<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 9, 1998
U.S. OFFICE PRODUCTS COMPANY
(Exact name of registrant as specified in charter)
Delaware 0-25372 52-1906050
(State of other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1025 Thomas Jefferson Street, N.W., Suite 600 East, Washington, D.C. 20007
(Address of principal executive offices, including Zip Code)
(202) 339-6700
(Registrant's telephone number, including area code)
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U.S. OFFICE PRODUCTS COMPANY
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
See Item 5 below.
ITEM 5. OTHER EVENTS
U.S. Office Products Company (the "Company") has completed its
previously announced comprehensive restructuring plan (the "Strategic
Restructuring Plan").
The Strategic Restructuring Plan consisted of the following
principal elements:
- Equity Tender Offer. Pursuant to a self-tender offer (the
"Equity Tender Offer"), the Company offered to purchase
37,037,037 shares of its common stock, par value $0.001 per
share, outstanding prior to the reverse stock split
described below (the "Pre-Split Common Stock"), including
shares issuable upon exercise of options (vested and
unvested) to purchase Pre-Split Common Stock, at $27.00 per
share (or, in the case of shares underlying stock options,
$27.00 minus the exercise price per share of options). The
purchase of Pre-Split Common Stock under the Equity Tender
Offer was completed on June 10, 1998. The total cash
consideration paid for shares of Pre-Split Common Stock in
the Equity Tender Offer was approximately $934.6 million.
- Spin-Off Distributions. Effective at 11:59 p.m. EDT on June
9, 1998, the Company distributed (the "Distributions") to
its stockholders all the shares of four separate companies
(collectively, the "Spin-Off Companies") that will conduct
the Company's former technology solutions (Aztec Technology
Partners, Inc. ("Aztec")), print management (Workflow
Management, Inc. ("Workflow")), educational supplies (School
Specialty, Inc. ("School Specialty")) and corporate travel
services (Navigant International, Inc. ("Navigant"))
businesses. Stockholders of record of the Company at 5:00
p.m. on June 9, 1998 received one share of Aztec common
stock for each five shares of Pre-Split Common Stock, one
share of Workflow common stock for each 7.5 shares of
Pre-Split Common Stock, one share of School Specialty common
stock for each nine shares of Pre-Split Common Stock, and
one share of Navigant common stock for each 10 shares of
Pre-Split Common Stock. In addition, School Specialty, and
Navigant each issued additional shares of their common stock
in public offerings.
2
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- Equity Investment. On June 10, 1998, CDR-PC Acquisition,
L.L.C. ("Investor"), an affiliate of an investment fund
managed by Clayton, Dubilier & Rice, Inc., a private
investment firm, acquired the following equity securities of
the Company: (i) approximately 9,092,106 shares of the
Company's post-reverse-stock-split Common Stock, $0.001 par
value per share ("New Common Stock"), (ii) special warrants
(the "Special Warrants") entitling Investor to purchase
additional New Common Stock in certain circumstances
intended to permit Investor to maintain its 24.9% equity
ownership position and (iii) warrants (the "Warrants")
entitling Investor to purchase additional shares of New
Common Stock equal to the number of shares it purchased on
June 10, 1998, plus the number of shares it acquires
or is entitled to acquire pursuant to the Special Warrants.
The number of shares that Investor can acquire pursuant to
the Special Warrants has not yet been determined and will
depend, in part, on the final adjustments to the conversion
formula for the Company's 5 1/2% Convertible Subordinated
Notes Due 2001. For additional information on the terms of
the investment by Investor, including the terms of the
Special Warrants and Warrants, see the Company's Proxy
Statement dated May 1, 1998.
In addition to the foregoing transactions, the Company
effected a reverse stock split. Pursuant to the reverse stock split, effective
at 5:00 p.m. on June 9, 1998 (after the record date for the Distributions), each
four outstanding shares of Pre-Split Common Stock were converted into one share
of New Common Stock. At June 10, 1998, after giving effect to the elements of
the Strategic Restructuring Plan and the reverse stock split, the Company had
approximately 36,514,484 shares of New Common Stock outstanding.
In conjunction with the Strategic Restructuring Plan, the
Company completed the following financing transactions (the "Financing
Transactions"):
- 2001 Note Exchange Offer. The Company offered to exchange
its 5 1/2% Convertible Subordinated Notes due 2001 (the
"2001 Notes") for Pre-Split Common Stock (the "2001 Note
Exchange Offer"). The 2001 Note Exchange Offer was completed
on May 29, 1998. Pursuant to the 2001 Note Exchange Offer,
$131,989,000 in principal amount of 2001 Notes were
exchanged for 8,100,741 shares of Pre-Split Common Stock.
After the 2001 Note Exchange Offer, $12,761,000 million in
principal amount of 2001 Notes remain outstanding. The
Company undertook the 2001 Note Exchange Offer in order to:
(a) reduce the amount of cash the Company otherwise could be
required to pay to retire the 2001 Notes at their final
maturity, and (b) minimize the future dilutive effect
on the Company's stockholder of the issuance of New Common
Stock upon conversion of the 2001 Notes if they were
converted after the completion of the Strategic
Restructuring Plan.
3
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- Senior Subordinated Note Offering. The Company issued $400.0
million aggregate principal amount of 9 3/4% Senior
Subordinated Notes due 2008 (the "Senior Subordinated
Notes") in a private placement. The Senior Subordinated
Notes were issued pursuant to an indenture dated June 10,
1998 between the Company and State Street Bank and Trust
Company, as trustee.
- New Credit Facility. The Company entered into a $1.225
billion senior secured bank credit facility (the "Credit
Facility") that consists of the following: (i) a $200.0
million seven-year multi-draw term loan facility; (ii) a
$250.0 million seven-year revolving credit facility; (iii) a
$100.0 million seven-year term loan facility; and (iv) a
$675.0 million eight-year term loan facility.
- 2003 Note Tender Offer. Pursuant to a tender offer (the
"2003 Note Tender"), the Company purchased $222,215,000 in
principal amount of its outstanding 5 1/2% Convertible
Subordinated Notes due 2003 (the "2003 Notes") for an
aggregate purchase price of $209,993,175 (representing
94.50% of the principal amount thereof, plus accrued
interest). Payment for the 2003 Notes purchased by the
Company was made on June 10, 1998. After the 2003 Note
Tender, approximately $6,785,000 in principal amount of 2003
Notes remain outstanding. The Company undertook the 2003
Note Tender in order to: (a) reduce the amount of cash the
Company otherwise would be required to pay to retire the
2003 Notes in 2003 (prior to the date of maturity of the
Credit Facility and the Senior Subordinated Notes), and (b)
minimize the future dilutive effect on the Company's
stockholder of the issuance of New Common Stock upon
conversion of the 2003 Notes if they were converted after
the completion of the Strategic Restructuring Plan.
The Company used the proceeds of the Equity Investment and the
Senior Subordinated Note Offering, together with borrowings under the Credit
Facility, to refinance the Company's existing credit facility, to pay the
purchase price of the Equity Tender Offer and the 2003 Note Tender, and to pay
fees and expenses incurred in connection with the Strategic Restructuring Plan
and the Financing Transactions.
4
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Pro forma financial information reflecting the
Distributions is not included in this Form 8-K. Restated financial statements
that reflect the Spin-Off Companies as discontinued operations were previously
filed with a Form 8-K on March 12, 1998. The financial statements to be filed
with the Company's Annual Report on Form 10-K for the fiscal year ended April
25, 1998 will also reflect the Spin-Off Companies as discontinued operations for
such period.
(c) Exhibits
<TABLE>
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Exhibit Description
<S> <C>
2.1 Agreement and Plan of Distribution dated as
of June 9, 1998 between U.S. Office Products
Company, Workflow Management, Inc., School
Specialty, Inc., Aztec Technology Partners,
Inc., and Navigant International, Inc.
99.1 Placement Agreement dated as of June 5, 1998
between U.S. Office Products Company and
Morgan Stanley & Co., Incorporated, Merrill
Lynch, Pierce, Fenner & Smith, Incorporated,
BT Alex. Brown Incorporated and Chase
Securities Inc.
99.2 Indenture dated as of June 10, 1998 between U.S. Office Products
Company and State Street Bank and Trust Company.
99.3 Registration Rights Agreement dated as of
June 5, 1998 between U.S. Office Products
Company and Morgan Stanley & Co.,
Incorporated, Merrill Lynch, Pierce, Fenner
& Smith, Incorporated, BT Alex. Brown
Incorporated and Chase Securities Inc.
99.4 Credit Agreement dated as of June 9, 1998
between U.S. Office Products Company and The
Chase Manhattan Bank, as Administrative
Agent, Bankers Trust Company, as Syndication
Agent, Merrill Lynch Capital Corporation, as
Documentation Agent, Chase Securities Inc.,
BT Alex. Brown Incorporated, and Merrill
Lynch, Pierce, Fenner & Smith Incorporated,
as co-arrangers and the other lenders named
therein.
</TABLE>
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99.5 Letter Agreement dated as of June 10, 1998
between U.S. Office Products Company and
CDR-PC Acquisition, L.L.C.
99.6 Common Stock Purchase Warrant dated June 10, 1998
99.7 Common Stock Purchase Special Warrant dated June 10, 1998
99.8 Registration Rights Agreement dated as of
June 10, 1998 among U.S. Office Products
Company and CDR-PC Acquisition, L.L.C.
99.9 Consulting Agreement dated as of June 10,
1998 by and between U.S. Office Products
Company and Clayton, Dubilier & Rice, Inc.
99.10 Indemnification Agreement dated as of June
10, 1998 by and among U.S. Office Products
Company, CDR-PC Acquisition, L.L.C.,
Clayton, Dubilier & Rice Fund V Limited
Partnership, and Clayton, Dubilier & Rice,
Inc.
99.11 Tax Allocation Agreement dated as of June 9, 1998 among U.S.
Office Products Company, Workflow Management, Inc., School
Specialty, Inc., Aztec Technology Partners, Inc., and Navigant
International, Inc.
99.12 Employee Benefits Services and Liabilities Agreement dated as of
June 9, 1998 between U.S. Office Products Company, Workflow
Management, Inc., School Specialty, Inc., Aztec Technology
Partners, Inc., and Navigant International, Inc.
99.13 Amended Services Agreement dated as of June 8, 1998 between U.S.
Office Products Company and Jonathan J. Ledecky
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
U.S. OFFICE PRODUCTS COMPANY
(Registrant)
By: /s/ Mark D. Director
------------------------------------
Mark D. Director
Executive Vice President--
Administration,
General Counsel and Secretary
DATED: June 24, 1998
7
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NO. EXHIBIT
<S> <C>
2.1 Agreement and Plan of Distribution dated as of June 9, 1998
between U.S. Office Products Company, Workflow Management,
Inc., School Specialty, Inc., Aztec Technology Partners, Inc., and
Navigant International, Inc.
99.1 Placement Agreement dated as of June 5, 1998
between U.S. Office Products Company and
Morgan Stanley & Co., Incorporated, Merrill
Lynch, Pierce, Fenner & Smith, Incorporated,
BT Alex. Brown Incorporated and Chase
Securities Inc.
99.2 Indenture dated as of June 10, 1998 between U.S. Office Products
Company and State Street Bank and Trust Company.
99.3 Registration Rights Agreement dated as of
June 5, 1998 between U.S. Office Products
Company and Morgan Stanley & Co.,
Incorporated, Merrill Lynch, Pierce, Fenner
& Smith, Incorporated, BT Alex. Brown
Incorporated and Chase Securities Inc.
99.4 Credit Agreement dated as of June 9, 1998
between U.S. Office Products Company and The
Chase Manhattan Bank, as Administrative
Agent, Bankers Trust Company, as Syndication
Agent, Merrill Lynch Capital Corporation, as
Documentation Agent, Chase Securities Inc.,
BT Alex. Brown Incorporated, and Merrill
Lynch, Pierce, Fenner & Smith Incorporated,
as co- arrangers and the other lenders named
therein.
99.5 Letter Agreement dated as of June 10, 1998
between U.S. Office Products Company and
CDR-PC Acquisition, L.L.C.
99.6 Common Stock Purchase Warrant dated June 10, 1998
99.7 Common Stock Purchase Special Warrant dated June 10, 1998
</TABLE>
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<TABLE>
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99.8 Registration Rights Agreement dated as of
June 10, 1998 among U.S. Office Products
Company and CDR-PC Acquisition, L.L.C.
99.9 Consulting Agreement dated as of June 10,
1998 by and between U.S. Office Products
Company and Clayton, Dubilier & Rice, Inc.
99.10 Indemnification Agreement dated as of June 10, 1998 by and
among U.S. Office Products Company, CDR-PC Acquisition,
L.L.C., Clayton, Dubilier & Rice Fund V Limited Partnership, and
Clayton, Dubilier & Rice, Inc.
99.11 Tax Allocation Agreement dated as of June 9, 1998 among U.S.
Office Products Company, Workflow Management, Inc., School
Specialty, Inc., Aztec Technology Partners, Inc., and Navigant
International, Inc.
99.12 Employee Benefits Services and Liabilities Agreement dated as of
June 9, 1998 between U.S. Office Products Company, Workflow
Management, Inc., School Specialty, Inc., Aztec Technology
Partners, Inc., and Navigant International, Inc.
99.13 Amended Services Agreement dated as of June 8, 1998 between
U.S. Office Products Company and Jonathan J. Ledecky
</TABLE>
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AGREEMENT
AND
PLAN OF DISTRIBUTION
Dated as of June 9, 1998
between
U.S. Office Products Company,
Workflow Management, Inc.,
School Specialty, Inc.,
Aztec Technology Partners, Inc.
and
Navigant International, Inc.
