on its behalf that are
necessary or desirable, in the reasonable determination of Buyer, to collect all
amounts due under any and all Specified Assets, including endorsing such
Seller's name on checks and other instruments representing Collections and
enforcing the Specified Assets and the Contracts related to the Receivables. The
Trustee may exercise any of the foregoing rights in the place of Buyer (as
assignee or otherwise) at any time following the designation of a Servicer other
than Big Flower pursuant to Section 10.2 of the Pooling Agreement.
(c) At any time when (i) an Early Amortization Event shall have occurred
and remain continuing or (ii) a Servicer other than Big Flower has been
designated pursuant to Section 10.2 of the Pooling Agreement, each Seller shall,
at Buyer's request, assemble all of the Records that evidence the Receivables
and Related Assets originated by such Seller and the Contracts related to the
Receivables, or that are otherwise necessary or desirable to collect the
Receivables or Related Assets, and
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make the same available to Buyer or the Trustee at a place selected by the
Trustee or its designee.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION BY THE SELLERS. Prior to the commencement of an
Amortization Period or Early Amortization Period in respect of any Series or
Purchased Interest, the Sellers may terminate all of their agreements to sell
Receivables hereunder to Buyer by giving Buyer and the Trustee not less than
thirty days' prior written notice of their election not to continue to sell
Receivables to Buyer; PROVIDED that such notice must be given as to all Sellers
and PROVIDED FURTHER, that such notice shall specify the effective date of
termination. The Trustee shall notify the Certificateholders of all Series
within five Business Days of receiving any such termination notice.
SECTION 8.2 AUTOMATIC TERMINATION. (a) The agreement of each Seller to sell
Receivables hereunder, and the agreement of Buyer to purchase Receivables from
such Seller hereunder, shall terminate automatically upon the first date on
which all Series and Purchased Interests are in accumulation, amortization or
early amortization periods; PROVIDED, HOWEVER, that if, at any time prior to
such date, an event specified in the definition of Bankruptcy Event occurs
(without regard to the 60 day grace period specified in paragraph (a) of that
definition) as a result of a bankruptcy proceeding being filed against a Seller,
then on and after the date on which such bankruptcy proceeding is filed until
the dismissal of the proceeding Buyer shall not purchase Receivables and Related
Assets from such Seller.
(b) If the Internal Revenue Service or the PBGC files one or more Tax or
ERISA Liens against the assets of any Seller or Transferor (including
Receivables), then (and for so long as such Liens remain in place) Buyer shall
not purchase any Receivables or Related Assets from such Seller (or from any
Seller if such Lien is filed against Transferor); PROVIDED Buyer may continue to
purchase Receivables and Related Assets for a period of fifteen days following
such filing if (i) the aggregate amount secured by such Tax or ERISA Liens is
less than $2,000,000 or (ii) the amount so secured is bonded in a manner that
satisfies the Modification Condition.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNITIES BY THE SELLERS. Without limiting any other rights
that any RPA Indemnified Party (as defined below) may have hereunder or under
applicable law, each Seller agrees to indemnify Buyer, each of its successors,
permitted transferees and assigns, and all officers, directors, shareholders,
controlling Persons, employees and agents of any of the foregoing (each of the
foregoing Persons being individually called a "RPA INDEMNIFIED PARTY"),
forthwith on demand, from and against any and all damages, losses, claims
(whether on account of settlements or otherwise), judgments, liabilities and
related reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) awarded against or incurred by any of them arising out of or as a
result of any of the following (all of the foregoing being collectively called
"RPA INDEMNIFIED LOSSES"):
(a) any representation or warranty made in writing by such Seller (or
any of its Authorized Officers) under any of the Transaction Documents, any
Monthly Report, any Daily Report or any other information or report
delivered by or on behalf of such Seller or the Servicer with respect to
such Seller or the Receivables or Related Assets originated by such Seller
(including without limitation any representation, warranty, information or
report relied upon by Buyer in connection with the offering or sale of any
Certificate or Purchased Interest), that contained any untrue statement of
a material fact or omitted to state material facts necessary to make the
statements not misleading when made,
(b) the failure by such Seller to comply with any applicable law, rule
or regulation with respect to any Receivable or any Related Asset or to
comply with any Contract related thereto, or the nonconformity of any
Receivable, the related Contract or any Related Assets with any such
applicable law, rule or regulation,
(c) the failure to vest and maintain vested in Buyer a first priority
perfected ownership interest in the Receivables originated by such Seller,
the Related Assets, the related Collections and the proceeds of each of the
foregoing, free and clear of any Adverse Claim (other than an Adverse Claim
created in favor of Buyer pursuant to this Agreement or in favor of the
Trustee pursuant to the Pooling Agreement), whether existing at the time of
the sale of such Receivable or at any time thereafter and without regard to
whether such Adverse Claim was a Permitted Adverse Claim,
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(d) any failure of such Seller to perform its duties or obligations in
accordance with the provisions of the Transaction Documents,
(e) any products liability claim, personal injury or property damage
suit, environmental liability claim or any other claim or action by a party
other than Buyer of whatever sort, whether sounding in tort, contract or
any other legal theory, arising out of or in connection with the goods or
services that are the subject of any Specified Assets with respect thereto
or Collections thereof,
(f) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Specified Assets
or Collections, whether at the time of any sale or at any subsequent time,
(g) any dispute, claim, offset or defense (other than the discharge in
bankruptcy) of an Obligor to the payment of any Receivable originated by
such Seller or Related Asset, or purported Receivable or Related Asset,
including a defense based on such Receivable's, or the related Contract's
not being a legal, valid and binding obligation of the Obligor enforceable
against it in accordance with its terms, and
(h) any tax or governmental fee or charge (other than franchise taxes
and taxes on or measured by the net income of Buyer or any of its
assignees), all interest and penalties thereon or with respect thereto, and
all reasonable out-of-pocket costs and expenses, including the reasonable
fees and expenses of counsel in defending against the same, that may arise
by reason of the purchase or ownership of the Receivables originated by
such Seller or any Related Asset connected with any such Receivables.
Notwithstanding the foregoing (and with respect to CLAUSE (ii) below, without
prejudice to the rights that Buyer may have pursuant to the other provisions of
this Agreement or the provisions of any of the other Transaction Documents), in
no event shall any RPA Indemnified Party be indemnified for any RPA Indemnified
Losses (i) resulting from gross negligence or willful misconduct on the part of
the RPA Indemnified Party, (ii) to the extent the same includes losses in
respect of Receivables and reimbursement therefor that would constitute credit
recourse to such Seller for the amount of any Receivable or Related Asset not
paid by the related Obligor, (iii) resulting from the action or omission of the
Servicer (unless the Servicer is a Big Flower Person), (iv) to the extent the
same are or result from lost profits, (v) to the extent the same are or result
from taxes on or measured by the net income of the RPA Indemnified Party and
(vi) to the extent the same constitute consequential, special or punitive
damages.
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If for any reason the indemnification provided above in this section is
unavailable to a RPA Indemnified Party or is insufficient to hold a RPA
Indemnified Party harmless, then such Seller shall contribute to the maximum
amount payable or paid to the RPA Indemnified Party as a result of the loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the RPA Indemnified Party on the one hand
and such Seller on the other hand, but also the relative fault of the RPA
Indemnified Party (if any) and such Seller and any other relevant equitable
considerations.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 AMENDMENTS: WAIVERS, ETC. (a) The provisions of this Agreement
may from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and signed by Buyer and each Seller (with
respect to an amendment) or by Buyer (with respect to a waiver or consent by it)
and, in the case of any amendment, modification or waiver, to the extent
provided in Section 7.2(k) of the Pooling Agreement, by the Trustee, and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. If any outstanding Investor
Certificates or Purchased Interests have been rated, this Agreement shall not be
amended unless Buyer shall have delivered the proposed amendment to the Rating
Agencies at least ten Business Days (or such shorter period as shall be
acceptable to each of them) prior to the execution and delivery thereof and the
Modification Condition has been satisfied with respect to such amendment.
(b) No failure or delay on the part of Buyer, any RPA Indemnified Party, or
the Trustee or any other third party beneficiary referred to in SECTION 10.11(a)
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on any Seller in any case shall entitle it to any notice
or demand in similar or other circumstances. No waiver or approval by Buyer or
the Trustee under this Agreement shall, except as may otherwise be stated in the
waiver or approval, be applicable to subsequent transactions. No waiver or
approval under this Agreement shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 10.2 NOTICES, ETC. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, by facsimile or by overnight courier, to the intended
party at the address or
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facsimile number of such party set forth under its name on the signature pages
hereof or at such other address or facsimile number as shall be designated by
the party in a written notice to the other parties hereto given in accordance
with this Section. Copies of all notices and other communications provided for
hereunder shall be delivered to the Trustee and the Rating Agencies at their
respective addresses for notices set forth in the Pooling Agreement. All notices
and communications provided for hereunder shall be effective, (a) if personally
delivered, when received, (b) if sent by certified mail, four Business Days
after having been deposited in the mail, postage prepaid and properly addressed,
(c) if transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means and (d) if sent by overnight courier, two Business Days after
having been given to the courier unless sooner received by the addressee.
SECTION 10.3 CUMULATIVE REMEDIES. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Without limiting
the foregoing, each Seller hereby authorizes Buyer, at any time and from time to
time, to the fullest extent permitted by law, to set-off, against any
Obligations of any Seller to Buyer that are then due and payable or that are not
then due and payable from a Seller to Buyer but have then accrued, any and all
indebtedness or other obligations at any time owing to any Seller by Buyer to or
for the credit or the account of any Seller or that are not then due and payable
from Buyer to a Seller but have then accrued.
SECTION 10.4 BINDING EFFECT ASSIGNABILITY SURVIVAL OF PROVISIONS. This
Agreement shall be binding upon and inure to the benefit of Buyer and the
Sellers and their respective successors and permitted assigns. No Seller may
assign any of its rights hereunder or any interest herein without (i) the prior
written consent of Buyer and the Trustee and (ii) the satisfaction of the
Modification Condition. This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until the first date following the
Purchase Termination Date, but not later than the date on which the Trust is
terminated pursuant to Section 12.1 of the Pooling Agreement, on which all
Obligations shall have been finally and fully paid and performed or such other
time as the parties hereto shall agree and as to which the Trustee (at the
direction of the Majority Investors) shall have given its prior written consent,
which consent shall not be unreasonably withheld or delayed. The rights and
remedies with respect to any breach of any representation and warranty made by a
Seller pursuant to ARTICLE V and the indemnification and payment provisions of
ARTICLE IX and SECTION 10.6 shall be continuing and shall survive any
termination of this Agreement.
SECTION 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES,
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EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF BUYER IN THE
RECEIVABLES AND THE RELATED ASSETS ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 10.6 COSTS, EXPENSES AND TAXES. In addition to the obligations of
the Sellers under ARTICLE IX, the Sellers agree jointly and severally to pay on
demand:
(a) all reasonable out-of-pocket and other costs and expenses in
connection with the enforcement of this Agreement, the Seller Assignment
Certificates or the other Transaction Documents by Buyer or any successor
in interest to Buyer, and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution and delivery, and the filing and
recording, of this Agreement or the other Transaction Documents, and agrees
to indemnify each RPA Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay the
taxes and fees.
SECTION 10.7 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE TRANSACTION
DOCUMENTS, AND HEREBY (A) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF THE
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN THE STATE OR FEDERAL COURT,
(B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF THE ACTION OR PROCEEDING,
AND (C) BUYER, IRREVOCABLY APPOINTS LEXIS DOCUMENT SERVICES, INC. (THE "PROCESS
AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 150 EAST 58TH STREET, NEW YORK,
NEW YORK 10155, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE
OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED
IN ANY ACTION OR PROCEEDING. THE SERVICE MAY BE MADE BY MAILING OR DELIVERING A
COPY OF THE PROCESS TO BUYER OR THE APPLICABLE SELLER IN CARE OF THE PROCESS
AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND BUYER AND EACH SELLER HEREBY
IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT THE SERVICE ON
ITS BEHALF.
AS AN ALTERNATIVE METHOD OF SERVICE, EACH OF BUYER AND THE SELLERS ALSO
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY ACTION OR
PROCEEDING BY THE MAILING OF COPIES OF THE PROCESS TO BUYER OR A SELLER (AS
APPLICABLE) AT ITS ADDRESS SPECIFIED HEREIN. NOTHING IN THIS SECTION SHALL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR
PROCEEDING
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AGAINST THE OTHER PARTY OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER
JURISDICTION.
SECTION 10.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
OR RELATING TO THE TRANSACTION DOCUMENTS OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER OF THE PARTIES HERETO OR SAY
OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THE TRANSACTION DOCUMENTS, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
SECTION 10.9 INTEGRATION. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
SECTION 10.11 ACKNOWLEDGMENT AND CONSENT. (a) The Sellers acknowledge that,
contemporaneously herewith, Buyer is selling, transferring, assigning, setting
over and otherwise conveying to the Trust all of Buyer's right, title and
interest in, to and under the Specified Assets, this Agreement and all of the
other Transaction Documents pursuant to SECTIONS 2.1 and 2.4 of the Pooling
Agreement. The Sellers hereby consent to the sale, transfer, assignment, set
over and conveyance to the Trust by Buyer of all right, title and interest of
Buyer in, to and under the Specified Assets, this Agreement and the other
Transaction Documents, and all of Buyer's rights, remedies, powers and
privileges, and all claims of Buyer against the Sellers, under or with respect
to this Agreement and the other Transaction Documents (whether arising pursuant
to the terms of this Agreement or otherwise available at law or in equity),
including (i) the right of Buyer, at any time, to enforce this Agreement
against the Sellers and the obligations of the Sellers hereunder, (ii) the right
to consent to or direct the appointment of a successor to the Servicer at the
times and upon the conditions set forth in the Pooling Agreement, and (iii) the
right, at any time, to give or withhold any and all consents, requests, notices,
directions, approvals, demands, extensions or waivers under or with respect to
this Agreement, any other Transaction Document or the obligations in respect of
the Sellers thereunder to the same extent as Buyer may do. Each of the parties
hereto acknowledges and agrees that the Trustee
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<PAGE>
and the Trust are third party beneficiaries of the rights of Buyer arising
hereunder and under the other Transaction Documents to which any Seller is a
party. Each Seller hereby acknowledges and agrees that it has no claim to or
interest in any of the Bank Accounts or the Trust Accounts.
(b) The Sellers hereby agree to execute all agreements, instruments and
documents, and to take all other action, that Buyer or the Trustee reasonably
determines is necessary or appropriate to evidence its consent described in
subsection (a) above. To the extent that Buyer, individually or through the
Servicer, has granted or grants powers of attorney to the Trustee under the
Pooling Agreement, the Sellers hereby grant a corresponding power of attorney on
the same terms to Buyer. The Sellers hereby acknowledge and agree that Buyer, in
all of its capacities, shall assign to the Trustee for the benefit of the
Certificateholders the powers of attorney and other rights and interests granted
by the Sellers to Buyer hereunder and agrees to cooperate fully with the Trustee
in the exercise of the rights.
SECTION 10.12 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.
SECTION 10.13 NO PROCEEDINGS. Each Seller hereby agrees that it will not
institute against Buyer or the Trust, or join any other Person in instituting
against Buyer or the Trust, any insolvency proceeding (namely, any proceeding of
the type referred to in the definition of Event of Bankruptcy) so long as any
Investor Certificates issued by the Trust shall be outstanding or there shall
not have elapsed one year plus one day since the last day on which any such
Investor Certificates shall have been outstanding. The foregoing shall not limit
the right of a Seller to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted against Buyer or the
Trust by any Person other than a Seller or any other Big Flower Person (provided
that no such action may be taken by a Seller until such proceeding has continued
undismissed, unstayed and in effect for a period of 10 days).
SECTION 10.14 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any of the other
Transaction Documents shall for any reason whatsoever be held invalid, then the
unenforceable covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement or the other Transaction Documents (as applicable) and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or any of the other Transaction Documents.
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<PAGE>
SECTION 10.15 RECOURSE TO BUYER. Except to the extent expressly provided
otherwise in the Transaction Documents, the obligations of Buyer under the
Transaction Documents to which it is a party are solely the obligations of
Buyer. No recourse shall be had for payment of any fee payable by or other
obligation of or claim against Buyer that arises out of any Transaction Document
to which Buyer is a party against any director, officer or employee of Buyer.
The provisions of this Section shall survive the termination of this Agreement.
[Remainder of page intentionally left blank.]
page 43
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
TREASURE CHEST ADVERTISING
COMPANY, INC., as Seller
By: /s/ Rick Frier
Title: Vice President
Address: 250 W. Pratt Street
Baltimore, Maryland 21201
Attention: Rick Frier
Telephone: 410-361-8352
Facsimile: 410-528-9287
WEBCRAFT TECHNOLOGIES, INC., as Seller
By: /s/ Thomas Gardner
Title: Vice President
Address: Route 1 & Adams Station
North Brunswick, New Jersey 08902
Attention: Joe DiPiano
Telephone: 908-422-2835
Facsimile: 908-422-2805
WEBCRAFT CHEMICALS, INC., as Seller
By: /s/ Thomas Gardner
Title: Vice President
Address: 80 Wheeler Point Road
Newark, New Jersey 07105
Attention: Joe DiPiano
Telephone: 908-422-2835
Facsimile: 908-422-2805
<PAGE>
LASER TECH COLOR, INC., as Seller
By: /s/ Debra L. Sanders
Title: Chief Financial Officer/Treasurer
Address: 2010 Westridge Drive
Irving, Texas 75038
Attention: Debra Sanders
Telephone: 214-714-4800
Facsimile: 214-714-0339
BFP RECEIVABLES CORPORATION,
as the Buyer
By: /s/ Rick Frier
Title: Vice President
Address: 250 W. Pratt Street
Baltimore, Maryland 21201
Attention: Rick Frier
Telephone: 410-361-8352
Facsimile: 410-528-9287
BIG FLOWER PRESS HOLDINGS, INC.
as initial Servicer
By: /s/ David Mait
Title: Vice President
Address: 3 East 54h Street, 19th Floor
New York, New York 10022
Attention: David Mait
Telephone: 212-521-1611
Facsimile: 212-223-4074
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On the 18th day of March, 1996 before me personally came Rick Frier to me
known, who, being by me duly sworn, did depose and say that he resides at
Ellicott City, Maryland; that he is a Vice President-Treasurer of Treasure Chest
Advertising Company, Inc., a Delaware corporation, the corporation described in
and that executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of the corporation.
Given under my hand and notarial seal, this 18th day of March, 1996.
/s/ Douglas Culhane
------------------------
Notary Public
Type or
Print Name: Douglas Culhane
My commission expires:
August 1, 1996
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On the 18th day of March, 1996 before me personally came Thomas Gardner to
me known, who, being by me duly sworn, did depose and say that he resides at
Haverford, Pennsylvania; that he is a Vice President of Webcraft Technologies,
Inc., a Delaware corporation, the corporation described in and that executed the
foregoing instrument; and that he signed his name thereto by order of the board
of directors of the corporation.
Given under my hand and notarial seal, this 18th day of March, 1996.
/s/ Douglas Culhane
------------------------
Notary Public
Type or
Print Name: Douglas Culhane
My commission expires:
August 1, 1996
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On the 18th day of March, 1996 before me personally came Thomas Gardner to
me known, who, being by me duly sworn, did depose and say that he resides at
Haverford, Pennsylvania; that he is a Vice President of Webcraft Chemicals,
Inc., a New Jersey corporation, the corporation described in and that executed
the foregoing instrument; and that he signed his name thereto by order of the
board of directors of the corporation.
Given under my hand and notarial seal, this 18th day of March, 1996.
/s/ Douglas Culhane
------------------------
Notary Public
Type or
Print Name: Douglas Culhane
My commission expires:
August 1, 1996
<PAGE>
STATE OF TEXAS )
) SS.
COUNTY OF DALLAS )
On the 13th day of March, 1996 before me personally came Debra Sanders to
me known, who, being by me duly sworn, did depose and say that she resides at
DeSoto, Texas; that she is a Chief Financial Officer/Treasurer of Laser Tech
Color, Inc., a Delaware corporation, the corporation described in and that
executed the foregoing instrument; and that he signed his name thereto by order
of the board of directors of the corporation.
Given under my hand and notarial seal, this 13th day of March, 1996.
/s/ Debbie Davis
------------------------
Notary Public
Type or
Print Name: Debbie Davis
My commission expires:
December 22, 1999
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On the 18th day of March, 1996 before me personally came Rick Frier to me
known, who, being by me duly sworn, did depose and say that he resides at
Ellicott City, Maryland; that he is the Vice President of BFP RECEIVABLES
CORPORATION, a Delaware corporation, the corporation described in and that
executed the foregoing instrument; and that he signed his name thereto by order
of the board of directors of the corporation.
Given under my hand and notarial seal, this 18th day of March, 1996.
/s/ Douglas Culhane
------------------------
Notary Public
Type or
Print Name: Douglas Culhane
My commission expires:
August 1, 1996
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On the 18th day of March, 1996 before me personally came David Mait to me
known, who, being by me duly sworn, did depose and say that he resides at
Wyckoff, New Jersey; that he is the Vice President of BIG FLOWER PRESS HOLDINGS,
INC., a Delaware corporation, the corporation described in and that executed the
foregoing instrument; and that he signed his name thereto by order of the board
of directors of the corporation.
Given under my hand and notarial seal, this 18th day of March, 1996.
/s/ Michael A. Morris
------------------------
Notary Public
Type or
Print Name: Michael A. Morris
My commission expires:
October 23, 1997
<PAGE>
EXHIBIT A
FORM OF BUYER NOTE
------------------
________, 1996
FOR VALUE RECEIVED, the undersigned, BFP RECEIVABLES CORPORATION, a
Delaware corporation ("BUYER"), promises to pay to _______________________, a
_____________corporation (the "SELLER" and together with its successors and
assigns, the "HOLDER"), on the terms and subject to the conditions set forth in
this promissory note (this "NOTE") and in the Receivables Purchase Agreement of
even date herewith (the "AGREEMENT") among Buyer, BIG FLOWER PRESS HOLDINGS,
INC. ("BIG FLOWER"), as Servicer and certain Subsidiaries of Big Flower, as
Sellers, an amount equal to the aggregate deferred Purchase Price owed by Buyer
to the Seller pursuant to ARTICLE III of the Agreement. Such amount, as shown
in the records of the Servicer, will be rebuttable presumptive evidence of the
principal amount and interest owing under this Note.
1. PURCHASE AGREEMENT. This Note is a Buyer Note described in, and is
subject to the terms and conditions set forth in, the Agreement. Reference is
hereby made to the Agreement for a statement of certain other rights and
obligations of Buyer and the Seller.
2. RULES OF CONSTRUCTION: DEFINITIONS. Certain rules of construction
governing the interpretation of this Note are set forth in Appendix A to the
Agreement and, except as otherwise specifically provided herein, capitalized
terms used but not defined herein have the meanings ascribed to them in Appendix
A to the Agreement. In addition, as used herein, the following terms have the
following meanings:
"BANKRUPTCY PROCEEDINGS" means any dissolution, winding up,
liquidation, readjustment, reorganization or other similar event relating
to Buyer, whether voluntary or involuntary, partial or complete, and
whether in bankruptcy, insolvency, receivership or other similar
proceedings, or upon an assignment for the benefit of creditors, or any
other marshalling of the assets and liabilities of Buyer or any sale of all
or substantially all of the assets of Buyer; PROVIDED, HOWEVER, that none
of the following shall constitute a "Bankruptcy Proceeding" so long as no
bankruptcy, insolvency, receivership or other similar proceedings shall
have been commenced by or against Buyer and is continuing: (i) the
commencement of an amortization period, accumulation period or early
amortization period, (ii) the allocation and distribution of Collections
and other amounts during an amortization period,
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accumulation period or early amortization period in accordance with the
terms of the Pooling Agreement and (iii) the liquidation, dissolution and
winding up of Buyer during an amortization period, accumulation period or
early amortization period in accordance with the Pooling Agreement after
the termination of the Pooling Agreement in accordance with Section 12.1
thereof.
"FINAL MATURITY DATE" means the date occurring one year and one day
after the Final Scheduled Payment Date of the latest maturing Series or
Purchased Interest from time to time outstanding.
"HIGHEST LAWFUL RATE" has the meaning set forth in PARAGRAPH 9.
"JUNIOR LIABILITIES" means all obligations of Buyer to the Holder
under this Note.
"REFERENCE RATE" means, with respect to any day occurring in a
Calculation Period, the rate of interest publicly announced from time to
time by the Manufacturers and Traders Trust Company as its "reference rate"
and in effect on the first day of such Calculation Period, as determined
by the Servicer.
"SENIOR INTERESTS" means all obligations of Buyer to the Trustee or
the Investor Certificateholders under or in connection with the Transaction
Documents, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, including without limitation
interest or other amounts due or to become due after an Event of
Bankruptcy.
"SUBORDINATION PROVISIONS" means, collectively, the provisions of
PARAGRAPH 7.
3. INTEREST. Subject to the Subordination Provisions, Buyer promises to
pay interest on the aggregate unpaid principal amount of this Note outstanding
on each day at an adjustable rate per annum equal to the Reference Rate in
effect on such day.
4. INTEREST PAYMENT DATES. (a) Subject to the Subordination Provisions,
Buyer shall pay accrued interest on this Note on each Distribution Date and on
the Final Maturity Date. Buyer also shall pay accrued interest on the principal
amount of each prepayment hereof on the date of such prepayment.
(b) Notwithstanding the provisions of PARAGRAPH 4(a), in the event that on
the date an interest payment is due hereunder the amount of funds available
therefor pursuant to SECTION 3.3 of the Agreement is insufficient to pay any
amount due pursuant to PARAGRAPH 4(a), then interest shall be payable only to
the extent that funds
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<PAGE>
are available therefor in accordance with SECTION 3.3 of the Agreement. All
interest on this Note that is not paid when due pursuant to this paragraph shall
be payable on the next date on which an interest payment on this Note is due and
on which funds are available therefor pursuant to SECTION 3.3 of the Agreement,
and all such unpaid interest shall accrue interest at the Reference Rate until
paid in full.
5. BASIS OF COMPUTATION. Interest accrued hereunder shall be computed for
the actual number of days elapsed on the basis of a 360-day year.
6. PRINCIPAL PAYMENT DATES. Subject to the Subordination Provisions, any
unpaid principal of this Note shall only become due and payable on the Final
Maturity Date. Subject to the Subordination Provisions, the principal amount of
and accrued interest on this Note may be prepaid on any Business Day without
premium or penalty; PROVIDED, that no prepayment shall be made by Buyer to the
extent that such prepayment would result in a default in the payment of any
other amount required to be paid by Buyer under any Transaction Document.
7. SUBORDINATION PROVISIONS. Buyer covenants and agrees, and the Holder,
by its acceptance of this Note, likewise covenants and agrees, that the payment
of all Junior Liabilities is hereby expressly subordinated in right of payment
to the payment and performance of the Senior Interests to the extent and in the
manner set forth in this paragraph:
(a) In the event of any Bankruptcy Proceeding, the Senior
Interests shall first be paid and performed in full and in cash before
the Holder shall be entitled to receive and to retain any payment or
distribution in respect of the Junior Liabilities. In order to
implement the foregoing: (i) all payments and distributions of any kind
or character in respect of the Junior Liabilities to which the Holder
would be entitled except for this CLAUSE (a) shall be made directly to
the Trustee (for the benefit of itself and the Investor
Certificateholders), and (ii) if a Bankruptcy Proceeding has been
commenced, the Holder shall promptly file a claim or claims, in the
form required in any Bankruptcy Proceedings, for the full outstanding
amount of the Junior Liabilities, and shall use commercially reasonable
efforts to cause said claim or claims to be approved and all payments
and other distributions in respect thereof to be made directly to the
Trustee (for the benefit of itself and the Investor Certificateholders)
until the Senior Interests shall have been paid and performed in full
and in cash.
(b) In the event that the Holder receives any payment or other
distribution of any kind or character from Buyer or from any other
source whatsoever, in payment of the Junior Liabilities, after the
commencement of any Bankruptcy Proceeding, such payment or other
distribution shall be
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<PAGE>
received in trust for the Trustee and the Investor Certificateholders and
shall be turned over by the Holder to the Trustee forthwith.
(c) Upon the final indefeasible payment in full and in cash of all
Senior Interests, the Holder shall be subrogated to the rights of the
Trustee and the Investor Certificateholders to receive payments or
distributions from Buyer that are applicable to the Senior Interests until
the Junior Liabilities are paid in full.
(d) These Subordination Provisions are intended solely for the purpose
of defining the relative rights of the Holder, on the one hand, and the
Trustee and the Investor Certificateholders on the other hand. Nothing
contained in these Subordination Provisions or elsewhere in this Note is
intended to or shall impair, as between Buyer, its creditors (other than
the Trustee and the Investor Certificateholders) and the Holder, Buyer's
obligation, which is unconditional and absolute, to pay the Junior
Liabilities as and when the same shall become due and payable in accordance
with the terms hereof and of the Agreement or to affect the relative rights
of the Holder and creditors of Buyer (other than the Trustee and the
Investor Certificateholders).
(e) The Holder shall not, until the Senior Interests have been finally
paid and performed in full and in cash, (i) cancel, waive, forgive,
transfer or assign, or commence legal proceedings to enforce or collect, or
subordinate to any obligation of Buyer (other than to the Senior
Interests), howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, or now or hereafter existing, or due or
to become due, the Junior Liabilities or any rights in respect hereof or
(ii) convert the Junior Liabilities into an equity interest in Buyer,
unless, in the case of each of CLAUSES (i) and (ii), the Holder shall have
received the prior written consent of the Trustee in each case.
(f) The Holder shall not, without the advance written consent of the
Trustee, commence, or join with any other Person in commencing, any
Bankruptcy Proceedings with respect to Buyer until at least one year and
one day shall have passed after the Senior Interests shall have been
finally paid and performed in full and in cash; PROVIDED, HOWEVER, that the
Holder shall at all times have the right to file any claim in or otherwise
take any action with respect to any insolvency proceeding instituted
against Buyer by any Person other than the Holder or any other Big Flower
Person (provided that no such action may be taken by the Holder until such
proceeding has continued undismissed, unstayed and in effect for a period
of 10 days).
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<PAGE>
(g) If, at any time, any payment (in whole or in part) made with
respect to any Senior Interest is rescinded or must be restored or returned
by a Certificateholder (whether in connection with any Bankruptcy
Proceedings or otherwise), these Subordination Provisions shall continue to
be effective or shall be reinstated, as the case may be, as though such
payment had not been made.
(h) Each of the Trustee and the Investor Certificateholders may, from
time to time, in its sole discretion, without notice to the Holder, and
without waiving any of its rights under these Subordination Provisions,
take any or all of the following actions: (i) retain or obtain an interest
in any property to secure any of the Senior Interests, (ii) retain or
obtain the primary or secondary obligations of any other obligor or
obligors with respect to any of the Senior Interests, (iii) extend or renew
for one or more periods (whether or not longer than the original period),
alter, increase or exchange any of the Senior Interests, or release or
compromise any obligation of any nature with respect to any of the Senior
Interests, (iv) amend, supplement, amend and restate, or otherwise modify
any Transaction Document to which it is a party, and (v) release its
security interest in, or surrender, release or permit any substitution or
exchange for all or any part of any rights or property securing any of the
Senior Interests, or extend or renew for one or more periods (whether or
not longer than the original period), or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to any
such rights or property.
(i) The Holder hereby waives: (i) notice of acceptance of these
Subordination Provisions by the Trustee or any of the Investor
Certificateholders, (ii) notice of the existence, creation, non-payment or
nonperformance of all or any of the Senior Interests, and (iii) all
diligence in enforcement, collection or protection of, or realization upon,
the Senior Interests, or any thereof, or any security therefor.
(j) These Subordination Provisions constitute a continuing offer from
Buyer to all Persons who become the holders of, or who continue to hold,
Senior Interests, and these Subordination Provisions are made for the
benefit of the Trustee and the Investor Certificateholders, and the Trustee
may proceed to enforce such provisions on behalf of each of such Persons.
8. GENERAL. No failure or delay on the part of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Note shall in any event be
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<PAGE>
effective unless (a) the same shall be in writing and signed and delivered by
Buyer and the Seller, and (b) all consents required for such actions under the
Transaction Documents shall have been received by the appropriate Persons.