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.01 General . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.02 References; Interpretation. . . . . . . . . . . . . 16
ARTICLE II
PRELIMINARY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.01 Stock Transfers . . . . . . . . . . . . . . . . . . 16
SECTION 2.02 Liabilities . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.03 Transfer of Certain Licenses and Permits. . . . . . 17
SECTION 2.04 Transfer and Assumption Documentation . . . . . . . 18
SECTION 2.05 Intercompany Accounts . . . . . . . . . . . . . . . 19
SECTION 2.06 Elimination of Guarantees . . . . . . . . . . . . . 19
SECTION 2.07 Assignments and Transfers Not Effected
Prior to the Distribution . . . . . . . . . . . . 19
SECTION 2.08 Debt. . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.09 Assignment of Acquisition Claims. . . . . . . . . . 21
SECTION 2.10 Pledged Shares. . . . . . . . . . . . . . . . . . . 21
SECTION 2.11 Other Transactions. . . . . . . . . . . . . . . . . 21
SECTION 2.12 Certain Acquisition Expenses Not Resulting
in the Incurrence of Debt . . . . . . . . . . . . 21
ARTICLE III
THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.01 Directors and Employees . . . . . . . . . . . . . . 22
SECTION 3.02 Mechanics of Distribution . . . . . . . . . . . . . 22
SECTION 3.03 Timing of Distribution. . . . . . . . . . . . . . . 23
ARTICLE IV
MUTUAL RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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SECTION 5.01 Indemnification by the Company. . . . . . . . . . . . . . . . . 24
SECTION 5.02 Indemnification by Printco. . . . . . . . . . . . . . . . . . . 25
SECTION 5.03 Indemnification by Schoolco . . . . . . . . . . . . . . . . . . 26
SECTION 5.04 Indemnification by Techco . . . . . . . . . . . . . . . . . . . 26
SECTION 5.05 Indemnification by Travelco . . . . . . . . . . . . . . . . . . 27
SECTION 5.06 Limitations on Indemnification Obligations. . . . . . . . . . . 28
SECTION 5.07 Procedures for Indemnification of Third Party Claims. . . . . . 28
SECTION 5.08 Indemnification Payments. . . . . . . . . . . . . . . . . . . . 30
SECTION 5.09 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.10 Tax Adjustments . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.11 MCI Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.12 Survival of Indemnities . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.01 Provision of Corporate Records. . . . . . . . . . . . . . . . . 32
SECTION 6.02 Access to Information . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.03 Retention of Records. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.04 Witness Services. . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.05 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.06 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.07 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.02 Distributed Companies' Insurance. . . . . . . . . . . . . . . . 34
SECTION 7.03 Access to the Company's Insurance Program . . . . . . . . . . . 35
SECTION 7.04 Insurance Recoveries. . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.05 Insurance Representations . . . . . . . . . . . . . . . . . . . 35
SECTION 7.06 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.07 Deductibles and Maximums. . . . . . . . . . . . . . . . . . . . 36
SECTION 7.08 Conflicts Between Article VII and the Company's
Insurance Program . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.09 Maintenance of Insurance Policies . . . . . . . . . . . . . . . 36
ARTICLE VIII
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.01 Conditions to Obligations of the Company. . . . . . . . . . . . 36
</TABLE>
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ARTICLE IX
DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.01 Mediation and Binding Arbitration . . . . . . . . . . . . . . . 38
SECTION 9.02 Initiation of Negotiation . . . . . . . . . . . . . . . . . . . 38
SECTION 9.03 Submission to Mediation . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.04 Selection of Mediator . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.05 Treatment of Negotiation and Mediation. . . . . . . . . . . . . 38
SECTION 9.06 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.07 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.08 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.09 Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.01 Modification, Amendment or Termination . . . . . . . . . . . . 40
SECTION 10.02 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.03 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.04 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.05 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.06 Certain Obligations. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.07 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.08 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.09 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.10 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.11 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . 44
SECTION 10.12 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.13 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.14 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.15 Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . 44
SECTION 10.16 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.17 Survival of Agreements . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.18 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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<CAPTION>
EXHIBITS
<S> <C>
Exhibit I Employee Benefits Services and Liabilities Agreement
Exhibit II Distributed Company Subsidiaries
Exhibit III Estimated Pro Rata Share Percentages
Exhibit IV Shared Liabilities
Exhibit V Shared Liabilities: Information Statement Sections
Exhibit VI Tax Allocation Agreement
SCHEDULES
Schedule 2.06 Specified Guarantees
Schedule 2.08 Debt Amounts
Schedule 2.09 Net Recovery Amounts
Schedule 2.10 Distribution of Pledged Shares
Schedule 2.11 Other Transactions
Schedule 5.11 Terms Applicable to MCI Agreement
</TABLE>
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Exhibit 2.1
AGREEMENT AND PLAN OF DISTRIBUTION
AGREEMENT AND PLAN OF DISTRIBUTION dated as of June 9, 1998 (the
"Agreement"), between U.S. OFFICE PRODUCTS COMPANY, a Delaware corporation (the
"Company"), WORKFLOW MANAGEMENT, INC., a Delaware corporation and wholly owned
subsidiary of the Company ("Printco"), SCHOOL SPECIALTY, INC., a Delaware
corporation and wholly owned subsidiary of the Company ("Schoolco"), AZTEC
TECHNOLOGY PARTNERS, INC., a Delaware corporation and wholly owned subsidiary of
the Company ("Techco"), and NAVIGANT INTERNATIONAL, INC., a Delaware corporation
and wholly owned subsidiary of the Company ("Travelco"). Certain capitalized
terms used herein without definition have the meanings specified in Section
1.01.
W I T N E S S E T H:
WHEREAS the Board of Directors of the Company has approved the form, terms
and provisions of this Agreement, pursuant to which and subject to the terms of
which (a) the Company will distribute all the issued and outstanding shares of
common stock of the Distributed Companies held by the Company (as to the shares
of each Distributed Company, the "Printco Common Shares," the "Schoolco Common
Shares," the "Techco Common Shares," and the "Travelco Common Shares") to the
holders of record of shares of common stock of the Company (the "Company Common
Stock"), other than shares held in the treasury of the Company, (b) each
Distributed Company will assume entirely such Distributed Company's Liabilities
and other liabilities specified herein, (c) each Distributed Company will agree
to indemnify the Company and hold it harmless from and against its Pro Rata
Share of certain Shared Liabilities and (d) certain other transactions will be
consummated, all as set forth in Article II hereof (the "Preliminary
Transactions");
WHEREAS the purpose of the Preliminary Transactions and the Distributions
is to divest the Company of all businesses, operations and Liabilities other
than the Retained Business, Retained Assets and Retained Liabilities of the
Company and its Subsidiaries;
WHEREAS it is the intention of the parties to this Agreement that for U.S.
federal income tax purposes the Distributions shall qualify as tax-free
spin-offs under Section 355 of the Code and shall not be taxable under Section
355(e) of the Code; and
WHEREAS in order to effect the separation of ownership of the Company and
the Distributed Companies, this Agreement sets forth the principal corporate
transactions required to effect the Preliminary Transactions and the
Distributions and sets forth other agreements that will govern certain other
matters following the Distributions.
NOW, THEREFORE, in consideration of the premises, and of the covenants and
agreements set forth herein, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01 General. 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):
"AAA" shall mean the American Arbitration Association.
"Acquisition Agreement" shall mean each of the merger, stock purchase,
asset purchase or other acquisition agreements pursuant to which certain of the
Distributed Company Subsidiaries (or divisions within such Subsidiaries or
Distributed Company) were acquired by the Company or any of its Subsidiaries
prior to the Distributions.
"Acquisition Claim" shall mean any and all rights or claims that the
Company or any of its Subsidiaries may have against the sellers of the
Distributed Company Subsidiaries under any of the Acquisition Agreements.
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
"Agent" shall mean American Stock Transfer & Trust Company, as transfer
agent for the Company.
"Ancillary Agreements" shall mean the Employee Benefits Agreement, the Tax
Allocation Agreement, the Imagenet Licensing Agreement and the Lead Generation
System Licensing Agreement.
"Assets" shall mean any and all assets, properties and rights, whether
tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including, without limitation,
the following:
(i) real property interests (including leases), land, plants,
buildings and improvements;
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(ii) machinery, equipment, tooling, vehicles, furniture and fixtures,
leasehold improvements, repair parts, tools, plant, and office
equipment and other tangible personal property, together with any
rights or claims arising out of the breach of any express or implied
warranty by the manufacturers or sellers of any of such assets or any
component part thereof;
(iii) inventories, including raw materials, work-in-process,
finished goods, parts, accessories and supplies;
(iv) cash, bank accounts, notes, loans and accounts receivable
(whether current or not current), interests as beneficiary under
letters of credit, advances and performance and surety bonds;
(v) certificates of deposit, banker's acceptances, shares of stock,
bonds, debentures, evidences of indebtedness, certificates of interest
or participation in profit-sharing agreements, collateral-trust
certificates, preorganization certificates or subscriptions,
transferable shares, investment contracts, voting-trust certificates,
puts, calls, straddles, options, swaps, collars, caps and other
securities or hedging arrangements of any kind;
(vi) financial, accounting and operating data and records including,
without limitation, books, records, notes, sales and sales promotional
data, advertising materials, credit information, cost and pricing
information, customer and supplier lists, reference catalogs, payroll
and personnel records, minute books, stock ledgers, stock transfer
records and other similar property, rights and information;
(vii) patents, patent applications, trademarks, trademark
applications and registrations, trade names, service marks, service
mark applications and registrations, service names, copyrights and
copyright applications and registrations, commercial and technical
information including engineering, production and other designs,
drawings, specifications, formulae, technology, computer and
electronic data processing programs and software, inventions,
processes, trade secrets, know-how, confidential information and other
proprietary property, rights and interest and all rights thereto;
(viii) agreements, leases, contracts, sale orders, purchase orders,
open bids and other commitments and all rights therein;
(ix) prepaid expenses, deposits and retentions held by third parties;
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(x) claims, causes of action, choses in action, rights under
insurance policies, rights under express or implied warranties, rights
of recovery, rights of set-off, rights of subrogation and all other
rights of any kind;
(xi) licenses, franchises, permits, authorizations and approvals; and
(xii) goodwill and going concern value.
"Assignee" shall have the meaning set forth in Section 2.07.
"Assignor" shall have the meaning set forth in Section 2.07.
"CDR-PC" shall mean CDR-PC Acquisition, L.L.C., a Delaware limited
liability company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the Treasury regulations promulgated thereunder, including any successor
legislation.
"Company" shall have the meaning set forth in the heading of this
Agreement.
"Company Debt" shall mean all Liabilities of the Company and its
Subsidiaries under or arising out of the Company Credit Agreement.
"Company Common Stock" shall have the meaning set forth in the
recitals to this Agreement.
"Company Credit Agreement" shall mean the Credit Agreement, dated as
of August 21, 1996, as amended, among the Company, various lending institutions
and Bankers Trust Company, as agent.
"Company Indemnitees" shall mean the Company, each Affiliate of the
Company after the Distribution Date, Clayton, Dubilier & Rice, Inc., CDR-PC,
Clayton, Dubilier & Rice Fund V Limited Partnership, CD&R Associates V Limited
Partnership, each of their respective partners, members, directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"Company Transaction Costs" shall mean Transaction Costs incurred by
the Company in connection with the Transactions.
"Conveyancing and Assumption Instruments" shall have the meaning set
forth in Section 2.04.
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"Conveyancing Instruments" shall have the meaning set forth in Section
2.04.
"Covered Claims" shall mean those Liabilities that, individually or in
the aggregate, and if reported timely, are covered within the terms and
conditions of any Policy in the Insurance Program.
"Defaulted Payment Obligation" shall have the meaning set forth in
Section 5.09.
"Dispute" shall have the meaning set forth in Section 9.01.
"Distributed Companies" shall mean Printco, Schoolco, Techco and
Travelco.
"Distributed Companies' Assets" shall mean the Printco Assets, the
Schoolco Assets, the Techco Assets and the Travelco Assets.
"Distributed Companies' Businesses" shall mean the Printco Business,
the Schoolco Business, the Techco Business and the Travelco Business.
"Distributed Companies' Indemnitees" shall mean the Printco
Indemnitees, the Schoolco Indemnitees, the Techco Indemnitees and the Travelco
Indemnitees.
"Distributed Companies' Liabilities" shall mean the Printco
Liabilities, the Schoolco Liabilities, the Techco Liabilities and the Travelco
Liabilities.
"Distributed Company Subsidiaries" shall mean the Printco
Subsidiaries, the Schoolco Subsidiaries, the Techco Subsidiaries and the
Travelco Subsidiaries.
"Distributed Company Transaction Costs" shall mean, as to any
Distributed Company, the Transaction Costs incurred by such Distributed Company
or the Company that relate to such Distributed Company's IPO or credit
facilities described in Section 2.08.
"Distribution Date" shall mean such date as hereafter may be
determined by the Company's Board of Directors as the date as of which the
Distributions shall be effected.
"Distribution Record Date" shall mean such date as hereafter may be
determined by the Company's Board of Directors as the record date for the
Distributions.
"Distribution Shares" shall mean the Printco Common Shares, the
Schoolco Common Shares, the Techco Common Shares and the Travelco Common Shares.
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"Distribution Time" shall mean 11:59 P.M. (Eastern time) on the
Distribution Date.
"Distributions" shall mean the distributions on the Distribution Date
to holders of record of shares of Company Common Stock, as of the Distribution
Record Date, other than shares held in the treasury of the Company, of (i) all
the Printco Common Shares on the basis of one Printco Common Share for each
seven and one-half (7.5) outstanding shares of Company Common Stock, (ii) all
the Schoolco Common Shares on the basis of one Schoolco Common Share for each
nine (9) outstanding shares of Company Common Stock, (iii) all the Techco Common
Shares on the basis of one Techco Common Share for each five (5) outstanding
shares of Company Common Stock, and (iv) all the Travelco Common Shares on the
basis of one Travelco Common Share for each ten (10) outstanding shares of
Company Common Stock.
"Earn-Out Payment Liability" shall mean any contingent cash payment
required to be made after the Distribution Date by the Company or any of its
Subsidiaries to sellers of certain Distributed Company Subsidiaries (or
divisions within such Subsidiaries or Distributed Company) or Retained
Subsidiaries (or divisions within such Subsidiaries) under circumstances that
may arise under the Acquisition Agreements.
"Employee Benefits Agreement" shall mean the Employee Benefits and
Services Liabilities Agreement between the Company and the Distributed Companies
substantially in the form of Exhibit I hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Guaranteed Liability" shall have the meaning set forth in Section
2.06.
"Guaranteed Party" shall have the meaning set forth in Section 2.06.
"Guarantor" shall have the meaning set forth in Section 2.06.
"Imagenet Licensing Agreement" shall have the meaning set forth in
Schedule 2.11.
"Indemnifiable Losses" shall mean any and all losses, liabilities,
claims, damages, demands, costs or expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses and any and all
out-of-pocket expenses) arising from Third Party Claims or any Indemnifying
Party's breach of its obligations under the Ancillary Agreements or this
Agreement, including all losses, liabilities, claims, damages, demands, costs or
expenses reasonably incurred in investigating, preparing for or defending
against any
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Actions or potential Actions or in asserting, preserving or enforcing any rights
hereunder (including, without limitation, rights under Article V) or under any
Ancillary Agreement.
"Indemnifying Party" shall have the meaning set forth in Section 5.06.
"Indemnitee" shall have the meaning set forth in Section 5.06.
"Information" of a party shall mean any and all information that such
party or any of its Representatives furnishes or has furnished to the receiving
party or any of its Representatives whether furnished orally or in writing or by
any other means or gathered by inspection and regardless of whether the same is
specifically marked or designated as "confidential" or "proprietary," together
with any and all notes, memoranda, analyses, compilations, studies or other
documents (whether in hard copy or electronic media) prepared by the receiving
party or any of its Representatives which contain or otherwise reflect such
Information, together with any and all copies, extracts or other reproductions
of any of the same; provided, however, that for the purposes hereof all
information relating to the Distributed Companies, the Distributed Companies'
Businesses or the Distributed Companies' Assets in the possession of the Company
at the Distribution Time shall be deemed to have been furnished by the related
Distributed Company and all information relating to the Retained Business or the
Retained Assets in the possession of the Distributed Companies or any of the
Distributed Company Subsidiaries at the Distribution Time shall be deemed to
have been furnished by the Company; provided further, however, that the term
"Information" does not include information that:
(a) at the time of disclosure is generally available to and
known by the public (other than as a result of a violation of this Agreement or
any other confidentiality obligation, whether directly or indirectly, by a party
to this Agreement or any of its Representatives);
(b) is available to the receiving party on a non-confidential
basis from a source other than the providing party or its Representatives,
provided that such source is not known by the receiving party to be subject to a
confidentiality agreement regarding such information; or
(c) has been independently acquired or developed by the
receiving party without violation of any of the obligations of the receiving
party or its Representatives under this Agreement.
"Information Statements" shall mean the Information
Statements/Prospectuses to be sent to the holders of shares of Company Common
Stock, as of the Distribution Record Date, in connection with the Distributions,
including any amendments or supplements thereto, which are included as exhibits
to the registration
7
<PAGE>
statements on Forms S-1 filed by the Distributed Companies, as applicable, under
the Securities Act.
"Insurance Program" shall mean, collectively, the series of policies
pursuant to which various insurance carriers provide insurance coverage to the
Company and its Affiliates in respect of claims or occurrences relating to,
without limitation, property damage, bodily injury, business interruption,
transit, fire, non-owned aircrafts, crime, fiduciary liability, general
liability, products' liability, professional liability, automobile liability and
employer's liability.
"Investment Agreement" shall mean the Investment Agreement dated as of
January 12, 1998 between the Company and CDR-PC, as amended by Amendment No. 1
thereto, dated February 3, 1998, and as the same may be amended from time to
time.