9. LIMITATION ON INTEREST. Notwithstanding anything in this Note to the
contrary, Buyer shall never be required to pay unearned interest on any amount
outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum
nonusurious interest rate that may be contracted for, charged or received under
applicable federal or state law (such maximum rate being herein called the
"HIGHEST LAWFUL RATE"). If the effective rate of interest that would otherwise
be payable under this Note would exceed the Highest Lawful Rate, or the Holder
shall receive any unearned interest or shall receive monies that are deemed to
constitute interest that would increase the effective rate of interest payable
by Buyer under this Note to a rate in excess of the Highest Lawful Rate, then
(a) the amount of interest that would otherwise be payable by Buyer under this
Note shall be reduced to the amount allowed by applicable law, and (b) any
unearned interest paid by Buyer or any interest paid by Buyer in excess of the
Highest Lawful Rate shall be refunded to Buyer. Without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by the Holder under this Note that are made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate shall be made, to
the extent permitted by applicable usury laws (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the actual period
during which any amount has been outstanding hereunder all interest at any time
contracted for, charged or received by the Holder in connection herewith. If at
any time and from time to time (i) the amount of interest payable to the Holder
on any date shall be computed at the Highest Lawful Rate pursuant to the
provisions of the foregoing sentence, and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to the
Holder would be less than the amount of interest payable to the Holder computed
at the Highest Lawful Rate, then the amount of interest payable to the Holder in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate until the total amount of interest payable
to the Holder shall equal the total amount of interest that would have been
payable to the Holder if the total amount of interest had been computed without
giving effect to the provisions of the foregoing sentence.
10. NO NEGOTIATION. This Note is not negotiable.
11. GOVERNING LAW. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
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<PAGE>
12. SECURITY INTEREST. The Seller may grant a security interest in or
otherwise pledge this Note as security, and any Person to whom such security
interest is granted or to whom this Note is pledged shall be bound by, and for
all purposes takes this Note subject to, the restrictions and other provisions
(including the Subordination Provisions) set forth herein.
l3. CAPTIONS. Paragraph captions used in this Note are provided solely
for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Note.
BFP RECEIVABLES CORPORATION
By:
------------------------
Title:
------------------------
page 7
<PAGE>
EXHIBIT B
FORM OF
SELLER ASSIGNMENT CERTIFICATE
-----------------------------
Reference is made to the Receivables Purchase Agreement of even date
herewith (as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time, the "AGREEMENT") between
____________________, ____________________ and BFP RECEIVABLES CORPORATION
("BUYER"). Unless otherwise defined herein, capitalized terms used herein have
the meanings provided in Appendix A to the Agreement.
The undersigned (the "SELLER") hereby sells, transfers, assigns, sets over
and conveys unto Buyer and its successors and assigns all right, title and
interest of the Seller in, to and under:
(a) each Receivable of the Seller (other than Contributed Receivables)
that existed and was owing to the Seller as at the closing of the Seller's
business on the Initial Cut-Off Date,
(b) each Receivable created by the Seller (other than Contributed
Receivables) that arises during the period from and including the closing of the
Seller's business on the Initial Cut-Off Date to but excluding the Purchase
Termination Date,
(c) all Related Security with respect to all Receivables (other than
Contributed Receivables) of the Seller,
(d) all proceeds of the foregoing, including all funds received by any
Person in payment of any amounts owed (including invoice prices, finance
charges, interest and all other charges, if any) in respect of any Receivable
described above (other than a Contributed Receivable) or Related Security with
respect to any such Receivable, or otherwise applied to repay or discharge any
such Receivable (including insurance payments that the Seller or the Servicer
applies in the ordinary course of its business to amounts owed in respect of any
such Receivable (it being understood that property insurance covering inventory
is not so applied and is not included in this grant) and net proceeds of any
sale or other disposition of repossessed goods that were the subject of any such
Receivable) or other collateral or property of any Obligor or any other party
directly or indirectly liable for payment of such Receivables), and
(e) all Records relating to any of the foregoing.
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<PAGE>
This Seller Assignment Certificate is made without recourse but on the
terms and subject to the conditions set forth in the Transaction Documents to
which the Seller is a party. The Seller acknowledges and agrees that Buyer is
accepting this Seller Assignment Certificate in reliance on the representations,
warranties and covenants of the Seller contained in the Transaction Documents to
which the Seller is a party.
THIS SELLER ASSIGNMENT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE AGREEMENT AND THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Seller Assignment
Certificate to be duly executed and delivered by its duly Authorized Officer
this _________ day of _____________________, 1996.
[SELLER FULL NAME]
By:
--------------------
Title:
--------------------
page 2
<PAGE>
SCHEDULE 1
to Receivables Purchase Agreement
Litigation and Other Proceedings
Sellers: Treasure Chest Advertising
Treasure Chest, Inc. ("Treasure Chest")
Laser Tech Color, Inc. ("Laser Tech")
Sullivan Communications, Inc. ("SCI") has alleged that the acquistion of
Laser Tech was consummated in violation of a confidentiality agreement
between SCI and Big Flower Press Holdings, Inc.
Treasure Chest was served with a Complaint on November 23, 1993 filed by
Ebenezer B. Ukpabi, a former employee of Treasure Chest, in the United States
District Court, District of Oregon, Case No. 93 1479-PA, alleging damages as
a result of racial discrimination.
Treasure Chest has been served with a cross-complaint by Heidelberg Harris,
Inc., in Los Angeles Superior Court case number KC010P926. The lawsuit stems
from an accident that occurred at Treasure Chest's City of Industry facility
in which an employee suffered a partial amputation of his fingers. The
employee filed the lawsuit against Heidelberg Harris, Inc., the manufacturer
of the equipment that was involved in the accident. Heidelberg Harris, Inc.,
then cross-claimed against Treasure Chest. Treasure Chest believes that it
has meritorious defenses to this lawsuit. Even if found liable, Treasure
Chest's maximum exposure is $200,000, which is the deductible on the
applicable insurance policy. Treasure Chest has received a conformed copy of
a request for dismissal without prejudice filed by Heidelberg Harris, Inc.,
with respect to the cross-complaint.
Undercharges have been claimed or cases filed by bankrupt carriers. Those
claims or litigations have been filed on behalf of:
Evans Delivery Company - $18,190.00
The Ink Company is rendering a
defense for Company in this matter
Overland Express 2,824.54
<PAGE>
P.I.E. 11,323.22
Professional Truck Auditing 12,776.82
Smith's Transportation 18,867.71
Transcon 4,059.65
Western Carriers 2,624.28
Winning Run/BGR 300.00
Carrier's Traffic Service, Inc. Threatened
Treasure Chest has obtained a Stipulated Judgment from The Learning Tree for
the sum of $31,500 which is being paid to Treasure Chest at the rate of
$1,050 for 30 months. Payments started March 1, 1992.
Treasure CHest has a claim for $200,000 plus interest against Donald Levine
for a guaranteed Note and Deed of Trust on real property in Scituate,
Massachusetts.
The Bankruptcy Trustee for Media Group has filed a preference action against
Treasure Chest in the Northern District of Georgia, Atlanta Division, Case
No. A90-06342-HR in the sum of $142,422.43.
In November, 1994, litigation was filed against Retail Graphics, in Los
Angeles, California, for approximately $10,000 stemming from a collection
matter. This matter has been referred to arbitration by the court.
Settlement negotiations are underway.
In November, 1994, a claim of sexual harassment was filed by Daniel
Franchini, with the Tampa, Florida, area of the EEOC against Treasure Chest.
A Notice of Right to Sue has been issued but Service of Process has not
occurred as of this date.
In August, 1994, litigation was filed in San Bernadino Superior Court by
Steven Brooks alleging wrongful termination against Treasure Chest.
Negotiations are underway and the case has been referred by the court to
arbitration.
In February, 1995, a Claim of Sexual Harassment was filed with the Industrial
Commission of Utah and the EEOC by Jackie Avery against Treasure Chest. This
matter was dismissed by the Utah Industrial Commission, which dismissal is
being appealed.
2
<PAGE>
Charge of Discrimination Before the Equal Employment Opportunity Commission,
Charlotte District Office, Charge No. 140931601. Charging Party: Giovanna L.
Little. Employer: Retail Graphics Printing Company (Charlotte, North
Carolina location).
DON MCGEE, INC. V. RETAIL GRAPHICS PRINTING CO., RETAIL GRAPHICS HOLDING CO.,
ATLANTIC PROPERTIES, INC. AND CLAES HONIG, Case No. 93-CVS-7272 in the
Superior Court of Mecklenburg County, North Carolina.
Sales and Use Tax Audit by the Texas Comptroller of Public Accounts for the
period of July, 1991 to June, 1993.
Sales, Use and Withholding Tax Audit by the Missouri Department of Revenue
for the sales tax period from February 1, 1991 to January 31, 1994, the use
tax period from January 1, 1991 to December 31, 1993 and the withholding tax
period from February 1, 1991 to January 31, 1994.
Internal complaint of alleged incident of sexual harassment from employee
Monica McClinton against employee Bobby Bell at Treasure Chest's North
Carolina plant.
Claims by WILLIE FREDERICK V. RETAIL GRAPHICS PRINTING COMPANY INC. (pending
in Charlotte, NC):
(a) Worker's Compensation claim filed with North Carolina Industrial
Commission (being handled by W/C Insurance Co.)
(b) A Retaliatory Discharge Complaint filed with the North Carolina
Department of Labor on January 14, 1994. Served March 3, 1994.
On June 14, 1994 an Age Discrimination Complaint was filed with the EEOC by
Shirley Alben against Treasure Chest. The matter is still pending and
Complainant has filed motion to amend to include an ADA complaint.
On July 28, 1995 litigation was filed against Treaure Chest by Brian Scudds
in the Court of Common Pleas of Franklin County, Ohio, alleging Wrongful
Termination and Retaliation on Workers Compensation for total of $150,000 in
damages (compensatory and punitive combined).
3
<PAGE>
On October, 1995, litigation was filed in the Los Angeles Superior Court by
Richard Nevins alleging Wrongful Termination and Racial Discrimination. No
amounts have yet been identified and Treasure Chest has yet to be served. A
complaint has been simultaneously been filed with the EEOC.
A Preferential Claim in the amount of $66,000 has been filed by the U.S.
Bankruptcy Trustee for the Audio Specialist Chapter 11 filing. Settlement
negotiations are underway.
ENVIRONMENTAL MATTERS
Treasure Chest has been notified by the California Department of Toxic
Substances Control and the Environmental Protection Agency ("EPA") that it
may have liability for the clean up of the Omega Chemical Corporation site in
Whittier, California. Treasure Chest has reserved approximately $200,000 to
cover its liability at this site.
The EPA has named Treasure Chest as one of several hundred potentially
responsible parties ("PRP"s) for the contamination at the Bay Drums and Peak
Oil Superfund sites in Tampa, Florida. With respect to the Peak Oil site,
Treasure Chest paid a settlement of approximately $6,000 in August 1995.
With respect to the Bay Drums site, Treasure Chest is a DE MINIMIS party,
and estimates that its liability for this site will be less than $25,000.
The EPA has named Treasure Chest as one of approximately 1,100 potentially
responsible parties for the costs of an emergency removal action at the
Chemical Handling Corp. site in Jefferson County, Colorado.
By letter dated April 11, 1994, the Ohio Environmental Protection Agency
requested information regarding wastes that Treasure Chest may have sent to
the Model Landfill in Franklin County, Ohio. Treasure Chest has responded to
this request.
Treasure Chest was named as a potential responsible party at the
Ekotek/Petrochem site in Utah, with respect to
4
<PAGE>
which Treasure Chest paid a settlement of $36,000 in early 1993.
Treasure Chest was named as a potential responsible party at the Reno Barrel
Recycling site in Reno, Nevada, with respect to which Treasure Chest paid a
settlement of approximately $50,000 in 1991.
The EPA named Treasure Chest as a potentially responsible party at the
Solvents Recovery Service Superfund site in Southington, Connecticut.
Treasure Chest paid a settlement of approximately $35,000 in 1994 for this
site.
Treasure Chest's Industry Division Facility is located within the San Gabriel
Valley Superfund site in California. As of the date of this Agreement,
Treasure Chest has not been named as a potentially responsible party at this
site.
Sellers: Webcraft Technologies, Inc. ("WTI")
Webcraft Chemicals, Inc. ("Chemicals")
1. Arbeit & Company Ltd. ("Arbeit") filed an action dated July 26, 1995
in the Supreme Court of New York, County of New York (Index No. 95/116600
CVNY) against WTI for breach of contract, fraud and loss of a rewarding
business opportunity. The Arbeit claim is based on an agreement between the
parties pursuant to which WTI was to print, bind, address and timely mail a
direct mail piece for a Johnson & Johnson and Wal-Mart Stores marketing
project. Arbeit alleges WTI entered into the contract with the knowledge
that performance of such was beyond their capabilities and, as a result,
performance of WTI's obligation under the contract was not successfully
completed. Damages are claimed in an amount not less than $3,750,000.
WTI filed its Answer and Counterclaim on October 5, 1995. The
counterclaims included breach of contract and quantum mcruit claims. The
parties are currently in the discovery phase.
2. Craig Adhesives supplied scratch-off coating to Lawson Mardon Group
Limited ("Lawson") on an ongoing basis. It is claimed that, in certain
instances, the product failed to work as specified. In a suit filed
5
<PAGE>
in Ontario Court (General Division) (Court File No. 70245/91Q) on April 16,
1991, Lawson alleges Craig Adhesives supplied defective products not
reasonably fit for the purpose for which they were sold and thus Craig
breached its contract and its warrantly to Lawson. In the alternative,
Lawson alleges Craig was negligent in failing to properly advise of any
special instructions or procedures necessary to ensure adequate performance.
Total damages are claimed in the amount of $3,450,000 (Canadian) (comprised
of $3 million (Canadian) in general damages and $450,000 (Canadian) in
special damages). Of this amount, approximately $2.6 million is attributed
to lost business opportunities.
Of the original total claim of $3,450,000 (Canadian), Lawson has
abandoned certain claims related to cost of business in the amount of
approximately $550,000 (Canadian).
Chemicals has filed a statement of defense and counterclaim (breach of
contract). A Pretrial Notice for Conference to occur on February 26, 1996
was received; however, counsel is scheduled to appear at a back-log hearing
on February 1, 1996 to request deferral of the pre-trial conference.
3. An action was filed by Beatrice Food Company, predecessor to WTI
("Beatrice") on July 7, 1980 in the United States District Court, District of
Connecticut (the "District Court") (Civil No. B 80-335) against New England
Printing and Lithographing Company ("NEPLC") for infringement of patents
relating to advertising pamphlets and owned by Webcraft Packing, predecessor
to Beatrice.
The District Court's decision in favor of Beatrice in 1984 was affirmed
by the Court of Appeals later that year with the exception of the award of
attorney feels which was vacated and remanded. In 1985 the District Court
declined to reinstate its earlier award of attorney fees and in 1988 the
District Court awarded damages to Beatrice of $22,107,837.69 and imposed a
personal sanction on NEPLC's attorney. On NEPLC's appeal of the damages
award and the sanction the Court of Appeals vacated and remanded both issues.
On remand, the District Court entered judgment in favor of Beatrice to
recover $25,339,529.88 in damages plus interest. The
6
<PAGE>
Court of Appeals vacated such judgment insofar as it awarded enhanced damages
of $16,893,019.92 and affirmed the remaining $8,446,509.96 and remanded to
the District Court to determine whether damages should be enhanced. On
November 11, 1995 the District Court found bad faith on the part of NEPLC and
therefore doubled the damages awarded making NEPLC liable for an additional
$8,446,509 over amounts already paid, with no interest.
4. By letter dated December 22, 1993, the Federal Election Commission
(the "FEC") claimed WTI violated the Federal Election Campaign Act by making
a contribution to the United Conservatives of America (the "UCA") through
performing work on credit without receiving remuneration. On May 17, 1994,
WTI transmitted affidavits setting forth WTI's course of business with the
UCA. WTI claims the work performed was for a fund raiser and was to be paid
for from the proceeds of such event and due to the unsuccessful nature of the
event WTI was never paid. No correspondence or action has been taken since
such transmittal by WTI.
5. Sabharwal filed a complaint with the State of New Jersey Department
of Law and Public Safety, Division on Civil Rights (Docket No.
EM15WB-40143-A) charging unlawful discrimination based on age and physical
handicap. This matter will be handled by WTI's insurance carrier. Sabharwal
has not instituted action in any civil or criminal court.
6. Relations Commission (Docket No. E-75060A) alleging age
discrimination against WTI. An Answer was filed January 11, 1996 and a fact
finding conference was continued until February 6, 1996.
7. Schafer filed a charge of discrimination based on age and/or
religion against WTI on July 19, 1994, against Criag Adhesives with the EEOC
on July 25, 1994 and against Pat Foust, Vice President of WTI on August 15,
1994. After WTI's Answer was filed, a Notice of a Right to Sue was delivered
to Schafer on June 29, 1995. Schafer filed a complaint dated October 19,
1995 in the United States District Court for the District of New York (Case
No. 95-Civ-3198 (AMW)) claiming (1) violation of the Age Discrimination
Employment Act, (ii) interference with the right to contract, (iii) violation
of the Civil Rights Act, (iv) retaliation with regard to
7
<PAGE>
Schafer's assertion of (i)-(iii), and (v) violation of ERISA. Schafer
requested reinstatement, back and front pay in the aggregate amount of
$750,000, liquidated damages, compensatory damages, punitive damages,
severance pay and reimbursement of attorney fees. An Answer was filed on
November 28, 1995 setting forth 21 affirmative defenses to Schafer's claims.
A scheduling conference was set for January 8, 1996.
8. Yarborough filed a claim with the EEOC (Charge # 100 94 0938)
alleging gender discrimination. This claim was dismissed by the EEOC on
October 30, 1995; however, Yarborough has 90 days from that date to file a
civil case against WTI.
9. Eastern was hired by WTI to deliver the product of certain WTI jobs
and failed to deliver in a timely fashion. WTI has demanded reimbursement
from Eastern for out-of-pocket losses of approximately $90,000 based on
customer credits due to the late delivery. Although Eastern admits delivery
was late, they refuse to assume liability. Negotiations on settlement have
occurred and correspondence from WTI's counsel dated December 11, 1995 for
the presentation by Eastern of a legitimate settlement offer. There has been
no claim filed to date with regard to this matter.
10. WTI has requested reimbursement from SEPTA for damages of $43,461
allegedly suffered due to a power outage caused by the negligence of a SEPTA
employee who hit a power line while digging in the vicinity of the WTI
facility. There has been no claim filed to date with regard to this matter.
11. Volz owns a patent which he claims was infringed by WTI in work
done for the American Bible Society. Outside counsel for WTI opined that the
work does not infringe the patent. Additional related work using the same
manufacturing process is scheduled to be completed in February 1996. There
has been no claim filed to date with regard to this matter.
12. Neveux is alleging a wrongful termination based on age against WTI.
There has been no claim filed to date with regard to this matter. Neveux has
proposed a settlement of $400,000 to resolve this matter.
8
<PAGE>
ENIVIRONMENTAL MATTERS
AIR POLLUTION
a. INSTALLATION OF AIR POLLUTION EQUIPMENT -- WTI has installed air
pollution equipment at its printing facilities. In January 1995, WTI
installed air pollution control equipment at its Salisbury, Maryland facility
to meet new air quality standards imposed by the FCAA at a cost of
approximately $600,000. In July 1994, WTI installed replacement air
pollution control equipment on its Lottery press in North Brunswick, New
Jersey at a cost of approximately $330,000.
b. SETTLEMENT WITH NJDEPE -- WTI, in November 1994, entered a
Stipulation of Settlement with the New Jersey Department of Environmental
Protection and Energy ("NJDEPE") and paid a $100,000 fine for air permit
exceedences. WTI contends that the original air pollution control equipment
did not satisfy its intended purpose and is in litigation with the
manufacturer.
c. MICHIGAN CONSENT JUDGMENT -- In February 1995, WTI satisfied a
Consent Judgment entered into with the Michigan Department of Natural
Resources in February 1993 by installing and maintaining air pollution
control equipment, submitting air emissions reports and paying a $263,000
fine.
ENVIRONMENTAL CLEAN-UP
d. OBLIGATIONS UNDER ISRA -- The purchase of WTI in 1986 triggered
investigatory and remedial obligations under the Environmental Cleanup
Responsibility Act, now called the Industrial Site Recovery Act ("ISRA"),
with respect to its New Jersey facilities. As part of the purchase
agreement, WTI agreed not to seek indemnification from the former parent of
WTI, Beatrice Companies, Inc., for the compliance costs. Beatrice entered
into an Administrative Consent Order ("ACO") with NJDEPE to allow the
purchase to proceed prior to completion of the assessment and cleanup
obligations, WTI maintains a Self-Guarantee of $100,000 for Buildings 1 and 2
in North Brunswick, New Jersey and a Self-Guarantee of $1,000 for the Wheeler
Point Road facility in Newark, New Jersey.
9
<PAGE>
WTI has completed its obligations under ISRA with respect to its Jersey
Avenue, Edwin Street, Forrest Street, Mulberry Street and Veronica Avenue,
New Jersey facilities.
e. GROUNDWATER CONTAMINATION -- At the Buildings 1 and 2 site, WTI is
in the process of delineating groundwater contamination that may have
resulted from discharges from former underground storage tanks. It is
believed this investigation will cost approximately $25,000, exclusive of any
cleanup costs. It is expected that NJDEPE may approve a proposal submitted
by WTI for natural attenuation of groundwater contaminants in lieu of active
groundwater remediation. If approved, WTI believes that cleanup costs will
not be material.
f. WHEELER POINT ROAD CLEANUP PLAN -- In October 1993, WTI submitted
its cleanup plan to the NJDEPE for its Wheeler Point Road facility. In April
1995, WTI conducted additional environmental testing required by NJDEPE prior
to its approval of the plan. Findings suggest that some site contamination
may be attributable to adjacent properties. Further investigatory activities
are needed and cleanup costs are estimated to be $450,000.
g. FORREST AVENUE ASSESSMENT -- During the period of January-March
1993, the United States Environmental Protection Agency ("EPA") conducted an
assessment at WTI's former Forrest Avenue facility in Metuchen, New Jersey.
EPA assigned a Hazard Ranking Score below the threshold score used to refer a
site for further action or proposed inclusion on the National Priority List.
Based upon this score and the prior remedial actions taken by WTI, WTI does
not believe that any material liabilities exist at this site.
h. NEW JERSEY SPILL COMPENSATION AND CONTROL ACT DIRECTIVE -- In March
1987, WTI received a Directive under the New Jersey Spill Compensation and
Control Act from NJDEPE alleging that WTI is jointly and severally liable,
along with 40 other parties, for the cleanup of a landfill located in
Jamesburg, New Jersey. Based upon the tentative allocation ascribed to WTI
of less than 0.057%, WTI believes that its potential cleanup costs relating
to this landfill should not exceed $150,000.
10
<PAGE>
i. NORTH PENN AREA 5 SUPERFUND SITE POTENTIAL LIABILITY -- In October
1990, WTI received from the EPA a notice of potential liability under the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, pertaining to the North Penn Area 5 Superfund site in Colmar,
Pennsylvania. In responding, WTI noted that the substances contaminating the
groundwater are not indigenous to the operations at its Chalfont facility and
the presence of such substances in the groundwater predate WTI's ownership of
the property. Furthermore, WTI believes it is indemnified by the former
owner, BBC Brown Boveri, for any contamination to the property prior to WTI
taking title thereto. BBC Brown Boveri has rejected WTI's request for such
indemnification. There has been no further comment by the EPA to WTI for
approximately three years. WTI cannot assess its liability for cleanup
costs, if any, and if such liability exists, whether or not it is a material.
OSHA
As a result of a citation issued by the Occupational Safety and Health
Administration ("OSHA") in December 1992, alleging violation of OSHA's
general duty clause regarding ergonomics, WTI entered into an Informal
Settlement Agreement with OSHA on January 27, 1993. Under the settlement,
WTI has implemented various abatement procedures including new material
handling equipment and is evaluating further introduction of engineering
controls on the presses at its North Brunswick, facilities in satisfaction of
the December 1995 compliance deadline.
11
<PAGE>
SCHEDULE 2
to Receivables Purchase Agreement
Changes in Financial Condition
None
<PAGE>
SCHEDULE 3
to Receivables Purchase Agreement
Offices of the Sellers Where
Records are Maintained
Seller: Treasure Chest Advertising Company, Inc.
250 West Pratt St.
Baltimore, Maryland 21201
Corporate
409 W. Citrus Edge
Glendora, CA
Corporate
1061 S. Bender
Glendora, CA
Glendora Sales
1155 S. Amelia Ave.
Glendora, CA
San Francisco Sales
1470 Enea Circle Blvd.
Concord, CA
Denver Sales
1333 W. 120th Ave.
Suite 102
Westminster, CO
Hartford Sales
1 Corporate Dr.
Windsor Locks, CT
Delaware Sales
3519 Silverside Rd.
Suite 107, First Floor
Ridgely Building
Concord Plaza
Wilmington, DE
<PAGE>
Miami Sales Office
800 Cypress Creek Rd.
Suite 320
Ft. Lauderdale, FL
Chicago Sales
1931 Rohlwing Rd.
Suite E
Rolling Meadows
Rolling Meadow, IL
Boston Sales
Grove St Crossing
Suite 100
Norwell, MA 02061
Annapolis Sales
706 Giddings Ave., #1
Annapolis, MD
Detroit Sales
5815 Clark Rd.
Suite B
Bath, MI
North Carolina Sales
2 Centerview Dr.
Greensboro, NC
New York Sales
310 Madison Ave. Room 1430
New York, NY
Cleveland Sales Office
8221 Brecksville Rd.
Suite 103, Bldg. 4
Brecksville, OH
Dayton Sales
3430 S. Dixie Dr.
Suite 206
Dayton, OH
<PAGE>
Portland Sales
7931 N.E. Halsey
#212
Portland, OR
Pittsburgh Sales
400 Broad St.
Suite 106A
Sewickley, PA
Memphis Sales
1355 Lynnfield Rd.
Suite 1355 Room 7
Memphis, TN
Dallas Sales
2401 Gateway Dr.
Irving, TX
Salt Lake Sales
2250 S. Redwood Rd.
Salt Lake City, UT
Richmond Sales
7814 Carousel Lane
Richmond, VA
Seattle Sales Office
16300 Christensen Rd.
Suite 217
Riverview Plaza
Seattle, WA
Seller: Laser Tech Color, Inc.
2010 Westridge Dr.
Irving, TX 75038
LaserTech Color/Atlanta
1575 Northside Dr.
Bldg. 100, Suite 230
Atlanta, GA 30318
<PAGE>
LaserTech Color/Illinois
One O'Hare Centre
6250 River Rd.
Suite 3000
Rosemont, IL 60018
LaserTech Color/CA
5ll M. Citrus Edge
Glendora, CA 91740
TC Color/Dallas
8120 Ambassador Row
Dallas, TX 75247
San Antonio Graphics
508 N. Rhapsody
San Antonio. TX 78216
TC Photo/Del Rey Beach
2875 S. Congress, Suite G
Del Rey Beach, FL 33445
Seller: Webcraft Technologies, Inc.
2 Walnut Grove Suite 200
Horsham, PA 19044
Route 1 and Adams Station
North Brunswick, NJ 08902
Washington DC Office
1730 M St., Suite 413
Washington DC
Chicago Sales Office
1211 W. 22nd St.
Suite 508
Oakbrook, IL
New York Sales Office
6 East 39th St.
New York, NY
<PAGE>
LA Sales Office
13160 Mindanao
Suite 270
Los Angeles, CA
Dallas Sales Office
33050 Regent Blvd.
Suite 150
Irving, TX
Minn Sales Office
10201 Wayzata Blvd.
Minnetonka, MN
Ohio Sales Office
7552 Slate Ridge Blvd.
Reynoldsburg, OH
SF Sales Office
201 Sansone St.
San Francisco, CA
Detroit Sales Office
19251 Mack Ave.
Grosse Point Woods, MI
Greensboro Sales Office
4000 Piedmont Parkway
Suite 310
High Point, NC
Commerce Center
205 Worth Commerce Dr.
North Brunswick, NJ
Salisbury Plant
2015 Industrial Parkway
Salisbury, MD
Michigan Plant
294 Airport Dr.
Ypsilanti, MI
2015 Industrial Parkway
Salisbury, MD 21602
<PAGE>
4371 County Line Rd.
Chalfont, PA 18914
Foot of Edwin St.
North Brunswick, NJ 08902
Route 1 and Adams Station
North Brunswick, NJ 08902
Seller: Webcraft Chemicals, Inc.
2 Walnut Grove Suite 200
Horsham, PA 19044
Route 1 and Adams Station
North Brunswick, NJ 08902
27 Veronica Ave.
Franklin Township, NJ 08823
80 Wheeler Point Rd.
Newark, NJ 07105
Anchor Warehouse
6009 8. Malt Ave.
Commerce, CA 90040
Contemporary Distributio
1502 North 25th Ave.
Melrose Park, IL 60160
Ohio Distribution Warehouse
1694 Williams Rd.
Columbus, OH 43207
488 Mulberry St.
Newark, NJ
<PAGE>
SCHEDULE 4
to Purchase Agrecment
Legal Names
None
Trade Names
Seller: Webcraft Chemicals, Inc.
Trade Names: Craig Adhesives Co.
Colorcraft
<PAGE>
SCHEDULE 5
to Purchase Agreement
Software Programs
Seller: Laser Tech Color, Inc.
License, dated October 14. 1989, by and between senex Systems Inc. and
Laser Tech Color, Inc. relating to the ProfiTRAK system software, the
ImageTRAK system software and the CepsTRAK system software
Seller: Webcraft Technology, Inc.
Non-exclusive License Agreement, dated March 30, 1995 by and between
Webcraft Technologies, Inc. and Lawson Associates Inc. relating to the
following software products: General Ledger, Accounts Payable,
Purchasing/Requisitions, Accounts Receivable, Fixed Assets, Project
Accounting, Accounts Payable, Universe/Environment, Report Smith,
Universe/Client, Universe/4GL
Seller: Treasure Chest Advertising Company, Inc.
Application Software License Agreement, dated as of February 26, 1990,
by and between Primac Systems, Inc. and Treasure Chest Advertising Company,
Inc. relating to the following Primac System Software: Primac Base Control,
Extended Payroll System, Job Estimating, Job Costing/Invoicing/Order Entry,
Production Scheduling Shop Floor Data Collection, Inventory Control, Purchase
Order, Sales Analysis, General Ledger Financial Reporting, Accounts
Receivable, Accounts Payable, Fixed Assets.
Seller: Webcraft Chemicals, Inc.
ROI Software Licence Agreement, dated August 7, 1995, between ROI Systems,
Inc. and Webcraft Chemicals, Inc. relating to Accounts Payable, Accounts
Receivable, Bill of Mater1al, General Ledger, Purchasing, Sales Order
Processing, Summarized Sales Analysis.