"IPO" shall mean, as to any Distributed Company, the initial public
offering of securities to be conducted by such company, which offering is
scheduled to occur on or about the Distribution Date.
"IPO Prospectus" shall mean, as to any Distributed Company, the
Registration Statement/Prospectus prepared in connection with such Distributed
Company's IPO.
"Liabilities" shall mean any and all debts, liabilities, obligations,
claims, damages, fees, costs and expenses, absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, including, without limitation, those debts, liabilities,
obligations, claims, damages, fees, costs and expenses, arising under any law,
rule, regulation, Action, threatened Action, order or consent decree of any
court, any governmental or other regulatory or administrative agency or
commission or any award of any arbitration tribunal, and those arising under any
contract, guarantee, commitment or undertaking.
"Mediation Period" shall have the meaning set forth in Section 9.03.
"MCI Agreement" shall mean the Special Customer Arrangement, effective
as of November 15, 1997, by and between MCI Telecommunications Corporation and
the Company.
"NASDAQ" shall mean the NASDAQ National Market System.
"Nonassignable Contract" shall have the meaning set forth in Section
2.07.
8
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"Person" shall mean any natural person, corporation, trust, limited
liability company, joint venture, association, company, partnership, entity,
unincorporated organization or government, or any agency or political
subdivision thereof.
"Pledged Shares" shall mean any Company Common Stock pledged or
assigned to the Company as of the Distribution Date as collateral security by
sellers of certain of the Distributed Company Subsidiaries (or divisions within
such Subsidiaries or Distributed Company) under the Acquisition Agreements.
"Policies" shall mean insurance policies and insurance contracts of
any kind (other than life and benefits policies or contracts), including,
without limitation, primary, excess and umbrella policies, commercial general
liability policies, fiduciary liability, automobile, aircraft, property and
casualty, workers' compensation and employee dishonesty insurance policies,
bonds and self-insurance and captive insurance company arrangements, together
with the rights, benefits and privileges thereunder.
"Preliminary Transactions" shall have the meaning set forth in the
recitals to this Agreement.
"Printco" shall have the meaning set forth in the heading of this
Agreement.
"Printco Acquisition Claims" shall mean any and all rights or claims
that the Company or any of its Subsidiaries may have against the sellers of
Printco and the Printco Subsidiaries (or divisions within such Subsidiaries or
Printco) under the Acquisition Agreements pursuant to which Printco and the
Printco Subsidiaries (or divisions within such Subsidiaries or Printco) were
acquired by the Company or any of its Subsidiaries.
"Printco Assets" shall mean (a) the Assets of Printco and the Printco
Subsidiaries and (b) the rights of Printco and the Printco Subsidiaries under
this Agreement and the Ancillary Agreements; provided, however, that Printco
Assets shall not include any claim of Printco against the Company relating to
the payment of finders' fees or other compensation in respect of customers
referred to the Company by Printco or the payment of rebates or other
compensation in respect of office products sold by Printco.
"Printco Business" shall mean all the businesses, Assets and
operations heretofore, currently or hereafter conducted or owned by Printco and
the Printco Subsidiaries including all businesses, Assets and operations
conducted or owned by Printco and the Printco Subsidiaries that have been sold
or otherwise disposed of or discontinued.
"Printco Common Shares" shall have the meaning set forth in the
recitals to this Agreement.
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<PAGE>
"Printco Indemnitees" shall mean Printco, the Printco Subsidiaries,
their Affiliates, each of their respective directors, officers, employees and
agents and each of the heirs, executors, successors and assigns of any of the
foregoing.
"Printco Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
Printco and the Printco Subsidiaries under this Agreement or the Ancillary
Agreements, (ii) all Liabilities of the Company and its Subsidiaries arising
primarily out of or relating primarily to the management or conduct of the
Printco Business or the administration of the Printco Subsidiaries, (iii) all
Specified Securities Liabilities of Printco, (iv) all Liabilities of the Company
relating to any Earn-Out Payment Liabilities arising out of any of the
Acquisition Agreements pursuant to which any of the Printco Subsidiaries or any
part of the Printco Business was acquired, (v) the Distributed Company
Transaction Costs of Printco, (vi) $1,000,000 of the Company Transaction Costs
and (vii) any Company Debt allocated to Printco pursuant to Section 2.08 of this
Agreement.
"Printco Subsidiaries" shall mean the Subsidiaries of Printco as
listed on Exhibit II.
"Pro Rata Share" shall mean, (i) as to any Distributed Company, the
percentage that is equal to the average of (a) the ratio of the pro forma fiscal
year 1998 revenues for such Distributed Company to the fiscal year 1998
consolidated revenues of the Company (prior to the Distributions), and (b) the
ratio of the pro forma fiscal year 1998 net income for such Distributed Company
to the fiscal year 1998 consolidated net earnings of the Company (prior to the
Distributions), and (ii) as to the Company, the percentage that is equal to 100%
less the sum of the Pro Rata Share percentages of the Distributed Companies as
defined in (i) above. Estimations of the Company's Pro Rata Share and each
Distributed Company's Pro Rata Share using financial data for the nine-month
period ended January 24, 1998 are set forth in Exhibit III.
"Proxy" shall mean the definitive proxy statement dated May 1, 1998,
distributed by the Company to the holders of the Company Common Stock,
describing and seeking approval for (i) the investment provided for in the
Investment Agreement and (ii) a one-for-four reverse stock split, as the same
may be amended.
"Recovery" shall mean those monies received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of an insured
pursuant to a claim under an insurance policy in the Insurance Program.
"Recovery Costs" shall have the meaning set forth in Section 7.04.
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"Representatives" of either party shall mean such party's Affiliates,
directors, officers, partners, employees, agents or other representatives
(including attorneys, accountants and financial advisors).
"Retained Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries except for the Distributed Companies' Assets, and (b) the rights of
the Company and its Subsidiaries under this Agreement and the Ancillary
Agreements.
"Retained Business" shall mean all the businesses, Assets and
operations heretofore, currently or hereafter conducted or owned by the Company
and the Retained Subsidiaries, including all businesses, Assets or operations
conducted or owned by the Company or its Subsidiaries that have been sold or
otherwise disposed of or discontinued, (other than the Distributed Companies'
Assets, Distributed Companies' Businesses and the business of managing and
administering the Distributed Companies' Subsidiaries).
"Retained Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
the Company and the Retained Subsidiaries under this Agreement or the Ancillary
Agreements, (ii) all Liabilities of the Company and its Retained Subsidiaries
arising primarily out of or relating primarily to the management or conduct of
the Retained Business or the administration of the Retained Subsidiaries, (iii)
all Specified Securities Liabilities of the Company, (iv) all Liabilities of the
Company relating to any Earn-Out Payment Liabilities arising out of any of the
Acquisition Agreements pursuant to which any of the Retained Subsidiaries or any
part of the Retained Business was acquired, (v) all of the Company Transaction
Costs (excluding, in aggregate, the $4,000,000 that is treated as part of the
Distributed Companies' Liabilities) and (vi) any indebtedness for borrowed money
of the Company other than Company Debt to be allocated to the Distributed
Companies pursuant to Section 2.08 of this Agreement.
"Retained Subsidiaries" shall mean (x) all of the Subsidiaries of the
Company other than the Distributed Companies and the Distributed Company
Subsidiaries, and (y) 1186203 Ontario Limited, 1243231 Ontario Limited and
1203803 Ontario Limited, and their respective Subsidiaries.
"Schoolco" shall have the meaning set forth in the heading of this
Agreement.
"Schoolco Acquisition Claims" shall mean any and all rights or claims
that the Company or any of its Subsidiaries may have against the sellers of
Schoolco and the Schoolco Subsidiaries (or divisions within such Subsidiaries or
Schoolco) under the Acquisition Agreements pursuant to which Schoolco and the
Schoolco Subsidiaries (or divisions within such Subsidiaries or Schoolco) were
acquired by the Company or any of its Subsidiaries.
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"Schoolco Assets" shall mean (a) the Assets of Schoolco and the
Schoolco Subsidiaries and (b) the rights of Schoolco and the Schoolco
Subsidiaries under this Agreement and the Ancillary Agreements; provided,
however, that Schoolco Assets shall not include any claim of Schoolco against
the Company relating to the payment of finders' fees or other compensation in
respect of customers referred to the Company by Schoolco or the payment of
rebates or other compensation in respect of office products sold by Schoolco.
"Schoolco Business" shall mean all the businesses, Assets and
operations heretofore, currently or hereafter conducted or owned by Schoolco and
the Schoolco Subsidiaries including all businesses, Assets or operations
conducted or owned by Schoolco and the Schoolco Subsidiaries that have been sold
or otherwise disposed of or discontinued.
"Schoolco Common Shares" shall have the meaning set forth in the
recitals to this Agreement.
"Schoolco Indemnitees" shall mean Schoolco, the Schoolco Subsidiaries,
their Affiliates, each of their respective directors, officers, employees and
agents and each of the heirs, executors, successors and assigns of any of the
foregoing.
"Schoolco Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
Schoolco and the Schoolco Subsidiaries under this Agreement or the Ancillary
Agreements, (ii) all the Liabilities of the Company and its Subsidiaries or
Affiliates, arising primarily out of or relating primarily to the management or
conduct of the Schoolco Business or the administration of the Schoolco
Subsidiaries, (iii) all Specified Securities Liabilities of Schoolco, (iv) all
Liabilities of the Company relating to any Earn-Out Payment Liabilities arising
out of any of the Acquisition Agreements pursuant to which any of the Schoolco
Subsidiaries or any part of the Schoolco Business was acquired, (v) the
Distributed Company Transaction Costs of Schoolco, (vi) $1,000,000 of the
Company Transaction Costs and (vii) any Company Debt allocated to Schoolco
pursuant to Section 2.08 of this Agreement.
"Schoolco Subsidiaries" shall mean the Subsidiaries of Schoolco as
listed on Exhibit II.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Laws" shall mean the Exchange Act, the Securities Act and
foreign, provincial and state securities laws.
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"Shared Liability" shall mean (i) any Liability of the Company and its
Subsidiaries, including without limitation a Liability arising under the
Securities Laws, that (x) arises out of an act or omission that occurred prior
to the Distribution Date, and (y) is not a Retained Liability, Printco
Liability, Schoolco Liability, Techco Liability or Travelco Liability, and (ii)
the Liabilities listed on Exhibit IV. By way of example and not of limitation,
Shared Liabilities shall include: any Liability arising in connection with the
Proxy, the 2001 Note Exchange Offer or Tender Offer (other than a liability
relating to information supplied by a specific subsidiary of the Company); and
any Liability relating to the operation of the Company's headquarters arising
prior to the Distribution Date; and any other liability not relating to the
business of any particular Retained Subsidiary or Distributed Company
Subsidiary.
"Special Insurance Recoveries" shall mean Recoveries whenever received
by the Company (i) relating to insured casualty losses of a Distributed Company
or Distributed Company Subsidiary occurring prior to the Distribution Date and
(ii) not actually used by the relevant Distributed Company or Distributed
Company Subsidiary to rebuild, reconstruct, renovate or repair properties or
facilities that suffered such loss.
"Specified Securities Liabilities" shall mean (a) as to any
Distributed Company, any Liability under the Securities Laws arising out of or
relating to (x) the Information Statement (other than Liabilities relating to
those sections of the Information Statements specified on Exhibit V) and/or IPO
Prospectus of such Distributed Company, and (y) any other securities filings or
disclosures made by, or the failure to make filings or disclosures required to
be made by, the Company or any of its Subsidiaries prior to the Distribution
Date to the extent such Liability arises primarily out of material omissions
made by or materially incorrect, false, or misleading information supplied by
such Distributed Company or any of its Subsidiaries; and (b) as to the Company,
any Liability under the Securities Laws arising out of or relating to any
securities filings or disclosures made by, or the failure to make filings or
disclosures required to be made by, the Company, or any of its Subsidiaries
prior to the Distribution Date to the extent such Liability arises primarily out
of material omissions made by or materially incorrect, false or misleading
information supplied by the Retained Business or a Retained Subsidiary.
"Subsidiary" shall mean any corporation, partnership, joint venture,
limited liability company or other entity (i) in which another entity owns,
directly or indirectly, ownership interests sufficient to elect a majority of
the Board of Directors (or persons performing similar functions) (irrespective
of whether at the time any other class or classes of ownership interests of such
corporation, partnership, joint venture, limited liability company or other
entity shall or might have such voting power upon the occurrence of any
contingency) or (ii) of which another entity is a general partner or an entity
performing similar functions (e.g., a trustee or managing member).
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"Tax" shall mean all U.S. federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect to such amounts.
"Tax Allocation Agreement" shall mean the Tax Allocation Agreement
between the Company and the Distributed Companies substantially in the form of
Exhibit VI hereto, as and to the extent amended and restated as of the closing
of the Transactions.
"Techco" shall have the meaning set forth in the heading of this
Agreement.
"Techco Acquisition Claims" shall mean any and all rights or claims
that the Company or any of its Subsidiaries may have against the sellers of
Techco and the Techco Subsidiaries (or divisions within such Subsidiaries or
Techco) under the Acquisition Agreements pursuant to which Techco and the Techco
Subsidiaries (or divisions within such Subsidiaries or Techco) were acquired by
the Company or any of its Subsidiaries.
"Techco Assets" shall mean (a) the Assets of Techco and the Techco
Subsidiaries and (b) the rights of Techco and the Techco Subsidiaries under this
Agreement and the Ancillary Agreements; provided, however, that Techco Assets
shall not include any claim of Techco against the Company relating to the
payment of finders' fees or other compensation in respect of customers referred
to the Company by Techco or the payment of rebates or other compensation in
respect of office products sold by Techco.
"Techco Business" shall mean all the businesses, Assets and operations
heretofore, currently or hereafter conducted or owned by Techco and the Techco
Subsidiaries including all businesses, Assets or operations conducted or owned
by Techco and the Techco Subsidiaries that have been sold or otherwise disposed
of or discontinued.
"Techco Common Shares" shall have the meaning set forth in the
recitals to this Agreement.
"Techco Indemnitees" shall mean Techco, the Techco Subsidiaries, their
Affiliates, each of their respective directors, officers, employees and agents
and each of the heirs, executors, successors and assigns of any of the
foregoing.
"Techco Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
Techco and the Techco Subsidiaries under this Agreement or the Ancillary
Agreements, (ii) all the Liabilities of the Company and its Subsidiaries,
arising primarily out of or relating primarily to the management or conduct of
the Techco Business or the administration of the Techco Subsidiaries, (iii) all
Specified Securities Liabilities of Techco, (iv) all Liabilities of the Company
relating to any Earn-Out Payment Liabilities arising out of any of the
Acquisition
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Agreements pursuant to which any of the Techco Subsidiaries or any part of the
Techco Business was acquired, (v) the Distributed Company Transaction Costs of
Techco, (vi) $1,000,000 of the Company Transaction Costs and (vii) any Company
Debt allocated to Techco pursuant to Section 2.08 of this Agreement.
"Techco Subsidiaries" shall mean the Subsidiaries of Techco as listed
on Exhibit II.
"Tender Offer" shall mean, collectively, (i) the cash tender offer
by the Company to purchase approximately 37 million shares (including shares
issuable upon exercise of outstanding stock options) of Company Common Stock
at a price of $27 per share commenced on May 4, 1998 (the "Equity Tender"),
and (ii) the tender offer of the Company to purchase any and all of its
$230.0 million outstanding 5 1/2% Convertible Subordinated Notes due 2003 for
a purchase price of 94.5% of the principal amount, plus accrued interest,
commenced on May 5, 1998.
"Third Party Claim" shall have the meaning set forth in Section 5.07.