20
<PAGE>
APPENDIX A
[Same as Appendix A to Pooling Agreement]
<PAGE>
EXHIBIT C
to Certificate Purchase
Agreement Series 1996-1
FORM OF SERIES 1996-1 SUPPLEMENT
<PAGE>
Big Flower (Bridge)
- --------------------------------------------------------------------------------
SERIES 1996-1 SUPPLEMENT
TO POOLING AND SERVICING AGREEMENT
dated as of March 19, 1996
among
BFP RECEIVABLES CORPORATION
as Transferor,
BIG FLOWER PRESS HOLDINGS, INC.
as Servicer,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
BIG FLOWER RECEIVABLES MASTER TRUST
$125,000,000 SERIES 1996-1 CERTIFICATES
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS; INCORPORATION OF TERMS
SECTION 1.1 DEFINITIONS ............................................... 1
SECTION 1.3 INCORPORATION OF TERMS .................................... 21
ARTICLE II DESIGNATION
SECTION 2.1 DESIGNATION ............................................... 21
ARTICLE III CONDITIONS TO ISSUANCE
SECTION 3.1 CONDITIONS TO ISSUANCE..................................... 22
ARTICLE IV PAYMENTS AND ALLOCATIONS
SECTION 4.1 INTEREST; ADDITIONAL AMOUNTS .............................. 22
SECTION 4.2 DAILY CALCULATIONS AND SERIES ALLOCATIONS ................. 23
SECTION 4.3 ALLOCATIONS OF DAILY SERIES COLLECTIONS (OTHER THAN
IN AN EARLY AMORTIZATION PERIOD) ....................... 23
SECTION 4.4 ALLOCATIONS OF DAILY SERIES COLLECTIONS DURING AN EARLY
AMORTIZATION PERIOD..................................... 24
SECTION 4.5 WITHDRAWALS FROM THE EQUALIZATION ACCOUNT ................. 26
SECTION 4.6 AVAILABLE SUBORDINATED AMOUNT ............................. 26
SECTION 4.7 WRITE-OFFS AND RECOVERIES.................................. 27
SECTION 4.8 CERTAIN DILUTION IN AN EARLY AMORTIZATION PERIOD .......... 28
SECTION 4.9 DEFEASANCE................................................. 28
SECTION 4.10 TAX OPINION .............................................. 29
ARTICLE V DISTRIBUTIONS AND REPORTS
SECTION 5.1 DISTRIBUTIONS.............................................. 29
SECTION 5.2 SPECIAL DISTRIBUTIONS ON THE REFINANCING DATE.............. 30
SECTION 5.3 PAYMENTS IN RESPECT OF TRANSFEROR CERTIFICATE.............. 30
SECTION 5.4 DAILY REPORTS AND MONTHLY REPORTS ......................... 31
SECTION 5.5 ANNUAL TAX INFORMATION .................................... 31
SECTION 5.6 PERIODIC PERFECTION CERTIFICATE ........................... 31
SECTION 5.7 OFFICER'S CERTIFICATE...................................... 31
SECTION 5.8 SERVICING REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS......... 32
SECTION 5.9 TRANSITION PERIOD.......................................... 32
<PAGE>
ARTICLE VI EARLY AMORTIZATION EVENTS
SECTION 6.1 EARLY AMORTIZATION EVENTS.................................. 33
SECTION 6.2 EARLY AMORTIZATION PERIOD,................................. 35
ARTICLE VII OPTIONAL REDEMPTION; INDEMNITIES
SECTION 7.1 OPTIONAL REDEMPTION OF INVESTOR INTERESTS ................. 36
SECTION 7.2 INDEMNIFICATION BY TRANSFEROR ............................. 36
SECTION 7.3 INDEMNIFICATION BY SERVICER................................ 37
ARTICLE VIII MISCELLANEOUS
SECTION 8.1 GOVERNING LAW ............................................. 37
SECTION 8.2 COUNTERPARTS............................................... 37
SECTION 8.3 SEVERABILITY OF PROVISIONS ................................ 38
SECTION 8.4 AMENDMENT, WAIVER, ETC. ................................... 38
SECTION 8.5 TRUSTEE ................................................... 38
SECTION 8.6 INSTRUCTIONS IN WRITING.................................... 38
SECTION 8.7 RULE 144A ................................................. 38
SECTION 8.8 SUPPLEMENTAL RATINGS REQUIREMENT........................... 38
EXHIBITS
EXHIBIT A Form of Series 1996-1 Certificate
EXHIBIT B Form of Daily Report
Part 1. For Use other than in Early Amortization Period
Part 2. For Use in Early Amortization Period
EXHIBIT C Form of Monthly Report
Part 1. For Use other than in Early Amortization Period
Part 2. For Use in Early Amortization Period
EXHIBIT D Form of Seller Guaranty
EXHIBIT E Post-Closing Conditions
<PAGE>
This SERIES 1996-1 SUPPLEMENT, dated as of March 19, 1996 (this
"SUPPLEMENT"), is made among BFP RECEIVABLES CORPORATION, a Delaware
corporation, as Transferor, BIG FLOWER PRESS HOLDINGS, INC., a Delaware
corporation ("BIG FLOWER"), as Servicer, and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement, dated as of March 19,
1996, (as it may be amended, supplemented or otherwise modified from time to
time, and as supplemented hereby, the "POOLING AGREEMENT"), among Transferor,
Servicer and Trustee, Transferor may from time to time issue, and direct Trustee
to authenticate, on behalf of the Trust, one or more Series of Certificates
representing undivided interests in the Transferred Assets. Certain terms
applicable to a Series are to be set forth in a Supplement. This Supplement is
a "Supplement" as that term is defined in the Pooling Agreement.
Pursuant to this Supplement, Transferor and Trustee shall create a Series
of Certificates ("SERIES 1995-1") and specify certain of their terms.
ARTICLE I DEFINITIONS; INCORPORATION OF TERMS
SECTION 1.1 DEFINITIONS. (a) Capitalized terms used and not otherwise
defined herein are used as defined in APPENDIX A to the Pooling Agreement. This
Supplement shall be interpreted in accordance with the conventions set forth in
PART B of that APPENDIX A.
(b) Each reference in this Supplement to funds on deposit in the Carrying
Cost Account, the Equalization Account or the Principal Funding Account (or
similar phrase) refers only to funds in the administrative sub-accounts of those
Accounts that are allocated to Series 1996-1. Unless the context otherwise
requires, in this Supplement: (i) each reference to a "Daily Report" or "Monthly
Report" refers to a Daily Report or Monthly Report for the Series 1996-1
Certificates; (ii) each reference to the "Servicing Fee" refers to the Servicing
Fee allocable to Series 1996-1; (iii) each reference to the "Series Collection
Allocation Percentage" or the "Series Loss Allocation Percentage" refers to the
Series Collection Allocation Percentage or Series Loss Allocation Percentage for
the Series 1996-1 Certificates; and (iv) each reference to the Transaction
Documents shall include a reference to the Certificate Purchase Agreement.
(c) Each capitalized term defined below relates only to the Series 1996-1
Certificates and to no other Series of Certificates. Whenever used in this
Supplement, the following words and phrases shall have the following meanings:
"ABR TRANCHE" means, at any time, the portion of the Invested Amount that
is designated by Transferor in accordance with the Certificate Purchase
Agreement to accrue interest based on the Alternate Base Rate.
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"ACCRUAL CONDITION" means that the Trustee and the Required Purchasers
shall have received a form of Daily Report which provides for a daily
determination of the Accrual Reserve in a manner satisfactory to the Required
Purchasers, and the Required Purchasers shall be satisfied that Servicer has the
information necessary and appropriate and is able to determine the Accrual
Reserve as provided in such form of Daily Report on each day thereafter.
"ACCRUAL RESERVE" means on any day, the sum of (a) 1.1 times the Incentive
Payment Accrual, PLUS (b) the aggregate amount of obligations owed by the
Sellers in respect of Incentive Payment Dilution with respect to Participating
Obligors that accrued prior to the current calendar year and have not been paid,
PLUS (c) the Incentive Payment Liquidation Reserve; PROVIDED, HOWEVER, that
until such time as the Agent shall have notified the Trustee and Transferor that
the Accrual Condition has been satisfied, the Accrual Reserve means (x)
$1,250,000, if such day is during the Transition Period, and (y) $2,500,000, if
such day is after the Transition Period.
"ACQUISITION AMOUNT" is defined in SECTION 2.1.
"ADDITIONAL AMOUNTS" means amounts payable pursuant to SECTIONS 4.2, 4.3,
4.5, 4.6 and 10.5 of the Certificate Purchase Agreement.
"ADJUSTED ELIGIBLE RECEIVABLES" means, on any Business Day, the result of
(a) the aggregate Unpaid Balance of Eligible Receivables held by the Trust on
that day, MINUS (b) the Unapplied Cash held by the Trust on that day, PLUS (c)
the Aggregate Retained Balances, in each case as reflected in the Daily Report
for that day.
"ADJUSTMENT CONDITION" means:
(a) with respect to the State Income Tax Reserve relating to any Subject
State, that the Required Purchasers shall have received opinions, prepared by
independent accountants or independent attorneys satisfactory to them, to the
effect that either (i) the Trust will not be liable to pay any State Income Tax
imposed by such Subject State (whether computed on its own income or the income
of Big Flower and its Subsidiaries) or (ii) the Trust will not be taxed on
income earned by any other Person (including but not limited to Big Flower, the
Sellers or Transferor); and
(b) with respect to the Sales Tax Reserve and any state, that the Required
Purchasers shall have received opinions, prepped by independent accountants or
independent attorneys satisfactory to them, to the effect that the Trust will
not be liable for the payment of any Sales Tax arising under the laws of such
state in connection with the Receivables (including any Sales Tax reflected in
the Seller's accounts receivables ledger);
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PROVIDED that in each case the scope of the research described in such opinions
and the conclusions set forth therein are satisfactory to the Required
Purchasers.
"AGED RECEIVABLES RATIO" means, as calculated in each Monthly Report as of
the Cut-Off Date for the related Calculation Period, a fraction (expressed as a
percentage) having (a) a numerator that is the sum of (i) the aggregate Unpaid
Balance of Receivables that remained outstanding 121 to 150 days after their
respective invoice dates, as determined as of the Cut-Off Date for such
Calculation Period, PLUS (ii) the aggregate Unpaid Balance of Receivables that
were written off as uncollectible during the most recently ended Calculation
Period and that, if not so written off, would have been outstanding not more
than 150 days after their respective invoice dates, as determined as of that
Cut-Off Date and (b) a denominator that is the aggregate amount payable pursuant
to invoices giving rise to Receivables that were generated by the Sellers during
the Calculation Period that occurred six Calculation Periods prior to the most
recently ended Calculation Period, as determined as of the Cut-Off Date for such
prior Calculation Period.
"AGENT" means Bankers Trust Company, in its capacity as Agent under the
Certificate Purchase Agreement, together with its successors in that capacity.
The Agent is an "Agent" for purposes of the Pooling Agreement.
"AGGREGATE RETAINED BALANCES" means, on any Business Day, the aggregate of
the balances retained in Lockbox Accounts, Blocked Account or Concentration
Accounts for items in the process of collection but for which funds have not
been made available by the related Lockbox Bank, Blocked Account Bank or
Concentration Account Bank, PROVIDED that (i) no notice of insufficient funds or
similar situation shall exist with respect thereto and (ii) the Unpaid Balance
of Receivables shall have been reduced by an amount equal to such balances.
"ALTERNATE BASE RATE" means, on any day, a fluctuating rate of interest per
annum equal to the higher of:
(a) the rate of interest announced, from time to time, by the Agent as its
prime commercial rate for United States dollar loans made in the United States
for any day, and
(b) the Federal Funds Rate.
Any change in the interest rate resulting from a change in the prime commercial
rate announced by the Agent shall become effective without prior notice to
Transferor or Servicer as of 12:01 a.m., New York City time, on the Business Day
on which each change in the prime commercial rate is announced by the Agent.
The prime commercial rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged by the Agent
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to any customer. The Agent may make commercial loans or other loans at rates of
interest at, above or below the prime commercial rate.
"AMORTIZATION PERIOD" means the period (x) beginning on the earlier of (i)
the date on which a termination notice is given by the Sellers pursuant to
SECTION 8.1 of the Purchase Agreement and (ii) October 15, 2001, and (y) ending
on the earlier of (i) the Expected Final Payment Date and (ii) the date, if any,
on which an Early Amortization Period commences.
"ANNUALIZED SALES" means, at any time with respect to a Participating
Obligor, the result of multiplying Year-to-Date Sales by the then applicable
Time Factor.
"APPLICABLE RATINGS FACTOR" means 2.5.
"APPLICABLE RESERVE RATIO" means, during any Distribution Period, the
greater of (a) the Minimum Required Reserve Ratio and (b) the Required Reserve
Ratios, in each case as calculated in the Monthly Report required to be
delivered on the Report Date immediately prior to the start of that Distribution
Period, PROVIDED that during the period from the Closing Date to the first
Distribution Date thereafter, the Applicable Reserve Ratio shall be 20.754%.
"APPROVAL CONDITION" means, with respect to any event or change in the
terms applicable to this Supplement or the Series 1996-1 Certificates, (i) if
the Series 1996-1 Certificates have been rated, the Modification Condition shall
be satisfied with respect to such event or change, and (ii) such event or change
shall have been approved in writing, prior to becoming effective, by the Agent.
"ASA MEASURING PERIOD" means, for any Cut-Off Date falling in an Early
Amortization Period, the Calculation Period ending on that Cut-Off Date (or the
portion thereof falling after the Early Amortization Calculation Date, in the
case of the first Cut-Off Date falling in the Early Amortization Period).
"AVAILABLE SUBORDINATED AMOUNT" means, at any time during an Early
Amortization Period, the amount calculated pursuant to SECTION 4.6.
"BASE AMOUNT" means, on any Business Day, the result of the following
formula:
[NER x SCAP x (100%-ARR)] - CCRR
where:
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APR = the Applicable Reserve Ratio in effect for that Business Day;
CCRR = the Carrying Cost Receivables Reserve as reported in the Daily
Report for that Business Day;
NER = the Net Eligible Receivables as reported in the Daily Report for
that Business Day; and
SCAP = the Series Collection Allocation Percentage for that Business
Day;
PROVIDED that: from and after the date upon which Transferor gives notice of
prepayment of the Series 1996-1 Certificates pursuant to SECTION 4.9, the Base
Amount shall equal the lower of (i) the Base Amount as calculated above and (ii)
the Base Amount as calculated for purposes of any Series of Certificates being
issued in connection with that prepayment.
"BENCHMARK QUARTER" means, at any time, the corresponding fiscal quarter of
Big Flower in the preceding fiscal year.
"BIG FLOWER" is defined in the PREAMBLE.
"BIG FLOWER CREDIT AGREEMENT" means the Credit Agreement dated as of
November 28, 1995, as amended and restated as of March 19, 1996 among Big
Flower, Treasure Chest Advertising Company, Inc., the financial institutions
named therein, Credit Suisse, as Documentation Agent and Bankers Trust Company,
as Administrative Agent.
"CARRYING COST CASH REQUIRED AMOUNT" means, on any Business Day, an amount
equal to the Current Carrying Costs.
"CARRYING COST RECEIVABLES RESERVE" means, on any Business Day, the result
of:
(a) the Current Carrying Costs; PLUS
(b) the product of (i) the Invested Amount, MULTIPLIED BY (ii) 1.75
TIMES the Certificate Rate, MULTIPLIED BY (iii) a fraction the numerator of
which is the product of 2 and the number of Turnover Days and the
denominator of which is 360; PLUS
(c) the product of (i) the Series Collection Allocation Percentage on
the next preceding Distribution Date, MULTIPLIED BY (ii) the aggregate
Unpaid Balance of Receivables held by Trustee on the next preceding
Distribution Date, MULTIPLIED BY (iii) 2%, MULTIPLIED BY (iv) a fraction
the numerator of which is the product of 2 MULTIPLIED BY the number of
Turnover Days and the denominator of which is 360; PLUS
(d) $60,000 MULTIPLIED BY a fraction, the numerator of which is the
product of 1.5 and the number of the Turnover Days and the denominator of
which is 360; MINUS
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(e) the balance on deposit in the Carrying Cost Account at the
beginning of that Business Day.
"CERTIFICATE PURCHASE AGREEMENT" means the Certificate Purchase Agreement
dated as of the Closing Date among Transferor, Servicer, the purchasers of the
Series 1996-1 Certificates, Credit Suisse as Co-Agent and the Agent. The
Certificate Purchase Agreement is hereby designated a "Transaction Document" for
purposes of the Pooling Agreement.
"CERTIFICATE RATE" means, at any time, the weighted average of the interest
rates on all outstanding Tranches.
"CERTIFICATE SPREAD" means for any Interest Period with respect to the ABR
Tranche or any Eurodollar Tranche, the lesser of (I) the "Applicable RL Margin"
(as defined in the Big Flower Credit Agreement, as in effect on the Closing
Date) for "Eurodollar Loans" or "Base Rate Loans" (as such terms are defined in
the Big Flower Credit Agreement as in effect on the Closing Date), respectively,
as at the first day of such Interest Period, and (II) the margin specified
below:
(a) for the period from the Closing Date up to (but not including) the
day corresponding to the Closing Date in the month falling three months
after the month in which the Closing Date occurs (or if there is no such
corresponding day, through the last day of that third month), (i) with
respect to any Eurodollar Tranche, 0.50% PER ANNUM, and (ii) with respect
to any ABR Tranche, 0% PER ANNUM;
(b) thereafter up to (but not including) the day corresponding to the
Closing Date in the month falling six months after the month in which the
Closing Date occurs (or if there is no such corresponding day, through the
last day of that sixth month), (i) with respect to any Eurodollar Tranche,
1.00% PER ANNUM, and (ii) with respect to any ABR Tranche, 0.25% PER ANNUM;
(c) thereafter up to (but not including) the day corresponding to the
Closing Date in the month falling twelve months after the month in which
the Closing Date occurs (or if there is no such corresponding day, though
the last day of that twelfth month), (i) with respect to any Eurodollar
Tranche, 1.50% PER ANNUM, and (ii) with respect to any ABR Tranche, 0.75%
PER ANNUM; and
(d) thereafter, (i) with respect to any Eurodollar Tranche, 2.00% PER
ANNUM, and (ii) with respect to any ABR Tranche, 1.25% PER ANNUM.
"CLOSING DATE" means March 19, 1996.
"CONCENTRATION FACTOR" means, as of any Cut-Off Date, the greatest of:
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(i) the "Benchmark Percentage" for purposes of CLAUSE (b) of the
definition of "Excess Concentration Balances,"
(ii) two times the "Benchmark Percentage" for purposes of CLAUSE (c)
of that definition,
(iii) three times the "Benchmark Percentage" for purposes of CLAUSE
(d) of that definition; and
(iv) five times the "Benchmark Percentage" for purposes of CLAUSE (e)
of that definition.
"CONTESTED TAX RESERVE" means $1,000,000, which amount represents a reserve
for disputed tax liabilities in the States of New York, Michigan, Ohio and
Pennsylvania; PROVIDED that such reserve may be reduced with the consent of the
Required Purchasers (which consent shall not be unreasonably withheld) upon the
final resolution of all or part of such disputes or upon providing the
Purchasers with evidence satisfactory to them that the actual amount of such
disputed tax liabilities is less than the amount of such reserve.
"CURRENT CARRYING COSTS" means, during any Distribution Period, the sum of
(i) the amount of interest on the Series 1996-1 Certificates and the amount of
the Servicing Fee that will be payable on the next Interest Payment Date and any
other Interest Payment Date falling not later than one week after such Interest
Payment Date PLUS (ii) accrued and unpaid expenses described in Section
7.20(1)(C) of the Pooling Agreement.
"DAILY SERIES COLLECTIONS" is defined in SECTION 4.2.
"DEFERRED PORTION" means, on any day the portion of the Acquisition Amount
as to which payment is deferred, which portion shall equal the sum of the
following amounts (as shown in the Daily Report for such day); (i) the Excess
Concentration Balances, PLUS (ii) the Accrual Reserve, PLUS (iii) the aggregate
unpaid balance of Receivables that are not Eligible Receivables, PLUS (iv) the
Carrying Cost Receivables Reserve, PLUS (v) the Applicable Reserve Ratio TIMES
the Net Eligible Receivables (it being understood that the Deferred Portion may
vary from day to day) PLUS (vi) the Contested Tax Reserve; PROVIDED that the
Deferred Portion shall be fixed as of the last day of the Revolving Period.
"DILUTION HORIZON VARIABLE" means, at any time, a fraction having (a) a
numerator equal to the product of (x) 1.47 and (y) the sum of the aggregate
amounts payable pursuant to invoices giving rise to Receivables and generated by
the Sellers during the Calculation Period ending on the most recent Cut-Off Date
(as of that Cut-Off Date) and (b) a denominator equal to the Net Eligible
Receivables as of the most recent Cut-Off Date.
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"DILUTION RATIO" means, as calculated in each Monthly Report as of the most
recent Cut-Off Date, a fraction (expressed as a percentage) having (a) a
numerator equal to the aggregate amount of Dilution on the Receivables occurring
during the Calculation Period ending on the most recent Cut-Off Date, and (b) a
denominator equal to the aggregate amounts payable pursuant to invoices giving
rise to Receivables that were generated by the Seller during the preceding
Calculation Period (so that, for example, if the Calculation Period specified in
CLAUSE (a) corresponded to the March fiscal month, the Calculation Period in
this CLAUSE (b) would be the one corresponding to the February fiscal month).
"DILUTION RESERVE RATIO" means, as calculated in each Monthly Report, the
result (expressed as a percentage) calculated in accordance with the following
formula:
{(ARF x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV
where:
ADR = the average of the Dilution Ratios during the period of 12
consecutive Calculation Periods ending on the related Cut-Off
Date;
ARF = the Applicable Ratings Factor;
DHV = the Dilution Horizon Variable; and
HDR = the highest Dilution Ratio as of the end of any of the 12
consecutive Calculation Periods ending on the related Cut-Off
Date.
"DILUTION RESERVE RATIO (Z-VALUE)" means, as calculated in each Monthly
Report, the result (expressed as a percentage) calculated in accordance with the
following formula:
[(ARF x ADR) + (Z-value x SD)] x DHV
where:
ADR = the average of the Dilution Ratios during the period of 12
consecutive Calculation Periods ending on the related Cut-Off
Date.
ARF = the Applicable Ratings Factor.
DHV = the Dilution Horizon Variable.
SD = the sample standard deviation, during the period of 12
consecutive Calculation Periods ending on the related Cut-Off
Date, of the Dilution Ratio.
"DRC" means Duff & Phelps Rating Co.
"EARLY AMORTIZATION CALCULATION DATE" means the day before an Early
Amortization Period begins.
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"EARLY AMORTIZATION PERIOD" means the period beginning on the date (if any)
specified in SECTION 6.2 and ending on the day on which the Invested Amount has
been reduced to
"EURODOLLAR TRANCHE" means, during any Interest Period, any portion of the
Invested Amount that is designated by Transferor in accordance with the
Certificate Purchase Agreement to accrue interest based on the Reserve-Adjusted
Eurodollar Rate.
"EXCESS CONCENTRATION BALANCES" means, on any day and with respect to an
Obligor, the aggregate outstanding balances of Eligible Receivables it owes
that, expressed as a percentage of the Adjusted Eligible Receivables, exceeds
the following percentages for the following Obligors:
(a) 100% for any Tier-1 Obligor;
(b) 18.75% for any Tier-2 Obligor;
(c) 9.375% for any Tier-3 Obligor;
(d) 6.25% for any Tier-4 Obligor, and
(e) 3.75% for any Tier-5 Obligor.
For purposes of placing Obligors in each of the tiers specified above, if an
Obligor does not have either a commercial paper rating or a senior actual or
implied debt rating from the Specified Rating Agencies, but is the wholly-owned
direct or indirect Subsidiary of a Person that has either such rating, such
Obligor shall be placed in the same tier as such Person would be placed if it
was an Obligor. Each of the percentages above is called a "BENCHMARK
PERCENTAGE." Transferor may from time to time, by notice in any Monthly Report
(and, in each case, after satisfying the Approval Condition) increase or
decrease any Benchmark Percentage. Any such change shall also be given effect
for purposes of the definition of "Concentration Factor" and consequently may
result in a change to the Concentration Factor.
EXPECTED FINAL PAYMENT DATE" means April 15, 2002.
"FEDERAL FUNDS RATE" means (a) the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for the day (or, if the day is
not a Business Day, the immediately preceding Business Day) by the Federal
Reserve Bank of New York; PROVIDED that if the rate is not so published for any
Business Day, the rate for purposes of this clause will be the average of the
quotations for the day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it, PLUS (b) 100 basis
points.
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"FINAL SCHEDULED PAYMENT DATE" means October 15, 2002.
"FIRST ISSUANCE DATE" means March 19, 1996.
"FULLY FUNDED DATE" means the first date falling in the Amortization Period
or an Early Amortization Period on which there are funds on deposit in the
Carrying Cost Account and the Principal Funding Account that, in the aggregate,
equal or exceed the Investor Repayment Amount and any Servicing Fee payable to
anyone other than a Big Flower Person on the first Distribution Date falling
after that date.
"GUARANTOR" means Big Flower, in its capacity as the guarantor under the
Seller Guaranty.
"HOLDBACK ACCOUNT TERMINATION DATE" is defined in SECTION 4.4.
"HOLDER" means a Holder (as defined in the Pooling Agreement) of a
Certificate.
"INCENTIVE MAXIMUM" means, at any time and with respect to any
Participating Obligor and any Incentive Target, the maximum possible liability
of the Sellers to such Participating Obligor with respect to purchasing
incentive programs, arising as a result of Year-to-Date Sales to such
Participating Obligor (assuming that such Participating Obligor's purchases from
the Sellers will meet or exceed such Incentive Target).
"INCENTIVE PAYMENT ACCRUAL" means, at any time, the aggregate of all
Incentive Maximums calculated, as follows:
(i) determine, with respect to each Incentive Target for each
Participating Obligor, the result of (a) Annualized Sales to such
Participating Obligor less (b) 75% of such Incentive Target;
(ii) determine the highest Incentive Target (if any) for which CLAUSE
(i) above yields a result greater than or equal to zero;
(iii) determine the Incentive Maximum for the Incentive Target
specified in CLAUSE (ii) above.
"INCENTIVE PAYMENT ADJUSTMENT FACTOR" means, at any time, the greater of
(a) 1.00 and (b) a fraction, the numerator of which is the aggregate amount of
Incentive Payment Dilution accrued by the Sellers with respect to Participating
Obligors during the immediately preceding calendar quarter and the denominator
of which is the portion of Year Earlier Incentive Payments accrued with respect
to Participating Obligors during the corresponding quarter in the preceding
calendar year.
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"INCENTIVE PAYMENT DILUTION" means the Sellers' liability for incentive
payments or discounts to Obligors under monthly, quarterly and annual purchasing
incentive programs (including volume rebate programs) for their customers.
"INCENTIVE PAYMENT LIQUIDATION RESERVE" means the product of (a) the
Incentive Payment Adjustment Factor, TIMES (b) the Incentive Payment Per Diem,
TIMES (c) a number equal to 2 TIMES the number of Turnover Days.
"INCENTIVE PAYMENT PER DIEM" at any time will equal the quotient of the
Year Earlier Incentive Payments DIVIDED by 365.
"INCENTIVE TARGET" means, with respect to a Participating Obligor and a
fiscal year of Big Flower, the aggregate amount of purchases required to be made
by such Participating Obligor during such fiscal year to be entitled to a
specified incentive payment or discount from the Sellers, as determined in good
faith by the Sellers (it being understood that a given Participating Obligor may
have more than one Incentive Target).
"INTERCREDITOR PROVISIONS" means the following provisions of the Big Flower
Credit Agreement: Sections 9.01 (xvii), 9.02 (x), 9.04 (xiv), 9.05 (xvii), (xix)
and (xx), 9.10 (iii), 9.15, and 10.11, the last two sentences of Section 9.11
and the definitions of Receivables Amendment Conditions, Receivables Bridge
Facility, Receivables Documents, Receivables Facility, Receivables Facility
Assets, Receivables Facility Financing Costs, Receivables Maximum Funding
Amount, Receivables Pooling Agreement, Receivables Purchasers, Receivables
Stated Amount, Receivables Subsidiary and Subsidiary Guarantor.
"INTEREST PAYMENT DATE" means any date upon which interest is payable with
respect to the ABR Tranche or any Eurodollar Tranche, as specified in SECTION
4.1.
"INTEREST PERIOD" means:
(a) as to the ABR Tranche (if any) from time to time, (i) the period
from the Closing Date to the first subsequent Distribution Date and (ii)
each Distribution Period thereafter; and
(b) as to each Eurodollar Troche (if any) from time to time, each
period from the date upon which that Eurodollar Tranche was first
designated as such pursuant to the Certificate Purchase Agreement (or the
end of the next preceding Interest Period for such Eurodollar Tranche, if
there has been one) to the date that is one month, two months or three
months, at the option of Transferor, thereafter; and if any Interest Period
for a Eurodollar Tranche would otherwise end on a day that is not a
Business Day, such Eurodollar Tranche shall instead end on the next
Business Day (or, if the next Business Day falls in the next calendar
month, then on the next preceding Business Day).
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"INVESTED AMOUNT" means, at any time, the sum of the purchase prices paid
for Purchases made pursuant to (and as defined in) the Certificate Purchase
Agreement at or prior to that time, reduced (but not below zero) by (a) the
aggregate amount of all distributions that have been made to the Holders of the
Series 1996-1 Certificates on account of principal, and (b) the amount of all
Investor Write-Offs that have been applied to reduce the Invested Amount (net of
Investor Allocable Recoveries and Investor Allocable Dilution Adjustments that
have been applied to reinstate the Invested Amount).
"INVESTOR ALLOCABLE DILUTION" means, for any ASA Measuring Period, the
product of the aggregate amount of Dilution for that ASA Measuring Period as to
which neither the applicable Seller nor the Guarantor has made any payment
required by SECTIONS 3.1 and 3.5 of the Purchase Agreement, MULTIPLIED BY the
Series Loss Allocation Percentage as of the beginning of that ASA Measuring
Period, MULTIPLIED BY the Investor Allocation Percentage as of the first
Business Day of that ASA Measuring Period.
"INVESTOR ALLOCABLE DILUTION ADJUSTMENTS" is defined in SECTION 4.8.
"INVESTOR ALLOCABLE LOSS AMOUNT" means, for any ASA Measuring Period, the
product of the Loss Amount for that ASA Measuring Period, MU1TIPLIED by the
Series Loss Allocation Percentage as of the beginning of that ASA Measuring
Period, MULTIPLIED BY the Investor Allocation Percentage as of the first
Business Day of that ASA Measuring Period.
"INVESTOR ALLOCABLE RECOVERIES" means, for any ASA Measuring Period, the
product of the Net Recoveries for that ASA Measuring Period, MULTIPLIED BY the
Series Loss Allocation Percentage as of the beginning of that ASA Measuring
Period, MULTIPLIED BY the Investor Allocation Percentage as of the first
Business Day of that ASA Measuring Period.
"INVESTOR ALLOCATION PERCENTAGE" means:
(x) on any Business Day falling in the Revolving Period, a fraction
(expressed as a percentage, which in any event may not exceed 100%) (a) the
numerator of which is the Net Invested Amount as of that Business Day, and
(b) the denominator of which is the Base Amount as of that Business Day;
and
(y) on any Business Day falling in the Amortization Period or an Early
Amortization Period, a fraction (expressed as a percentage, which in any
event may not exceed 100%) (a) the numerator of which is the Net Invested
Amount as of the first day of the Amortization Period or the Early
Amortization Calculation Date, as applicable, and (b) the denominator of
which is the Base Amount as of the first day of the Amortization Period or
the Early Amortization Calculation Date, as applicable.
"INVESTOR OWNERSHIP PERCENTAGE" means, on any Business Day, a fraction
(expressed as a percentage, which in any event may not exceed 100%) (x) the
numerator of which is the
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Acquisition Amount on such day and (y) the denominator of which is the excess of
(i) the Unpaid Balance of Receivables on such day over (ii) the Unapplied Cash
on such day; PROVIDED that the Investor Ownership Percentage shall be fixed on
the last day of the Revolving Period.
"INVESTOR REPAYMENT AMOUNT" means, on any Business Day falling in the
Amortization Period or an Early Amortization Period, the sum of (a) the
outstanding principal amount of the Series 1996-1 Certificates, PLUS (b) the
interest and any Additional Amounts known to be payable on the Series 1996-1
Certificates on the first Distribution Date falling after that date.
"INVESTOR WRITE-OFFS" means, as calculated in any Monthly Report relating
to a Calculation Period falling completely or partially in an Early Amortization
Period:
(a) if the Available Subordinated Amount is greater than zero at the
end of the related ASA Measuring Period, zero; and
(b) if the Available Subordinated Amount is zero at the end of the
related ASA Measuring Period (after taking into account any reduction in
the Available Subordinated Amount shown in such Monthly Report), the excess
(if any) of (x) the sum of the Investor Allocable Loss Amount and the
Investor Allocable Dilution MINUS the sum of Investor Allocable Recoveries
and Investor Allocable Dilution Adjustment for the related ASA Measuring
Period, over (y) the Available Subordinated Amount as of the beginning of
that ASA Measuring Period.
"LOSS AMOUNT" means, with respect to any ASA Measuring Period, an amount
equal to the positive difference (if any) of (a) the amount of Receivables held
by the Trust that became Write-Offs during that ASA Measuring Period, MINUS (b)
the amount of Recoveries received during that ASA Measuring Period.
"LOSS RESERVE RATIO" means, as calculated in each Monthly Report, the
result (expressed as a percentage) of (a) the Applicable Ratings Factor
MULTIPLIED BY (b) the highest average of the Aged Receivables Ratio for any
three consecutive Calculation Periods that occurred during the preceding 12
consecutive Calculation Periods ending on the most recent Cut-Off Date
MULTIPLIED BY (c) a fraction having (i) a numerator equal to the sum of the
aggregate amounts payable pursuant to invoices giving rise to Receivables
generated by the Sellers during the three Calculation Periods preceding or
ending on the most recent Cut-Off Date, and (ii) a denominator equal to the Net
Eligible Receivables, as of the most recent Cut-Off Date.
"LOSS RESERVE RATIO (Z-VALUE)" means, as calculated in each Monthly Report,
the result (expressed as a percentage) of (a) the Loss Reserve Ratio PLUS (b)
the product of the Z-value MULTIPLIED BY the sample standard deviation of the
Aged Receivables Ratio during the preceding 12 consecutive Calculation Periods
ending on the most recent Cut-Off Date.
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"LOSS TO LIQUIDATION RATIO" means, as calculated in each Monthly Report, a
fraction (a) the numerator of which is the aggregate Unpaid Balance of
Receivables (net of recoveries) that were written off as uncollectible or
(without duplication) converted into promissory notes during the three preceding
Calculation Periods in accordance with the Credit and Collection Policy of the
applicable Seller, and (b) the denominator of which is the aggregate amount of
Collections on the Receivables received during such three Calculation Periods.
"MAXIMUM EXPOSURE AMOUNT" shall be calculated by the Servicer in each
Monthly Report as of the preceding Cut-Off Date (or as of such more recent date
as Servicer may select) and shall equal the positive result (if any) of (a) the
product of (i) the Adjusted Eligible Receivables, MULTIPLIED BY (ii) the result
(expressed as a decimal) of 100% MINUS the Pro Forma Reserve, MINUS (b) the Net
Invested Amount, in each case calculated as of such Cut-Off Date or such more
recent date, as the case may be.