"Transaction Costs" shall mean all transaction costs including legal,
accounting, investment banking, financial advisory and other fees incurred by a
party hereto (or one of its Subsidiaries) in connection with the Transactions or
any of the other transactions described in, or contemplated by, IPO Prospectuses
and Section 2.08.
"Transactions" shall mean the execution, delivery and performance of
this Agreement, the Ancillary Agreements, and the Investment Agreement and the
consummation of the Preliminary Transactions, the Distributions, the Proxy, the
Tender Offer, the 2001 Note Exchange Offer and any other transactions
contemplated by this Agreement, the Ancillary Agreements and the Investment
Agreement, including without limitation the financing of the Company related
thereto, but not including the initial public offerings by the Distributed
Companies or the financings of the Distributed Companies.
"Transferred Policies" shall have the meaning set forth in Section
7.02(b).
"Travelco" shall have the meaning set forth in the heading of this
Agreement.
"Travelco Acquisition Claims" shall mean any and all rights or claims
that the Company or any of its Subsidiaries may have against the sellers of
Travelco and the Travelco Subsidiaries (or divisions within such Subsidiaries or
Travelco) under the Acquisition Agreements pursuant to which Travelco and the
Travelco Subsidiaries (or divisions within such Subsidiaries or Travelco) were
acquired by the Company or any of its Subsidiaries.
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"Travelco Assets" shall mean (a) the Assets of Travelco and the
Travelco Subsidiaries and (b) the rights of Travelco and the Travelco
Subsidiaries under this Agreement and the Ancillary Agreements; provided,
however, that Travelco Assets shall not include any claim of Travelco against
the Company relating to the payment of finders' fees or other compensation in
respect of customers referred to the Company by Travelco or the payment of
rebates or other compensation in respect of office products sold by Travelco.
"Travelco Business" shall mean all the businesses, Assets and
operations heretofore, currently or hereafter conducted or owned by Travelco and
the Travelco Subsidiaries including all businesses, Assets or operations
conducted or owned by Travelco and the Travelco Subsidiaries that have been sold
or otherwise disposed of or discontinued.
"Travelco Common Shares" shall have the meaning set forth in the
recitals to this Agreement.
"Travelco Indemnitees" shall mean Travelco, the Travelco Subsidiaries,
their Affiliates, each of their respective directors, officers, employees and
agents and each of the heirs, executors, successors and assigns of any of the
foregoing.
"Travelco Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
Travelco and the Travelco Subsidiaries under this Agreement or the Ancillary
Agreements, (ii) all the Liabilities of the Company and its Subsidiaries,
arising primarily out of or relating primarily to the management or conduct of
the Travelco Business or the administration of the Travelco Subsidiaries, (iii)
all Specified Securities Liabilities of Travelco, (iv) all Liabilities of the
Company relating to any Earn-Out Payment Liabilities arising out of any of the
Acquisition Agreements pursuant to which any of the Travelco Subsidiaries or any
part of the Travelco Business was acquired, (v) the Distributed Company
Transaction Costs of Travelco, (vi) $1,000,000 of the Company Transaction Costs
and (vii) any Company Debt allocated to Travelco pursuant to Section 2.08 of
this Agreement.
"Travelco Subsidiaries" shall mean the Subsidiaries of Travelco as
listed on Exhibit II.
"2001 Note Exchange Offer" shall mean the Company's offer to exchange
its 5 1/2% Convertible Subordinated Notes due 2001 for Company Common Stock at
a temporarily reduced conversion price commenced on May 1, 1998.
SECTION 1.02 References; Interpretation. References to an "Exhibit"
or to a "Schedule" are, unless otherwise specified, to one of the Exhibits or
Schedules attached to this Agreement, and references to a "Section" or "Article"
are, unless otherwise specified,
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to one of the Sections and Articles of this Agreement. Any time the word
"including" is used herein it means "including without limitation".
ARTICLE II
PRELIMINARY TRANSACTIONS
SECTION 2.01 Stock Transfers.
(a) At or prior to the Distribution Time, the Company shall transfer
or otherwise convey to Printco all its right, title and interest in and to all
the shares of capital stock of the Printco Subsidiaries.
(b) At or prior to the Distribution Time, the Company shall transfer
or otherwise convey to Schoolco all its right, title and interest in and to all
the shares of capital stock of the Schoolco Subsidiaries.
(c) At or prior to the Distribution Time, the Company shall transfer
or otherwise convey to Techco all its right, title and interest in and to all
the shares of capital stock of the Techco Subsidiaries.
(d) At or prior to the Distribution Time, the Company shall transfer
or otherwise convey to Travelco all its right, title and interest in and to all
the shares of capital stock of the Travelco Subsidiaries.
Immediately after the stock transfers set forth in this Section 2.01, the
Company shall not own any capital stock of (or other equity interest in) any of
the Distributed Company Subsidiaries.
SECTION 2.02 Liabilities.
(a) Effective as of the Distribution Time and except as otherwise
specifically provided in this Agreement or any of the Ancillary Agreements,
Printco hereby unconditionally agrees to cause each Printco Subsidiary that has
incurred a Printco Liability to pay, perform and discharge such Liability when
due in accordance with its terms.
(b) Effective as of the Distribution Time and except as otherwise
specifically provided in this Agreement or any of the Ancillary Agreements,
Schoolco hereby unconditionally agrees to cause each School Subsidiary that has
incurred a Schoolco Liability to pay, perform and discharge such Liability when
due in accordance with its terms.
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(c) Effective as of the Distribution Time and except as otherwise
specifically provided in this Agreement or any of the Ancillary Agreements,
Techco hereby unconditionally agrees to cause each Techco Subsidiary that has
incurred a Techco Liability to pay, perform and discharge such Liability when
due in accordance with its terms.
(d) Effective as of the Distribution Time and except as otherwise
specifically provided in this Agreement or any of the Ancillary Agreements,
Travelco hereby unconditionally agrees to cause each Travelco Subsidiary that
has incurred a Travelco Liability to pay, perform and discharge such Liability
when due in accordance with its terms.
SECTION 2.03 Transfer of Certain Licenses and Permits.
(a) In furtherance of the transfer of the capital stock of the
Printco Subsidiaries to Printco and the assumption of the Printco Liabilities
set forth in this Article II, at or prior to the Distribution Time, (i) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which are used primarily in connection with the Printco
Business but which are held in the name of the Company or any Retained
Subsidiary shall be duly and validly transferred by the Company or such
Subsidiary to Printco or the appropriate Printco Subsidiary, and (ii) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which are used primarily in connection with the Retained
Business but which are held in the name of Printco or the Printco Subsidiaries
shall be duly and validly transferred by Printco or such Subsidiary to the
Company or the appropriate Subsidiary of the Company.
(b) In furtherance of the transfer of the capital stock of the
Schoolco Subsidiaries to Schoolco and the assumption of the Schoolco Liabilities
set forth in this Article II, at or prior to the Distribution Time, (i) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which are used primarily in connection with the Schoolco
Business but which are held in the name of the Company or any Retained
Subsidiary shall be duly and validly transferred by the Company or such
Subsidiary to Schoolco or the appropriate Schoolco Subsidiary, and (ii) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which are used primarily in connection with the Retained
Business but which are held in the name of Schoolco or the Schoolco Subsidiaries
shall be duly and validly transferred by Schoolco or such Subsidiary to the
Company or the appropriate Subsidiary of the Company.
(c) In furtherance of the transfer of the capital stock of the Techco
Subsidiaries to Techco and the assumption of the Techco Liabilities set forth in
this Article II, at or prior to the Distribution Time, (i) all transferrable
licenses, permits and authorizations issued by governmental or regulatory
entities which are used primarily in connection with the Techco Business but
which are held in the name of the Company or any Retained Subsidiary shall be
duly and validly transferred by the Company or such Subsidiary to Techco or the
appropriate Techco Subsidiary, and (ii) all transferrable licenses,
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permits and authorizations issued by governmental or regulatory entities which
are used primarily in connection with the Retained Business but which are held
in the name of Techco or the Techco Subsidiaries shall be duly and validly
transferred by Techco or such Subsidiary to the Company or the appropriate
Subsidiary of the Company.
(d) In furtherance of the transfer of the capital stock of the
Travelco Subsidiaries to Travelco and the assumption of the Travelco Liabilities
set forth in this Article II, at or prior to the Distribution Time, (i) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which are used primarily in connection with the Travelco
Business but which are held in the name of the Company or any Retained
Subsidiary shall be duly and validly transferred by the Company or such
Subsidiary to Travelco or the appropriate Travelco Subsidiary, and (ii) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which are used primarily in connection with the Retained
Business but which are held in the name of Travelco or the Travelco Subsidiaries
shall be duly and validly transferred by Travelco or such Subsidiary to the
Company or the appropriate Subsidiary of the Company.
SECTION 2.04 Transfer and Assumption Documentation. In furtherance of the
transfer of the capital stock of the Distributed Company Subsidiaries to the
relevant Distributed Companies and the assumption of the Distributed Companies'
Liabilities set forth in this Article II, at or prior to the Distribution Time,
(i) the parties hereto shall execute and deliver, and cause their respective
Subsidiaries to execute and deliver, such deeds, bills of sale, stock powers,
certificates of title, assignments of leases and contracts and other instruments
of contribution, grant, conveyance, assignment, transfer and delivery necessary
to evidence such contribution, grant, conveyance, assignment, transfer and
delivery (collectively, the "Conveyancing Instruments") and (ii) each party
hereto or the appropriate Subsidiary of such party shall execute and deliver
such instruments of assumption (together with the Conveyancing Instruments, the
"Conveyancing and Assumption Instruments") as and to the extent necessary to
evidence such assumption.
SECTION 2.05 Intercompany Accounts. All intercompany receivables,
payables and loans (other than receivables, payables and loans otherwise
specifically provided for in any of the Ancillary Agreements or hereunder)
between any Distributed Company or Distributed Company Subsidiary, on the one
hand, and the Company or any of the Retained Subsidiaries, on the other hand,
including, without limitation, in respect of any cash balances, any cash
balances representing deposited checks or drafts for which only a provisional
credit has been allowed or any cash held in any centralized cash management
system, shall be settled or otherwise eliminated prior to the Distribution Date.
SECTION 2.06 Elimination of Guarantees. To the extent that any of the
parties to this Agreement or any Subsidiary thereof is a guarantor of or obligor
for (a "Guarantor") any Liability of any other party to this Agreement or any
Subsidiary thereof (a
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"Guaranteed Party"), the Guarantor and the Guaranteed Party shall use their
commercially reasonable efforts to have, on or prior to the Distribution Date,
or as soon as practicable thereafter, the Guarantor removed as guarantor of or
obligor for such Liability of the Guaranteed Party (a "Guaranteed Liability").
In the event that the Guarantor cannot be removed as guarantor of or obligor for
such Guaranteed Liability, the Guaranteed Party agrees that until such
Guaranteed Liability is discharged in full, the Guaranteed Party shall take no
action, and shall not permit any of its Subsidiaries to take any action, which
will have the effect of increasing the contingent liability or exposure of the
Guarantor or any of its Subsidiaries with respect to such Guaranteed Liability.
The first sentence of this Section 2.06 shall not apply, but the second sentence
of this Section 2.06 shall apply, to the obligations set forth on Schedule 2.06.
SECTION 2.07 Assignments and Transfers Not Effected Prior to the
Distribution. Anything contained herein to the contrary notwithstanding, (a)
this Agreement shall not constitute an agreement to assign or transfer any
agreement, contract, lease, license, permit, sales order, purchase order, open
bid or other commitment if an assignment, attempted assignment, transfer or
attempted transfer of the same without the consent of a third party would
constitute a breach thereof or in any way impair the rights of the Distributed
Companies or the Company or any of their respective Subsidiaries thereunder (any
such item being referred to as a "Nonassignable Contract") and (b) nothing
herein shall be deemed to require the transfer of any Assets or the assumption
of any Liabilities which by their terms or operation of law cannot be
transferred or assumed. To the extent that any assignments or transfers
contemplated by this Article II shall not have been consummated at or prior to
the Distribution Time, the parties hereto and their respective Subsidiaries
shall cooperate and use commercially reasonable efforts to obtain any necessary
consents or approvals for the assignment of all Nonassignable Contracts, the
transfer of all Assets and the assumption of all Liabilities contemplated to be
assigned, transferred or assumed pursuant to this Article II and shall otherwise
cooperate and use reasonable best efforts to effect any such assignments,
transfers or assumptions as promptly following the Distribution Time as shall be
practicable. In the event that any consent required with respect to a
Nonassignable Contract is not obtained or an attempted assignment thereof would
be ineffective or would impair either party's rights under any such
Nonassignable Contract, then the party obligated to assign such Nonassignable
Contract (the "Assignor") will promptly (i) pay or cause to be paid to the
assignee thereof (the "Assignee"), when received, all monies received by the
Assignor with respect to any such Nonassignable Contract and (ii) use
commercially reasonable efforts to cause to be tendered to the Assignee all
non-monetary performance, and in consideration thereof the Assignee shall pay,
perform and discharge on behalf of the Assignor all the Assignor's Liabilities,
thereunder in a timely manner and in accordance with the terms thereof. In the
event that any such transfer of Assets or assumption of Liabilities has not been
consummated, from and after the Distribution Time, the party retaining such
Asset or Liability shall hold such Asset in trust for the use and benefit of the
party entitled thereto (at the expense of the party entitled thereto) or retain
such
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Liability for the account of the party by whom such Liability is to be assumed
pursuant hereto, as the case may be. The parties hereto will take such other
action as may be reasonably requested by the Assignee or party to whom such
Asset is to be transferred, or by whom such Liability is to be assumed, as the
case may be, in order to place such party, insofar as is reasonably possible, in
the same position as would have existed had such Nonassignable Contract been
assigned, or such Asset or Liability been transferred or assumed, as
contemplated hereby. As and when any required consent to the assignment of a
Nonassignable Contract is obtained or any such Asset or Liability becomes
transferable or able to be assumed, such assignment, transfer or assumption
shall be effected forthwith. The parties agree that, as of the Distribution
Time, each party hereto shall be deemed to have acquired complete and sole
beneficial ownership over all Assets, together with all rights, powers and
privileges incident thereto, and shall be deemed to have assumed all
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement or any of the Ancillary Agreements.
SECTION 2.08 Debt. On or prior to the consummation of all transactions
contemplated by the Investment Agreement, (a) each Distributed Company shall
obtain bank credit facilities, borrow funds under such facilities and pay such
moneys borrowed to reduce the Company Debt equal in amount to (i) the amounts
reflected in relation to such Distributed Company on Schedule 2.08, and (ii) the
amount of any debt incurred by the Company after January 12, 1998 (the original
date of the Investment Agreement) in connection with the acquisition of any
entities that, upon the Distributions, will become a Subsidiary of such
Distributed Company, which money shall be paid to the Company to be applied to
the Company Debt; and (b) the Company shall repay the Company Debt. Interest
shall accrue on the amounts owed to the Company under this Section 2.08 for each
day such obligation remains unpaid, beginning with the day following
consummation of the Investment Agreement until, but not including, the date of
payment. Such interest shall accrue at the annual rate then in effect under the
Company's bank credit facility. The preceding sentence shall not be construed
as a waiver of any closing condition relating to the repayment of debt by the
Distributed Companies and their Subsidiaries in any agreement entered into in
connection with the Transactions.
SECTION 2.09 Assignment of Acquisition Claims. The Company hereby
contributes, grants, conveys, assigns, transfers and delivers to Printco,
Schoolco, Techco and Travelco all the Company's rights and interest in and to
the Printco Acquisition Claims, the Schoolco Acquisition Claims, the Techco
Acquisition Claims and the Travelco Acquisition Claims, respectively.