"MINIMUM REQUIRED RESERVE RATIO" means the sum, as of any Cut-Off Date, of
(a) the Concentration Factor for the Cut-Off Date PLUS (b) the product of the
average of the Dilution Ratios for the period of 12 preceding Calculation
Periods ending on the Cut-Off Date, MULTIPLIED BY the Dilution Horizon Variable
for the Cut-Off Date; PROVIDED that in no event shall the Minimum Required
Reserve Ratio be less than 18.75%.
"NET ELIGIBLE RECEIVABLES" means, at any time, (a) the Adjusted Eligible
Receivables, MINUS (b) the then aggregate amount of all Excess Concentration
Balances with respect to all Obligors, MINUS (c) the Accrual Reserve, MINUS (d)
the Contested Tax Reserve, MINUS (e) the State Income Tax Reserve, MINUS (f) the
Sales Tax Reserve, MINUS (g) the Post-Closing Reserve; it being understood that
(i) the amounts referred to in the preceding clauses shall be calculated without
duplication and (ii) Incentive Payment Dilution may be excluded from the amount
of Dilution in the Daily Reports and Monthly Reports.
"NET INVESTED AMOUNT" means, on any Business Day, the Invested Amount,
reduced by the aggregate balance on deposit in the Equalization Account and the
Principal Funding Account.
"NET RECOVERIES" means, with respect to any ASA Measuring Period, an amount
equal to the positive difference (if any) of (a) the amount of Recoveries
received in that ASA Measuring Period MINUS (b) the amount of Receivables that
became Write-Offs in that ASA Measuring Period.
"PARTICIPATING OBLIGOR" means (i) an Obligor that participates in a
purchasing incentive program, or (ii) any other Obligor designated by the
Sellers as a participant in a purchasing incentive program, subject in the case
of this clause (ii) to satisfaction of the Approval Condition.
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"POST-CLOSING CONDITIONS" means the conditions listed on Exhibit E hereto.
"POST-CLOSING RESERVE" means: (a) at all times during the Transition
Period, zero, and (b) for each day during any calendar week after the Transition
Period on which any Post-Closing Condition has not been satisfied to the
reasonable satisfaction of the Required Purchasers, an amount equal to the Post-
Closing Reserve in effect on the first Business Day of the immediately preceding
calendar week PLUS, if the Required Purchasers in their sole discretion deem an
additional reserve to be appropriate for such calendar week, $500,000.
"PRINCIPAL PAYMENT DATE" means (i) any date on which the Invested Amount is
to be reduced pursuant to SECTION 3.1 of the Certificate Purchase Agreement,
(ii) any date on which any prepayment is to be made pursuant to SECTION 4.9,
(iii) the end of each Interest Period in respect of the next maturing Eurodollar
Tranche and/or ABR Tranche, in such order as the Agent shall select so as to
minimize "breakage costs," (iv) each Distribution Date falling in an Early
Amortization Period (beginning with the Distribution Date falling in the
Calculation Period after the Calculation Period in which the Early Amortization
Period begins) and (v) any Distribution Date falling on or after the Expected
Final Payment Date.
"PRO FORMA RESERVE" shall be calculated by the Servicer as of the preceding
Cut-Off Date in each Monthly Report (or as of such more recent date as Servicer
may select in a Daily Report), and shall be the greatest of the amounts
determined pursuant to clauses (x), (y) and (z) below:
(x) the greatest of (i) the "Benchmark Percentage" for purposes of clause
(c) of the definition of "Excess Concentration Balances," (ii) two times
the "Benchmark Percentage" for purposes of CLAUSE (d) of that definition
and (iii) three times the "Benchmark Percentage" for purposes of CLAUSE
(e) of that definition; and
(y) a percentage calculated in the same manner as the Loss Reserve Ratio
for such Cut-Off Date, except that the Applicable Ratings Factor shall be
deemed to be 1.5; and
(z) a percentage calculated in the same manner as the Loss Reserve Ration
(Z-value) for such Cut-Off Date, except that the Z-value shall be deemed to
be 1.96.
"RATING AGENCY" means S&P and DCR.
"REFERENCE BANKS" means Bankers Trust Company and Credit Suisse.
"REFINANCING DATE" is defined in SECTION 4.9.
"REQUIRED PURCHASERS" is defined in SECTION 9.9 of the Certificate Purchase
Agreement.
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"REQUIRED RECEIVABLES" means, on any Business Day:
(a) So long as an Early Amortization Period has not commenced, the result
of the following formula:
LA + CCRR R
---------- ---
(1 - ARR) X NER
where:
ARR = the Applicable Reserve Ratio in effect for that Business Day;
CCRR = the Carrying Cost Receivables Reserve, as reported in the Daily
Report for that Business Day;
LA = the Invested Amount;
NER = the Net Eligible Receivables as reported in the Daily Report for
that Business Day; and
R = the aggregate Unpaid Balance of Receivables held by the Trust as
reported in the Daily Report for that Business Day.
(b) If an Early Amortization Period has commenced, the result of the
following formula:
AIA + ASA + UCCRR
where:
AIA = the Adjusted Invested Amount, which shall be the Invested Amount
as of the end of the Revolving Period, reduced (but not below
zero) by the amount of all Investor Write-Offs (net of Investor
Allocable Recoveries and Investor Allocable Dilution Adjustments
that have been applied to reinstate the Invested Amount));
UCCRR = the Unfunded Carrying Cost Receivables Reserve on that Business
Day; and
ASA = the Available Subordinated Amount on that Business Day.
"REQUIRED RESERVE RATIO" means, as calculated in each Monthly Report, the
greater of (a) the Loss Reserve Ratio PLUS the Dilution Reserve Ratio, and (b)
the Loss Reserve Ratio (Z-value) PLUS the Dilution Reserve Ratio (Z-value).
"REQUIRED SERIES HOLDERS" means the Required Purchasers.
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"RESERVE-ADJUSTED EURODOLLAR RATE" means for any Interest Period, the rate
PER ANNUM obtained by dividing (i) the arithmetic average (rounded upward to the
nearest 1/100 of one percent) of the offered quotation, if any, to first class
banks in the interbank Eurodollar market by Reference Banks for U.S. dollar
deposits of amounts in same day funds comparable to the principal amount of the
Certificate of that Reference Bank with maturities comparable to such Interest
Period as of approximately 10:00 a.m. (New York time) on the second Business Day
prior to the first day of that Interest Period by (ii) a percentage equal to
100% MINUS the stated maximum rate of all reserve requirements (including any
marginal, emergency, supplemental, special or other reserves) applicable on such
second preceding Business Day to any member bank of the Federal Reserve System
in respect of "Eurocurrency liabilities" as defined in Regulation D of the
Federal Reserve Board (or any successor category of liabilities under Regulation
D).
"REVOLVING PERIOD" means the period beginning on the Closing Date and
ending on the day before the first day of the Amortization Period or an Early
Amortization Period.
"SALES TAX" means any sales, use or similar tax that arises from sales of
goods or services in any jurisdiction, including any interest, penalties, surtax
or additions to tax in respect of the foregoing.
"SALES TAX PER DIEM" means at any time (a) 1.5 times the amount of Sales
Tax accrued (or required to be accrued) by the Sellers during the applicable
Benchmark Quarter (other than Sales Tax arising under the laws of any state as
to which the Adjustment Condition is satisfied), DIVIDED by (b) 90.
"SALES TAX RESERVE" means:
(a) during the Transition Period, zero; and
(b) at any other time, the product of (i) 2 MULTIPLIED BY the number
of Turnover Days MULTIPLIED BY the Sales Tax Per Diem, PLUS (ii) an amount
equal to the Sales Tax Per Diem for each day that has elapsed since the end
of the most recently ended fiscal quarter of Big Flower, MINUS any such
Sales Tax which has actually been paid for such quarter, PLUS (iii) the
aggregate amount of Sales Tax accrued (or required to be accrued) by the
Sellers prior to or during the most recently ended fiscal quarter of Big
Flower (other than Sales Tax arising under the laws of any state as to
which the Adjustment Condition is satisfied), to the extent such Sales Tax
has not been paid.
"SERIES ALLOCABLE DILUTION ADJUSTMENTS" means, for any ASA Measuring
Period, the product of the aggregate amount of payments pursuant to SECTIONS 3.1
and 3.5 of the Purchase Agreement pursuant to the Seller Guaranty received
during that ASA Measuring
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Period relating to Dilution that occurred prior to that ASA Measuring Period,
MULTIPLIED BY the Series Loss Allocation Percentage as of the beginning of that
ASA Measuring Period.
"SERIES 1996-1" is defined in the PREAMBLE.
"SERIES 1996-1 Certificates" means any of the Series 1996-1 Certificates
issued pursuant to this Supplement, each of which shall be substantially in the
form of EXHIBIT A.
"SPECIFIED AMOUNT" at any time means an amount equal to the product of (i)
1.5 MULTIPLIED BY (ii) 9.3% of the aggregate amounts payable pursuant to
invoices giving rise to Receivables that were generated by all Sellers during
the applicable Benchmark Quarter, MULTIPLIED BY (iii) .20%.
"SPECIFIED RATING AGENCIES" means, as to any Obligor: (a) if both DCR and
S&P rate such Obligor, DCR and S&P; and (b) if S&P rates such Obligor, but DCR
does not, S&P. If DCR rates such Obligor, but S&P does not, then the Obligor is
deemed to be an unrated Obligor.
"STATED AMOUNT" means as to any Certificate, the initial maximum principal
amount that may be required to be funded by the Holder of such Certificate, as
such amount may be reduced pursuant to SECTION 2.3 of the Certificate Purchase
Agreement.
"STATE INCOME TAX" means any income or franchise or other tax on or
measured by net income and imposed by a Subject State, including any interest,
penalties, surtax or additions to tax in respect of any of the foregoing.
"STATE INCOME TAX PER DIEM" means for any Subject State:
(a) prior to the satisfaction of the Adjustment Condition for such
Subject State, (i) 1.5 TIMES the amount of State Income Tax accrued (or
required to be accrued) by Big Flower, the Sellers and the Trust during the
Benchmark Quarter for such Subject State, DIVIDED by (ii) 90; and
(b) thereafter, (i) 1.5 TIMES the maximum potential liability of the
Trust for State Income Tax required to be accrued (assuming the Trust would
be a taxable entity) during the Benchmark Quarter for such Subject State,
DIVIDED by (ii) 90;
PROVIDED that, prior to the first anniversary of the Closing Date, the sum of
the amounts determined for all Subject States pursuant to clauses (a) and (b)
above shall not be less than the Specified Amount DIVIDED by 90; and PROVIDED,
FURTHER, that the State Income Tax Per Diem shall be zero following the
satisfaction of the Adjustment Condition for each Subject State pursuant to
clause (i) of the definition of Adjustment Condition.
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"STATE INCOME TAX RESERVE" means the sum for all Subject States of
(a) for each Subject State as to which the Adjustment Condition has
been satisfied, (i) the product of 2 MULTIPLIED by the number of Turnover
Days MULTIPLIED by the State Income Tax Per Diem for such Subject State,
PLUS (ii) an amount equal to the State Income Tax Per Diem for such Subject
State for each day that has elapsed since the end of the most recently
ended fiscal quarter of Big Flower, MINUS any such State Income Tax which
has actually been paid for such quarter, PLUS (iii) the maximum potential
liability of the Trust for State Income Tax required to be accrued
(assuming the Trust would be a taxable entity) prior to or during such most
recently ended fiscal quarter of Big Flower for such Subject State, to the
extent such State Income Tax has not been paid; and
(b) for each Subject State as to which the Adjustment Condition has
not been satisfied, the sum (determined without duplication) of (i) the
amount determined pursuant to CLAUSE (a) above PLUS (ii) the product of 2
MULTIPLIED BY the number of Turnover Days MULTIPLIED by the State Income
Tax Per Diem for such Subject State, PLUS (iii) an amount equal to the
State Income Tax Per Diem for such Subject State for each day that has
elapsed since the end of the most recently ended fiscal quarter of Big
Flower, MINUS any such State Income Tax which has actually been paid for
such quarter, PLUS (iv) the aggregate amount of State Income Tax accrued
(or required to be accrued) by Big Flower, the Sellers and the Trust prior
to or during such most recently ended fiscal quarter of Big Flower for such
Subject State, to the extent that such State Income Tax has not been paid.
"SUBJECT STATE" means either the State of California or the State of New
Jersey.
"TIER-1 OBLIGOR" means any Obligor that has (a) a commercial paper rating
from the Specified Rating Agencies of at least "A-1+" (or its equivalent) or (b)
a senior actual or implied debt rating from the Specified Rating Agencies of at
least "AAA" (or its equivalent); provided that if such Obligor has both a
commercial paper rating from the Specified Rating Agencies and a senior actual
or implied debt rating from the Specified Rating Agencies, such Obligor must
have a commercial paper rating from the Specified Rating Agencies of at least
"A-1+" (or its equivalent) and a senior actual or implied debt rating from the
Specified Rating Agencies of at least "AAA" (or its equivalent) to be a Tier-1
Obligor.
"TIER-2 OBLIGOR" means any Obligor (other than a Tier-1 Obligor) that has
(a) a commercial paper rating from the Specified Rating Agencies of at least "A-
1" (or its equivalent) or (b) a senior actual or implied debt sting from the
Specified Rating Agencies of at least "AA-" (or its equivalent), provided that
if such Obligor has both a commercial paper rating from the Specified Rating
Agencies and a senior actual or implied debt rating
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from the Specified Rating Agencies, such Obligor must have a commercial paper
rating from the Specified Rating Agencies of at least "A-1" (or its equivalent)
and a senior actual or implied debt rating from the Specified Rating Agencies of
at least "AA-" (or its equivalent) to be a Tier-2 Obligor.
"TIER-3 OBLIGOR" means any Obligor (other than a Tier-1 Obligor or a Tier-2
Obligor) that has (a) a commercial paper rating from the Specified Rating
Agencies of at least "A-2" (or its equivalent) or (b) a senior actual or implied
debt rating from the Specified Rating Agencies of at least "A-" (or its
equivalent), provided that if such Obligor has both a commercial paper sting
from the Specified Rating Agencies and a senior actual or implied debt rating
from the Specified Rating Agencies, such Obligor must have a commercial paper
rating from the Specified Rating Agencies of at least "A-2" (or its equivalent)
and a senior actual or implied debt rating from the Specified Rating Agencies of
at least "A-" (or its equivalent) to be a Tier-3 Obligor.
"TIER-4 OBLIGOR" means any Obligor (other than a Tier-1 Obligor, a Tier-2
Obligor or a Tier-3 Obligor) that has (a) a commercial paper rating from the
Specified Rating Agencies of at least "A-3" (or its equivalent) or (b) a senior
actual or implied debt rating from the Specified Rating Agencies of at least
"BBB-" (or its equivalent), provided that if such Obligor has both a commercial
paper rating from the Specified Rating Agencies and a senior actual or implied
debt rating from the Specified Rating Agencies, such Obligor must have a
commercial paper rating from the Specified Rating Agencies of at least "A-3" (or
its equivalent) and a senior actual or implied debt rating from the Specified
Rating Agencies of at least "BBB-" (or its equivalent) to be a Tier-4 Obligor.
"TIER-5 OBLIGOR" means any Obligor other than a Tier-1 Obligor, a Tier-2
Obligor, a Tier-3 Obligor or a Tier-4 Obligor.
"TIME FACTOR" means, at any time, a fraction, (x) the numerator of which is
365 and (y) the denominator of which is the number of days that have elapsed
during the current calendar year.
"TRANCHE" means each of the ABR Tranche and each Eurodollar Tranche.
"TRANSFEROR Indemnified Losses" is defined in SECTION 7.2.
"TRANSFEROR Indemnified Parry" is defined in SECTION 7.2.
"TRANSFEROR PAYMENT PERCENTAGE" means, on any Business Day, the difference
of 100% MINUS the Investor Allocation Percentage on that Business Day.
"TRANSITION PERIOD" means the period from the Closing Date to April 15,
1996.
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"UNAPPLIED CASH" means, on any Business Day, available funds received in
the Master Collection Account and reflected in the Daily Report for that
Business Day that have not been applied as Collections on a particular
Receivable on or prior to the time as of which that Daily Report is prepared.
"UNFUNDED CARRYING COST RECEIVABLES RESERVE" means, on any Business Day
falling in an Early Amortization Period, the difference (but not less than zero)
of (a) the Carrying Cost Receivables Reserve as of the Early Amortization
Calculation Date, MINUS (b) the aggregate Collections deposited into the
Carrying Cost Account during the portion of the Early Amortization Period up to
and including that Business Day.
"UNMATURED EARLY AMORTIZATION EVENT" means an event or condition that, upon
the giving of notice or the passage of time, would become an Early Amortization
Event.
"YEAR EARLIER INCENTIVE PAYMENTS" means, at any time, the aggregate amount
of payments made (or to be made) or discounts given (or to be given) to
Participating Obligors by the Sellers on account of Incentive Payment Dilution
during the then most recently ended calendar year.
"YEAR-TO-DATE SALES" means, with respect to a Participating Obligor as of
any time, the aggregate amount of year-to-date purchases by such Participating
Obligor from the Sellers during the then-current fiscal year of Big Flower,
determined as of the last Business Day of the most recently completed calendar
week.
"Z-value" means 2.58.
SECTION 1.2 MODIFICATION CONDITION. For so long as the Series 1996-1
Certificates remain outstanding, for purposes of the Transaction Documents the
definition of the term "Modification Condition" shall be as follows:
"MODIFICATION CONDITION" means, with respect to any action, that (i) each
Rating Agency has confirmed in writing that such action will not result in a
reduction or withdrawal of the rating of any outstanding Series or Purchased
Interest that was rated by such Rating Agency, and (ii) if any Series has not
been rated, the Trustee and the Required Series Holders for that Series shall
have consented in writing to such action.
SECTION 1.3 INCORPORATION OF TERMS. The terms of the Pooling Agreement are
incorporated in this Supplement as if set forth in full herein. As supplemented
by this Supplement, the Pooling Agreement is in all respects ratified and
confirmed and both together shall be read, taken and construed as one and the
same agreement. If the terms of this Supplement and the terms of the Pooling
Agreement conflict, the terms of this Supplement shall control with respect to
the Series 1996-1 Certificates.
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ARTICLE II DESIGNATION
SECTION 2.1 DESIGNATION. There is hereby created a Series to be known as
the "Series 1996-1 Certificates." Subject to the conditions set forth in ARTICLE
III, Trustee shall authenticate and deliver the Series 1996-1 Certificates, to
or upon the order of Transferor in an aggregate Stated Amount equal to
$125,000,000. Notwithstanding the terms of SECTION 6.1 of the Pooling Agreement,
the Series 1996-1 Certificates shall be in minimum denominations of $5,000,000
and in integral multiples of $1,000,000 in excess of that amount.
The Series 1996-1 Certificates represent an undivided interest in the
portion of the Transferred Assets allocable to this Series, which undivided
interest (expressed as a percentage) shall equal the Investor Ownership
Percentage. The amount payable on any day by the Holders of such Certificates
for the acquisition of such undivided interest (the "ACQUISITION AMOUNT") shall
equal the Invested Amount PLUS the Deferred Portion (it being understood that
the Acquisition Amount may vary from day to day); PROVIDED that the Acquisition
Amount shall be fixed on the last day of the Revolving Period.
The Deferred Portion of the Acquisition Amount shall be subject to a
holdback and shall be paid to the extent (and only to the extent) Daily Series
Collections are not required to pay amounts described in CLAUSES FIRST through
FOURTH of SECTION 4.3 or SECTION 4.4 (as applicable), it being understood that
the Holders of Series 1996-1 Certificates shall not be liable to pay any portion
of the Deferred Portion not paid out of Daily Series Collections.
ARTICLE III CONDITIONS TO ISSUANCE
SECTION 3.1 CONDITIONS TO ISSUANCE. Trustee will not authenticate the
Series 1996-1 Certificates unless all conditions to the issuance of the Series
1996-1 Certificates under SECTION 6.10 of the Pooling Agreement shall have been
satisfied.
ARTICLE IV PAYMENTS AND ALLOCATIONS
SECTION 4.1 INTEREST; ADDITIONAL AMOUNTS. (a) Subject to SECTION 4.1 of the
Certificate Purchase Agreement, Transferor may from time to time allocate the
outstanding principal amount under the Series 1996-1 Certificates to an ABR
Tranche and up to four Eurodollar Tranches. Interest on the ABR Tranche shall be
payable on each Distribution Date, and interest on a Eurodollar Tranche shall be
payable at the end of the applicable Interest Period, except that interest on
the amount of any principal repaid on any other date shall be payable on the
date of the repayment. If any such day is not a Business Day, interest shall
instead be due on the next Business Day (or, if the next Business Day falls in
the next calendar month, then on the next preceding Business Day).
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(b) Interest on a Eurodollar Tranche shall accrue during any Interest
Period at a rate per annum equal to the Reserve Adjusted Eurodollar Rate PLUS
the Certificate Spread and shall be calculated on the basis of actual days over
a year of 360 days.
(c) Interest on the ABR Tranche shall accrue at the Alternate Base Rate in
effect from time to time PLUS the Certificate Spread and shall be calculated on
the basis of actual days over a year of 365 or 366 days, as the case may be.
(d) Interest with respect to the Series 1996-1 Certificates due but not
paid on any Distribution Date or the last day of an Interest Period, as the case
may be, will be due on the next Distribution Date or last day of the next
Interest Period with additional interest on the amount at 2% PER ANNUM above the
Alternate Base Rate to the extent permitted by law; PROVIDED, HOWEVER, that
Transferor may direct any such overdue interest to be paid on any Business Day
prior to such next Distribution Date or last day of the next Interest Period
from funds on deposit in the Carrying Cost Account.
(e) Additional Amounts shall also be payable with respect to the Series
1996-1 Certificates as specified in the Certificate Purchase Agreement and to
the extent (but only to the extent) that funds become available for such
Additional Amounts in accordance with SECTIONS 4.2 and 4.3.
SECTION 4.2 DAILY CALCULATIONS AND SERIES ALLOCATIONS. On each Business
Day, Servicer shall calculate the Series Collection Allocation Percentage for
Series 1996-1, the Carrying Cost Cash Required Amount and, during the Revolving
Period and the Amortization Period, the Base Amount. On each Business Day during
the Revolving Period or the Amortization Period, Servicer shall also determine
whether the Net Invested Amount is greater than, equal to or less than the Base
Amount.
Pursuant to SECTION 4.3 of the Pooling Agreement, Servicer shall allocate
the Series Collection Allocation Percentage of available funds received in the
Master Collection Account since the preceding Business Day's allocation to the
Series Interest of Series 1996-1. The portion of funds so allocated, together
with any funds released from the Equalization Account in accordance with SECTION
4.5 on that Business Day, are called the "Daily Series Collections."
SECTION 4.3 ALLOCATIONS OF DAILY SERIES COLLECTIONS (OTHER THAN IN AN EARLY
AMORTIZATION PERIOD). On each Business Day (other than a Business Day falling in
an Early Amortization Period or after the Fully Funded Date), Servicer shall
allocate the lesser of (i) the Investor Allocation Percentage of the Daily
Series Collections and (ii) the aggregate amount of Daily Series Collections
required to fund the items described IN PRIORITIES FIRST through FOURTH below,
to the following purposes, in the priority indicated (and to the extent of Daily
Series Collections available):
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FIRST, to the Carrying Cost Account until the amount allocated to the
Carrying Cost Account equals the Carrying Cost Cash Required Amount;
SECOND, if Transferor shall have notified the Agent in accordance with
SECTION 3.1 of the Certificate Purchase Agreement that it desires to reduce
the Invested Amount or if the Amortization Period has begun, to the
Principal Funding Account until the funds on deposit in that account equal
the amount of such reduction or (during the Amortization Period) the
Invested Amount, PROVIDED that the amount allocated pursuant to this
PRIORITY SECOND on any Business Day shall not exceed the product of (x) the
Investor Ownership Percentage, MULTIPLIED BY (y) the excess of the Daily
Series Collections over the amounts allocated on that Business Day pursuant
to PRIORITY FIRST;
THIRD, if during the Revolving Period the Net Invested Amount is
greater than the Base Amount, to the Equalization Account in an amount
sufficient to reduce the Net Invested Amount to an amount equal to the Base
Amount; and
FOURTH, to hold in the Master Collection Account the amount necessary
to pay on the next Distribution Date all amounts owed by Transferor in
respect of Additional Amounts payable to the Holders.
On such Business Day, Servicer shall allocate the remainder of the
Daily Series Collections to make current and/or deferred transfer payments
to Transferor in respect of the Transferor Certificate.
If, on any day, the amount of Collections that is then allocated to the
Carrying Cost Account exceeds the amount of Collections that is then required to
be allocated to the Carrying Cost Account, Servicer shall reallocate such
Collections on such day to one or more of the obligations described in
PRIORITIES SECOND through FOURTH above, and in the last sentence of the
preceding paragraph, in the order of priority set forth therein.
In addition, if, on any day, funds on deposit in the Master Collection
Account and available for allocation under PRIORITY FOURTH are less than the
amount of the obligations described therein, then the available Collections
shall be allocated by Servicer to the holders of such obligations PRO RATA
according to the respective amounts of such obligations held by them.
On any Business Day falling after the Fully Funded Date, all Daily Series
Collections shall be paid to Transferor as current and/or deferred transfer
payments.
SECTION 4.4 ALLOCATIONS OF DAILY SERIES COLLECTIONS DURING AN EARLY
AMORTIZATION PERIOD. On each Business Day falling in an Early Amortization
Period and prior to or on the
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Fully Funded Date, Servicer shall allocate the Daily Series Collections to the
following purposes, in the priority indicated (and to the extent of Daily Series
Collections available):
FIRST, to the Carrying Cost Account to the extent that the balance
therein is less than the amount of Current Carrying Costs (other than any
Servicing Fee payable to any Big Flower Person) payable on the Distribution
Date relating to the Calculation Period during which such Business Day
falls;
SECOND, to the Principal Funding Account and to Transferor (or, prior
to the Holdback Account Termination Date, to the Holdback Account) in the
following amounts:
(a) the amount to be transferred to the Principal Funding Account
shall equal the product of (i) the Investor Allocation Percentage,
MULTIPLIED BY (ii) the excess of the Daily Series Collections over the
amount allocated on that Business Day pursuant to PRIORITY FIRST,
PROVIDED that the amount allocated pursuant to this CLAUSE (a) on any
Business Day shall not exceed the product of (x) the Investor
Ownership Percentage, MULTIPLIED BY (y) the excess of the Daily Series
Collections over the amounts allocated on that Business Day pursuant
to PRIORITY FIRST; and PROVIDED FURTHER that the aggregate amount so
deposited in the Principal Funding Account shall not exceed the
Invested Amount; and
(b) the amount to be transferred to Transferor (or, prior to the
Holdback Account Termination Date, to the Holdback Account) shall
equal the product of (i) the Transferor Payment Percentage, MULTIPLIED
BY (ii) the excess of the Daily Series Collections over the amount
allocated on that Business Day pursuant to PRIORITY FIRST;
THIRD, to hold in the Master Collection Account the amount necessary
to pay on the next Distribution Date all Additional Amounts payable to the
Holders;
FOURTH, to pay any Servicing Fee payable to any Big Flower Person on
the Distribution Date relating to the Calculation Period during which such
Business Day falls; and
FIFTH, the balance to Transferor, PROVIDED that prior to the Holdback
Account Termination Date, amounts payable to Transferor pursuant to this
PRIORITY FIFTH shall be deposited into the Holdback Account and held as
PROVIDED below.
The "HOLDBACK ACCOUNT TERMINATION DATE" shall be the earlier to occur of
(i) the date that falls twelve months after the beginning of the Early
Amortization Period and (ii) the Fully Funded Date. If at any time prior to the
Holdback Account Termination Date, the
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amount of funds on deposit in the Holdback Account exceeds the difference of (1)
the Investor Repayment Amount MINUS (2) the amount of funds then held in the
Carrying Cost Account and the Principal Funding Account that are available to
pay the Investor Repayment Amount, then the amount of such excess funds shall be
released from the Holdback Account and paid to Transferor as current and/or
deferred transfer payments. On the Holdback Account Termination Date, Servicer
shall calculate an amount equal to (x) the aggregate amount of funds held in the
Holdback Account, MINUS (y) the aggregate Investor Allocable Dilution for the
Early Amortization Period as to which no Series Allocable Dilution Adjustments
have been received. The amount of such difference, if positive, will be paid to
Transferor. The funds remaining in the Holdback Account after the payment of
such amount to Transferor shall be transferred to the Master Collection Account
and applied to the items listed in PRIORITIES FIRST through FIFTH above, in that
order (except that no such funds shall be allocated to Transferor or the
Holdback Account pursuant to PRIORITY SECOND and the amount allocable to the
Principal Funding Account shall not be limited by application of the Investor
Allocation Percentage).
If, on any day, funds on deposit in the Master Collection Account and
available for allocation under PRIORITY THIRD are less than the amount of the
obligations described therein, then the available Collections shall be allocated
by Servicer to the holders of such obligations pro rata according to the
respective amounts of such obligations held by them.
On any Business Day falling after the Fully Funded Date, all Daily Series
Collections shall be paid to Transferor in respect of the Transferor
Certificate.
SECTION 4.5 WITHDRAWALS FROM THE EQUALIZATION ACCOUNT. On any Business Day
during the Revolving Period on which no Early Amortization Event or Unmatured
Early Amortization Event exists, Servicer may instruct Trustee in writing to
withdraw funds from the Equalization Account and apply such funds as Daily
Series Collections, so long as the Net Invested Amount would not exceed the Base
Amount after giving effect to such transfer and application. On the first day of
the Amortization Period or an Early Amortization Period, Servicer shall instruct
Trustee to transfer the entire balance in the Equalization Account to the
Principal Funding Account.
SECTION 4.6 AVAILABLE SUBORDINATED AMOUNT. (a) If an Early Amortization
Period begins, Servicer shall promptly calculate the Available Subordinated
Amount as of the Early Amortization Calculation Date and report such amount in
the Daily Report for the first day in the Early Amortization Period. Servicer
shall also calculate the Available Subordinated Amount as of each Cut-Off Date
falling in the Early Amortization Period, such calculation to be reflected in
the related Monthly Report.
(b) The Available Subordinated Amount as of the Early Amortization
Calculation Date shall equal the product of (x) the Investor Allocation
Percentage, MULTIPLIED BY (y) the result of:
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(i) the product of the Unpaid Balance of Receivables held by Trustee
at the opening of business on the Early Amortization Calculation Date,
MULTIPLIED BY the Series Collection Allocation Percentage on that date;
MINUS
(ii) the sum of (i) the lesser of (A) the Base Amount and (B) the Net
Invested Amount and (ii) the Carrying Cost Receivables Reserve at the
opening of business on the Early Amortization Calculation Date.
(c) The Available Subordinated Amount, as of any Cut-Off Date in the Early
Amortization Period, shall equal the result of:
(i) the Available Subordinated Amount as of the preceding Cut-Off Date
(or as of the Early Amortization Calculation Date, in the case of the first
Cut-Off Date falling in the Early Amortization Period); MINUS
(ii) the Investor Allocable Loss Amount with respect to the ASA
Measuring Period ending on that Cut-Off Date; MINUS
(iii) any Investor Allocable Dilution with respect to the ASA
Measuring Period ending on that Cut-Off Date; PLUS
(iv) subject to SECTIONS 4.7 and 4.8, the Investor Allocable
Recoveries and Investor Allocable Dilution Adjustments with respect to the
ASA Measuring Period ending on that Cut-Off Date.
(d) Notwithstanding the foregoing, in no event shall the Available
Subordinated Amount at any time be less than zero or greater than the initial
Available Subordinated Amount calculated pursuant to SUBSECTION (b).
SECTION 4.7 WRITE-OFFS AND RECOVERIES. (a) In each Monthly Report required
to be delivered during the Early Amortization Period, Servicer shall calculate
the Investor Write- Offs and the Investor Allocable Recoveries for the most
recently ended ASA Measuring Period.
(b) If the Investor Write-Offs calculated in any Monthly Report exceed
zero, the Invested Amount and the outstanding principal amount of the Series
1996-1 Certificates shall be reduced by the amount of the Investor Write-Offs
with effect from the related Distribution Date.
(c) If the Invested Amount has been reduced on account of any Investor
Write-Offs, then any Investor Allocable Recoveries with respect to any
Calculation Period ending after the reduction takes place shall be applied to
reinstate the Invested Amount and the outstanding principal amount of the Series
1996-1 Certificates, to the extent of such prior
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reductions that have not previously been reinstated, with effect from the
related Distribution Date. If Investor Allocable Recoveries are so applied to
reinstate the Invested Amount and the outstanding principal amount of the Series
1996-1 Certificates on any Distribution Date, then Investor Allocable Recoveries
shall be applied to increase the Available Subordinated Amount on the same
Distribution Date only to the extent of the excess, if any, of the Investor
Allocable Recoveries, minus the amount of Investor Allocable Recoveries so
applied to reinstate the Invested Amount.