Notwithstanding the assignment of the foregoing Acquisition Claims under this
Section 2.09: (i) the net recoveries of Printco arising out of the Printco
Acquisition Claims shall be shared between Printco and the Company, as they are
collected, in a ratio of 20% to 80%, respectively, until the Company has
received the amount shown on Schedule 2.09 (including through any Special
Insurance Proceeds retained by the
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Company pursuant to Section 7.04), after which time any net recoveries from the
Printco Acquisition Claims shall be shared, as they are collected, between
Printco and the Company in a ratio of 95% to 5%, respectively, (ii) the net
recoveries of Schoolco arising out of the Schoolco Acquisition Claims shall be
shared, as they are collected, between Schoolco and the Company in a ratio of
20% to 80%, respectively, until the Company has received the amount shown on
Schedule 2.09, after which time any net recoveries from the Schoolco Acquisition
Claims shall be shared, as they are collected, between Schoolco and the Company
in a ratio of 95% to 5%, respectively, (iii) the net recoveries from the Techco
Acquisition Claims shall be assigned 100% to Techco, and (iv) the net
recoveries from the Travelco Acquisition Claims shall be assigned 100% to
Travelco.
SECTION 2.10 Pledged Shares. The Company shall hold all Pledged Shares for
the purposes specified in, and distribute such Pledged Shares as provided
pursuant to, Schedule 2.10.
SECTION 2.11 Other Transactions. In furtherance of the transfer of the
capital stock of the Distributed Company Subsidiaries to the relevant
Distributed Companies and the assumption of the Distributed Companies'
Liabilities set forth in this Article II, at or prior to the Distribution Time,
the parties agree to effect the transactions, if any, described in Schedule 2.11
attached hereto.
SECTION 2.12 Certain Acquisition Expenses Not Resulting in the Incurrence
of Debt. On or prior to the consummation of all transactions contemplated by
the Investment Agreement, each of the Distributed Companies shall pay to the
Company in cash an amount equal to all amounts expended by such Distributed
Company and its respective Subsidiaries after January 12, 1998 in connection
with the acquisition of any entity that, upon the Distributions, will become a
Subsidiary of such Distributed Company (plus any and all fees and expenses
incurred in connection with such acquisition) to the extent that such amounts,
fees and expenses were not paid with debt described in Section 2.08(a)(ii).
ARTICLE III
THE DISTRIBUTION
SECTION 3.01 Directors and Employees.
(a) The Company shall cause all those individuals who will be
officers or directors of the Company or any Retained Subsidiary immediately
after the Distribution Time to resign, effective as of the Distribution Time,
from all officer or director positions with any of the Distributed Companies or
Distributed Company Subsidiaries in which they serve.
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(b) The Company shall cause all those individuals who will be
officers or directors of any of the Distributed Companies or the Distributed
Company Subsidiaries immediately after the Distribution Time to resign,
effective as of the Distribution Time, from all officer or director positions
with the Company or any Retained Subsidiary in which they serve.
SECTION 3.02 Mechanics of Distribution.
(a) Delivery of Shares to Agent. Following consummation of the
transactions contemplated by Section 2.01 and subject to the closing conditions
set forth in Article VIII the Company shall deliver to the Agent, for the
benefit of holders of record of the Company Common Stock as at the close of
business on the Distribution Record Date, the share certificates representing
(i) all the Printco Common Shares, (ii) all the Schoolco Common Shares, (iii)
all the Techco Common Shares and (iv) all the Travelco Common Shares, and shall
instruct the Agent to distribute such share certificates to such holders of the
Company Common Stock upon notice from the Company that the conditions to the
obligation of the Company to consummate the Distributions have been satisfied or
waived and that the Agent is authorized to proceed with the distribution of the
Distribution Shares. Immediately following the Distributions, the Company shall
not own any capital stock of the Distributed Companies or the Distributed
Company Subsidiaries.
(b) Distribution of Certificates. The Distributions shall be
effected by the distribution to each holder of record of Company Common Stock,
as of the Distribution Record Date, of certificates representing one Printco
Common Share for each seven and one-half (7.5) shares of Company Common Stock,
one Schoolco Common Share for each nine (9) shares of Company Common Stock, one
Techco Common Share for each five (5) shares of Company Common Stock, one
Travelco Common Share for each ten (10) shares of Company Common Stock and of
cash in lieu of fractional shares as set forth in Section 3.02(c). The Company
shall instruct the Agent to distribute the Distribution Shares and the cash in
lieu of fractional shares as promptly as practicable after the Distribution
Time.
(c) Payment for Fractional Shares. No certificate or scrip
representing fractional shares of the Distribution Shares shall be distributed
to holders of the Company Common Stock as part of the Distributions. Each
holder of Company Common Stock who would otherwise be entitled to receive a
fractional share of the common stock of any of the Distributed Companies
pursuant to the Distributions shall receive cash in lieu of such fractional
share. As soon as practicable after the Distribution Date, the Company shall
direct the Agent to determine the number of fractional shares of any of the
Distribution Shares allocable to each holder of record of Company Common Stock
as of the Distribution Record Date who will receive cash in lieu of such
fractional shares, to aggregate all such fractional shares into whole shares and
sell the whole shares obtained thereby in open market
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transactions or otherwise, in each case at then prevailing trading prices, and
to cause to be distributed to each such holder, in lieu of any fractional share,
such holder's ratable share of the proceeds of such sale, after making
appropriate deductions of the amount required to be withheld for U.S. federal
income tax purposes and after deducting an amount equal to all brokerage
charges, commissions and transfer taxes attributed to such sale.
SECTION 3.03 Timing of Distribution. The Board of Directors of the
Company shall, or shall authorize certain officers of the Company to, formally
declare the Distributions and shall authorize the Company to effect the
Distributions at the Distribution Time, subject to the satisfaction or waiver of
the conditions set forth in Article VIII. The Distributions shall be deemed to
be effective upon notification by the Company to the Agent that the conditions
to the obligations of the Company to consummate the Distributions have been
satisfied or waived and that the Agent is authorized to proceed with the
distribution of the Distribution Shares.
ARTICLE IV
MUTUAL RELEASE
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Effective as of the Distribution Time and except as otherwise specifically
set forth in this Agreement or any of the Ancillary Agreements, each of the
parties hereto, on its own behalf and on behalf of each of its respective
Subsidiaries, releases and forever discharges all of the other parties hereto
and their respective Subsidiaries, and their respective officers, directors,
agents, Affiliates, record and beneficial security holders (including, without
limitation, trustees and beneficiaries of trusts holding such securities),
advisors and Representatives (in their respective capacities as such) and their
respective heirs, executors, administrators, successors and assigns, of and from
all debts, demands, actions, causes of action, suits, accounts, covenants,
contracts, agreements, damages, claims and Liabilities whatsoever of every name
and nature, both in law and in equity, which the releasing party has or ever
had, which arise out of or relate to the Transactions or the IPOs; provided,
however, that the foregoing general release shall not apply to (i) any
Liabilities (including Liabilities with respect to indemnification) assumed,
transferred, assigned, allocated or arising under this Agreement, any of the
Ancillary Agreements or the Investment Agreement and shall not affect any
party's right to enforce this Agreement, any Ancillary Agreement or the
Investment Agreement in accordance with their respective terms, (ii) any
Liabilities of the Company, any of its Subsidiaries or any seller of a Retained
Subsidiary or Distributed Company Subsidiary arising out of the agreement
pursuant to which such Retained Subsidiary or Distributed Company Subsidiary was
acquired by the Company or any of its Subsidiaries or any other agreement to
which the Company or any of its Subsidiaries and such a seller (acting in the
capacity of a seller) are parties, or (iii) any Liability arising out of an
agreement between any party to this Agreement and Jonathan J. Ledecky. Each
party understands and agrees that, except as otherwise specifically provided in
this Agreement, the Ancillary Agreements or any agreements entered into between
the Company and the Distributed Companies in connection with the transactions
contemplated by Section 2.01, none of the parties is, in this Agreement or the
Ancillary Agreements or otherwise, representing or warranting in any way as to
the Assets, business or Liabilities transferred, assumed or retained as
contemplated hereby or as to any consents or approvals required in connection
with the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements, it being agreed and understood that each party shall take
or keep all of its Assets "as is" and that it shall bear the economic and legal
risk that conveyance of such Assets shall prove to be insufficient or that the
title to any Assets shall be other than good and marketable and free from
encumbrances of any nature whatsoever; provided, however, that the foregoing
disclaimer shall not apply to any representations made by the Company, any of
its Subsidiaries or any seller of a Retained Subsidiary or Distributed Company
Subsidiary under the agreement pursuant to which such Retained Subsidiary or
Distributed Company Subsidiary was acquired.
ARTICLE V
INDEMNIFICATION
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SECTION 5.01 Indemnification by the Company. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, (a) the Company and, as to any particular Indemnifiable Loss, the
Retained Subsidiary out of whose assets, business or operations the
Indemnifiable Loss arises, shall indemnify, defend and hold harmless the
Distributed Companies' Indemnitees from and against, and pay or reimburse the
Distributed Companies' Indemnitees for, any and all Indemnifiable Losses, as
incurred, of the Distributed Companies' Indemnitees arising out of, relating to
or resulting from (i) the Retained Liabilities, the Retained Assets or the
Retained Business or (ii) the breach by the Company or any of the Retained
Subsidiaries of any provision of this Agreement or of any Ancillary Agreement to
which the Company is a party, in each case, whether such Indemnifiable Losses
relate to or arise out of or result from events, occurrences, actions,
omissions, facts or circumstances occurring, existing or asserted at, before or
after the Distribution Time, and (b) the Company shall bear the costs of and
indemnify, defend and hold harmless the Printco Indemnitees, the Schoolco
Indemnitees, the Techco Indemnitees and the Travelco Indemnitees from the
Company's Pro Rata Share of Indemnifiable Losses, as incurred, that relate to,
arise out of or result from the Shared Liabilities; provided, however, that the
Company shall have no obligation to indemnify any of the Distributed Companies'
Indemnitees for any Indemnifiable Losses arising out of, relating to or
resulting from (y) the gross negligence, bad faith or wilful misconduct of the
relevant Distributed Company or Distributed Company Subsidiary after the
Distribution Time or (z) the failure of such Distributed Company or any of its
Subsidiaries to perform its obligations under any agreement in accordance with
the terms of such agreement after the Distribution Time.
SECTION 5.02 Indemnification by Printco. Except as otherwise specifically
set forth in any provision of this Agreement or of any Ancillary Agreement, (a)
Printco and, as to any particular Indemnifiable Loss, the Printco Subsidiary out
of whose assets, business or operations the Indemnifiable Loss arises, shall
indemnify, defend and hold harmless the Company Indemnitees, the Schoolco
Indemnitees, the Techco Indemnitees and the Travelco Indemnitees from and
against, and pay or reimburse such Indemnitees for, any and all Indemnifiable
Losses, as incurred, of the Company Indemnitees, the Schoolco Indemnitees, the
Techco Indemnitees and the Travelco Indemnitees arising out of, relating to or
resulting from (i) the Printco Liabilities, the Printco Assets, the Printco
Business or the Printco Acquisition Claims, (ii) the breach by Printco or any of
its Subsidiaries of any provision of this Agreement or of any Ancillary
Agreement to which Printco is a party, in each case, whether such Indemnifiable
Losses relate to, arise out of or result from events, occurrences, actions,
omissions, facts or circumstances occurring, existing or asserted at, before or
after the Distribution Time and (b) Printco shall bear the costs of and
indemnify, defend and hold harmless the Company Indemnitees, the Schoolco
Indemnitees, the Techco Indemnitees and the Travelco Indemnitees from Printco's
Pro Rata Share of Indemnifiable Losses, as incurred, that relate to, arise out
of or result from the Shared Liabilities; provided, however, that Printco shall
have no obligation to indemnify any of the Company Indemnitees, the
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Schoolco Indemnitees, the Techco Indemnitees or the Travelco Indemnitees for any
Indemnifiable Losses relating to, arising out of or resulting from (x) the gross
negligence, bad faith or wilful misconduct of the Company, Schoolco, Techco,
Travelco, or any of their respective Subsidiaries, as applicable, after the
Distribution Time or (y) the failure of the Company, Schoolco, Techco or
Travelco, or any of their respective Subsidiaries, as applicable, to perform its
obligations under any agreement in accordance with the terms of such agreement
after the Distribution Time; provided further, however, that Printco shall have
no obligation to indemnify any of the Company Indemnitees, the Schoolco
Indemnitees, the Techco Indemnitees or the Travelco Indemnitees for any
Indemnifiable Losses (including such losses arising from Defaulted Payment
Obligations) pursuant to clause (b) of this Section 5.02 once Printco has
indemnified such Indemnitees for Losses pursuant to clause (b) of this Section
5.02 in an aggregate amount equal to $1.75 million.
SECTION 5.03 Indemnification by Schoolco. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, (a) Schoolco and, as to any particular Indemnifiable Loss, the
Schoolco Subsidiary out of whose assets, business or operations the
Indemnifiable Loss arises, shall indemnify, defend and hold harmless the Company
Indemnitees, the Printco Indemnitees, the Techco Indemnitees and the Travelco
Indemnitees from and against, and pay or reimburse such Indemnitees for, any and
all Indemnifiable Losses, as incurred, of the Company Indemnitees, the Printco
Indemnitees, the Techco Indemnitees and the Travelco Indemnitees arising out of,
relating to or resulting from (i) the Schoolco Liabilities, the Schoolco Assets,
the Schoolco Business or the Schoolco Acquisition Claims and (ii) the breach by
Schoolco or any of its Subsidiaries of any provision of this Agreement or of any
Ancillary Agreement to which Schoolco is a party, in each case, whether such
Indemnifiable Losses relate to, arise out of or result from events, occurrences,
actions, omissions, facts or circumstances occurring, existing or asserted at,
before or after the Distribution Time, and (b) Schoolco shall bear the costs of
and indemnify, defend and hold harmless the Company Indemnitees, the Printco
Indemnitees, the Techco Indemnitees and the Travelco Indemnitees from Schoolco's
Pro Rata Share of Indemnifiable Losses, as incurred, that relate to, arise out
of or result from the Shared Liabilities; provided, however, that Schoolco shall
have no obligation to indemnify any of the Company Indemnitees, the Printco
Indemnitees, the Techco Indemnitees and the Travelco Indemnitees for any
Indemnifiable Losses relating to, arising out of or resulting from (x) the gross
negligence, bad faith or wilful misconduct of the Company, Printco, Techco or
Travelco, as applicable, after the Distribution Time or (y) the failure of the
Company, Printco, Techco or Travelco, or any of their respective Subsidiaries,
as applicable, to perform its obligations under any agreement in accordance with
the terms of such agreement after the Distribution Time; provided further,
however, that Schoolco shall have no obligation to indemnify any of the Company
Indemnitees, the Printco Indemnitees, the Techco Indemnitees or the Travelco
Indemnitees for any Indemnifiable Losses (including such losses arising from
Defaulted Payment Obligations) pursuant to clause (b) of this Section 5.03 once
Schoolco has indemnified such Indemnitees for Losses pursuant to clause (b) of
this Section 5.03 in an aggregate amount equal to $1.75 million.