SECTION 4.8 CERTAIN DILUTION IN AN EARLY AMORTIZATION PERIOD. (a) In each
Monthly Report required to be delivered during the Early Amortization Period,
Servicer shall calculate the Investor Allocable Dilution and the Series
Allocable Dilution Adjustments for the most recently ended ASA Measuring Period.
(b) If the Investor Allocable Dilution calculated in any Monthly Report is
greater than zero, and there are funds in the Holdback Account, then those funds
(up to an amount equal to the amount of the Investor Allocable Dilution), shall
be allocated (i) first, in accordance with priority first of the first paragraph
of SECTION 4.4, (ii) second, to the Principal Funding Account (in accordance
with priority second of the first paragraph of SECTION 4.4), so long as the
aggregate amount on deposit therein does not exceed the Invested Amount and
(iii) third, in accordance with PRIORITIES THIRD through FIFTH of the first
paragraph of SECTION 4.4, in that priority.
(c) If the Available Subordinated Amount or the Invested Amount has been
reduced on account of any Investor Allocable Dilution, then (i) any Series
Allocable Dilution Adjustments with respect to any Calculation Period ending
after the reduction takes place and (ii) any additional funds deposited in the
Holdback Account (the "INVESTOR ALLOCABLE DILUTION ADJUSTMENTS") shall be
allocated (x) first, to reinstate the Invested Amount and the outstanding
principal amount of the Series 1996-1 Certificates, and (y) second, to reinstate
the Available Subordinated Amount, in each case to the extent not previously
reinstated. Any amount so allocated on any day shall be allocated (i) first, in
accordance with priority first of SECTION 4.4, (ii) second, to the Principal
Funding Account, so long as the aggregate amount on deposit therein does not
exceed the Invested Amount and (iii) third, in accordance with priorities third
through FIFTH of the first paragraph of SECTION 4.4, in that priority.
SECTION 4.9 DEFEASANCE. On any Business Day falling in the Revolving Period
(but with not less than three Business Days prior written notice from Servicer
to the Holders), Servicer may, upon instruction from Transferor, cause the
Series 1996-1 Certificates to be prepaid in full (but not in part) by causing
the Series Interest to be conveyed to one or more Persons (who may be the
holders of a new Series issued substantially contemporaneously with such
prepayment) for a cash purchase price in an amount equal to the sum of (a) the
Invested Amount, PLUS (b) to the extent not available in the Carrying Cost
Account, accrued and unpaid interest on the Series 1996-1 Certificates to the
day of such prepayment (the "REFINANCING DATE"), plus (c) to the extent not
available from funds set aside pursuant to PRIORITY FOURTH of SECTION 4.3, any
Additional Amounts owed with respect to the Series
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1996-1 Certificates (including any Additional Amounts arising as a result of
such prepayment). No such prepayment or conveyance shall, however, be permitted
if as a result thereof Transferor or any of its Affiliates would acquire such
Series Interest or the underlying Receivables. The purchase price shall be
deposited in the Principal Funding Account and shall be distributed to the
Agent, for further distribution to the Holders, on the Refinancing Date in
accordance with the terms of SECTION 5.2.
SECTION 4.10 TAX OPINION. If any Tax Opinion is required to be delivered in
connection with the Series 1996-1 Certificates, the term "Tax Opinion" shall
have the meaning specified below:
"Tax Opinion" means, with respect to any action, an Opinion of Counsel to
the effect that, for Federal income tax and applicable state income and
franchise tax purposes, (a) such action will not adversely affect the
characterization of the Investor Certificates of Series 1996-1 as debt or
partnership interests, (b) following such action the Trust should not be treated
as an association (or publicly traded partnership) taxable as a corporation, (c)
such action should not be treated as a taxable event to any Series 1996-1
Investor Certificateholder or Certificate Owner.
ARTICLE V DISTRIBUTIONS AND REPORTS
SECTION 5.1 DISTRIBUTIONS. On each Distribution Date and (with respect to
clause (b) below) each Principal Payment Date, other than a Distribution Date
that may be a Refinancing Date, Trustee shall, in accordance with instructions
set out in the applicable Daily Report, distribute to the Agent, for further
distribution among the Holders, the following amounts:
(a) accrued and unpaid interest on the ABR Tranche, and any additional
interest payable pursuant to SECTION 4.1, to the extent funds are available
for such payment in the Carrying Cost Account;
(b) on each Principal Payment Date, all funds deposited in the
Principal Funding Account on or prior to the most recent Cut-Off Date (but
in no event in excess of the Invested Amount) shall be distributed in
reduction of the Invested Amount;
(c) if, on the Expected Final Payment Date or any Distribution Date
falling in an Early Amortization Period, the funds on deposit in the
Carrying Cost Account (less any Servicing Fee payable on that day to anyone
other than a Big Flower Person) will be equal to or greater than the
Invested Amount (after giving effect to the distribution required by
SUBSECTION (b)), then an amount equal to such remaining Invested Amount
shall be withdrawn from the Carrying Cost Account and distributed in
reduction of the Invested Amount; and
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(d) any Additional Amounts payable with respect to Series 1996-1
Certificates to the extent that funds have been allocated for those
Additional Amounts pursuant to PRIORITY FOURTH of SECTION 4.3 or PRIORITY
THIRD of SECTION 4.4.
On each Distribution Date, Trustee shall also, in accordance with
instructions set out in the applicable Daily Report, distribute the Servicing
Fee to the Servicer to the extent that funds are available for that purpose in
the Carrying Cost Account.
On the last day of each Interest Period for a Eurodollar Tranche, Trustee
shall, in accordance with instructions set out in the applicable Daily Report,
distribute to the Agent, for further distribution among the Holders, accrued and
unpaid interest on such Eurodollar Tranche, to the extent funds are available
for such payment in the Carrying Cost Account.
On any Business Day, Trustee shall, in accordance with instructions set out
in the applicable Daily Report, distribute to the Agent, for further
distribution among the Holders, overdue interest payable pursuant to SECTION
4.1(d) on such Business Day, to the extent funds are available for such payment
in the Carrying Cost Account.
SECTION 5.2 SPECIAL DISTRIBUTIONS ON THE REFINANCING DATE. On the
Refinancing Date, Trustee shall, in accordance with instructions set out in the
applicable Daily Report, distribute to the Agent, for further distribution among
the Holders, the following amounts:
(a) all interest accrued on the Series 1996-1 Certificates to the
Refinancing Date, to the extent funds are available for such payment in the
Carrying Cost Account or have been deposited in the Principal Funding
Account pursuant to SECTION 4.9;
(b) all funds deposited in the Principal Funding Account pursuant to
SECTION 4.9; and
(c) any Additional Amounts payable with respect to the Series 1996-1
Certificates to the extent that funds for those Additional Amounts have
been allocated pursuant to PRIORITY FOURTH of SECTION 4.3 or PRIORITY THIRD
of SECTION 4.4 or deposited in the Principal Funding Account pursuant to
SECTION 4.9.
Any amounts payable to the Holders of Certificates pursuant to this SECTION
shall be paid to the Agent, and the Agent shall distribute such amounts to such
Holders.
SECTION 5.3 PAYMENTS IN RESPECT OF TRANSFEROR CERTIFICATE. On each day on
which funds are allocated pursuant to SECTIONS 4.3 and 4.4 {and subject to the
terms of SECTION 4.4 relating to the Holdback Account), Trustee shall, in
accordance with instructions set out in the applicable Daily Report, distribute
to Transferor, in respect of the Transferor Certificate, all funds allocated for
that purpose in accordance with those SECTIONS. In addition, after the Invested
Amount has been repaid in full and all interest and Additional Amounts owed to
the
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Holders have been paid, any additional funds on deposit in the Carrying Cost
Account, the Equalization Account or the Principal Funding Account shall
similarly be paid to Transferor, in respect of the Transferor Certificate.
SECTION 5.4 DAILY REPORTS AND MONTHLY REPORTS. Each Daily Report and
Monthly Report shall be substantially in the applicable form set out in EXHIBIT
B or C or in such other form as may be satisfactory to Servicer and Trustee and
consistent with the terms of this Supplement and the Pooling Agreement. Copies
of each Monthly Report shall be provided free of charge by the Servicer to the
Holders of Series 1996-1 Certificates.
SECTION 5.5 ANNUAL TAX INFORMATION. On or before February 15 of each
calendar year, beginning with calendar year 1996, Servicer, on behalf of
Trustee, shall furnish or cause to be furnished to each Person who at any time
during the preceding calendar year was a Holder the information for the
preceding calendar year, or the applicable portion thereof during which the
Person was a Holder, as is required to be provided by an issuer of indebtedness
under the Internal Revenue Code to the holders of the issuer's indebtedness and
such other customary information as is necessary to enable such Holders to
prepare their federal income tax returns. Servicer's obligations under the
preceding sentence shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Agent to the
specified Persons pursuant to the Pooling Agreement or any requirements of the
Internal Revenue Code as from time to time in effect. Notwithstanding anything
to the contrary contained in this Agreement, Trustee shall, to the extent
required by applicable law, from time to time furnish to the appropriate Persons
a Form 1099-INT within the period required by applicable law.
SECTION 5.6 PERIODIC PERFECTION CERTIFICATE. On or before December 1 of
each calendar year, beginning with calendar year 1996, Servicer, on behalf of
Trustee, shall furnish or cause to be furnished to Trustee and the Agent an
Officer's Certificate setting forth a list of all changes in (a) the name,
identity or corporate structure of Transferor or any Seller and (b) the chief
executive office of Transferor or any Seller (or in the place of business of
Transferor or any Seller that has only one place of business) that have taken
place since the date of the Officer's Certificate most recently delivered
pursuant to this SECTION 5.6 (or since the Closing Date, in the case of the
first such Officer's Certificate to be delivered), or indicating that no such
events have taken place, and stating in each case what filings of UCC financing
statements, or amendments thereto, relating to the Transaction Documents have
been made in connection with each such event (identifying the date and filing
index numbers for each). Any financing statement identified in such an Officer's
Certificate delivered to Trustee shall be deemed to have been identified to
Trustee in writing for purposes of SUBSECTION 11.1(c)(v) of the Pooling
Agreement. If any such new UCC financing statements are filed, Servicer shall
cause Trustee to be named as secured party (in the case of any filing against
Transferor) or assignee of the secured party (in the case of any filing against
a Seller).
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SECTION 5.7 OFFICER'S CERTIFICATE. In addition to the annual statements required
to be delivered by Servicer pursuant to SECTION 3.2(j) of the Pooling Agreement,
Servicer will also deliver to Trustee and each Rating Agency on or before August
31, 1996, an Officer's Certificate stating, as to each signer thereof, that (i)
a review of the activities of the Servicer during the period from the Closing
Date to June 30, 1996 and of performance under the Pooling Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under the Pooling Agreement in all material respects throughout the period
covered by such Officer's Certificate, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and remedies therefor being pursued.
SECTION 5.8 SERVICING REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS. (a) In
addition to the servicing reports required to be delivered pursuant to SECTION
3.7(a) of the Pooling Agreement, on or before August 31, 1996, Servicer shall,
as an expense of Servicer paid out of the Servicing Fee, cause Deloitte & Touche
or another firm of recognized independent public accountants that is generally
recognized as being among the "big six" (which may also render other services to
Servicer, the Sellers or Transferor) to furnish a report to Trustee, Servicer
and Transferor (which report shall be addressed to Trustee and the Purchasers
and shall relate to the period from the Closing Date to the last day of the most
recently ended fiscal quarter). The accountant's report shall set forth the
results of its performance of the procedures described in EXHIBIT D to the
Pooling Agreement with respect to the Monthly Reports and Daily Reports
delivered to Trustee pursuant to SECTION 3.5 of the Pooling Agreement during the
period covered by such accountant's report.
(b) The accountant's report described in CLAUSE (a) shall state that the
accountant has compared the amounts contained in the Monthly Reports and a
sample randomly selected from all Daily Reports delivered to Trustee during the
period covered by the report with the records (including computer records) from
which the amounts were derived and that, on the basis of such comparison, the
amounts are in agreement with the documents and records, except for such
exceptions as it believes to be immaterial and such other exceptions as shall be
set forth in the report. A copy of the report may be obtained by a Holder by a
request in writing to Trustee addressed to the Corporate Trust Center.
SECTION 5.9 TRANSITION PERIOD. (a) During the Transition Period, Servicer
and Transferor shall (i) use their best efforts to cause the Adjustment
Condition to be satisfied, and (ii) provide the Agent with all information
necessary or appropriate to evaluate whether such conditions are satisfied and
whether State Income Tax Reserve and the Sales Tax Reserve are being properly
calculated by Servicer.
(b) At all times prior to the satisfaction of the Accrual Condition or the
Post-Closing Conditions, as applicable, Servicer and Transferor shall (i) use
their best efforts to cause the Accrual Condition and/or the Post-Closing
Conditions, as the case may be, to be satisfied,
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and (ii) provide the Agent with all information necessary or appropriate to
evaluate whether such conditions are satisfied and whether the Accrual Reserve
and the Post-Closing Reserve are being properly calculated by Servicer.
ARTICLE VI EARLY AMORTIZATION EVENTS
SECTION 6.1 EARLY AMORTIZATION EVENTS. Each of the following shall
constitute an "EARLY AMORTIZATION EVENT":
(a) any of the following shall occur:
(i) failure on the part of Transferor or Servicer to make
any payment of the principal amount of the Series 1996-1
Certificates when due, or to make any deposit required by the
terms of any Transaction Document within one Business Day after
the date the deposit is required to be made, or to make any
payment of any interest on the Series 1996-1 Certificates or any
other payment required by the terms of any Transaction Document
on or before three Business Days after the date such payment is
required to be made; or
(ii) failure on the part of Servicer to deliver a Daily
Report within the time period required under SECTION 3.5(c) of
the Pooling Agreement, and continuance of such failure for five
Business Days; provided that if the Servicer shall have estimated
the Base Amount in the Daily Report for one or more days due to
adverse circumstances beyond its control (as described in, and
subject to the limitations in, such SECTION 3.5(c)), then the
five day grace period specified in this CLAUSE (ii) shall be
reduced by the number of days on which the Base Amount was
estimated (of, if such number of days exceeds five, shall be
reduced to zero); or
(iii) failure on the part of the Servicer to deliver a
Monthly Report within the time required under SECTION 3.5(d) of
the Pooling Agreement and the applicable Supplement or PI
Agreement, and continuance of such failure for three Business
Days; or
(iv) failure on the part of Transferor, Guarantor, Servicer
or any Seller duly to observe or perform in any material respect
SECTION 6.10, 6.1(h), 6.1(i), 6.1(j), 6.3(a), 6.3(b), 6.3(c),
6.3(e) or 6.30 of the Purchase Agreement or SECTION 7.2(c),
7.2(d), 7.2(e), 7.20, 7.2(h), 7.2(i), 7.20), 7.2(k), 7.2(m) or
7.2(o) of the Pooling Agreement, which failure continues
unremedied for a period of five Business Days; or
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(v) failure on the part of Transferor, Guarantor, Servicer
or any Seller duly to observe or perform any other covenant or
agreement set forth in any Transaction Document, which failure
continues unremedied for a period of 30 days; or
(vi) Guarantor gives notice of termination of the Seller
Guaranty;
(b) any representation or warranty made by a Seller in SUBSECTION
5.1(d), 5.1(k), 5.1(n), 5.1(o) or 5.1(r) of the Purchase Agreement or by
Transferor in SUBSECTION 2.3(a)(i), 2.3(a)(ii) or 7.1(i) of the Pooling
Agreement shall prove to have been incorrect in any material respect when
made, and continues to be incorrect in any material respect for a period of
five Business Days, or any other representation or warranty made by
Transferor, Servicer or any Seller in any Transaction Document shall prove
to have been incorrect in any material respect when made, and continues to
be incorrect in any material respect for a period of 30 days; PROVIDED that
a mistake in the representation of a Receivable as an Eligible Receivable
or the breach of a representation and warranty with respect to a Receivable
shall not constitute an Early Amortization Event unless and until the
applicable Seller has failed to make the cash payments (if any) owed under
SECTIONS 3.1 and 3.5 of the Purchase Agreement in respect of such mistake
or breach (it being understood that certain of such mistakes or breaches
may result in a non-cash adjustment under the Purchase Agreement);
(c) a Bankruptcy Event shall occur with respect to Transferor,
Servicer, Guarantor or any Seller, or Transferor shall become unable, for
any reason, to transfer Receivables or other Transferred Assets to the
Trust in accordance with the provisions of this Agreement and the Pooling
Agreement; PROVIDED that if, at the time any event that would, with the
passage of time, become a Bankruptcy Event occurs as a result of a
bankruptcy proceeding being filed against Transferor or any Seller, then,
on and after the day on which the bankruptcy proceeding is filed until the
earlier to occur of the dismissal of the proceeding and the Early
Amortization Commencement Date, Transferor shall not purchase Receivables
and Related Assets from the affected Seller or, if Transferor is the
subject of the proceeding, transfer Receivables and Related Transferred
Assets to the Trust;
(d) the Trust or Transferor shall be required to be registered as an
"investment company" under and within the meaning of the Investment Company
Act of 1940, as amended;
(e) the Net Invested Amount exceeds the Base Amount for a period of
four or more consecutive Business Days;
(f) a Servicer Default shall have occurred and shall not have been
remedied;
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(g) Big Flower shall cease to own, directly or indirectly, 100% of the
issued and outstanding capital stock of Transferor;
(h) the Internal Revenue Service or the PBGC files one or more Tax or
ERISA Liens against the assets of Transferor or any Seller (including
Receivables) and either (x) such Tax or ERISA Liens remain in effect for
fifteen days, or (y) the aggregate amount secured thereby exceeds
$2,000,000;
(i) the cessation of, or the failure to create, a valid first-priority
perfected ownership or security interest in favor of Trustee in the
Receivables or the rights of Transferor under the Purchase Agreement;
(j) the Invested Amount is not paid in full on the Expected Final
Payment Date;
(k) Transferor is unable to pay the purchase price for new Receivables
by increasing the principal amount of the Buyer Notes as provided in
SECTION 3.1 of the Purchase Agreement, and such inability to pay for new
Receivables continues for five consecutive Business Days;
(1) any foreclosure or similar proceeding in respect of any adverse
claim on any Buyer Note or the Transferor's common stock shall have been
commenced; or title to any Buyer Note or Transferor's common stock shall
pass to the holders of such adverse claim, it being understood that the
grant of a security interest in the stock of Transferor or any Buyer Note
pursuant to the Big Flower Credit Agreement or to a creditor of a Seller
that is party to an Intercreditor Agreement shall not be an Early
Amortization Event; or
(m) the Intercreditor Provisions shall be amended, waived, modified or
breached without the prior written consent of the Agent.
SECTION 6.2 EARLY AMORTIZATION PERIOD. Upon the occurrence and continuance
of any Early Amortization Event described in SUBSECTION 6.1(c), an Early
Amortization Period shall commence without any notice or other action on the
part of Trustee or the Series 1996-1 Certificateholders, immediately upon the
occurrence of such Early Amortization Event. Upon the occurrence and continuance
of any other Early Amortization Event, after the applicable grace period, if
any, set forth in such subsection, if so directed by the Required Series
Holders, Trustee shall by notice then given in writing to Transferor and
Servicer, declare that an Early Amortization Period has commenced as of the date
of Transferor's receipt of the notice.
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ARTICLE VII OPTIONAL REDEMPTION; INDEMNITIES
SECTION 7.1 OPTIONAL REDEMPTION OF INVESTOR INTERESTS. On any Distribution
Date occurring during an Early Amortization Period with respect to the Series
1996-1 Certificates on or after the date that the aggregate Unpaid Balance of
the Receivables then included in the Receivables Pool is reduced to ten percent
or less of the aggregate Unpaid Balance of the Receivables then included in the
Receivables Pool as of the commencement of such Early Amortization Period,
Transferor shall have the option to redeem the Series 1996-1 Series Interest.
The purchase price will be an amount equal to the Invested Amount plus accrued
and unpaid interest (and accrued and unpaid interest with respect to interest
that was due but not paid on any prior Distribution Date) through the day
preceding the Distribution Date at the Certificate Rate applicable to the Series
PLUS the aggregate amount by which the Invested Amount has been reduced on
account of Investor Write-Offs and Investor Allocable Dilution (and not
subsequently reinstated) PLUS any Additional Amounts then due. Upon the tender
of the outstanding Certificates of the Series by the Holders, Trustee shall
distribute the amounts, together with all funds on deposit in the Principal
Funding Account that are allocable to the Series 1996-1 Certificates, to the
Holders of the Series on the next Distribution Date in repayment of the
principal amount and accrued and unpaid interest owing to the Holders. Following
any redemption, the Holders of the Series shall have no further rights with
respect to the Receivables. In the event that Transferor fails for any reason to
deposit in the Principal Funding Account the aggregate purchase price for the
Series 1996-1 Certificates, payments shall continue to be made to the Holders of
the Series in accordance with the terms of the Pooling Agreement and this
Supplement.
SECTION 7.2 INDEMNIFICATION BY TRANSFEROR. Transferor hereby agrees to
indemnify the Trust, Trustee, each Holder of a Series 1996-1 Certificate and
each of the successors, permitted transferees and assigns of any such Person and
all officers, directors, shareholders, controlling Persons, employees,
affiliates and agents of any of the foregoing (each of the foregoing Persons
individually being called a "TRANSFEROR INDEMNIFIED PARTY"), forthwith on
demand, from and against any and all damages, losses, claims (whether on account
of settlements or otherwise, and whether or not the relevant Indemnified Party
is a party to any action or proceeding that gives rise to any Transferor
Indemnified Losses (as defined below)), judgments, liabilities and related
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) (all of the foregoing collectively being called "TRANSFEROR
INDEMNIFIED LOSSES") awarded against or incurred by any of them that arise out
of or relate to this Agreement, any other Transaction Document or any of the
transactions contemplated herein or therein or the use of proceeds herefrom or
therefrom (including without limitation any Transferor Indemnified Losses (i)
relating to any Adverse Claim, without regard to whether such Adverse Claim was
a Permitted Adverse Claim or (ii) arising from any failure to make any filing or
obtain any consent as required by the Federal Assignment of Claims Act with
respect to any Receivables).
page 36
<PAGE>
Notwithstanding the foregoing, in no event shall any Transferor Indemnified
Party be indemnified for any Transferor Indemnified Losses (i) resulting from
gross negligence or willful misconduct on the part of such Transferor
Indemnified Party (or the gross negligence or willful misconduct on the part of
any of its officers, directors, employees, affiliates or agents), (ii) to the
extent they include Transferor Indemnified Losses in respect of Receivables and
reimbursement therefor that would constitute credit recourse to Transferor for
the amount of any Receivable or Related Transferred Asset not paid by the
related Obligor, (iii) to the extent they are or result from lost profits, (iv)
to the extent they are or result from taxes (including interest and penalties
thereon) asserted with respect to (A) distributions on the Series 1996-1
Certificates, (B) franchise or withholding taxes imposed on any Transferor
Indemnified Party other than the Trust or Trustee in its capacity as Trustee, or
(C) federal or other income taxes on or measured by the net income of such
Transferor Indemnified Party and costs and expenses in defending against the
same, or (v) to the extent they constitute consequential, special or punitive
damages.
If for any reason the indemnification provided in this SECTION is
unavailable to a Transferor Indemnified Party or is insufficient to hold a
Transferor Indemnified Party harmless, then Transferor shall contribute to the
amount paid by such Transferor Indemnified Party as a result of any loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Transferor Indemnified Party on the one hand
and Transferor on the other hand, but also the relative fault (if any) of such
Transferor Indemnified Party and Transferor and any other relevant equitable
considerations.
Notwithstanding any provisions contained in any Transaction Document to the
contrary, Transferor shall not, and shall not be obligated to, pay any amount
pursuant to this SECTION unless funds are allocated for such payment pursuant to
ARTICLE IV of this Supplement. Any amount which Transferor does not pay pursuant
to the operation of the preceding sentence shall not constitute a claim (as
defined in Section 101 of the Bankruptcy Code) against or corporate obligation
of Transferor for any such insufficiency.
SECTION 7.3 INDEMNIFICATION BY SERVICER. Servicer agrees that each Agent
and each Holder of a Series 1996-1 Certificate shall be an "Indemnified Party"
for purposes of the Pooling Agreement.
ARTICLE VIII MISCELLANEOUS
SECTION 8.1 GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
SECTION 8.2 COUNTERPARTS. This Supplement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when
page 37
<PAGE>
so executed shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
SECTION 8.3 SEVERABILITY OF PROVISIONS. If any one or more of the
provisions or terms of this Supplement shall for any reason whatsoever be held
invalid, then the unenforceable provision(s) or term(s) shall be deemed
severable from the remaining provisions or terms of this Supplement and shall in
no way affect the validity or enforceability of the other provisions or terms of
this Supplement.
SECTION 8.4 AMENDMENT, WAIVER, ETC. This Supplement may be amended, subject
to SECTION 13.1 of the Pooling Agreement and SECTION 10.1 of the Certificate
Purchase Agreement, from time to time by Servicer, Transferor and Trustee by a
written instrument signed by each of them, without the consent of any Holders;
provided that such action shall not adversely affect in any material respect the
interests of any Holder; AND PROVIDED FURTHER, that for purses of this
Supplement, any decrease in an applicable Certificate Rate or any postponement
of the applicable Expected Final Payment Date shall be deemed to materially
adversely affect the interests of a Holder. This Supplement also may be amended,
modified or waived from time to time by Servicer, Transferor and Trustee with
the consent of the Required Series Holders to the extent permitted by SECTION
13.1 of the Pooling Agreement and SECTION 10.1 of the Certificate Purchase
Agreement, and the terms of that SECTION shall apply to any such amendment,
modification or waiver.
SECTION 8.5 TRUSTEE. Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplement
or for or in respect of the recitals contained herein, all of which recitals are
made solely by Transferor and Servicer.
SECTION 8.6 INSTRUCTIONS IN WRITING. All instructions given by Servicer to
Trustee pursuant to this Supplement shall be in writing, and may be included in
a Daily Report or Monthly Report.
SECTION 8.7 RULE 144A. So long as any of the Series 1996-1 Certificates are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, Transferor shall, unless it becomes subject to and complies with
the reporting requirements of SECTION 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, or rule 12g3- 2(b) thereunder, provide to any Holder of
such restricted securities, or to any prospective purchaser of such restricted
securities designated by a Holder, upon the request of such Holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Act.
SECTION 8.8 SUPPLEMENTAL RATINGS REQUIREMENT. So long as any of the Series
1996-1 Certificates are outstanding, if any provision of the Purchase Agreement,
the Pooling Agreement, this Supplement or the Certificate Purchase Agreement
requires a person or investment to have a certain rating from S&P, and such
person or investment is also rated by
page 38
<PAGE>
DCR, such provision shall be read to also require a rating from DCR that is
equivalent to the required rating from S&P.
[Remainder of page intentionally left blank.]
page 39
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
BFP RECEIVABLES CORPORATION, as Transferor
By: /s/ Rick Frier
Name: Rick Frier
Title: Vice President
BIG FLOWER PRESS HOLDINGS, INC., as Servicer
By: /s/ David Mait
Name: David Mait
Title: Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY, as
Trustee
By: /s/ Anita K. Spann
Name: Anita K. Spann
Title: Trust Officer
<PAGE>
EXHIBIT A
to the Series 1996-1 Supplement
FORM OF SERIES 1996-1 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN CONTRAVENTION OF THAT
ACT. THIS CERTIFICATE WILL BE NOT ACCEPTED FOR REGISTRATION OF TRANSFER EXCEPT
UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE REGISTRAR AND TRANSFER AGENT
THAT THE RESTRICTIONS ON TRANSFER SET FORTH IN THE POOLING AGREEMENT HAVE BEEN
COMPLIED WITH.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF BFP RECEIVABLES
CORPORATION THAT SUCH PURCHASER IS NOT AND WILL NOT BECOME A PARTNERSHIP,
SUBCHAPTER S CORPORATION OR GRANTOR TRUST FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES. [If this representation cannot be made, Transferor, Servicer or the
Trustee may require the legend to contain additional representations.]
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, PARTICIPATED, TRADED OR TRANSFERRED,
NOR MAY ANY INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b)(1) OF THE
CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER,
INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR AN INTERDEALER
QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
BIG FLOWER RECEIVABLES BACKED CERTIFICATES
SERIES 1996-1 CERTIFICATE
Maximum Principal Amount:
First Distribution Date: $
-----------------
THIS CERTIFIES THAT __________ is the registered owner of a nonassessable,
fully-paid, fractional undivided interest in the Big Flower Receivables Master
Trust (the "TRUST") that was created pursuant to (a) the Pooling and Servicing
Agreement, dated as of _______________, 1996 (as the same may be amended,
supplemented or otherwise modified from time to time, the "POOLING AGREEMENT"),
among BFP RECEIVABLES CORPORATION, a Delaware corporation, ("TRANSFEROR"), BIG
FLOWER PRESS HOLDINGS, INC., a Delaware corporation, ("SERVICER"), and
MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee (together with its
successors and assigns in such capacity, "TRUSTEE") and (b) the Supplement dated
as of _______________, 1996 relating to the Series 1996-1 Certificates (the
"SUPPLEMENT"). This Certificate is one of the duly
<PAGE>
authorized Series 1996-1 Certificates designated and issued under the Pooling
Agreement and the Supplement. Except as otherwise defined herein, capitalized
terms have the meanings that APPENDIX A to the Pooling Agreement assigns to
them. This Certificate is subject to the terms, provisions and conditions of,
and is entitled to the benefits afforded by, the Pooling Agreement and the
Supplement, to which terms, provisions and conditions the Holder of this
Certificate by virtue of the acceptance hereof assents and by which the Holder
is bound.
Unless the certificate of authentication hereon shall have been executed by
or on behalf of Trustee by the manual signature of a duly authorized signatory,
this Certificate shall not entitle the Holder hereof to any benefit under the
Transaction Documents or be valid for any purpose.
This Certificate does not represent a recourse obligation of, or an
interest in, Transferor, any Seller, Servicer, Trustee or any Affiliate of any
of them. This Certificate is limited in right of payment to the Transferred
Assets.
By its acceptance of this Certificate, each Holder hereof (a) acknowledges
that it is the intent of Transferor, and agrees that it is the intent of the
Holder that, for purposes of Federal, applicable state and local income and
franchise and other taxes measured by or imposed on income, the Series 1996-1
Certificates (including this Certificate) will be treated as evidence of
indebtedness secured by the Transferred Assets and the Trust not be
characterized as an association taxable as a corporation, (b) agrees that the
provisions of the Transaction Documents be construed to further that intent, and
(c) agrees to treat this Certificate for purposes of Federal, applicable state
and local income and franchise and other taxes measured by or imposed on income
as indebtedness.
This Certificate shall be construed in accordance with the laws of the
State of New York, without regard to its conflict of laws principles, and all
obligations, rights and remedies under or arising in connection with this
Certificate shall be determined in accordance with the laws of the State of New
York.
page 2
<PAGE>
IN WITNESS WHEREOF, Transferor has caused this Certificate to be executed
by its officer thereunto duly authorized.
BFP RECEIVABLES CORPORATION
By:
-------------------------
Title:
----------------------
page 3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 1996-1 Certificates referred to in the Pooling
Agreement, as supplemented by the Supplement.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
----------------------------
Title:
------------------------
Dated: , 1996
-----------
page 4
<PAGE>
PURCHASES AND REPAYMENTS
<TABLE>
<CAPTION>
Principal
Amount of Outstanding
Purchase Principal
Amount Purchased Repaid Balance Stated Amount
- ---------------- --------- ----------- -------------
<S>
Interest
Base Eurodollar Period (if Base Eurodollar Base Eurodollar
Rate Rate applicable) Rate Rate Rate Rate Reduction Net
- ------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
page 5
<PAGE>
EXHIBIT B
INCLUDED WITH CLOSING BINDERS
<PAGE>
EXHIBIT C
INCLUDED WITH CLOSING BINDERS
<PAGE>
EXHIBIT D
Big Flower
GUARANTY
THIS GUARANTY, dated as of March 19, 1996 (this "GUARANTY"), is issued by
BIG FLOWER PRESS HOLDINGS, INC., a Delaware corporation ("GUARANTOR"), for the
benefit of BFP RECEIVABLES CORPORATION, a Delaware corporation ("PURCHASER"),
and its successors and assigns.
Guarantor agrees as follows:
SECTION 1. DEFINITIONS. Capitalized terms used in this Guaranty, unless
otherwise defined herein, shall have the meaning set forth in Appendix A to the
Pooling and Servicing Agreement, dated as of March 19, 1996 (as it may be
amended, supplemented or otherwise modified from time to time, the "POOLING
AGREEMENT") among Purchaser, Guarantor, as Servicer, and Manufacturers and
Traders Trust Company, as Trustee.
SECTION 2. GUARANTY. FOR VALUE RECEIVED, Guarantor hereby unconditionally
guarantees the full and prompt payment when due, whether by acceleration or
otherwise, and at all times thereafter, and the full and prompt performance, of
each of the Sellers' (each, a "GUARANTEED PARTY") obligations, howsoever
created, arising or evidenced, whether direct or indirect, primary or secondary,
absolute or contingent, joint or several, now or hereafter existing or due or to
become due, which arise out of or in connection with any Seller Transaction
Document (all of such obligations being hereinafter collectively called the
"LIABILITIES"); PROVIDED that nothing contained herein shall be deemed to
constitute recourse liability for the payment of any Receivable or of the
principal of, or interest on, any Certificate or Purchased Interest. Guarantor
further agrees to pay all expenses (including reasonable attorneys' fees and
legal expenses) paid or incurred by Purchaser or its assigns in endeavoring to
collect the Liabilities, or any part thereof, and in enforcing this Guaranty.
SECTION 3. CONTINUING GUARANTY. This Guaranty shall in all respects be a
continuing, absolute and unconditional guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, that at any time or from time
to time all Liabilities may have been paid in full), subject to discontinuance
only upon actual receipt by Trustee of written notice from Guarantor of the
discontinuance hereof; PROVIDED, HOWEVER, that no such notice of discontinuance
hereof shall affect or impair any of the agreements and obligations
<PAGE>
of Guarantor (i) hereunder with respect to any and all Liabilities existing
prior to the time of actual receipt of such notice by Trustee, any and all
Liabilities created or acquired thereafter pursuant to any commitments and
agreements made by Purchaser under and with respect to the Purchase Agreement,
and any and all extensions or renewals thereof, and (ii) any and all expenses
paid or incurred by Purchaser or its assigns in endeavoring to collect any of
the foregoing and in enforcing this Guaranty; and all of the agreements and
obligations under this Guaranty shall, notwithstanding any such notice of
discontinuance, remain fully in effect until all such Liabilities (including any
extensions or renewals of any thereof) and all such other obligations and
expenses finally shall have been paid in full.
SECTION 4. RESCISSION. Guarantor further agrees that, if at any time all or
any part of any payment theretofore applied by Purchaser to any of the
Liabilities is or must be rescinded or returned by Purchaser for any reason
whatsoever, such Liabilities shall, for the purposes of this Guaranty, to the
extent that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by Purchaser, and this
Guaranty shall continue to be effective or be reinstated, as the case may be, as
to such Liabilities, all as though such application by Purchaser had not been
made.
SECTION 5. CERTAIN ACTIONS. Purchaser may, from time to time at its sole
discretion and without notice to Guarantor, take any or all of the following
actions without affecting the obligations of Guarantor hereunder: (a) retain or
obtain a lien upon or a security interest in any property to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Guarantor, with
respect to any of the Liabilities or any obligation hereunder; (c) extend or
renew for one or more periods (regardless of whether longer than the original
period), alter or exchange any of the Liabilities, or release or compromise any
obligation of Guarantor hereunder or any obligation of any nature of any other
obligor (including any Guaranteed Party) with respect to any of the Liabilities;
(d) release or fail to perfect its lien upon or security interest in, or impair,
surrender, release or permit any substitution or exchange for, all or any part
of any property securing any of the Liabilities or any obligation hereunder, or
extend or renew for one or more periods (regardless of whether longer than the
original period) or release, compromise, alter or exchange any obligations of
any nature of any obligor with respect to any such property; and (e) resort to
Guarantor for payment of any of the Liabilities, regardless of whether Purchaser
shall have resorted to any property securing any of the Liabilities or any
obligation hereunder or shall have proceeded against any other obligor primarily
or secondarily obligated with respect to any of the Liabilities.
SECTION 6. SUBROGATION. Any amounts received by Purchaser from whatsoever
source on account of the Liabilities may be applied by it toward the payment of
such of the Liabilities, and in such order of application, as Purchaser or its
assigns may from time to time elect. Until such time as Purchaser shall have
received payment of the full amount of all Liabilities and performance of all of
Guarantor's obligations hereunder, no payment made by or for the account of
Guarantor pursuant to this Guaranty shall entitle Guarantor by
2
<PAGE>
subrogation, indemnity or otherwise to any payment by any Guaranteed Party or
from or out of any property of any Guaranteed Party and Guarantor shall not
exercise any right or remedy against any Guaranteed Party or any property of any
Guaranteed Party by reason of any performance by Guarantor of this Guaranty.
SECTION 7. WAIVER. Guarantor hereby expressly waives: (a) notice of
Purchaser's acceptance of this Guaranty; (b) notice of the existence or creation
or non-payment of all or any of the Liabilities; (c) presentment, demand, notice
of dishonor, protest, and all other notices whatsoever (PROVIDED that nothing
contained in this CLAUSE (c) shall affect any obligations to give notice or make
demand as set forth in the Purchase Agreement or the Pooling Agreement); and (d)
all diligence in collection or protection of or realization upon the Liabilities
or any thereof, any obligation hereunder, or any security for or guaranty of any
of the foregoing.
SECTION 8. UNCONDITIONAL NATURE OF GUARANTY. No delay on Purchaser's part
in the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Purchaser of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or remedy;
nor shall any modification or waiver of any of the provisions of this Guaranty
be binding upon Purchaser except as expressly set forth in a writing duly signed
by Purchaser. No action of Purchaser permitted hereunder shall in any way affect
or impair Purchaser's rights or Guarantor's obligations under this Guaranty. For
the purposes of this Guaranty, Liabilities shall include all of each Guaranteed
Party's obligations under the Transaction Documents, notwithstanding any right
or power of such Guaranteed Party or anyone else to assert any claim or defense
as to the invalidity or unenforceability of any such obligation, and no such
claim or defense shall affect or impair the obligations of Guarantor hereunder.
Guarantor's obligations under this Guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might constitute a legal or
equitable discharge or defense of Guarantor. Guarantor hereby acknowledges that
there are no conditions to the effectiveness of this Guaranty.
SECTION 9. INFORMATION. Guarantor has and will continue to have independent
means of obtaining information concerning each Guaranteed Party's affairs,
financial condition and business. Purchaser shall not have any duty or
responsibility to provide Guarantor with any credit or other information
concerning any Guaranteed Party's affairs, financial condition or business which
may come into Purchaser's possession.
SECTION 10. REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants as follows:
(A) ORGANIZATION AND STANDING. It has been duly organized and is
validly existing as a corporation in good standing under the laws of its
state of incorporation, with corporate power and authority to own its
properties and to
3
<PAGE>
conduct its business as such properties are presently owned and such
business is presently conducted.
(b) DUE QUALIFICATION. It is duly licensed or qualified to do business
as a foreign corporation in good standing in each jurisdiction in which (i)
the ownership or lease of its property or the conduct of its business
requires such licensing or qualification, and (ii) the failure to be so
licensed or qualified would be reasonably likely to have a Material Adverse
Effect.
(c) POWER AND AUTHORITY: DUE AUTHORIZATION. It has (i) all necessary
power, authority and legal right to execute, deliver and perform its
obligations under this Guaranty and (ii) duly authorized by all necessary
corporate action such execution, delivery and performance of this Guaranty.
(d) BINDING OBLIGATIONS. This Guaranty constitutes the legal, valid
and binding obligation of Guarantor, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or
at law.
(e) NO VIOLATION. The execution, delivery and performance of this
Guaranty will not (i) conflict with, or result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under (A) the certificate of incorporation or by-
laws of Guarantor or (B) any indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument to
which Guarantor is a party or by which it or its property is bound, (ii)
results in or requires the creation or imposition of any Adverse Claim
(other than a Permitted Adverse Claim) upon any of its properties pursuant
to the terms of any such indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument or
(iii) violate any law or any order, rule, regulation applicable to Guarantor
of any court or of any federal, state or foreign regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Guarantor or any of its properties.
SECTION 11. SUCCESSORS AND ASSIGNS. (a) This Guaranty shall be binding upon
Guarantor and upon Guarantor's successors and assigns and all references herein
to Guarantor or any Guaranteed Party shall be deemed to include any successor or
successors, whether immediate or remote, to such Person. Guarantor shall not
assign any of its obligations hereunder without the prior written consent of
Purchaser.
(b) This Guaranty shall inure to the benefit of Purchaser and its
successors and assigns. Guarantor acknowledges and agrees that Purchaser's
rights to receive payment and
4
<PAGE>
pursue remedies under this Guaranty are being assigned to Trustee, for the
benefit of the Certificateholders and the Purchasers, pursuant to the Pooling
Agreement, as supplemented from time to time (including by the Series 1996-1
Supplement to the Pooling Agreement, of even date with this Guaranty).
SECTION 12. GOVERNING LAW. THIS GUARANTEE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES. Wherever possible each provision of
this Guaranty shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Guaranty.
SECTION 13. CONSENT TO JURISDICTION: WAIVER OF JURY TRIAL. Purchaser may
enforce any claim arising out of this Guaranty in any state or federal court
having subject matter jurisdiction and located in New York, New York and with
respect to any such claim, Guarantor hereby irrevocably submits to the
jurisdiction of such courts. Guarantor irrevocably consents to the service of
process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to Guarantor, and agrees that such service, to the fullest
extent permitted by law, (i) shall be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and (ii)
shall be taken and held to be valid personal service upon and personal
delivery to it. Nothing herein contained shall preclude Purchaser from
bringing an action or proceeding in respect hereof in any other country,
state or place having jurisdiction over such action. 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 suit, action or
proceeding brought in such a court located in New York, New York and any
claim that any such suit, action or proceeding brought in such court has been
brought in an inconvenient forum. GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS
GUARANTY, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
SECTION 14. NOTICES. All notices hereunder shall be given in the manner set
forth in SECTION 13.6 of the Pooling Agreement.
5
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been executed and delivered by
Guarantor's duly authorized officer as of the date first written above.
BIG FLOWER PRESS HOLDINGS, INC.
By: /s/ David Mait
Name: David Mait
Title: Vice President
Address: 3 East 54th Street, Fifth Floor
New York, New York 10022
Attention: David Mait
Telephone: 212-521-1611
Facsimile: 212-223-4074
<PAGE>
Exhibit E
POST-CLOSING CONDITIONS
1. Complete execution of a Lockbox Agreement with a Lockbox Bank as to
Webcraft Technologies, Inc.'s Lockbox Account.
2. Complete execution of a Blocked Account Agreement with a Blocked Account
Bank as to Webcraft Chemicals, Inc.'s Blocked Account.
3. Good Standing Certificate for the following entities in the following
States dated March 19, 1996 or later:
BIG FLOWER PRESS HOLDINGS. INC.: (a) Delaware
LASER TECH COLOR, INC.: (a) Georgia
WEBCRAFT TECHNOLOGIES, INC,: (a) Delaware
WEBCRAFT CHEMICALS. INC.: (a) California
(b) Kansas
(c) Pennsylvania
4 Tax Certificate for Webcraft Chemicals, Inc. from the Ohio Department of
Taxation certifying no taxes are due and no reports have not been filed.
5. Evidence of filing of single business tax return for June 1995 with the
Department of Treasury in the State of Michigan by Treasure Chest
Advertising Company, Inc.
6. Evidence of filing of all franchise tax reports and payment of all
franchise taxes due with the New York State Department of Taxation and
Finance by Treasure Chest Advertising Company, Inc.
7. Evidence of filing of all franchise tax reports and payment of all
franchise taxes due with the New York State Department of Taxation and
Finance by Big Flower Press Holdings, Inc.
8. Evidence of filing of sales tax return for January 1996 with Department of
Treasury in the State of Michigan by Webcraft Technologies, Inc.
9. Evidence of filing of all franchise tax reports and payment of all
franchise taxes due with the New York State Department of Taxation by
Webcraft Technologies, Inc.
10. Evidence of payment of all taxes owed by Webcraft Technologies, Inc. in the
Commonwealth of Pennsylvania or
<PAGE>
that such taxes are being contested in good faith and that adequate
reserves have been established to cover such taxes in the "Contested Tax
Reserve".
11. Evidence of release, termination or payment of liens as indicated on
Schedule 1 to this EXHIBIT E hereto (or with respect to the last two items
listed, evidence that such liens do not relate to any Seller).
-2-
<PAGE>
Schedule 1
to
Exhibit E
Consignment Releases
- -Webcraft Technologies, Inc.
- Prothonotary of Bucks County -- 94-60746
- Commonwealth of Pennsylvania -- 22931384
- -Laser Tech
- Secretary of State of Texas -- 9100229960
Equipment Releases
- -Laser Tech (Secretary of State of Texas)
- 224217
- 075462
- 159419
- -Treasure Chest (Secretary of State of California)
- 92003490 -92143041 -92144428
- 92209641 -92215545 -93070071
- 93070072 -93083782 -93102900
- 93123978 -93131884 -93136629
- 93156060 -93182028 -94141251
- 94141252 -90008329 -90043659
- 90151740 -90209588 -90239562
- 90245647 -90264778 -90284589
- 90293233 -90305282 -9527061201
Payment of judgments underlying Judgment Liens
- -Webcraft Chemicals, Inc. (New Jersey - Middlesex County)
- JC-000542115-00 -- $2,950.58
- DJ-00004752-93 -- $146.00
Terminations
- -Webcraft Chemicals, Inc.
-BT Commercial Corporation
-Illinois
l. 3192815
2. 3192816
3. 3192817
-New Jersey
1. 1541806
2. 1541807
3. 1541809
-Connecticut National Bank
-New Jersey -- 1385412
-3-
<PAGE>
- -Webcraft Technologies, Inc.
-BT Commercial Corporation
1. Pennsylvania -- 22611267
2. Bucks County -- 9363546
3. Maryland -- 13338008
4. New Jersey -- 1541802
- -Treasure Chest
-Treasure Chest Finance Corporation -- 72737270
-Banker's Trust
-Maryland -- 153408114
-New York -- 100509
-County Recorder, LA County
-931638640
-931575189
- -Michael C. Wendt (dba Laser Tech)
-Bank of the West
-Texas -- 9300031758
- -Laser Tech, Tim Whitlock and Roy Tuley
-First State Bank
-Texas -- 9400108934 (number to be confirmed)
-4-
<PAGE>
EXHIBIT D
to Certificate Purchase
Agreement Series 1996-1
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of __________ (this "AGREEMENT"), is
made between _______________ ("ASSIGNOR"), and _______________ ("ASSIGNEE").
Except as otherwise defined herein, capitalized terms have the meanings assigned
to them in the Certificate Purchase Agreement (as defined below).
BACKGROUND
A. Assignor is a party to the Certificate Purchase Agreement, dated as of
________ __, 1996 (as amended, supplemented or otherwise modified from time to
time, the "CERTIFICATE PURCHASE AGREEMENT"), among BFP RECEIVABLES CORPORATION,
a Delaware corporation ("TRANSFEROR"), BIG FLOWER PRESS HOLDINGS, INC., a
Delaware corporation, the Purchasers party thereto (including Assignor), certain
Purchasers and Bankers Trust Company as Agent.
B. Assignor wishes to assign, and Assignee wishes to be so assigned,
Assignor's rights and obligations arising on and after the Effective Date (as
defined below) under the Certificate Purchase Agreement and its Certificate
including (a) its obligations to make Purchases (its "CREDIT EXPOSURE") and (b)
its outstanding Purchases (the "PURCHASES").
C. Assignor and Assignee also wish (a) Assignee to assume the obligations
of Assignor under the Certificate Purchase Agreement with respect to Assignee's
Share (as defined below) to the extent of the rights assigned and (b) Assignor
to be released from the obligations assumed by Assignee.
SECTION 1. ASSIGNMENT. Effective on the Effective Date (as defined below)
and upon payment of the amount specified in SECTION 3(a), Assignor hereby
assigns and transfers to Assignee, without recourse, representation or warranty
of any kind, express or implied (except as provided in SECTIONS 6(a) and (b)),
and subject to Section 4(b), Assignee's Share (as specified in ANNEX I hereto)
(the "ASSIGNEE'S SHARE") of all of Assignor's rights, title and interest arising
under (a) the Certificate Purchase Agreement relating to Assignor's Credit
Exposure including all rights and obligations with respect to the
<PAGE>
Purchases attributable to Assignee's Share and (b) Assignor's Certificate with
respect to Assignee's Share as will result in Assignee having from and after the
Effective Date the Percentage ("ASSIGNEE'S PERCENTAGE") specified in ANNEX I.
SECTION 2. ASSUMPTION. Effective on the Effective Date, Assignee hereby
irrevocably purchases, assumes and takes from Assignor, and Assignor is hereby
expressly and absolutely released from, all of Assignor's obligations arising
under the Certificate Purchase Agreement relating to Assignee's Share and of any
outstanding Purchases attributable to Assignee's Share. Assignee hereby agrees
to be bound by the provisions of the Certificate Purchase Agreement.
SECTION 3. PAYMENT. In consideration of the assignment by Assignor to
Assignee as set forth above, Assignee agrees to pay to Assignor, in Dollars and
in immediately available funds, (a) on or prior to the Effective Date, an amount
specified by Assignor in writing on or prior to the Effective Date that
represents Assignee's Share attributable to the principal amount of the
Purchases made pursuant to the Certificate Purchase Agreement and outstanding on
the Effective Date, and (b) from time to time thereafter, other amounts (if any)
that Assignee has agreed in writing to pay to Assignor after the Effective Date.
In consideration of the assumption by Assignee, Assignor agrees to pay to
Assignee within two Business Days of the Effective Date, an assignment fee (if
any) that previously has been agreed to in writing by both parties.
Notwithstanding anything to the contrary in this Agreement, if and when
Assignee receives or collects (x) any payment of principal or interest relating
to any Purchases or (y) any payment of fees that are required to be paid to
Assignor pursuant to this Agreement, then Assignee shall forward the payment to
Assignor.
To the extent payment of funds to Assignee or Assignor are not made within
two Business Days, each, as the case may be, shall be entitled to recover the
due amount, together with interest thereon at the Federal Funds Rate per annum
accruing from the date of payment or the date of receipt of the funds by the
other party.
SECTION 4. EFFECTIVENESS. (a)(i) This Agreement shall become effective on
the date (the "EFFECTIVE DATE") on which [it shall have been duly executed by
all parties and the Agent shall have recorded the information contained herein
in its records (or automatically upon the Agent's receipt of this Agreement
signed by Assignor, Assignee and Transferor if not so recorded within five
Business Days of such receipt)] [the Agent shall have
Page 2
<PAGE>
received this Agreement duly executed by Assignor and Assignee]*. Assignor
hereby notifies the Agent of the assignment, effective as of the Effective Date,
of Assignee's Share and any Purchases attributable to the Assignee's Share, and
directs the Agent to pay Assignee (A) any payment of principal of, or interest
on, any Purchase attributable to the Assignee's Share of any Purchases and (B)
any Non-Usage Fees attributable to the Assignee's Share of the Credit Exposure.
No (x) failure of either Assignee or Assignor to settle any amount owed to the
other (except with respect to the payment of the processing and recordation fee
to the Agent and the payment due under SECTION 3(a)), (y) dispute respecting any
other settlement, including in respect of Transferor, or (z) bankruptcy,
insolvency or other condition whatsoever respecting any Person, shall in any way
impair, reduce or otherwise affect the effectiveness of this Agreement.
(ii) Assignor, Assignee and the Agent each acknowledges and agrees that
from and after the Effective Date, the Agent shall make all payments under the
Certificate Purchase Agreement in respect of Assignee's Share (including all
payments of principal, interest and Non-Usage Fees with respect thereto, whether
or not the payments shall have accrued prior to or after the Effective Date) to
Assignee only. Assignor and Assignee hereby agree further to make all
appropriate adjustments in payments to either of them under the Certificate
Purchase Agreement for periods prior to the Effective Date directly between
themselves.
(b) With respect to any Purchase attributable to Assignee's Share, if and
when Assignor receives or collects any payment of principal, interest, Non-Usage
Fees or Additional Amounts with respect to Assignee's Share for any period
commencing on or after the Effective Date, Assignor shall distribute to Assignee
the portion attributable to Assignee's Share, but only to the extent it accrued
on or after the Effective Date and was not theretofore paid to Assignee by
Transferor or otherwise. Any principal, interest, Non-Usage Fees and Additional
Amounts paid prior to the Effective Date shall be retained by Assignor. Any
principal, interest, Non-Usage Fees and Additional Amounts received by Assignee
that accrued prior to the Effective Date shall be forwarded promptly, in the
form received, to Assignor. Assignee recognizes and agrees that (i) it shall
receive no payment on account of any Agent's fees or other amounts or expenses
(including counsel fees) payable to the Agent (in such capacities and for their
own account), (ii) this Agreement shall not operate to assign any rights or
delegate any obligations of the Agent (in such capacities), and (iii)
notwithstanding anything to the contrary in this Agreement, Assignor shall
retain all of its rights to indemnification under the
- -------------------------
*/ Use second set of brackets in the case of an assignment by Greenwich
Funding Corporation to a Permitted Transferee.
Page 3
<PAGE>
Certificate Purchase Agreement for any events, acts or omissions occurring prior
to the Effective Date.
(c) The Agent, by its execution hereof, acknowledges the assignment and
agrees to make payments in respect of principal, interest, fees and Additional
Amounts as described in CLAUSE (a).
SECTION 5. RIGHTS AS PURCHASER UNDER CERTIFICATE PURCHASE AGREEMENT. In
accordance with SECTION 10.3 of the Certificate Purchase Agreement, (a) as of
the Effective Date, Assignee will be a Purchaser under, and party to, the
Certificate Purchase Agreement and shall have (i) all of the rights and
obligations of a Purchaser (to the extent of the assignment and assumption of
Assignee's Share effected by this Agreement) and (ii) the addresses for (A)
notice purposes and (B) LIBOR Office as set forth in items 2 and 3,
respectively, of ANNEX I hereto and (b) promptly on or after the Effective Date,
Transferor will execute and deliver any documents and instruments that Assignor
or Assignee reasonably may require.
SECTION 6. REPRESENTATIONS AND WARRANTIES. (a) Each of Assignor and
Assignee represents and warrants to the other as follows:
(i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement, to fulfill the
obligations hereunder and to consummate the transactions contemplated
hereby,
(ii) the making and performance of this Agreement and all documents
required to be executed and delivered hereunder do not and will not violate
any law or regulation of the jurisdiction of its incorporation or any other
applicable law or regulation,
(iii) this Agreement has been duly executed and delivered and
constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, and
(iv) all approvals, authorizations or other actions by, or filing
with, any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained.
(b) Assignor represents and warrants to Assignee that Assignee's Share and
the Purchases attributable to Assignee's Share are not subject to any liens or
security interests created by Assignor.
Page 4
<PAGE>
(c) Except as set forth in SUBSECTIONS (a) and (b), Assignor makes no
representations or warranties, express or implied, to Assignee and shall not be
responsible to Assignee for (i) the execution, effectiveness, genuineness,
legality, validity, enforceability, collectibility, regulatory status or
sufficiency of the Certificate Purchase Agreement or any of the other
Transaction Documents, (ii) the perfection, priority, value or adequacy of any
collateral security or guaranty, (iii) the taking of any action, or the failure
to take any action, with respect to any of the Transaction Documents, (iv) any
representations, warranties, recitals or statements made in any of the
Transaction Documents or in any written or oral financial or other statements,
instruments, reports, certificates or documents made or furnished by Assignor to
Assignee or by or on behalf of Transferor or any of its Affiliates to Assignor
or Assignee in connection with the Transaction Documents and the transactions
contemplated thereby, (v) the financial or other condition of Transferor or any
other Person or (vi) any other matter having any relation to any of the
foregoing. Assignor shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Transaction Documents or the existence or
possible existence of any Unmatured Early Amortization Event, Early Amortization
Event or Servicer Default. Additionally, Assignor shall not have any duty or
responsibility either initially or on a continuing basis to make any
investigation or any appraisal on Assignee's behalf or to provide Assignee with
any credit or other information with respect thereto, whether coming into
Assignor's possession before the execution of the Certificate Purchase Agreement
or at any time thereafter. Assignor shall have no responsibility with respect to
the accuracy of, or the completeness of, any information provided to Assignee,
whether by Assignor or by or on behalf of Transferor or any other Person
obligated under the Certificate Purchase Agreement or any related instrument or
document.
(d) Assignee represents and warrants that (x) it has made its own
independent investigation of each of the foregoing matters, including the
financial condition and affairs of Transferor and its Affiliates, in connection
with the making of the Purchases and the execution of this Agreement (including
the solvency of Transferor and its Affiliates, their ability to pay their
respective debts as they mature and the capital of Transferor and its Affiliates
remaining after the closing under the Transaction Documents and the consummation
of the transactions contemplated thereby) and has made and shall continue to
make its own appraisal of the creditworthiness of Transferor and its Affiliates,
and (y) the representations and warranties set forth in SECTION 6.3 of the
Certificate Purchase Agreement are true and correct with respect to the
Assignee. Assignee hereby agrees that it will not make any general solicitation
or general advertising for the offer or sale of the Certificates. Assignee (i)
confirms that it has received copies of the
Page 5
<PAGE>
Transaction Documents together with copies of certain other closing documents
delivered in connection with the Certificate Purchase Agreement, financial
statements and any other documents and information that it has requested or
deemed appropriate to make its own credit analysis and decision to enter into
this Agreement and (ii) agrees that it will, independently and without reliance
upon the Agent, Assignor or any other Purchaser 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 action under the Transaction Documents.
SECTION 7. NO PROCEEDINGS. Assignee hereby agrees to be bound by the
provisions of Section 10.13 of the Certificate Purchase Agreement.
SECTION 8. WITHHOLDING TAXES. [In accordance with Section 4.6 of the
Certificate Purchase Agreement, Assignee agrees to execute and deliver to the
Agent, for delivery to Transferor, on or before the Effective Date, (a) two
original copies of Internal Revenue Service Form 4224 or successor applicable
form, properly completed and duly executed by the Assignee certifying that it is
entitled to receive payments under the Certificate Purchase Agreement and any
Certificate without deduction or withholding of any United States Federal income
taxes, or (b) an original copy of Internal Revenue Service Form W-8 or
applicable successor form, properly completed and duly executed. Assignee
represents and warrants to Transferor and Assignor that, as of the Effective
Date, it shall be entitled to receive payments under its Certificate, the
Certificate Purchase Agreement and hereunder without deduction for or on account
of any taxes imposed by the United States of America or any political
subdivision thereof. In the event that, after delivering the applicable form,
Assignee shall cease to be exempt from withholding and/or deduction of taxes,
then the Agent may withhold and/or deduct the applicable amount from any
payments of principal, interest and any fees to which Assignee otherwise would
be entitled, and the Agent shall have no liability whatsoever to Assignee for
any such withholding or deduction. Assignee shall indemnify Transferor and the
Agent from and against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs or expenses that result from Assignee's breach
of such representation and warranty.]**
SECTION 9. MISCELLANEOUS. (a) Each of the parties hereto agrees to take any
action and execute and deliver any documents that any party hereto reasonably
may request from time to time in order to implement more fully the purposes of
this Agreement. Without limiting the generality of the foregoing, Assignor and
Assignee will cooperate in obtaining for Assignee a Certificate
- -------------------------
** If the Assignee is not a U.S. person within the meaning of Section
7701(a)(30) of the Internal Revenue Code.
Page 6
<PAGE>
(as well as a replacement Certificate for Assignor representing any retained
interest of Assignor).
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
(c) Except as otherwise set forth herein, this Agreement sets forth the
entire agreement between the parties relating to the subject matter hereof, and
no term or provision of this Agreement may be amended, changed, waived,
discharged or terminated orally or otherwise, except in a writing signed by
Assignor and Assignee.
(d) This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
(e) Each of the parties hereto agrees that each party shall bear its own
expenses in connection with the preparation and execution of this Agreement and
the consummation of the Assignment described herein. Assignee further agrees
that it shall send a check in the amount of $[1,500] [3,500] to the Agent on or
prior to the Effective Date, as payment of the processing and recordation fee
described in SECTION 10.3(c) of the Certificate Purchase Agreement. [Select
correct amount in accordance with that Section.]
(e) All representations and warranties made, and indemnities provided for,
herein shall survive the consummation of the transactions contemplated hereby.
(f) Assignor may at any time or from time to time grant assignments and
participations in its rights and obligations under the Certificate Purchase
Agreement and its Certificate to other Persons, but not in the portions thereof
assigned to Assignee.
(g) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither Assignor nor
Assignee may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party. The preceding
sentence shall not limit the right of Assignee to assign all or part of
Assignee's Share in the manner contemplated by the Certificate Purchase
Agreement.
Page 7
<PAGE>
(h) Assignee acknowledges that all obligations of the Agent are subject to
ARTICLE IX of the Certificate Purchase Agreement.
Page 8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers and delivered as of the day and
year first above written.
-----------------------------------,
as Assignor
By:
--------------------------------
Title:
---------------------------
-----------------------------------,
as Assignee
By:
--------------------------------
Title:
---------------------------
Accepted and Agreed to this __
day of __________, 199_
BFP RECEIVABLES CORPORATION
By:
---------------------------
Title:
------------------------
The undersigned hereby acknowledges the terms and provisions of this
Agreement, and agrees to make payments in respect of principal, interest and
fees as described in SECTION 4(a).
BANKERS TRUST COMPANY,
as Agent
By:
---------------------------
Title:
------------------------
Page 9
<PAGE>
ANNEX I
to Assignment Agreement
ITEM 1. ASSIGNEE'S SHARE:
(a) Assignee's Stated Amount $
-------------
(b) Assignee's Percentage
-------------%
ITEM 2. ADDRESS OF ASSIGNEE FOR NOTICE PURPOSES:
-----------------------------------
-----------------------------------
-----------------------------------
Attention:
-------------------------
Telephone:
-------------------------
Facsimile:
-------------------------
ITEM 3. LIBOR OFFICE OF ASSIGNEE:
-----------------------------------
-----------------------------------
-----------------------------------
<PAGE>
APPENDIX X
to Revolving Certificate Purchase
Agreement Series 1996-1
INDEX OF ADDITIONAL DEFINED TERMS
Agent ........................................................................ 1
Agreement .................................................................... 1
BTCo ......................................................................... 1
Certificates ................................................................. 1
Credit Exposure ............................................................. 24
Financial Advisors .......................................................... 30
Indemnitees ................................................................. 27
LIBOR Office ................................................................. 7
Non-Usage Fee ................................................................ 6
Participants ................................................................ 24
Percentage ................................................................... 2
Pooling Agreement ............................................................ 1
Purchase ..................................................................... 2
Purchasers ................................................................... 1
Receivables Review .......................................................... 20
Required Purchasers ......................................................... 23
Servicer ..................................................................... 1
Stated Amount ................................................................ 4
Supplement ................................................................... 1
Taxes ....................................................................... 10
Transferee .................................................................. 26
Transferor ................................................................... 1
Trust ........................................................................ 1
Trust Interest ............................................................... 1
Trustee ...................................................................... 1
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective March 21, 1996 (the
"Effective Date"), is entered into by and between Mark A. Angelson
("Executive"), Big Flower Press Holdings, Inc., a Delaware corporation (the
"Company"), and Treasure Chest Advertising Company, Inc., a Delaware
corporation and a direct wholly-owned subsidiary of the Company ("Treasure
Chest").
WHEREAS, the Company and Treasure Chest each desires to establish its
right to the services of Executive, in the capacity described below, on the
terms and conditions hereinafter set forth, and Executive is willing to
accept such employment on such terms and conditions.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, Executive, the Company and Treasure Chest have agreed and do
hereby agree as follows:
1. EMPLOYMENT. The Company does hereby employ Executive as Executive
Vice President and General Counsel of the Company and Secretary of the Board
of Directors of the Company (the "Board") and Treasure Chest does hereby
employ Executive as General Counsel and a member of the Board of Directors of
Treasure Chest (the "Treasure Chest Board"). Executive shall have primary
worldwide responsibility for legal and board secretarial functions
(including, without limitation, selection and supervision of outside counsel
and staff lawyers) for the Company and all present and after-acquired direct
and indirect subsidiaries (including Treasure Chest) ("Subsidiaries").
Executive does hereby accept and agree to such employment. Subject to the
supervision and control of the Board of Directors and the Chairman and Chief
Executive Officer of the Company, Executive shall do and perform all services
and acts necessary or advisable to fulfill the duties and responsibilities of
his position and shall render such services on the terms set forth herein,
PROVIDED, that Executive shall report directly to R. Theodore Ammon or his
successor, if any, as Chairman and Chief Executive Officer of the Company and
shall be a member of the senior management team responsible for the strategic
direction of the Company and its Subsidiaries. In addition, Executive shall
have such other executive and managerial powers and duties with respect to
the Company and its Subsidiaries as may reasonably be assigned to him by the
Company's Board of Directors or Chairman and Chief Executive Officer to the
extent consistent with
1
<PAGE>
his positions and status as set forth above. Commencing May 1, 1996,
Executive agrees to devote all of his working time, attention and efforts to
the Company and its Subsidiaries and affiliates. Executive's principal place
of employment shall be the Company's principal executive offices.