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SECTION 5.04 Indemnification by Techco. Except as otherwise specifically
set forth in any provision of this Agreement or of any Ancillary Agreement, (a)
Techco and, as to any particular Indemnifiable Loss, the Techco Subsidiary out
of whose assets, business or operations the Indemnifiable Loss arises, shall
indemnify, defend and hold harmless the Company Indemnitees, the Printco
Indemnitees, the Schoolco Indemnitees and the Travelco Indemnitees from and
against, and pay or reimburse such Indemnitees for, any and all Indemnifiable
Losses, as incurred, of the Company Indemnitees, the Printco Indemnitees, the
Schoolco Indemnitees and the Travelco Indemnitees arising out of, relating to or
resulting from (i) the Techco Liabilities, the Techco Assets, the Techco
Business or the Techco Acquisition Claims and (ii) the breach by Techco or any
of its Subsidiaries of any provision of this Agreement or of any Ancillary
Agreement to which Techco is a party, in each case, whether such Indemnifiable
Losses relate to, arise out of or result from events, occurrences, actions,
omissions, facts or circumstances occurring, existing or asserted at, before or
after the Distribution Time, and (b) Techco shall bear the costs of and
indemnify, defend and hold harmless the Company Indemnitees, the Printco
Indemnitees, the Schoolco Indemnitees and the Travelco Indemnitees from Techco's
Pro Rata Share of Indemnifiable Losses, as incurred, that relate to, arise out
of or result from the Shared Liabilities; provided, however, that Techco shall
have no obligation to indemnify any of the Company Indemnitees, the Printco
Indemnitees, the Schoolco Indemnitees and the Travelco Indemnitees for any
Indemnifiable Losses relating to, arising out of or resulting from (x) the gross
negligence, bad faith or wilful misconduct of the Company, Printco, Schoolco or
Travelco, as applicable, after the Distribution Time or (y) the failure of the
Company, Printco, Schoolco or Travelco, or any of their respective Subsidiaries,
as applicable, to perform its obligations under any agreement in accordance with
the terms of such agreement after the Distribution Time; provided further,
however, that Techco shall have no obligation to indemnify any of the Company
Indemnitees, the Printco Indemnitees, the Schoolco Indemnitees or the Travelco
Indemnitees for any Indemnifiable Losses (including such losses arising from
Defaulted Payment Obligations) pursuant to clause (b) of this Section 5.04 once
Techco has indemnified such Indemnitees for Losses pursuant to clause (b) of
this Section 5.04 in an aggregate amount equal to $1.75 million.
SECTION 5.05 Indemnification by Travelco. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, (a) Travelco and, as to any particular Indemnifiable Loss, the
Travelco Subsidiary out of whose assets, business or operations the
Indemnifiable Loss arises, shall indemnify, defend and hold harmless the Company
Indemnitees, the Printco Indemnitees, the Schoolco Indemnitees and the Techco
Indemnitees from and against, and pay or reimburse such Indemnitees for, any and
all Indemnifiable Losses, as incurred, of the Company Indemnitees, the Printco
Indemnitees, the Schoolco Indemnitees and the Techco Indemnitees arising out of,
relating to or resulting from (i) the Travelco Liabilities, the Travelco Assets,
the Travelco Business or the Travelco Acquisition Claims and (ii) the breach by
Travelco or any of its Subsidiaries
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of any provision of this Agreement or of any Ancillary Agreement to which
Travelco is a party, in each case, whether such Indemnifiable Losses relate to
or arise from events, occurrences, actions, omissions, facts or circumstances
occurring, existing or asserted at, before or after the Distribution Time, and
(b) Travelco shall bear the costs of and indemnify, defend and hold harmless the
Company Indemnitees, the Printco Indemnitees, the Schoolco Indemnitees and the
Techco Indemnitees from Travelco's Pro Rata Share of Indemnifiable Losses, as
incurred, that relate to, arise out of or result from the Shared Liabilities;
provided, however, that Travelco shall have no obligation to indemnify any of
the Company Indemnitees, the Printco Indemnitees, the Schoolco Indemnitees and
the Techco Indemnitees for any Indemnifiable Losses relating to, arising out of
or resulting from (x) the gross negligence, bad faith or wilful misconduct of
the Company, Printco, Schoolco or Techco, as applicable, after the Distribution
Time or (y) the failure of the Company, Printco, Schoolco or Techco, or any of
their respective Subsidiaries, as applicable, to perform its obligations under
any agreement in accordance with the terms of such agreement after the
Distribution Time ; provided further, however, that Travelco shall have no
obligation to indemnify any of the Company Indemnitees, the Printco Indemnitees,
the Schoolco Indemnitees or the Techco Indemnitees for any Indemnifiable Losses
(including such losses arising from Defaulted Payment Obligations) pursuant to
clause (b) of this Section 5.05 once Travelco has indemnified such Indemnitees
for Losses pursuant to clause (b) of this Section 5.05 in an aggregate amount
equal to $1.75 million.
SECTION 5.06 Limitations on Indemnification Obligations. The amount that
any party (an "Indemnifying Party") is or may be required to pay to any other
Person (an "Indemnitee") pursuant to Sections 5.01, 5.02, 5.03, 5.04 or 5.05, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds, settlement recoveries or other amounts actually recovered by or on
behalf of such Indemnitee in respect of the related Indemnifiable Loss. If an
Indemnitee shall have received the payment required by this Agreement from an
Indemnifying Party in respect of an Indemnifiable Loss and shall subsequently
actually receive Insurance Proceeds, settlement recoveries or other amounts in
respect of such Indemnifiable Loss, then such Indemnitee shall pay to such
Indemnifying Party a sum equal to the amount of such Insurance Proceeds,
settlement recoveries or other amounts actually received, up to the aggregate
amount of any payments made by such Indemnifying Party pursuant to this
Agreement in respect of such Indemnifiable Loss. Amounts paid by an
Indemnifying Party pursuant to clause (b) of Sections 5.01, 5.02, 5.03, 5.04 or
5.05 which are paid with, or reimbursed by, Insurance Proceeds, settlement
recoveries or other amounts actually recovered, by or on behalf of an
Indemnifying Party, in respect of the related Indemnifiable Loss, shall not
count toward the limit on each party's Shared Liabilities set forth in the
second proviso of Sections 5.01, 5.02, 5.03, 5.04 or 5.05, as applicable.
SECTION 5.07 Procedures for Indemnification of Third Party Claims.
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(a) If a claim or demand is made against an Indemnitee by any person
who is not a party, or an Affiliate of a party, to this Agreement or any of the
Ancillary Agreements (a "Third Party Claim") as to which such Indemnitee is
entitled to indemnification pursuant to this Agreement, such Indemnitee shall
notify the Indemnifying Party in writing, and in reasonable detail, of the Third
Party Claim promptly (and in any event within 10 business days) after receipt by
such Indemnitee of written notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent that the defense or conduct of such
Third Party Claim by the Indemnifying Party shall have been actually and
materially prejudiced as a result of such failure (except that the Indemnifying
Party shall not be liable for any expenses incurred during the period in which
the Indemnitee failed to give such notice); provided further, however, that in
no event shall such failure to notify the Indemnifying Party (i) constitute
prejudice suffered by the Indemnifying Party if it has otherwise received notice
of the Third Party Claim or (ii) relieve it from any liability or obligation
that it may otherwise have to such Indemnitee. Thereafter, the Indemnitee shall
deliver to the Indemnifying Party, promptly (and in any event within 10 business
days) after the Indemnitee's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnitee relating to the
Third Party Claim.
(b) (i) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
Indemnitee therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party, provided that such counsel is not reasonably objected to by
the Indemnitee, and, thereafter, the Indemnifying Party shall not be liable to
the Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the Indemnifying Party
elects to assume the defense of a Third Party Claim pursuant to this subsection
(b)(i), the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall have full control of such defense, and the Indemnifying Party shall
be liable for the reasonable fees and expenses of counsel employed by the
Indemnitee for any period during which the Indemnifying Party has failed to
assume the defense thereof.
(ii) Notwithstanding subsection (b)(i) of this Section 5.07, if
the Indemnitee reasonably believes that a Third Party Claim could lead to a
material adverse effect on its business, it shall be entitled to retain control
of (and the related Indemnifying Party shall not be entitled to assume), or to
reassert control over, the defense of the claim and shall be entitled to be
reimbursed for its reasonable out-of-pocket expenses attributable to such
defense. If the Indemnitee elects to retain control of, or to reassert control
over, the defense of a Third Party Claim pursuant to this subsection (b)(ii),
the Indemnifying Party shall have the right to participate in the defense
thereof and to employ counsel, at its own
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expense, separate from the counsel employed by the Indemnitee, it being
understood that the Indemnitee shall have full control of such defense.
(c) If the Indemnifying Party elects to assume the defense of any
Third Party Claim pursuant to subsection (b)(i) of this Section 5.07, all of the
Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof. If the Indemnitee elects to retain control of, or to
reassert control over, the defense of any Third Party Claim pursuant to
subsection (b)(ii) of this Section 5.07, the Indemnifying Party shall cooperate
with the Indemnitee in the defense or prosecution thereof. Such cooperation
shall include the retention and, upon the Indemnitee's or Indemnifying Party's
request, as applicable, the provision to such party of records and information
which are reasonably relevant to such Third Party Claim and making employees
available on a mutually convenient basis to provide additional information
regarding any material provided hereunder.
(d) Notwithstanding the foregoing, the Indemnifying Party shall not
be entitled to assume the defense of any Third Party Claim (and shall be liable
for the reasonable fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the Indemnitee which the Indemnitee reasonably determines in good faith,
after conferring with its counsel, cannot be separated from any related claim
for money damages. If such equitable relief or other relief portion of the
Third Party Claim can be so separated from that for money damages, the
Indemnifying Party shall be entitled to assume the defense of the portion
relating to money damages.
(e) Notwithstanding the foregoing, the Indemnifying Party shall not
be entitled to assume the defense of any Third Party Claim (and shall be liable
for the reasonable fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Indemnitee reasonably determines in
good faith, after conferring with its counsel, that the Indemnitee has available
to it one or more defenses or counterclaims that are inconsistent with one or
more of those that may be available to the Indemnifying Party in respect of such
Third Party Claim.
(f) Whether or not the Indemnifying Party shall have assumed the
defense of a Third Party Claim, in no event will the Indemnitee admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the Indemnifying Party's prior written consent (which consent
shall not be unreasonably withheld or delayed); provided, however, that the
Indemnitee shall have the right to settle, compromise or discharge such Third
Party Claim without the consent of the Indemnifying Party if the Indemnitee
releases in writing the Indemnifying Party from its indemnification obligation
hereunder with respect to such Third Party Claim and such settlement, compromise
or discharge would not otherwise adversely affect the Indemnifying Party. If
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the Indemnifying Party shall have assumed the defense of a Third Party Claim
(and the Indemnitee shall not have reasserted control over the defense of such
claim pursuant to Section 5.07(b)(ii)), the Indemnitee shall agree to any
settlement, compromise or discharge of a Third Party Claim that the Indemnifying
Party may recommend and that by its terms does not obligate the Indemnitee to
pay any of the liability in connection with such Third Party Claim, releases the
Indemnitee completely and unconditionally in connection with such Third Party
Claim and does not provide for injunctive or other nonmonetary relief affecting
the Indemnitee.
SECTION 5.08 Indemnification Payments. Indemnification required by this
Article V shall be made by prompt periodic payments of the amount thereof during
the course of the investigation, preparation or defense, as and when bills are
received or loss, liability, claim, damage, cost or expense is incurred.
SECTION 5.09 Defaults. In the event that any obligation of any
Indemnifying Party to indemnify an Indemnitee as required by Sections 5.02,
5.03, 5.04 and 5.05 proves to be uncollectible by the Indemnitee despite
reasonable collection efforts (a "Defaulted Payment Obligation"), such Defaulted
Payment Obligation shall be treated as a Shared Liability and shall be shared by
the Company and the Distributed Companies as provided in clause (b) of Sections
5.02, 5.03, 5.04 and 5.05; provided, however, that for purposes of calculating
each non-defaulting party's Pro Rata Share of such Shared Liability, "Pro Rata
Share" for each non-defaulting party shall be calculated as the fraction (a) the
numerator of which is such party's Pro Rata Share and (b) the denominator of
which is the sum of each non-defaulting party's Pro Rata Share. Defaulted
Payment Obligations shall count toward the limit on each party's Shared
Liabilities set forth in the second proviso to Sections 5.02, 5.03, 5.04 and
5.05, as applicable.
SECTION 5.10 Tax Adjustments. The amount of any Indemnifiable Loss shall
be (i) increased by the amount of any net Tax cost actually incurred by the
Indemnitee arising from any payments required by this Article V (other than this
Section 5.10) and received from the Indemnifying Party, together with such
additional amounts as are necessary so that the aggregate payments received from
the Indemnifying Party on account of such Indemnifiable Loss, net of any such
net Tax cost and any net Tax cost actually incurred by the Indemnitee as a
result of the receipt or accrual of such additional amounts, is equal to the
amount of such Indemnifiable Loss; and (ii) reduced by the amount of any net Tax
benefit actually realized by the Indemnitee arising from the incurrence or
payment of any such Indemnifiable Loss; provided however, that in the event such
net Tax benefit is subsequently reduced as a result of the carryback of any
other Tax benefit, or disallowed, the Indemnifying party shall promptly pay the
Indemnitee the amount of such reduction or disallowance. For purposes of this
Section 5.10, a net Tax benefit shall be deemed to be "actually realized" only
to the extent of the excess of (i) the aggregate amount of Taxes that would have
been shown as due and payable on the U.S. federal, state and local income Tax
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returns of the Indemnitee in the taxable period in which such net Tax benefit is
actually realized if such Indemnifiable Loss had not been incurred, and no
payment had been made in respect of such Indemnifiable Loss by the Indemnifying
Party over (ii) the aggregate amount of Taxes actually shown as due and payable
on such Tax returns.
SECTION 5.11 MCI Agreement. Notwithstanding Sections 5.01, 5.02, 5.03,
5.04 and 5.05, each of the parties hereto agrees to indemnify and hold the other
parties hereto harmless for any Liability under the MCI Agreement attributable
to the failure of such party to meet the required targets under the MCI
Agreement set forth on Schedule 5.11.
SECTION 5.12 Survival of Indemnities. The obligations of the parties
under this Article V shall survive the sale or other transfer by any of them of
any Assets or businesses or the assignment by any of them of any Liabilities,
with respect to any Indemnifiable Loss of any Indemnitee related to such Assets,
businesses or Liabilities.
ARTICLE VI
COVENANTS
SECTION 6.01 Provision of Corporate Records. Prior to or as promptly as
practicable after the Distribution Time, the Company shall deliver to each
Distributed Company copies of, or, if in the possession of such Distributed
Company or its Subsidiaries, such Distributed Company shall retain, all
corporate books and records and the relevant portions (or copies thereof) of all
corporate books and records relating directly and primarily to such Distributed
Company's Assets, such Distributed Company's Business, or such Distributed
Company's Liabilities, including, in each case, all agreements, litigation files
and government filings, whether or not active; provided however, that if
original versions of the above documents are in the possession of the Company
and not in the possession of the relevant Distributed Company, the Company shall
deliver said originals to such relevant Distributed Company. From and after the
Distribution Time, all such books, records and other items or such copies
thereof shall be the property of such Distributed Company; provided however,
that nothing in this Section 6.01 shall preclude the Company from retaining
duplicates of all such corporate records that are delivered to a Distributed
Company.
SECTION 6.02 Access to Information. From and after the Distribution Time
each party hereto shall afford to each other party and their respective
authorized accountants, counsel and other designated representatives reasonable
access and duplicating rights (at such other party's expense) during normal
business hours and upon reasonable advance notice, subject to the
confidentiality provisions hereof and any additional appropriate restrictions
for classified, privileged or confidential information, to all Information
within the possession or control of such party or to which it has access
relating
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to the business, Assets or Liabilities of such other party as they existed prior
to the Distribution Time or relating to or arising in connection with the
relationship between the Retained Business, on the one hand, and the
Distributed Companies' Businesses, on the other hand, on or prior to the
Distribution Time, insofar as such access is reasonably required for a
reasonable purpose. Without limiting the foregoing, Information may be
requested under this Section 6.02 for audit, accounting, claims, litigation and
Tax purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
SECTION 6.03 Retention of Records. Except as provided in this Agreement
or any of the Ancillary Agreements or as otherwise agreed in writing, if any
Information relating to the business, Assets or Liabilities of a party hereto,
as they existed prior to the Distribution Time or as they are transferred,
assumed or imposed pursuant to this Agreement, is retained by one of the other
parties hereto, the party retaining such Information shall, and shall cause its
Subsidiaries to, retain all such Information in such party's possession or under
its control until such Information is at least ten years old except that if,
prior to the expiration of such period, the party retaining such information
wishes to destroy or dispose of any such Information that is at least three
years old, prior to destroying or disposing of any of such Information, (a) such
party shall provide no less than 30 days' prior written notice to the other
party, specifying the Information proposed to be destroyed or disposed of and
(b) if, prior to the scheduled date for such destruction or disposal, the other
party requests in writing that any of the Information proposed to be destroyed
or disposed of be delivered to such other party, the party proposing to dispose
of or destroy such Information shall arrange for the delivery of the requested
Information to a location specified by, and at the expense of, the requesting
party.
SECTION 6.04 Witness Services. From and after the Distribution Time, each
of the parties hereto shall use commercially reasonable efforts to make
available to each other party hereto, upon reasonable written request, its and
its Subsidiaries' officers, directors, employees and agents as witnesses to the
extent that (i) such persons may reasonably be required in connection with the
prosecution, investigation or defense of any Action or threatened Action in
which the requesting party may from time to time be involved and (ii) there is
no conflict in the Action or threatened Action between the requesting party and
the other party.
SECTION 6.05 Reimbursement. Except to the extent otherwise contemplated
by any Ancillary Agreement, a party providing books and records, access to
Information or witness services to the other party under this Article VI shall
be entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for supplies, disbursements and other out-of-pocket expenses
and direct and indirect costs of employees, as may be reasonably incurred in
providing such books and records, access to Information or witness services.
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SECTION 6.06 Confidentiality.
(a) Each party hereto shall keep, and shall cause its Representatives
to keep, the other party's Information strictly confidential and will disclose
such Information only to such of its Representatives who need to know such
Information and who agree to be bound by this Section 6.06 and not to disclose
such Information to any other Person or entity. Without the prior written
consent of the other party, each party and its Representatives shall not
disclose the other party's Information to any Person or entity except as may be
required by law or judicial process or in connection with the enforcement of its
rights under this Agreement or any of the Ancillary Agreements and, in each
case, in accordance with this Section 6.06. Each party agrees to be responsible
for any breach of this confidentiality provision by any of its Representatives.
(b) In the event that any party hereto or any of its Representatives
becomes legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process), or determines that it
is necessary in connection with the enforcement of its rights under this
Agreement or any of the Ancillary Agreements, to disclose all or any part of the
other party's Information, the receiving party or its Representatives shall
promptly notify the other party of such compulsion or determination in writing,
and consult with and assist the other party in seeking a protective order or
request for other appropriate remedy. In the event that such protective order
or other remedy is not obtained or the other party waives compliance with the
terms hereof, such receiving party or its Representatives, as the case may be,
shall disclose only that portion of the Information which, in the opinion of the
receiving party's outside counsel, is legally required to be disclosed, and
shall exercise all commercially reasonable efforts to assure that confidential
treatment will be accorded such Information by the Persons or entities receiving
such Information. The providing party shall be given an opportunity to review
the Information prior to disclosure.
SECTION 6.07 Further Assurances. In case at any time after the
Distribution Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement and the Ancillary Agreements, the
proper officers at such time of each party to this Agreement shall promptly take
all such action. Without limiting the foregoing, the Company and the
Distributed Companies or their respective Subsidiaries, as appropriate, shall
use commercially reasonable efforts to obtain all consents and approvals, to
enter into all agreements and to make all filings and applications that may be
required or are reasonably necessary for the consummation of the Transactions,
including, without limitation, all applicable governmental and regulatory
filings. In addition, the Company shall use commercially reasonable efforts to
obtain releases of all liens on the Distributed Companies' Assets that exist as
a result of the Company Credit Agreement.
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ARTICLE VII
INSURANCE
SECTION 7.01 General. Except as provided in this Article, the Company
shall keep in effect all policies under its Insurance Program as of the date
hereof insuring the Distributed Companies' Assets and the operations of the
Distributed Companies' Businesses until 12:00 midnight (Eastern time) on the
Distribution Date, except to the extent that a Distributed Company shall have
earlier obtained appropriate coverage and notified the Company in writing to
that effect. Beginning at 12:01 a.m. on the day following the Distribution
Date, the Distributed Companies will cease to be insured under all policies in
the Company's Insurance Program.
SECTION 7.02 Distributed Companies' Insurance.
(a) Each Distributed Company will purchase and pay for the types and
amounts of insurance coverage that it reasonably deems appropriate and
sufficient for the period beginning on and continuing after the Distribution
Date, including Broad Form Contractual Liability insurance coverage as to such
Distributed Company's indemnity obligations set forth in this Agreement.
(b) Each Distributed Company agrees that the Company has made no
warranty, expressed or implied, and no representation that the insurance
described in Sections 7.01 or 7.02(a) above is or will be adequate or sufficient
to meet such Distributed Company's current or future insurance needs.
SECTION 7.03 Access to the Company's Insurance Program. Each Distributed
Company and its Affiliates shall have access through the Company after the
Distribution Date to such coverages and limits as may be available under the
Company's Insurance Program for Covered Claims occurring prior to the
Distribution Date. Such access shall be subject to available coverage and to
all of the terms, conditions, exclusions, retentions and limits of such
Policies.
SECTION 7.04 Insurance Recoveries. The Company shall use reasonable
efforts to obtain Recoveries for the Distributed Companies and their Affiliates
from the Company's insurance carriers for coverage available under Section 7.03
and shall keep the Distributed Companies reasonably informed of the Company's
efforts under this Section 7.04. The Company will reimburse the Distributed
Companies for any Recovery obtained by it on behalf of such Distributed Company
or Affiliate thereof pursuant to such claims; provided, however, that Special
Insurance Recoveries shall be shared between the Company and the relevant
Distributed Company in the same manner as any net recoveries of an Acquisition
Claim of such Distributed Company (payable at that time) would be shared between
the Company and such Distributed Company pursuant to Section 2.09, including
that, if the net recoveries from an Acquisition Claim of such Distributed
Company are not
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required to be shared in any manner with the Company pursuant to Section 2.09,
any Special Insurance Recoveries related to such Distributed Company should be
entirely payable to it. Any Distributed Company receiving a Recovery in its
entirety under this Section 7.04 shall pay all costs incurred by the Company
after the Distribution Date in making the related claim pursuant to this Section
7.04, including the salaries of the Company's officers and employees based on
the portion of time spent on such claims ("Recovery Costs"), and such Recovery
Costs incurred in pursuing the claim may be deducted from the Recovery. As to
any Recovery Costs incurred in relation to Special Insurance Recoveries, the
party or parties receiving such Special Insurance Recoveries, or a portion
thereof, shall bear the related Recovery Costs in proportion to the share of the
Special Insurance Recoveries such party receives. Each Distributed Company
agrees to make available to the Company such of its employees as the Company may
reasonably request as witnesses or deponents in connection with the Company's
management of claims, at such Distributed Company's sole cost and expense
notwithstanding Sections 6.04 and 6.05. Each Distributed Company agrees that,
if the Company has paid a Recovery to it for such a claim and such Distributed
Company receives proceeds from any other person with respect to such claim, it
will pay over to the Company the amount of proceeds it has received.
SECTION 7.05 Insurance Representations. Each Distributed Company hereby
represents and warrants to the Company that no representation by such
Distributed Company (or any of its officers, directors or Subsidiaries) relating
to information underlying any Insurance Policy of the Company contains an untrue
statement of material fact or omits to state a material fact necessary to make a
statement contained therein, in light of the circumstances under which they were
made, not misleading with respect to such information.
SECTION 7.06 Assignment. Nothing in this Agreement shall be deemed to
constitute (or to reflect) an assignment of any insurance policy or insurance
benefit.
SECTION 7.07 Deductibles and Maximums.
(a) To the extent that there are deductible amounts or retentions
applicable to potential insurance recoveries for claims of the Company or a
Distributed Company that are not per-occurrence deductibles, the Company shall
allocate such deductibles or retentions in such manner as the Company or a
Distributed Company, as applicable, determines, in good faith, is fair and
reasonable. For purposes of this Section 7.07, the parties agree that it is
fair and reasonable to allocate the deductibles, if any, first to any claims
based on recklessness, bad faith or wilful misconduct.
(b) To the extent that the Recoveries for any particular group of
claims of the Company or a Distributed Company may be subject to overall policy
limits, the Company shall allocate Recoveries in such manner as the Company
determines, in good faith, is fair and reasonable.
37
<PAGE>
SECTION 7.08 Conflicts Between Article VII and the Company's Insurance
Program. Any provision of this Agreement that conflicts with any term or
provision of the Company's applicable insurance policies shall be void.
SECTION 7.09 Maintenance of Insurance Policies. Each of the Company and
the Distributed Companies covenants to maintain insurance policies related to
such Company's or Distributed Company's indemnification obligations under this
Agreement with similar covenants, limits and deductibles as in effect as of
12:01 a.m. on the day following the Distribution Date for a period of four years
from such date and time.
ARTICLE VIII
CONDITIONS
SECTION 8.01 Conditions to Obligations of the Company. The obligation of
the Company to consummate the Distributions hereunder shall be subject to the
satisfaction or waiver of each of the following conditions:
(a) All of the transactions contemplated by Article II hereof to
occur prior to the Distribution Time shall have been consummated.
(b) The Distribution Shares to be issued in the Distributions shall
have been approved for trading on the NASDAQ, subject only to official notice of
issuance.
(c) All filings required to be made prior to the Distribution Time
with, and all consents, approvals and authorizations required to be obtained
prior to the Distribution Time from, any government or any court, arbitral
tribunal, administrative agency or commission or other regulatory authority,
agency or commission, governmental or otherwise, in connection with the
consummation of the Preliminary Transactions, the Distributions and any other
transaction contemplated hereby shall have been made or obtained, except where
the failure to make or obtain the same would not, individually or in the
aggregate, have a material adverse effect on the business, properties, results
of operations or financial condition of the Company, the Distributed Companies
or any of their respective Subsidiaries, or on the ability of any thereof to
consummate the transactions contemplated hereby, or to perform its obligations
under this Agreement or any of the Ancillary Agreements to which it is or will
be a party.
(d) Each of the Ancillary Agreements shall have been executed and
delivered by each of the parties thereto and shall be in full force and effect
in accordance with its terms.
38
<PAGE>
(e) Each of the registration statements on Forms S-1 under the
Securities Act filed with the SEC by the Distributed Companies in connection
with the Distributions shall have become effective under the Exchange Act, no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated by the SEC; and the
Information Statements shall have been or shall be simultaneously or promptly
mailed to holders of Distribution Shares in accordance with the rules,
regulations and policies of the SEC.
(f) No statute, rule or regulation or temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition shall be in
effect that prohibits consummation of the Preliminary Transactions or the
Distributions.
(g) All conditions to the Tender Offer shall have been satisfied or
waived by the Company, and the Tender Offer shall have been consummated prior to
or on the Distribution Date.
(h) The Company and each of the Distributed Companies shall have
received an opinion of Wilmer, Cutler & Pickering, counsel to the Company, that
for U.S. federal income tax purposes the Distributions will qualify as tax-free
spin-offs under Section 355 of the Code and will not be taxable under Section
355(e) of the Code. In rendering such opinion, such counsel shall be entitled
to rely on certain assumptions and representations provided by the Company, the
Distributed Companies and CDR-PC and certain other information, data,
documentation and other materials that Wilmer, Cutler & Pickering deems
necessary.
ARTICLE IX
DISPUTE RESOLUTION
SECTION 9.01 Mediation and Binding Arbitration. Except as may be
expressly provided in any of the Ancillary Agreements or in any other agreement
between the parties entered into pursuant hereto, if a dispute, controversy or
claim (collectively, a "Dispute") between the Company and any of the Distributed
Companies or any of their respective Affiliates arises out of or relates to this
Agreement, any Ancillary Agreement, or any other agreement entered into pursuant
hereto or thereto, including, without limitation, the breach, termination,
enforceability, interpretation or validity of any such agreement or any matter
involving an Indemnifiable Loss, the Company and such Distributed Company agree
to use the following procedures, in lieu of either party pursuing other
available remedies and as the sole and exclusive remedy (except as provided in
Section 10.11 below), to resolve the Dispute.
39
<PAGE>
SECTION 9.02 Initiation of Negotiation. A party seeking to initiate the
procedures shall provide written notice to the other party, describing briefly
the nature of the Dispute. A meeting shall be held between the parties within
10 days of the receipt of such notice, attended by executives who have
decision-making authority regarding the Dispute, to attempt in good faith to
negotiate a resolution of the Dispute.
SECTION 9.03 Submission to Mediation. If, within 30 days after such
meeting, the parties have not succeeded in negotiating a resolution of the
Dispute, the parties agree to submit the Dispute at the earliest possible date
to mediation conducted in accordance with the Commercial Mediation Rules of the
AAA, and to bear equally the costs of the mediation. The parties agree to
participate in good faith in the mediation and negotiations related thereto for
a period of 30 days or such longer period as they may mutually agree following
the initial mediation session (the "Mediation Period").
SECTION 9.04 Selection of Mediator. The parties will jointly appoint a
mutually acceptable and neutral mediator. If they are unable to agree upon such
appointment within 20 days from the conclusion of the negotiation period, a
mediator shall be appointed by the AAA pursuant to the Commercial Mediation
Rules of the AAA.
SECTION 9.05 Treatment of Negotiation and Mediation. All negotiations and
mediations pursuant to this Article shall be treated as compromise and
settlement negotiations for purposes of Rule 408 of the Federal Rules of
Evidence and comparable state rules.
SECTION 9.06 Arbitration.
(a) Notwithstanding the foregoing provisions of this Article IX, at
the end of the Mediation Period any party may submit the matter to binding
arbitration conducted in accordance with the Commercial Arbitration Rules of the
AAA, by one or three arbitrators(s) selected in accordance with the provisions
of Section 9.06(b). Any arbitration proceeding hereunder shall be held in the
city of New York, New York, and shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sections 1-16, and judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof or having
jurisdiction over the relevant party or its assets. Any arbitral award
hereunder shall be in writing, state the reasons for the award and be final and
binding on the parties.
(b) The parties shall seek to appoint jointly a mutually acceptable
sole arbitrator. If the parties cannot agree on an acceptable sole arbitrator
within 10 days after the commencement of the arbitration, the Dispute shall be
heard by a panel of three arbitrators, one appointed by each of the parties
within 20 days after commencement of the arbitration, and the third arbitrator
selected by the other two arbitrators within 15 days of appointment of the first
two arbitrators. If either side fails to appoint an arbitrator within 20
40
<PAGE>
days after the commencement of the arbitration, then that arbitrator shall be
appointed by the AAA, which shall promptly notify the parties of such
appointment. If the first two arbitrators appointed fail to appoint a third
arbitrator within the 15-day period prescribed above, then the AAA shall appoint
the third arbitrator and shall promptly notify the parties of the appointment.
References herein to the "Arbitrator" shall mean the sole arbitrator or the
three-arbitrator panel, as the case may be.
(c) In the event the Dispute involves (i) valuation of a liability
under (A) this Agreement, (B) any Ancillary Agreement or (C) any other agreement
entered into by the parties pursuant to this Agreement or any Ancillary
Agreement, (ii) an amount in controversy in a Dispute or (iii) the amount of
damages following a determination of liability, the arbitration shall proceed in
the following manner: Each party shall submit to the Arbitrator and exchange
with each other, on a schedule to be determined by the Arbitrator, a proposed
valuation, amount or damages, as the case may be, together with a statement,
including all supporting documents or other evidence upon which it relies,
setting forth such party's explanation as to why its proposal is reasonable and
appropriate. The Arbitrator, within 15 days of receiving such proposals and
supporting documents, shall choose between the two proposals and shall be
limited to awarding only one or the other of the two proposals submitted.