2. TERM OF AGREEMENT. The term ("Term") of this Agreement shall
commence on the Effective Date and shall continue for a period of three (3)
years; provided, however, that on the second anniversary of the Effective
Date (and on each succeeding anniversary of the Effective Date during the
Term), the Term shall automatically be extended by an additional year (unless
Executive or the Company shall give the other at least thirty (30) days'
notice to the contrary), so that as a result of each such extension the then
remaining Term will be two (2) years.
3. COMPENSATION.
(a) BASE SALARY. The Company and/or Treasure Chest shall pay
Executive an annual base salary at the rate of $450,000 per year or such
higher amount as the Company's Board of Directors may from time to time
determine (the "Base Salary") provided that for the period prior to May 1,
1996 the Base Salary shall be at such reasonable rate as the Company and the
Executive shall agree, in each case payable in equal biweekly installments or
at such other time or times as Executive and the Company shall agree. The
Base Salary shall be subject to discretionary increase, as determined by an
annual review by the Company on or prior to each anniversary of the Effective
Date, but shall not be decreased from the rate in effect at any time and from
time to time during the Term.
(b) PERFORMANCE BONUS. For the period ending December 31, 1996,
Executive shall be entitled to receive from the Company and/or Treasure Chest
a performance bonus (the "Fiscal Year 1996 Bonus") in the amount of $225,000
(not subject to proration) payable in a lump sum in cash on or before January
15, 1997. For each succeeding fiscal year of the Company, Executive shall be
entitled to participate in the Treasure Chest Executive Incentive Plan or any
similar or successor annual bonus plan of Treasure Chest or the Company (the
"EIP") and to receive an annual performance bonus from Treasure Chest or the
Company in accordance with the terms thereof, PROVIDED, that Executive's
minimum target bonus under the EIP shall be not less than 50% of the Base
Salary in effect at the time such target bonus is determined. Each of the
Fiscal Year 1996 Bonus and each performance bonus paid in accordance with
2
<PAGE>
the EIP shall constitute a "Performance Bonus" for the purposes of this
Agreement.
(c) STOCK OPTIONS. The Executive shall be granted incentive stock
options (the "Options") qualified under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), to purchase 150,000 shares of the
common stock, par value $.01 per share, of the Company (the "Common Stock")
under the Company's Restated 1993 Stock Award and Incentive Plan (the "Stock
Plan"), PROVIDED, that to the extent that the number of the Options that
qualify as incentive stock options shall be less than 150,000, the remaining
Options that do not so qualify shall be non-qualified stock options. The date
of grant of the Options shall be the Effective Date; the exercise price of
the Options shall equal the closing price of the Common Stock on the
Effective Date; the Options shall vest and become exercisable at the rate of
10% on December 31, 1996, an additional 15% on the first anniversary of the
Effective Date and an additional 25% on each of the next 3 anniversaries of
the Effective Date, provided that the Options shall become 100% vested and
exercisable upon a Change in Control; and the Options shall expire upon the
earlier to occur of (i) ten (10) years from the Effective Date (the "Option
Term") or (ii) except as otherwise provided in Section 4, ninety (90) days
following the termination of Executive's employment with the Company and
Treasure Chest. If the Company or Treasure Chest shall receive any tax
benefits from the failure of any Options granted hereunder to qualify as
incentive stock options other than because of the limitation contained in
Section 422(d) of the Code or because of Executive's failure to exercise such
Options in a timely way or to hold the shares of Common Stock acquired
pursuant thereto for a sufficient period of time after the grant or exercise
of the Options, the Company or Treasure Chest shall pay to the Executive the
amount of such benefits within ten (10) business days of the receipt of such
benefit by the Company or Treasure Chest. The Company and Executive shall
enter into a stock option agreement substantially in the form set forth in
Exhibit A hereto in respect of such grant.
(d) LIFE INSURANCE. With respect to each policy year or partial
policy year that this Agreement is in effect, the Company and/or Treasure
Chest shall pay to or on behalf of Executive an amount sufficient to cover
the cost of premium payments on a split-dollar life insurance policy or
policies (the "Policy") providing a death benefit in the aggregate amount of
$2 million to be acquired and owned by Executive (such policy or policies to
be in a form and providing for premium payments in an amount reasonably
acceptable to the Company), and such amounts shall be used to pay such
premiums. The Executive shall provide for the collateral assignment to the
Company and/or
3
<PAGE>
Treasure Chest of a portion of any cash surrender value or death benefits,
as the case may be, payable under the Policy in an amount sufficient to
reimburse the Company and/or Treasure Chest, without interest, for the
aggregate value of such premium payments. In addition, the Executive shall
have the right to purchase up to the maximum amount of group term life
insurance available through any plan or program adopted from time to time by
the Company or Treasure Chest for the benefit of its executive employees.
(e) FRINGE BENEFITS. Executive shall be entitled to participate in
any fringe, welfare and pension benefit and incentive programs adopted from
time to time by the Company or Treasure Chest for the benefit of its
executive employees. Without limiting the generality of the foregoing,
Executive shall be entitled to the following such benefits:
(1) PARTICIPATION IN STOCK PLAN. Executive shall be eligible
to receive grants of stock options under the Stock Plan and any
successor or similar plan.
(2) RELOCATION EXPENSES. Subject to offset by any payments for
relocation expenses made to or on behalf of Executive by others, the
Company and/or Treasure Chest shall reimburse Executive (including
gross up payments for any items which are includable as income and not
deductible for federal income tax purposes) for all reasonable
relocation expenses including, but not limited to, the following
relocation expenses: (a) one year of mortgage interest not to exceed
L56,000 or such lower amount as may be required by Barclay's Bank plc
in connection with the sale of the Executive's primary residence in
London, England, an estate agent fee, if any, incurred in connection
with the sale of such primary residence, based on 2.5% of the sale
price of such primary residence, such fee not to exceed L35,000 and
all reasonable closing costs, including without limitation lawyers'
fees, in connection with such sale and Executive's purchase of a
primary residence in the New York area; (b) the reasonable costs of
moving Executive's family and household goods to the New York
metropolitan area; (c) reasonable temporary living expenses for
Executive and his family in the London and New York areas immediately
prior to their departure from London and immediately after their
arrival in New York, respectively, if reasonably necessary; (d) a
reasonable number of round trip visits between London and New York for
the purpose of securing schooling and housing, including reasonable
costs for meals, lodging and transportation for Executive and his
family during such trips and (e) reasonable living
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expenses for the Executive for the period prior to his family's
relocation (including visits to family if Executive is required to be
absent from London for more than (two) 2 consecutive weeks without them).
(3) TAX PREPARATION AND FINANCIAL CONSULTING. Not later than
April 30, 1997, the Company and/or Treasure Chest shall reimburse
Executive for costs incurred in personal tax preparation and planning
and financial consulting incurred in connection with Executive's
relocation from England to the United States in an amount not to
exceed $10,000.
(4) CAR ALLOWANCE. The Company and/or Treasure Chest shall
provide Executive a car allowance to cover the cost of purchasing or
leasing a suitable vehicle and the cost of insuring and maintaining
such vehicle in the aggregate amount of $1,000 per month.
(5) SUPPLEMENTAL RETIREMENT BENEFIT. Executive shall be
entitled to participate in the Treasure Chest Supplemental Executive
Retirement Plan or any successor or replacement plan maintained from
time to time for the benefit of Treasure Chest's or the Company's
senior executives.
(6) REIMBURSEMENT FOR BUSINESS EXPENSES. The Company and/or
Treasure Chest shall reimburse Executive for all reasonable and
necessary expenses incurred by Executive in performing his duties for
the Company and its Subsidiaries, including, without limitation,
lawyers' professional expenses, registration fees and dues.
4. TERMINATION OF EXECUTIVE'S EMPLOYMENT.
(a) DEATH. In the event Executive's employment hereunder is
terminated by reason of Executive's death, (i) all outstanding equity
incentive awards (including without limitation stock options granted under
the Stock Plan) shall immediately vest and any then outstanding stock options
or similar awards held by Executive shall remain exercisable for a period of
one year following the date of Executive's death or, if earlier, until the
end of the Option Term, and (ii) this Agreement shall thereupon terminate
without further obligation by the Company or Treasure Chest, except for
payment of amounts of Base Salary and any fringe benefits accrued through the
date of such termination.
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(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness ("Disability"), Executive shall have been absent
from the full-time performance of his duties with the Company and Treasure
Chest for a period of six (6) consecutive months and, within thirty (30) days
after written notice is provided to him by the Company, he shall not have
returned to the full-time performance of his duties, Executive's employment
under this Agreement may be terminated by the Company and/or Treasure Chest
or Executive for Disability. During any period prior to such termination
during which Executive is absent from the full-time performance of his duties
with the Company and Treasure Chest due to Disability, the Company and/or
Treasure Chest shall continue to pay Executive his Base Salary at the rate in
effect at the commencement of such period of Disability, offset by any
amounts payable to Executive under any disability insurance plan or policy
provided by the Company and/or Treasure Chest. Upon termination of
Executive's employment for Disability, (i) the Company and/or Treasure Chest
shall continue to pay Executive his Base Salary through the end of the Term,
offset by any amounts payable to Executive under any disability insurance
plan or policy provided by the Company and/or Treasure Chest, (ii) all
outstanding equity incentive awards (including without limitation stock
options granted under the Stock Plan) shall immediately vest and any then
outstanding stock options or similar awards held by Executive shall remain
exercisable for a period of one year from the date of such termination or, if
earlier, until the end of the Option Term and (iii) the Company and/or
Treasure Chest will continue to pay to or on behalf of the Executive premium
payments on the Policy for the remainder of the Term.
(c) TERMINATION FOR CAUSE. The Company and Treasure Chest may
terminate Executive's employment under this Agreement for Cause at any time
prior to expiration of the Term. As used herein, "Cause" shall mean only acts
of fraud, misappropriation or embezzlement committed by Executive and
intended to result in personal enrichment at the expense of the Company
and/or Treasure Chest. Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board (including the Chairman) at a meeting
of the Board (after reasonable notice to Executive and opportunity for
Executive, together with his counsel, to be heard before the Board, finding
that in the good faith opinion of the Board, Executive was guilty of the
conduct described herein, and specifying the particulars thereof in full
detail. In the event of termination for Cause, this Agreement shall terminate
without further obligation by the Company or Treasure Chest, except for
payment of amounts of Base Salary and any fringe benefits accrued through the
date of such termination.
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(d) TERMINATION BY THE COMPANY OTHER THAN FOR DEATH, DISABILITY OR
CAUSE OR BY THE EXECUTIVE FOR GOOD REASON. If, whether before or after a
Change in Control, (A) Executive's employment is terminated by the Company or
Treasure Chest for any reason other than Executive's death or Disability or
for Cause, or (B) Executive terminates his employment for Good Reason, then
(i) the Company and/or Treasure Chest shall pay Executive as severance,
within ten (10) business days following the date of such termination, a lump
sum amount equal to two (2) times the sum of (x) Executive's then Base Salary
plus (y) Executive's highest annual Performance Bonus in the three (3) year
period immediately preceding such termination, (ii) the Company and/or
Treasure Chest shall pay Executive a lump sum amount equal to the present
value of all other benefits otherwise payable through the then remaining Term
under Sections 3(d) and 3(e), and (iii) all outstanding equity incentive
awards (including without limitation stock options granted under the Stock
Plan) shall immediately vest and, if such termination occurs prior to a
Change in Control, any then outstanding stock options or similar awards held
by Executive shall remain exercisable for a period of one year from the date
of such termination or, if earlier, until the end of the Option Term and, if
such termination occurs after a Change in Control, Executive shall be
entitled to receive a lump sum amount equal to the "spread" on any then
outstanding stock options or similar awards held by Executive in exchange for
the surrender and cancellation of such awards.
(e) EXCISE TAX GROSS-UP. In the event any of the payments hereunder
shall become subject to the excise tax imposed under Section 4999 of the
Code, or any similar or successor provision of federal, state or local law,
the Company and/or Treasure Chest shall pay to Executive such additional
amounts as may be necessary to fully offset the tax effects of such excise
tax or taxes, in accordance with the procedures set forth in Exhibit B hereto.
(f) NO MITIGATION REQUIRED. Executive shall not be required in any
way to mitigate the amount of any payment or benefit provided for under this
Section 4, including, but not limited to, by seeking other employment, nor
shall the amount of any payment or benefit provided for under this Section 4
be reduced by any compensation earned by Executive as the result of
employment with or services provided to another employer after the date of
Executive's termination of employment hereunder, or otherwise; provided,
however, that in the event Executive shall materially breach the provisions
of Section 6(b) hereof, the Company and Treasure Chest shall have the right,
in addition to any other remedies it may have with respect to such breach, to
offset any amounts payable hereunder or otherwise owing to Executive by the
amount
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of any compensation earned by Executive as the result of employment with or
any other services provided to a Competitor of the Company (as defined below).
5. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) GOOD REASON. "Good Reason" shall mean the occurrence of any of
the following:
(1) The Company's or Treasure Chest's material breach of any
of the provisions of this Agreement, including without limitation the
occurrence of any of the events described in subsections (2)-(4) of
this Section 5(a);
(2) Any material adverse alteration in Executive's titles,
positions, status, duties or responsibilities with the Company or its
Subsidiaries;
(3) Any reduction in Executive's annual Base Salary or annual
or long term aggregate compensation and benefits opportunities;
(4) Any relocation of the Company's principal executive
offices outside of the New York metropolitan area, or requiring
Executive to travel on business in unreasonable amounts in relation to
the Executive's duties hereunder;
(5) The Company's providing notice to Executive that it does
not wish to have the Term automatically extended pursuant to Section
2; or
(6) A substantial disagreement between Executive and the
Company regarding the response of the Company to legal issues arising
out of the conduct of the Company's business at a time when R.
Theodore Ammon is not serving as Chairman and Chief Executive Officer
of the Company; PROVIDED HOWEVER that such event shall not constitute
Good Reason if the Company is acting in accordance with the written
advice of its regular outside counsel.
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(b) CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company; any trustee or other fiduciary holding
securities under an employee benefit plan of the Company; or any company
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership at such time of
stock of the Company), is or becomes after the Effective Date the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such person any securities acquired
directly from the Company) representing thirty-five percent (35%) or more
of the combined voting power of the Company's then outstanding
securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
subparagraph (i), (iii) or (iv) of this Section 5(b)) whose election by
the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
Board of Directors then still in office who either were members of the
Board of Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute at least a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other entity and, in connection
with such merger or consolidation, individuals who constitute the Board
of Directors immediately prior to the time any agreement to effect such
merger or consolidation is entered into fail for any reason to constitute
at least a majority of the board of directors of the surviving
corporation following the consummation of such merger or consolidation; or
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(iv) the stockholders of the Company approve (a) a plan of
complete liquidation of the Company or (b) an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
6. CONFIDENTIAL INFORMATION AND NON-COMPETITION.
(a) CONFIDENTIALITY. Executive acknowledges that in his employment
hereunder he will occupy a position of trust and confidence. Executive shall
not, except as may be required to perform his duties hereunder or as required
by applicable law, without limitation in time or until such information shall
have become public other than by Executive's unauthorized disclosure, dis-
close to others or use, whether directly or indirectly, any Confidential
Information regarding the Company and its Subsidiaries. "Confidential
Information" shall mean information about the Company and its Subsidiaries,
and their respective clients and customers that is not disclosed by the
Company and its Subsidiaries for financial reporting purposes and that was
learned by Executive in the course of his employment by the Company and its
Subsidiaries, including (without limitation) any proprietary knowledge, trade
secrets, data, formulae, information and client and customer lists and all
papers, resumes, and records (including computer records) of the documents
containing such Confidential Information. Executive acknowledges that such
Confidential Information is specialized, unique in nature and of great
value to the Company and its Subsidiaries, and that such information gives
the Company and its Subsidiaries a competitive advantage. The Executive
agrees to deliver or return to the Company, at the Company's request at any
time or upon termination or expiration of his employment or as soon
thereafter as possible, all documents, computer tapes and disks, records,
lists, data, drawings, prints, notes and written information (and all copies
thereof) furnished by the Company and its Subsidiaries or prepared by the
Executive in the course of his employment by the Company and its Subsidiaries.
(b) NON-COMPETITION. During the Term (and, in the event Executive
terminates his employment hereunder other than for Good Reason or Executive's
employment is terminated by the Company for Cause, for a period of one (1)
year beyond the expiration of the Term), Executive shall not, directly or
indirectly, without the prior written consent of the Company, provide
services to (whether as an employee or a consultant, with or without pay),
own, manage, operate, join, control, participate in, or be connected with (as
a stockholder, partner, or otherwise), any business, individual, partner,
firm, corporation, or other entity that is then a direct competitor of the
Company or its
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Subsidiaries (including Treasure Chest) (each such competitor a "Competitor
of the Company"); provided, however, that the "beneficial ownership" by
Executive, either individually or as a member of a "group," as such terms
are used in Rule 13d of the General Rules and Regulations under the Exchange
Act, of not more than five percent (5%) of the voting stock of any publicly
held corporation shall not alone constitute a violation of this Agreement and
provided further that, with the consent of the Company (which consent shall
not be unreasonably withheld), the foregoing shall not prohibit Executive
from rendering services to an entity that conducts a business that is a
"Competitor of the Company" if such business does not contribute a material
portion of such entity's revenues. It is further expressly agreed that the
Company will or would suffer irreparable injury if Executive were to compete
with the Company or any Subsidiary in violation of this Agreement and that
the Company would by reason of such competition be entitled to injunctive
relief in a court of appropriate jurisdiction, and Executive further consents
and stipulates to the entry of such injunctive relief in such a court
prohibiting Executive from competing with the Company or any Subsidiary of
the Company in violation of this Agreement. Executive and the Company
acknowledge and agree that the business of the Company is national in nature,
and that the terms of the non-competition agreement set forth herein shall
apply on a nationwide basis.
(c) NON-SOLICITATION OF CUSTOMERS AND SUPPLIERS. During the Term
(and, in the event Executive terminates his employment hereunder other than
for Good Reason or Executive's employment is terminated by the Company for
Cause, for a period of one (1) year beyond the expiration of the Term),
Executive shall not, directly or indirectly, influence or attempt to
influence customers or suppliers of the Company or any of its Subsidiaries or
affiliates to divert their business to any Competitor of the Company.
(d) NON-SOLICITATION OF EMPLOYEES. Executive recognizes that he
will possess confidential information about other employees of the Company
and its Subsidiaries relating to their education, experience, skills,
abilities, compensation and benefits, and inter-personal relationships with
customers of the Company and its Subsidiaries. Executive recognizes that the
information he will possess about these other employees is not generally
known, is of substantial value to the Company and its Subsidiaries in
developing its business and in securing and retaining customers, and will be
acquired by him because of his business position with the Company and its
Subsidiaries. Executive agrees that, during the Term (and, in the event
Executive terminates his employment hereunder other than for Good Reason or
Executive's
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employment is terminated by the Company for Cause, for a period of one (1)
year beyond the expiration of the Term), he will not, directly or indirectly,
solicit or recruit any employee of the Company or its Subsidiaries for the
purpose of being employed by him or by any Competitor of the Company on whose
behalf he is acting as an agent, representative or employee and that he will
not convey any such confidential information or trade secrets about other
employees of the Company and its Subsidiaries to any other person except
within the scope of the Executive's duties hereunder.
(e) SURVIVAL OF PROVISIONS. The obligations contained in this
Section 6 shall, to the extent provided in this Section 6, survive the
termination or expiration of Executive's employment with the Company and, as
applicable, shall be fully enforceable thereafter in accordance with the
terms of this Agreement. If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 6 is excessive
in duration or scope or is unreasonable or unenforceable under the laws of
that state, it is the intention of the parties that such restriction may be
modified or amended by the court to render it enforceable to the maximum
extent permitted by the law of that state.
7. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be given by first-class mail, certified or
registered with return receipt requested or hand delivery acknowledged in
writing by the recipient personally, and shall be deemed to have been duly
given three (3) days after mailing or immediately upon duly acknowledged hand
delivery to the respective persons named below:
If to Company or Big Flower Press Holdings, Inc.
Treasure Chest: 3 East 54th Street
New York, New York 10022
ATTENTION: Chairman and Chief Executive
Officer
If to Executive: Mark A. Angelson
initially c/o R. J. Urowsky, Esq.
125 Broad Street
New York, NY 10004
and thereafter at the Executive's then
principal residence as notified in writing
by the Executive to the Company
pursuant hereto.
Either party may change such party's address for notices by notice duly
given pursuant hereto.
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8. DISPUTE RESOLUTION: ATTORNEYS' FEES. The Company, Treasure Chest
and Executive agree that any dispute arising as to the parties' rights and
obligations hereunder, other than with respect to Section 6, shall be
resolved by binding arbitration before a private judge to be determined by
mutually agreeable means. Each party shall have the right, in addition to any
other relief granted by such arbitrator (or by any court with respect to
relief granted with respect to Section 6), to attorneys' fees based on a
determination by the arbitrator (or, with respect to Section 6, the court) of
the extent to which each party has prevailed as to the material issues raised
in determination of the dispute. In the absence of such mutual agreement on a
private judge, disputes arising hereunder shall be resolved under the rules
of the American Arbitration Association before a single arbitrator sitting in
New York City presiding over an expedited confidential hearing.
9. TERMINATION OF PRIOR AGREEMENTS. This Agreement terminates and
supersedes any and all prior agreements and understandings among the parties
with respect to Executive's employment and compensation by the Company and
Treasure Chest.
10. ASSIGNMENT: SUCCESSORS. This Agreement is personal in its nature
and none of the parties hereto shall, without the consent of the others,
assign or transfer this Agreement or any rights or obligations hereun- der;
provided that, in the event of the merger, consolidation, transfer, or sale
of all or substantially all of the assets of the Company or Treasure Chest
with or to any other individual or entity, this Agreement shall, subject to
the provisions hereof, be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the promises,
covenants, duties, and obligations of the Company and Treasure Chest
hereunder, and all references herein to the "Company" or "Treasure Chest"
shall refer to such successor.
11. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed under
and in accordance with the laws of the State of New York.
12. WITHHOLDING. The Company shall make such deductions and withhold
such amounts from each payment made to the Executive hereunder as may be
required from time to time by law, governmental regulation or order.
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13. HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
14. WAIVER; MODIFICATION. Failure to insist upon strict compliance with
any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
15. SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any law or
public policy, only the portions of this Agreement that violate such law or
public policy shall be stricken. All portions of this Agreement that do not
violate any law or public policy shall continue in full force and effect.
Further, any court order striking any portion of this Agreement shall modify
the stricken terms as narrowly as possible to give as much effect as possible
to the intentions of the parties under this Agreement.
16. INDEMNIFICATION. The Company and its Subsidiaries (including
Treasure Chest) shall indemnify and hold Executive harmless for acts and
omissions in his capacity as an officer, director or employee of the Company
and its Subsidiaries (including Treasure Chest) to the maximum extent
permitted under applicable law.
17. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the Company and Treasure Chest has caused this
Agreement to be executed and delivered by its duly authorized officer, and
the Executive has executed and delivered this Agreement on March 21, 1996.
BIG FLOWER PRESS HOLDINGS, INC.
/s/ Theodore Ammon
___________________
By: Theodore Ammon
Its: Chairman of the Board and Chief
Executive Officer
TREASURE CHEST ADVERTISING COMPANY, INC.
/s/ Theodore Ammon
__________________
By: Theodore Ammon
Its: Chairman of the Board and Chief
Executive Officer
/s/ Mark A. Angelson
____________________
MARK A. ANGELSON
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION AGREEMENT, dated as of the 21st day of
March, 1996, by and between Big Flower Press Holdings, Inc., a Delaware
corporation (the "Company"), and Mark A. Angelson (the "Optionee"), an
executive of the Company and Treasure Chest Advertising Company, Inc., a
Delaware corporation and a subsidiary of the Company ("Treasure Chest").
Pursuant to the Company's Restated 1993 Stock Award and Incentive
Plan (the "Plan") and the terms of that certain Employment Agreement, dated
as of the date hereof, between the Company, Treasure Chest and Optionee (the
"Employment Agreement"), the Compensation Committee of the Board of Directors
of the Company, the Administrator of the Plan (the "Committee"), has
determined that the Optionee is to be granted an option (the "Option") to
purchase shares of the Company's Common Stock, on the terms and conditions
set forth herein, and hereby grants such Option. It is intended that to the
extent permitted by law the Option constitute an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and otherwise a non-qualified stock option. Any
capitalized terms not defined herein shall have their respective meanings set
forth in the Plan.
1. NUMBER OF SHARES AND OPTION PRICE. The Option entitles the
Optionee to purchase 150,000 shares of the Company's Common Stock, par value
$.01 per share (the "Option Shares"), at a price (the "Option Price") of
$12.625 per share, which is equal to the closing price of the Common Stock on
the date hereof as reported on the New York Stock Exchange.
2. PERIOD OF OPTION. The term of the Option and of this Option
Agreement shall commence on the date hereof (the "Date of Grant") and, unless
the Option is previously terminated pursuant to this Option Agreement or the
Employment Agreement, shall terminate upon the expiration of ten (10) years
from the Date of Grant. Upon the termination of the Option, all rights of the
Optionee hereunder shall cease.
3. CONDITIONS OF EXERCISE. (a) Subject to acceleration in the
circumstances set forth in the Employment Agreement, the Option shall vest
and become exercisable at the rate of 10% on December 31, 1996, an additional
15% on the first anniversary of the Effective Date, and an additional 25% on
each of the next 3 anniversaries of the Effective Date.
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(b) Except as otherwise provided herein or in the Employment
Agreement, the right of the Optionee to purchase Option Shares with respect
to which this Option has become exercisable as herein provided may be
exercised in whole or in part at any time or from time to time prior to the
tenth anniversary of the Date of Grant.
4. NONTRANSFERABILITY OF OPTION. Except as otherwise provided
herein, the Option and this Option Agreement shall not be transferable. More
particularly, but not by way of limiting the generality of the foregoing,
except as otherwise provided herein, the Option may not be assigned,
transferred, pledged or hypothecated in any way, shall not be assignable by
operation of law, and shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option contrary to the provisions hereof, and the
levy of any execution, attachment or similar process upon the Option shall be
null and void and without effect.
5. EXERCISE OF OPTION. The Option shall be exercised as provided in
the Plan.
6. TERMINATION FOR CAUSE. If the Optionee's employment with the
Company is terminated for Cause (as defined in the Employment Agreement), the
Option shall expire immediately.
7. NOTICES. Any notice required or permitted under this Option
Agreement shall be deemed given when delivered personally, or when deposited
in a United States Post Office, postage prepaid, addressed, as appropriate,
to the Optionee at the address set forth in the Employment Agreement or such
other address as the Optionee may designate in writing to the Company, or to
the Company: Attention: Chairman and Chief Executive Officer (or his
designee), at the Company's address or such other address as the Company may
designate in writing to the Optionee.
8. FAILURE TO ENFORCE NOT A WAIVER. The failure of the Company to
enforce at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
9. GOVERNING LAW. This Option Agreement shall be governed by and
construed according to the laws of the State of Delaware without regard to
its principles of conflict of laws.
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10. INCORPORATION OF PLAN AND EMPLOYMENT AGREEMENT. The Plan and the
Employment Agreement are hereby incorporated by reference and made a part
hereof, and the Option and this Option Agreement shall be subject to all
terms and conditions of the Plan and the applicable provisions of the Employ-
ment Agreement.
11. AMENDMENTS. This Option Agreement may be amended or modified at
any time only by an instrument in writing signed by the parties hereto.
12. RIGHTS AS A SHAREHOLDER. Neither the Optionee nor any successor
in interest shall have any rights as a stockholder of the Company with
respect to any shares of Common Stock subject to the Option until the date of
issuance of a stock certificate for such shares of Common Stock.
13. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. Neither the Plan, the
granting of the Option, this Option Agreement nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Optionee has a right to continue
as an employee of the Company or any subsidiary or affiliate for any period
of time or at any specific rate of compensation.
14. NO INVESTMENT REPRESENTATION. The Committee shall not require the
Optionee to furnish to the Company an agreement in which the Optionee
represents that the shares of Common Stock to be acquired upon exercise of
the Option are to be acquired for the Optionee's own account, and the
Optionee may acquire such Common Stock with a view to the sale or
distribution thereof.
15. AUTHORITY OF THE COMMITTEE. The Committee shall have full
authority to interpret and construe the terms of the Plan and this Option
Agreement. The determination of the Committee as to any such matter of
interpretation or construction shall be final, binding and conclusive.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Option Agreement on the day and year first above written.
BIG FLOWER PRESS HOLDINGS, INC.
By ____________________________
Its ____________________________
The undersigned hereby accepts and agrees
to all the terms and provisions of the
foregoing Option Agreement and to all the
terms and provisions of the Plan and the
Employment Agreement herein incorporated
by reference.
________________________________________
Optionee
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EXHIBIT B
GROSS-UP PAYMENT
In the event that any payment received by Executive or paid by the
Company on behalf of Executive under this Agreement or under any other plan,
arrangement or agreement with the Company or any person whose actions result
in a change in control of the Company (provided that the Company approves of
the arrangement pursuant to which the payment by such person is made to
Executive) or any person affiliated with the Company or such person
(collectively, the "Total Payments") will be subject to the excise tax (the
"Excise Tax") imposed by section 4999 (or any successor provision) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay to Executive an additional amount (the "Gross-Up Payment") such that the
net amount retained or to be retained by Executive, after deduction of any
Excise Tax on the Total Payments and on any federal, state and local income,
excise and/or other taxes upon the Gross-Up Payment provided for hereunder,
shall be equal to the Total Payments.
For purposes of determining whether any of the Total Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and reasonably acceptable to Executive the
Total Payments (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b)(4)(A) of the Code, or such excess
parachute payments (in whole or in part) represent reasonable compensation
for services actually rendered, within the meaning of section 280G(b)(4)(B)
of the Code, in excess of the Base Amount allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax, and (ii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income and other taxes at the
highest applicable marginal rate of taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income and other taxes
at the highest applicable marginal rate of taxation in the state and locality
of Executive's residence on the date the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
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deduction of such state and local taxes and any other taxes. In the event
that the Excise Tax is subsequently determined to be less than the amount
originally taken into account hereunder, Executive shall repay to the
Company, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income and other taxes imposed on the
Gross-Up Payment being repaid by Executive to the extent that such repayment
results in an actual reduction in Excise Tax and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the
rate provided in section 1274(b)(2)(B) of the Code (provided, however, that
if all or any portion of the amount of any repayment made to Executive by
any governmental entity shall be made at a higher rate of interest than that
provided under section 1274(b)(2)(B) of the Code (the "Higher Interest Rate
Amount"), Executive shall also repay to the Company interest on the Higher
Interest Rate Amount at a rate equal to the excess of such higher rate of
interest over the rate provided under section 1274(b)(2)(B) of the Code). In
the event that the Excise Tax is determined to exceed the amount originally
taken into account hereunder (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions to tax payable by
Executive with respect to such excess) at the time that the amount of such
excess is finally determined. The parties agree that such excess will be
considered to have been finally determined at the conclusion of Internal
Revenue Service administrative appellate proceedings, unless the parties
mutually agree to pay or settle such amount earlier, or agree to pursue an
appeal further. Executive and the Company shall each reasonably cooperate
with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Total Payments. In the event of an audit or other
administrative or judicial proceeding relating to or arising from the issue
of potential liability for the Excise Tax, the Company shall pay all
attorneys' and accountants' fees and other costs reasonably incurred by
Executive in connection with the audit or other proceeding to the extent such
fees and costs relate to such liability, provided, that in the case of
judicial or administrative proceedings, the Company consents to the pursuit
of such proceedings.
The Gross-Up Payment payable pursuant hereto shall be payable (or,
as applicable withheld), in whole or in part as applicable, on the earlier of
(i) the date the Company is required to withhold the Excise Tax pursuant to
section 4999 of the Code or (ii) the date Executive is required to pay the
Excise Tax.
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Executive shall notify the Company of any audit or review by the
Internal Revenue Service of Executive's federal income tax return for the
year in which a payment under this Agreement is made within ten (10) days of
Executive's receipt of such audit or review. In addition, Executive shall
also notify the Company of the final resolution of such audit or review
within ten (10) days of such resolution.
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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective this 29th day of
March, 1996 (the "Effective Date"), is entered into by and among Edward T.
Reilly ("Executive"), Big Flower Press Holdings, Inc., a Delaware
corporation (the "Company"), and Treasure Chest Advertising Company, Inc., a
Delaware corporation and a direct wholly-owned subsidiary of the Company
("Treasure Chest").
WHEREAS, the Company and Treasure Chest each desires to establish its
right to the services of Executive, in the capacity described below, on the
terms and conditions hereinafter set forth, and Executive is willing to
accept such employment on such terms and conditions.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, Executive, the Company and Treasure Chest have agreed and do hereby
agree as follows:
1. EMPLOYMENT. The Company does hereby employ Executive as President
and Chief Operating Officer of the Company, and Treasure Chest does hereby
employ Executive as Vice Chairman of the Board of Directors of Treasure
Chest. Executive does hereby accept and agree to such employment. Subject to
the supervision and control of the Board of Directors and the Chief Executive
Officer of the Company, Executive shall do and perform all services and acts
necessary or advisable to fulfill the duties and responsibilities of his
position, shall render such services on the terms set forth herein, and shall
have the authority and responsibility commensurate with those positions
PROVIDED, that Executive shall report solely to the Chief Executive Officer
of the Company and PROVIDED FURTHER that all officers of the Company and its
subsidiaries (other than the Chief Executive Officer and the General Counsel)
shall report to Executive (or to a person who reports directly or indirectly
to Executive). In addition, Executive shall have such other executive and
managerial powers and duties with respect to the Company and its
subsidiaries (including Treasure Chest) as may be assigned to him by the
Company's Board of Directors or Chief Executive Officer, to the extent
commensurate with his positions and status as set forth above. Executive
also agrees to serve, if elected, as a director of the Company and each of
its subsidiaries (including Treasure Chest). Executive agrees to devote all of
his working time, attention and efforts to the Company and its
subsidiaries (including Treasure Chest), PROVIDED, that nothing in this
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Agreement shall preclude Executive from engaging, consistent with his duties
and responsibilities hereunder, in charitable and community affairs, or
from managing his passive personal investments. Executive's principal place
of employment shall be the Company's principal executive offices.
2. TERM OF AGREEMENT. The term ("Term") of this Agreement shall
commence on the Effective Date and shall continue for a period of three (3)
years; provided, however, that on the second anniversary of the Effective
Date (and on each succeeding anniversary of the Effective Date during the
Term), the Term shall automatically be extended by an additional year (unless
Executive or the Company shall give the other at least thirty (30) days'
notice to the contrary), so that as a result of each such extension the then
remaining Term will be two (2) years.
3. COMPENSATION.
(a) BASE SALARY. Treasure Chest shall pay Executive an initial
annual base salary at the rate of $500,000 per year or such higher amount as
the Company's Board of Directors may from time to time determine (the "Base
Salary"), payable in equal biweekly installments or at such other time or
times as Executive and the Company shall agree. The Base Salary shall be
subject to discretionary increase by the Company, but shall not be decreased
from the rate in effect at any time and from time to time during the Term.
(b) PERFORMANCE BONUS. For the fiscal year of the Company ending
December 31, 1996, Executive shall be entitled to receive from Treasure Chest
a performance bonus (the "Fiscal Year 1996 Bonus") in the amount of $250,000
payable in a lump sum in cash on or before January 15, 1997. For each
succeeding fiscal year of the Company, Executive shall be entitled to
participate in the Treasure Chest Executive Incentive Plan or any similar
or successor annual bonus plan of Treasure Chest or the Company (the "EIP")
and to receive an annual performance bonus from Treasure Chest or the Company
in accordance with the terms thereof, PROVIDED, that Executive's minimum
target bonus under the EIP shall be not less than 50% of the Base Salary in
effect at the time such target bonus is determined.
(c) SIGNING BONUS. In order to compensate Executive for the value
of stock options granted by his previous employer and forfeited in connection
with his termination of employment therewith, Treasure
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Chest shall pay Executive within five (5) business days after the Effective
Date a lump sum in cash in the amount of $37,000.
(d) STOCK OPTIONS. Pursuant to the prior approval of such grant by
the Compensation Committee of the Board of Directors of the Company,
Executive shall be granted incentive stock options (the "Options") qualified
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to purchase 200,000 shares of the common stock, par value $.01 per
share, of the Company (the "Common Stock") under the Company's Restated 1993
Stock Award and Incentive Plan (the "Stock Plan"), PROVIDED, that to the
extent that the number of the Options that qualify as incentive stock options
shall be less than 200,000, the remaining Options that do not so qualify
shall be non-qualified stock options. The date of grant of the Options shall
be the Effective Date; the exercise price of the Options shall equal the
closing price of the Common Stock on the Effective Date; the Options shall
vest and become exercisable at the rate of 20% per year on December 31 of
each of 1996, 1997, 1998 and 1999, with the remaining 20% to vest and become
exercisable on the fourth anniversary of the Effective Date, provided that
the Options shall become 100% vested and exercisable upon a Change in
Control; and the Options shall expire upon the earlier to occur of (i) ten
(10) years from the Effective Date (the "Option Term") or (ii) except as
otherwise provided in Section 4, ninety (90) days following the termination
of Executive's employment with the Company and Treasure Chest. The Company
and Executive shall enter into a stock option agreement substantially in the
form set forth in Exhibit A hereto.
(e) FRINGE BENEFITS. Executive shall be entitled to participate in
any fringe, welfare and pension benefit and incentive programs adopted from
time to time by the Company or Treasure Chest for the benefit of its
executive employees. Without limiting the generality of the foregoing,
Executive shall be entitled to the following such benefits:
(1) CAR ALLOWANCE. Treasure Chest shall provide Executive a car
allowance to cover the cost of purchasing or leasing a suitable vehicle
and the cost of insuring and maintaining such vehicle in the aggregate
amount of $1,000 per month.
(2) SUPPLEMENTAL RETIREMENT BENEFIT. Executive shall be entitled
to participate in the Treasure Chest Supplemental Executive Retirement
Plan or any successor or replacement plan (the "SERP") maintained from
time to time for the benefit of Treasure Chest's or the Company's senior
executives.
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(3) REIMBURSEMENT FOR BUSINESS EXPENSES. The Company and/or
Treasure Chest shall reimburse Executive for allreasonable and necessary
expenses incurred by Executive in performing his duties for the Company
and its subsidiaries (including Treasure Chest), PROVIDED, that the Company
may provide Executive with the use of an apartment in New York City in lieu
of reimbursement for hotel expenses.
4. TERMINATION OF EXECUTIVE'S EMPLOYMENT.
(a) DEATH. In the event Executive's employment hereunder is
terminated by reason of Executive's death, (i) Treasure Chest shall continue
to pay the Base Salary to Executive's surviving spouse, and if there is no
surviving spouse, to Executive's estate, through the end of the Term (ii) all
outstanding equity incentive awards (including without limitation stock
options granted under the Stock Plan) shall immediately vest and any then
outstanding stock options or similar awards held by Executive shall remain
exercisable for a period of one year from the date of death, or, if earlier,
until the end of the Option Term and (iii) Treasure Chest shall pay to
Executive's estate the Accrued Obligations (as defined below).
(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness ("Disability"), Executive shall have been absent
from the full-time performance of his duties with the Company and Treasure
Chest for a period of six (6) consecutive months and, within thirty (30) days
after written notice is provided to him by the Company, he shall not have
returned to the full-time performance of his duties, Executive's employment
under this Agreement may be terminated by the Company or Executive for
Disability. During any period prior to such termination during which
Executive is absent from the full-time performance of his duties with the
Company and Treasure Chest due to Disability, Treasure Chest shall continue
to pay Executive his Base Salary at the rate in effect at the commencement of
such period of Disability, offset by any amounts payable to Executive under
any disability insurance plan or policy. Upon termination of Executive's
employment for Disability, (i) Treasure Chest shall continue to pay
Executive, or upon his death, his surviving spouse, or if there is no
surviving spouse, his estate, his Base Salary through the end of the Term,
offset by any amounts payable to Executive under any disability insurance
plan or policy, (ii) all outstanding equity incentive awards (including
without limitation stock options granted under the Stock Plan) shall
immediately vest and any then outstanding stock options or similar awards
held by Executive shall remain exercisable for a period of one year from the
date
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of such termination or, if earlier, until the end of the Option Term and
(iii) Treasure Chest shall pay Executive the Accrued Obligations (as defined
below).
(c) TERMINATION FOR CAUSE. The Company may terminate Executive's
employment under this Agreement for Cause at any time prior to expiration of
the Term. As used herein, "Cause" shall mean acts of fraud, misappropriation
or embezzlement committed by Executive and intended to result in substantial
personal enrichment at the expense of the Company. Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board of
Directors of the Company (the "Board") at a meeting of the Board (after
reasonable notice to Executive and opportunity for Executive, together with his
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of the conduct described herein, and
specifying the particulars thereof in full detail. In the event of termination
for Cause, this Agreement shall terminate without further obligation by the
Company or Treasure Chest, except for (i) payment of amounts of Base Salary and
any fringe benefits accrued through the date of such termination (including
accrued vacation) in accordance with Company and Treasure Chest policy and any
bonus earned but unpaid under the EIP for any fiscal year of the Company ending
prior to Executive's termination of employment (the "Accrued Obligations"), and
(ii) as otherwise may be provided under the terms of any outstanding equity
incentive award.
(d) TERMINATION BY THE COMPANY OTHER THAN FOR DEATH, DISABILITY
OR CAUSE OR BY THE EXECUTIVE FOR GOOD REASON. If, whether before or after a
Change in Control, (A) Executive's employment is terminated by the Company
for any reason other than Executive's death or Disability or for Cause, or
(B) Executive terminates his employment for Good Reason, then (i) Treasure
Chest shall pay Executive as severance, within ten (10) business days
following the date of such termination, a lump sum amount equal to two (2)
times the sum of (x) Executive's then Base Salary plus (y) Executive's
highest annual Performance Bonus in the three (3) year period immediately
preceding such Change in Control, (ii) the Company and/or Treasure Chest
shall pay Executive a lump sum amount equal to the present value of all
other benefits otherwise payable or provided or which would vest through the
then remaining Term under Section 3(e), (iii) all outstanding equity incentive
awards (including without limitation stock options granted under the Stock Plan)
shall immediately vest and any then outstanding stock options or similar awards
held by Executive shall remain exercisable for a period of one
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<PAGE>
year from the date of such termination or, if earlier, until the end of the
Option Term and (iv) Treasure Chest shall pay to Executive the Accrued
Obligations.
(e) TERMINATION BY EXECUTIVE WITH NOTICE. Executive may terminate
his employment hereunder upon thirty (30) days written notice to the Company
without Good Reason, in which event this Agreement shall terminate without
further obligation of the Company or Treasure Chest except for (i) payment of
the Accrued Obligations and (ii) as otherwise may be provided under the terms
of any outstanding equity incentive award.
(f) EXCISE TAX GROSS-UP. In the event any of the payments hereunder
shall become subject to the excise tax imposed under Section 4999 of the Code,
or any similar or successor provision of federal, state or local law, Treasure
Chest shall pay to Executive such additional amounts as may be necessary to
fully offset the tax effects of such excise tax or taxes, in accordance with the
procedures set forth in Exhibit B hereto.
(g) NO MITIGATION REQUIRED. Executive shall not be required in any
way to mitigate the amount of any payment or benefit provided for under this
Section 4, including, but not limited to, by seeking other employment, nor
shall the amount of any payment or benefit provided for under this Section 4
be reduced by any compensation earned by Executive as the result of
employment with or services provided to another employer after the date of
Executive's termination of employment hereunder, or otherwise; provided,
however, that in the event Executive shall, prior to the occurrence of a
Change in Control, breach the provisions of Section 6(b) hereof, Treasure
Chest shall have the right, in addition to any other remedies it may have
with respect to such breach, to recoup a portion of any amounts paid
hereunder or otherwise owing to Executive in either case for the period
during which the breach exists equal to the amount of any compensation earned
by Executive as the result of employment with or any other services provided
to a Competitor of the Company (as defined below) during the period he is in
violation of Section 6(b).
5. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) GOOD REASON. "Good Reason" shall mean the occurrence of any of
the following:
(1) The Company's or Treasure Chest's material breach of any of
the provisions of this Agreement, including without
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limitation the occurrence of any of the events described in subsections
(2)-(4) of this Section 5(a);
(2) Any material adverse alteration in Executive's titles,
positions, status, duties or responsibilities with the Company or its
subsidiaries or any failure to re-elect Executive to any such positions or
the assignment to Executive of any duties or responsibilities inconsistent
with Executive's positions and status as set forth in Section 1 above;
(3) Executive's ceasing to be a member of the Company's Board
of Directors for any reason other than Executive's death, Disability,
resignation or refusal to stand for re-election to the Company's Board of
Directors;
(4) The Chief Executive Officer of the Company being an
individual other than Theodore Ammon or Executive (other than on an interim
or temporary basis or by reason of Executive's Disability);
(5) Any reduction in Executive's annual Base Salary or
annual or long term aggregate compensation and benefits opportunities;
(6) Any relocation of the Company's principal executive
offices outside of the New York metropolitan area; or
(7) The Company's providing notice to Executive that it does
not wish to have the Term automatically extended pursuant to Section 2.
(b) CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company; any trustee or other fiduciary holding
securities under an employee benefit plan of the Company; or any company
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership at such time of stock
of the Company), is or becomes after the Effective Date the "beneficial
owner" (as defined in Rule 13d-3 under the
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<PAGE>
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any
securities acquired directly from the Company) representing thirty-five
percent (35%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in
subparagraph (i), (iii) or (iv) of this Section 5(b)) whose election by
the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
Board of Directors then still in office who either were members of the
Board of Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other entity and, in connection with
such merger or consolidation, individuals who constitute the Board of
Directors immediately prior to the time any agreement to effect such merger
or consolidation is entered into fail for any reason to constitute at least
a majority of the board of directors of the surviving corporation following
the consummation of such merger or consolidation; or
(iv) the stockholders of the Company approve (a) a plan of
complete liquidation of the Company or (b) an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
6. CONFIDENTIAL INFORMATION AND NON-COMPETITION.
(a) CONFIDENTIALITY. Executive acknowledges that in his employment
hereunder he will occupy a position of trust and confidence. Executive shall
not, except as may be required to perform his duties hereunder or as required
by applicable law, without limitation in time or until such information shall
have become public other than by Executive's unauthorized disclosure, dis-
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close to others or use, whether directly or indirectly, any Confidential
Information regarding the Company, its subsidiaries or affiliates.
"Confidential Information" shall mean information about the Company, its
subsidiaries and affiliates, and their respective clients and customers that
is not disclosed by the Company and its subsidiaries or affiliates for
financial reporting purposes and that was learned by Executive in the course
of his employment by the Company and its subsidiaries or affiliates,
including (without limitation) any proprietary knowledge, trade secrets,
data, formulae, information and client and customer lists and all papers,
resumes, and records (including computer records) of the documents containing
such Confidential Information. Executive acknowledges that such Confidential
Information is specialized, unique in nature and of great value to the
Company, its subsidiaries and affiliates, and that such information gives the
Company, its subsidiaries and affiliates a competitive advantage. The
Executive agrees to deliver or return to the Company, at the Company's
request at any time or upon termination or expiration of his employment or as
soon thereafter as possible, all documents, computer tapes and disks,
records, lists, data, drawings, prints, notes and written information (and
all copies thereof) furnished by the Company, its subsidiaries or affiliates
or prepared by the Executive during the term of his employment by the
Company, its subsidiaries or affiliates.
(b) NON-COMPETITION. During the Term (and, in the event Executive
terminates his employment hereunder other than for Good Reason or Executive's
employment is terminated by the Company for Cause, for a period of one (1)
year beyond the expiration of the Term), Executive shall not, directly or
indirectly, without the prior written consent of the Company, provide
consultative services or otherwise provide services to (whether as an
employee or a consultant, with or without pay), own, manage, operate, join,
control, participate in, or be connected with (as a stockholder, partner, or
otherwise), any business, individual, partner, firm, corporation, or other
entity that is then a competitor of the Company, its subsidiaries or
affiliates (including Treasure Chest) in any business other than book
publishing or television or cable broadcasting (each such competitor a
"Competitor of the Company"); provided, however, that the "beneficial
ownership" by Executive, either individually or as a member of a "group," as
such terms are used in Rule 13d of the General Rules and Regulations under
the Exchange Act, of not more than five percent (5%) of the voting stock of
any publicly held corporation shall not alone constitute a violation of this
Agreement and further provided the foregoing shall not prohibit Executive
from rendering services to an entity that has interests in a business that is
a Competitor of the Company where such business does not account for more
than 25% of the gross revenues of such entity, or from owning not more than
5%
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of the stock of such entity provided, in either case, that none of such
services are rendered to the business that is a Competitor of the Company.
It is further expressly agreed that the Company will or would suffer
irreparable injury if Executive were to compete with the Company or any
subsidiary or affiliate inviolation of this Agreement and that the Company
would by reason of such competition be entitled to injunctive relief in a
court of appropriate jurisdiction, and Executive further consents and
stipulates to the entry of such injunctive relief in such a court prohibiting
Executive from competing with the Company or any subsidiary or affiliate of the
Company in violation of this Agreement. Executive and the Company acknowledge
and agree that the business of the Company is national in nature, and that the
terms of the non-competition agreement set forth herein shall apply on a
nationwide basis.
(c) NON-SOLICITATION OF CUSTOMERS AND SUPPLIERS. During the Term
(and, in the event Executive terminates his employment hereunder other
than for Good Reason or Executive's employment is terminated by the Company
for Cause, for a period of one (1) year beyond the expiration of the Term),
Executive shall not, directly or indirectly, influence or attempt to
influence customers or suppliers of the Company or any of its subsidiaries
or affiliates to divert their business to any Competitor of the Company.
(d) NON-SOLICITATION OF EMPLOYEES. Executive recognizes that he
will possess confidential information about other employees of the Company,
its subsidiaries and affiliates relating to their education, experience,
skills, abilities, compensation and benefits, and interpersonal relationships
with customers of the Company, its subsidiaries and affiliates. Executive
recognizes that the information he will possess about these other employees is
not generally known, is of substantial value to the Company, its subsidiaries
and affiliates in developing their business and in securing and retaining
customers, and will be acquired by him because of his business position with the
Company and its subsidiaries or affiliates. Executive agrees that, during the
Term (and, in the event Executive terminates his employment hereunder other than
for Good Reason or Executive's employment is terminated by the Company for
Cause, for a period of one (1) year beyond the expiration of the Term), he will
not, directly or indirectly, solicit or recruit any employee of the Company, its
subsidiaries or its affiliates for the purpose of being employed by him or by
any Competitor of the Company on whose behalf he is acting as an agent,
representative or employee and that he will not convey any such confidential
information or trade secrets about other employees of the Company, its
subsidiaries or affiliates to any other person.
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(e) SURVIVAL OF PROVISIONS. The obligations contained in this
Section 6 shall, to the extent provided in this Section 6, survive the
termination or expiration of Executive's employment with the Company and,
as applicable, shall be fully enforceable thereafter in accordance with the
terms of this Agreement. If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 6 is excessive
in duration or scope or is unreasonable or unenforceable under the laws of
that state, it is the intention of the parties that such restriction
may be modified or amended by the court to render it enforceable to the
maximum extent permitted by the law of that state.
7. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be given by fax or first-class mail,
certified or registered with return receipt requested, and shall be deemed to
have been duly given three (3) days after mailing or twenty-four (24) hours
after transmission of a fax to the respective persons named below:
If to Company or Big Flower Press Holdings, Inc.
Treasure Chest: 3 East 54th Street
New York, New York 10022
ATTENTION: Corporate Secretary
Phone: (212) 521-1600
Fax: (212) 223-4074
If to Executive: Edward T. Reilly
To his address and fax number as shown
in the personnel records of the Company
or Treasure Chest
Either party may change such party's address for notices by notice duly
given pursuant hereto.
8. DISPUTE RESOLUTION: ATTORNEYS' FEES. The Company, Treasure Chest
and Executive agree that any dispute arising as to the parties' rights and
obligations hereunder, other than with respect to Section 6, shall be
resolved by binding arbitration before a private judge to be determined by
mutually agreeable means, or if the parties fail so to agree, then before a
panel of three arbitrators in New York City in accordance with the rules of
the American Arbitration Association then in effect. The Company and/or
Treasure Chest shall pay its own attorneys' fees in any such action or
proceeding. In addition, Executive shall have the right, in addition to
any other relief granted by such arbitrator (or by any court with respect to
relief granted with respect to
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Section 6), to attorneys' fees based on a determination by the arbitrator
(or, with respect to Section 6, the court) of the extent to which Executive
has prevailed as to the material issues raised in determination of the
dispute.
9. TERMINATION OF PRIOR AGREEMENTS. This Agreement terminates and
supersedes any and all prior agreements and understandings between the
parties with respect to Executive's employment and compensation by the
Company.
10. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its
nature and neither of the parties hereto shall, without the consent of the
other, assign or transfer this Agreement or any rights or obligations
hereunder; provided that, in the event of the merger, consolidation,
transfer, or sale of all or substantially all of the assets of the Company
with or to any other individual or entity, this Agreement shall, subject to
the provisions hereof, be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the promises,
covenants, duties, and obligations of the Company hereunder, and all
references herein to the "Company" shall refer to such successor.
11. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed
under and in accordance with the laws of the State of New York.
12. WITHHOLDING. The Company shall make such deductions and withhold
such amounts from each payment made to the Executive hereunder as may be
required from time to time by law, governmental regulation or order.
13. HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
14. WAIVER; MODIFICATION. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed
by each party hereto.
12
<PAGE>
15. SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute
or public policy, only the portions of this Agreement that violate such
statute or public policy shall be stricken. All portions of this Agreement
that do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Agreement
shall modify the stricken terms as narrowly as possible to give as much
effect as possible to the intentions of the parties under this Agreement.
16. INDEMNIFICATION. (a) The Company and its subsidiaries (including
Treasure Chest) shall indemnify and hold Executive harmless for acts and
omissions in his capacity as an officer, director or employee of, or as a
fiduciary acting at the request of, the Company and its subsidiaries
(including Treasure Chest) to the maximum extent permitted under applicable
law. In addition, following the termination of Executive's employment with
the Company and Treasure Chest for any reason other than for Cause, to the
extent the Company and/or Treasure Chest is then providing director and
officer liability insurance to their respective directors and officers, the
Company and/or Treasure Chest shall include Executive as a named insured
under any applicable such policy with respect to actions undertaken by
Executive while serving as a director, officer or fiduciary of the Company
and/or Treasure Chest.
(b) The Company and Treasure Chest shall be jointly and severally
liable for all amounts due under this Agreement.
17. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
13
<PAGE>
IN WITNESS WHEREOF, each of the Company and Treasure Chest has
caused this Agreement to be executed by its duly authorized officer, and
the Executive has hereunto signed this Agreement, as of the date first above
written.
BIG FLOWER PRESS HOLDINGS, INC.
/s/ Theodore Ammon
By: Theodore Ammon
Its: Chairman of the Board
and Chief Executive Officer
TREASURE CHEST ADVERTISING COMPANY, INC.
/s/ Theodore Ammon
By: Theodore Ammon
Its: Chairman of the Board
and Chief Executive Officer
/s/ Edward T. Reilly
EDWARD T. REILLY
14
<PAGE>
Exhibit A
INCENTIVE STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION AGREEMENT, dated as of the 21st day of March,
1996, by and between Big Flower Press Holdings, Inc., a Delaware corporation
(the "Company"), and Edward T. Reilly (the "Optionee"), an executive of the
Company and Treasure Chest Advertising Company, Inc., a Delaware
corporation and a subsidiary of the Company ("Treasure Chest").
Pursuant to the Company's Restated 1993 Stock Award and Incentive Plan
(the "Plan") and the terms of that certain Employment Agreement, dated as of
the date hereof, between the Company, Treasure Chest and Optionee (the
"Employment Agreement"), the Compensation Committee of the Board of
Directors of the Company, the Administrator of the Plan (the "Committee"),
has determined that the Optionee is to be granted an option (the "Option") to
purchase shares of the Company's Common Stock, on the terms and conditions
set forth herein, and hereby grants such Option. It is intended that to
the extent permitted by law the Option constitute an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and otherwise a non-qualified stock option. Any
capitalized terms not defined herein shall have their respective meanings set
forth in the Plan.
1. NUMBER OF SHARES AND OPTION PRICE. The Option entitles the Optionee
to purchase 200,000 shares of the Company's Common Stock, par value $.01 per
share (the "Option Shares"), at a price (the "Option Price") of $[ ] per
share, which is equal to the closing price of the Common Stock on the date
hereof as reported on the New York Stock Exchange.
2. PERIOD OF OPTION. The term of the Option and of this Option Agreement
shall commence on the date hereof (the "Date of Grant") and, unless the
Option is previously terminated pursuant to this Option Agreement or the
Employment Agreement, shall terminate upon the expiration of ten (10) years
from the Date of Grant. Upon the termination of the Option, all rights of the
Optionee hereunder shall cease.
3. CONDITIONS OF EXERCISE. (a) Subject to acceleration in
the circumstances set forth in the Employment Agreement, the
Option shall vest and become exercisable at the rate of 20% per year on
December 31 of each of 1996, 1997, 1998 and 1999, with the remaining 20%
to vest and become exercisable on the fourth anniversary of the
Effective Date.
<PAGE>
(b) Except as otherwise provided herein or in the Employment
Agreement, the right of the Optionee to purchase Option Shares with respect
to which this Option has become exercisable as herein provided may be
exercised in whole or in part at any time or from time to time prior to the
tenth anniversary of the Date of Grant.
4. NONTRANSFERABILITY OF OPTION. Except as otherwise provided herein,
the Option and this Option Agreement shall not be transferable. More
particularly, but not by way of limiting the generality of the foregoing,
except as otherwise provided herein, the Option may not be assigned,
transferred, pledged or hypothecated in any way, shall not be assignable by
operation of law, and shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option contrary to the provisions hereof, and the
levy of any execution, attachment or similar process upon the Option shall
be null and void and without effect.
5. EXERCISE OF OPTION. The Option shall be exercised as provided
in the Plan.
6. TERMINATION FOR CAUSE. If the Optionee's employment with the Company
is terminated for Cause (as defined in the Employment Agreement), the Option
shall expire immediately.
7. NOTICES. Any notice required or permitted under this Option
Agreement shall be deemed given when delivered personally, or when deposited
in a United States Post Office, postage prepaid, addressed, as appropriate,
to the Optionee at the address set forth in the Employment Agreement or such
other address as the Optionee may designate in writing to the Company, or to
the Company: Attention: Secretary (or his designee), at the Company's address
or such other address as the Company may designate in writing to the
Optionee.
8. FAILURE TO ENFORCE NOT A WAIVER. The failure of the Company to
enforce at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
9. GOVERNING LAW. This Option Agreement shall be governed by and
construed according to the laws of the State of Delaware without regard to
its principles of conflict of laws.
2
<PAGE>
10. INCORPORATION OF PLAN AND EMPLOYMENT AGREEMENT. The Plan and the
Employment Agreement are hereby incorporated by reference and made a part
hereof, and the Option and this Option Agreement shall be subject to all
terms and conditions of the Plan and the applicable provisions of the Employ-
ment Agreement.
11. AMENDMENTS. This Option Agreement may be amended or modified at any
time only by an instrument in writing signed by the parties hereto.
12. RIGHTS AS A SHAREHOLDER. Neither the Optionee nor any successor in
interest shall have any rights as a stockholder of the Company with respect
to any shares of Common Stock subject to the Option until the date of
issuance of a stock certificate for such shares of Common Stock.
13. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. Neither the Plan, the
granting of the Option, this Option Agreement nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Optionee has a right to continue
as an employee of the Company or any subsidiary or affiliate for any period
of time or at any specific rate of compensation.
14. INVESTMENT REPRESENTATION. Upon the exercise of all or any part of
the Option, the Committee may require the Optionee to furnish to the Company
an agreement (in such form as the Committee may specify) in which the Optionee
shall represent that the shares of Common Stock to be acquired upon exercise of
the Option are to be acquired for the Optionee's own account and not with a view
to the sale or distribution thereof.
15. AUTHORITY OF THE COMMITTEE. The Committee shall have full
authority to interpret and construe the terms of the Plan and this Option
Agreement. The determination of the Committee as to any such matter of
interpretation or construction shall be final, binding and conclusive.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Option Agreement on the day and year first above written.
BIG FLOWER PRESS HOLDINGS, INC.
By ___________________________
Its___________________________
The undersigned hereby accepts and
agrees to all the terms and provisions
of the foregoing Option Agreement and to
all the terms and provisions of the Plan
and the Employment Agreement herein
incorporated by reference.
____________________________________
Optionee
4
<PAGE>
EXHIBIT B
GROSS-UP PAYMENT
In the event that any payment received by Executive or paid by the
Company on behalf of Executive under this Agreement or under any other plan,
arrangement or agreement with the Company or any person whose actions
result in a change in control of the Company (provided that the Company
approves of the arrangement pursuant to which the payment by such person is
made to Executive) or any person affiliated with the Company or such person
(collectively, the "Total Payments") will be subject to the excise tax (the
"Excise Tax") imposed by section 4999 (or any successor provision) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay
to Executive an additional amount (the "Gross-Up Payment") such that the net
amount retained or to be retained by Executive, after deduction of any Excise
Tax on the Total Payments and on any federal, state and local income, excise
and/or other taxes upon the Gross-Up Payment provided for hereunder, shall be
equal to the Total Payments.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax (i) the Total
Payments shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code, and all "excess parachute payments "within the
meaning of section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the accounting
firm (the "Auditors") that was, immediately prior to the Change in Control,
the Company's independent auditors and reasonably acceptable to Executive
the Total Payments (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and
(ii) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, Executive
shall be deemed to pay federal income and other taxes at the highest
applicable marginal rate of taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income and other taxes at
the highest applicable marginal rate of taxation in the state and locality of
<PAGE>
Executive's residence or place of employment on the date the Gross-Up
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes and any
other taxes. In the event that the Excise Tax is subsequently determined to
be less than the amount originally taken into account hereunder, Executive
shall repay to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and other
taxes imposed on the Gross-Up Payment being repaid by Executive to the extent
that such repayment results in an actual reduction in Excise Tax and/or a
federal, state or local income tax deduction) plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the Code
(provided, however, that if all or any portion of the amount of any repayment
made to Executive by any governmental entity shall be made at a higher rate of
interest than that provided under section 1274(b)(2)(B) of the Code (the
"Higher Interest Rate Amount"), Executive shall also repay to the Company
interest on the Higher Interest Rate Amount at a rate equal to the excess of
such higher rate of interest over the rate provided under section 1274(b)(2)(B)
of the Code). In the event that the Excise Tax is determined to exceed the
amount originally taken into account hereunder (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions to tax payable
by Executive with respect to such excess) at the time that the amount of such
excess is finally determined. The parties agree that such excess will be
considered to have been finally determined at the conclusion of Internal Revenue
Service administrative appellate proceedings, unless the parties mutually agree
to pay or settle such amount earlier, or agree to pursue an appeal further.
Executive and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Total
Payments. In the event of an audit or other administrative or judicial
proceeding relating to or arising from the issue of potential liability for the
Excise Tax, the Company shall pay all attorneys' and accountants' fees and other
costs reasonably incurred by Executive in connection with the audit or other
proceeding to the extent such fees and costs relate to such liability, provided,
that in the case of judicial or administrative proceedings, the Company consents
to the pursuit of such proceedings.
The Gross-Up Payment payable pursuant hereto shall be payable (or, as
applicable withheld), in whole or in part as applicable, on the earlier of
(i) the date the Company is required to withhold the Excise Tax pursu-
2
<PAGE>
ant to section 4999 of the Code or (ii) the date Executive is required to pay
the Excise Tax.
Executive shall notify the Company of any audit or review by the Internal
Revenue Service of Executive's federal income tax return for the year in
which a payment under this Agreement is made within ten (10) days of
Executive's receipt of such audit or review. In addition, Executive shall
also notify the Company of the final resolution of such audit or review
within ten (10) days of such resolution.
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheets and condensed consolidated statements of
operations found on pages 2 through 4 of the Company's Form 10-Q for the year
to date, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,901
<SECURITIES> 0
<RECEIVABLES> 32,930
<ALLOWANCES> 1,253
<INVENTORY> 41,630
<CURRENT-ASSETS> 114,889
<PP&E> 278,516
<DEPRECIATION> 46,979
<TOTAL-ASSETS> 658,256
<CURRENT-LIABILITIES> 160,962
<BONDS> 0
0
0
<COMMON> 160
<OTHER-SE> 75,381
<TOTAL-LIABILITY-AND-EQUITY> 658,256
<SALES> 221,378
<TOTAL-REVENUES> 221,378
<CGS> 197,354
<TOTAL-COSTS> 197,354
<OTHER-EXPENSES> 25,893
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,180
<INCOME-PRETAX> (10,049)
<INCOME-TAX> (5,025)
<INCOME-CONTINUING> (5,024)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,892)
<CHANGES> 0
<NET-INCOME> (6,916)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