(d) Cost of Arbitration. The costs of arbitration shall be
apportioned between the parties to the arbitration as determined by the
Arbitrator in such manner as the Arbitrator deems reasonable taking into account
the circumstances of the case, the conduct of the parties during the proceeding
and the result of the arbitration.
(e) Arbitration Period. Any arbitration proceeding shall be
concluded in a maximum of six (6) months from the commencement of the
arbitration. The parties involved in the proceeding may agree in writing to
extend the arbitration period if necessary to appropriately resolve the Dispute.
SECTION 9.07 Confidentiality. All negotiation, mediation and arbitration
proceedings under this Article shall be treated as confidential Information in
accordance with the provisions of Section 6.06 hereof. Any mediator or the
Arbitrator shall be bound by an agreement containing confidentiality provisions
at least as restrictive as those contained in Section 6.06 hereof.
SECTION 9.08 Notices. All notices by one party to the other party in
connection with the dispute resolution provisions set forth in this Article
shall be in accordance with the provisions of Section 10.05 hereof.
SECTION 9.09 Consolidation. The Arbitrator may consolidate an arbitration
under this Agreement with any arbitration arising under or relating to the
41
<PAGE>
Ancillary Agreements or any other agreement between the parties entered into
pursuant hereto, as the case may be, if the subject of the Disputes thereunder
arise out of or relate essentially to the same set of facts or transactions.
Such consolidated arbitration shall be determined by the arbitrator appointed
for the arbitration proceeding that was commenced first in time.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Modification, Amendment or Termination. This Agreement may
not be modified, amended or terminated except by an agreement in writing signed
by each of the parties hereto and approved by the board of directors of each of
the parties hereto; provided, however, that (a) any modification or amendment to
this Agreement that is adverse to the rights or interests of CDR-PC, as a
stockholder or warrantholder of the Company, and (b) any termination of this
Agreement, shall not be effective unless such modification, amendment or
termination was approved by an affirmative vote of not less than three-fourths
of the members of the board of directors of the Company; provided further,
however, that the preceding proviso shall apply only for so long as CDR-PC has
the right to designate at least two nominees to the board of directors of the
Company pursuant to Section 4.01(b) of the Investment Agreement; provided
further, however, that Article V shall not be terminated, modified or amended
after the Distribution Time in respect of the third party beneficiaries thereto
without the consent of such persons.
SECTION 10.02 Waiver; Remedies. The conditions to the Company's
obligation to consummate the Distributions are for the sole benefit of the
Company and may be waived by the Company in whole or in part in its sole
discretion. No delay on the part of the Company or the Distributed Companies in
exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of either the Company or the
Distributed Companies of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder, nor will any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
the parties may otherwise have at law or in equity.
SECTION 10.03 Counterparts. For the convenience of the parties, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
42
<PAGE>
SECTION 10.04 Notices. Any notice, request, instruction or other
communication to be given hereunder by any party to another shall be in writing
and shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telefacsimile, upon confirmation of receipt, (ii) on
the first business day following the date of dispatch if delivered by Federal
Express or other nationally reputable next-day courier service with proof of
delivery, or (iii) on the fifth business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
(a) If to Printco:
Workflow Management, Inc.
240 Royal Palm Way
Palm Beach, FL 33480
Attention: Thomas B. D'Agostino
Telefacsimile: (561) 659-7793
(b) If to Schoolco:
School Specialty, Inc.
1000 North Bluemound Drive
Appleton, Wisconsin 54914
Attention: Daniel P. Spalding
Telefacsimile: (920) 734-6276
(c) If to Techco:
Aztec Technology Partners, Inc.
52 Roland Street
Boston, Massachusetts 02129
Attention: James E. Claypoole
Telefacsimile: (617) 623-5888
(d) If to Travelco:
Navigant International, Inc.
84 Inverness Circle East
Englewood, Colorado 80112-5314
Attention: Edward S. Adams
Telefacsimile: (303) 706-0770
43
<PAGE>
(e) If to the Company:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W., Suite 600 East
Washington, D.C. 20007-5490
Attention: Mark D. Director, Esq.
Kathleen Delaney, Esq.
Telefacsimile: (202) 339-6733
with copies to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George P. Stamas, Esq.
Telefacsimile: (202) 663-6363
and
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, NY 10152
Attention: Brian D. Finn
Telefacsimile: (212) 407-5200
and
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Franci J. Blassberg, Esq.
Telefacsimile: (212) 909-6836
SECTION 10.05 Entire Agreement. This Agreement and the Ancillary
Agreements (including Exhibits, Annexes and Schedules hereto and thereto)
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter hereof and thereof.
SECTION 10.06 Certain Obligations. Whenever any Ancillary Agreement
requires any of the Subsidiaries of any party to such Ancillary Agreement to
take any action,
44
<PAGE>
this Agreement will be deemed to include an undertaking on the part of such
party to cause such Subsidiary to take such action.
SECTION 10.07 Assignment. This Agreement shall be assignable in whole in
connection with a merger or consolidation or the sale or transfer of all or
substantially all the Assets or stock of a party hereto so long as the
resulting, surviving or transferee entity assumes all the obligations of the
relevant party hereto by operation of law or pursuant to an agreement in form
and substance reasonably satisfactory to the other party. Otherwise, this
Agreement shall not be assignable, in whole or in part, directly or indirectly,
by any party hereto without the prior written consent of the other party, and
any attempt to assign any rights or obligations arising under this Agreement
without such consent shall be void.
SECTION 10.08 Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
SECTION 10.09 Severability. If any provision of this Agreement or any of
the Ancillary Agreements or the application thereof to any person or
circumstance is determined to be invalid, void or unenforceable by a court of
competent jurisdiction or by one or more arbitrator(s), the remaining provisions
thereof, or the application of such provision to persons or circumstances other
than those as to which it has been held invalid or unenforceable, shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated thereby is not affected in any manner adverse to any
party. Upon any such determination, the parties shall negotiate in good faith in
an effort to agree upon a suitable and equitable substitute provision to effect
the original intent of the parties.
SECTION 10.10 Equitable Relief. No provision of this Agreement shall
preclude any party from seeking equitable relief to prevent any immediate,
irreparable harm to its interests, including multiple breaches of this Agreement
or the Ancillary Agreements by another party. Otherwise, the procedures set
forth in Article IX regarding dispute resolution are exclusive and shall be
fully exhausted prior to the initiation of litigation. Any party to this
Agreement may also seek specific enforcement of the Arbitrator's decision under
Article IX; the opposing party's only defense to such a request for specific
performance shall be fraud by or on the Arbitrator.
SECTION 10.11 Third Party Beneficiaries. Except as provided in Article V
relating to Indemnitees and Sections 10.01 and 10.02 relating to modification,
amendment and termination, this Agreement is solely for the benefit of the
parties hereto and their respective Subsidiaries and Affiliates, directors and
officers, and should not be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
45
<PAGE>
SECTION 10.12 Expenses. Except as otherwise set forth in this Agreement
or any Ancillary Agreement, each party shall bear its own costs and expenses
incurred after the Distribution Time.
SECTION 10.13 Exhibits and Schedules. The Exhibits and Schedules to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
SECTION 10.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to contracts made and to be performed entirely within such state,
without regard to the conflicts of law principles of such state.
SECTION 10.15 Consent to Jurisdiction. Each of the parties irrevocably
submits to the exclusive jurisdiction of the state and federal courts of
Delaware for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each of the parties
agree that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction in this Section
10.17. Each of the parties irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the state and federal
courts of Delaware, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
This consent to jurisdiction provision does not, in any way, limit the force and
effect of the requirements set forth in Article IX regarding resolution of
Disputes.
SECTION 10.16 Ancillary Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
SECTION 10.17 Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Time.
SECTION 10.18 Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Distribution to be duly executed as of the day and year first above written.
U.S. OFFICE PRODUCTS COMPANY
By
/s/ Mark D. Director
-----------------------------
Name: Mark D. Director
Title: Executive Vice President - Administration
General Counsel and Secretary
WORKFLOW MANAGEMENT, INC.
By
/s/ Thomas B. D'Agostino
-----------------------------
Name: Thomas B. D'Agostino
Title: President
SCHOOL SPECIALTY, INC.
By
/s/ Daniel P. Spalding
-----------------------------
Name: Daniel P. Spalding
Title: President
AZTEC TECHNOLOGY PARTNERS, INC.
By
/s/ James E. Claypoole
-----------------------------
Name: James E. Claypoole
Title: Chairman
NAVIGANT INTERNATIONAL, INC.
By
/s/ Edward S. Adams
------------------------------
Name: Edward S. Adams
Title: President
<PAGE>
Exhibit IV
Agreement and Plan of Distribution
Shared Liabilities
The following are Shared Liabilities under clause (ii) of the
definition of Shared Liability in the Agreement:
(1.) Liabilities arising out of Pierce v. Ledecky et al., filed
April 14, 1998, in the Court of Chancery of the State of
Delaware.
<PAGE>
Schedule 2.08
Agreement and Plan of Distribution
<TABLE>
Debt Amounts
------------
<S> <C>
Workflow Management, Inc. $ 30.0 million
School Specialty, Inc. $ 80.0 million
Aztec Technology Partners, Inc. $ 5.0 million
Navigant International, Inc. $ 15.0 million
</TABLE>
<PAGE>
Schedule 2.10
Agreement and Plan of Distribution
Distribution of Pledged Shares
1. Statement of Purpose
Pursuant to the Distributions, any person who owns shares of
Company Common Stock as of the Distribution Record Date is entitled to receive
Distribution Shares in respect of such stock, including Distribution Shares in
respect of any Company Common Stock pledged as collateral security by such
shareholder as a seller under an Acquisition Agreement. However, under the
Acquisition Agreements with such selling stockholders, the Company is entitled
to retain as pledged shares all non-cash dividends paid on Company Common Stock.
Therefore, Distribution Shares distributed to such sellers in respect of any
Company Common Stock that remains pledged as of the Distribution Date shall be
considered pledged under the relevant Acquisition Agreement and shall be held by
the Company as set forth in Section 2.10 of the Agreement as security for the
payment of claims of the Company or the relevant Distributed Company against
such seller. The following provisions govern the holding, distribution and
valuation of the Pledged Shares after the Distributions.
2. Definitions
"Adjusted Value" shall mean, as to any Original Pledged Shares
or any Distributed Company Pledged Shares, the value of such shares after the
Distributions as determined pursuant to clause 4.
"Distributed Company Pledged Shares" shall mean all
Distribution Shares distributed in respect of the Original Pledged Shares
remaining subject to the pledge.
"Historical Value" shall mean, as to any Original Pledged
Share, the value assigned to it under the Acquisition Agreement pursuant to
which such Original Pledged Share was pledged.
"Original Pledged Share" shall mean any share of Company
Common Stock pledged or assigned to the Company prior to the Distribution Date
(and remaining pledged or assigned as of the Distribution Date) as collateral
security by a seller of a Distributed Company Subsidiary (or a division within
such Subsidiary or Distributed Company) under the Acquisition Agreement
governing such sale.
"Pledged Shares" shall mean, collectively, the Original
Pledged Shares and the Distributed Company Pledged Shares.
"Trading Price" shall mean, as to any share of common stock,
the price at which such share is trading on the open market at the close of the
trading on a specified day.
<PAGE>
3. Terms
(a) As of the Distribution Date, the Company shall continue to
hold all Original Pledged Shares pledged under the Acquisition Agreements
pursuant to which the Distributed Company Subsidiaries (or divisions within such
Subsidiaries or Distributed Companies) were acquired by the Company or any of
its Subsidiaries (or any cash resulting from liquidation of such Original
Pledged Shares or from the tender of such Original Pledged Shares in the Equity
Tender) for the benefit of the Company and the relevant Distributed Companies,
as applicable. The Company shall, after the Distribution Date, similarly hold
the Distributed Company Pledged Shares paid as a dividend on such Original
Pledged Shares. In the event it is determined after the Distribution Date that a
Distributed Company is entitled to a recovery under an Acquisition Claim and
such claim is secured by Pledged Shares held by the Company, the Company shall
distribute such shares as set forth below; provided, however, that, as to any
Acquisition Claim, no Pledged Shares shall be released to the Company or a
Distributed Company unless and until (i) the decision of the arbitrator or court
of competent jurisdiction concerning such Acquisition Claim is final and
non-appealable, or (ii) there has been a final settlement of such Acquisition
Claim and the Company has been released from all claims against it by the seller
under the related Acquisition Agreement (or the Company is otherwise reasonably
satisfied that the resolution of the Acquisition Claim will not impose liability
on it).
(b) In the event it is finally determined after the
Distribution Date that a Distributed Company is entitled to a recovery under an
Acquisition Claim and such claim is secured by Pledged Shares, the Company shall
distribute to such Distributed Company (in accordance with the provisions of the
related Acquisition Agreement) Pledged Shares (or cash related thereto) equal in
value to the value of the recovery to which the Distributed Company is entitled
(excluding the amount, if any, of the net recovery to which the Company is
entitled under Section 2.09 of the Agreement). The shares to be distributed
shall be distributed from the pool of Pledged Shares for that particular seller
in the following order of preference: (i) from the common shares of such
Distributed Company, to the extent available, (ii) from the common shares of the
other Distributed Companies in equal proportions, to the extent available, and
(iii) from Company Common Stock.
(c) In the event it is determined after the Distribution Date
that the Company is entitled to a recovery under an Acquisition Claim and such
claim is secured by Pledged Shares, the Company shall withdraw (in accordance
with the provisions of the related Acquisition Agreement) Pledged Shares (or
cash related thereto) equal in value to the net recovery to which it is
entitled. The shares to be withdrawn shall be withdrawn from the pool of Pledged
Shares in the following order of preference: (i) from Company Common Stock, to
the extent available, and (ii) from the common shares of the Distributed
Companies in equal proportions, to the extent available.
(d) In the event of a distribution or withdrawal of Pledged
Shares as described in (b) or (c) above, the Company shall first distribute or
withdraw, as applicable, all cash held in escrow as a result of the liquidation
or tender of the Pledged Shares, if any.
2
<PAGE>
4. Valuation. For purposes of determining the value of the Pledged Shares to be
released pursuant to Section 2.10 and this Schedule 2.10 under any Acquisition
Agreement for a transaction accounted for as a pooling or where the relevant
Acquisition Agreement does not provide for the valuation of Pledged Shares as of
a date after the Distribution Date, the per share value of the Original Pledged
Shares or Distributed Company Pledged Shares, as the case may be, shall equal
the product of (i) such entity's Allocable Share times (ii) the Historical Value
of one underlying Original Pledged Share. The Allocable Share with respect to
the Distributed Company Pledged Shares of any particular Distributed Company
shall be the fraction (x) the numerator of which is the initial public offering
price of such Distributed Company in the Offering and (y) the denominator of
which is the average closing price of the Company's Common Stock for the lesser
of (1) ten business days preceding the Distributions, or (2) the number of
business days falling between the expiration of the Equity Tender and the
completion of the Distributions. The Allocable Share with respect to the
Original Pledged Shares of the Company shall be the number one minus the
Allocable Shares for each of the Distributed Companies.
5. Restrictions of Revalued Pledged Shares. The parties agree that they will
dispose of any Original Pledged Shares and Distributed Company Pledged Shares
received pursuant to Section 2.10 and this Schedule 2.10 as follows:
(i) Each Distributed Company agrees to retire any and
all Pledged Shares comprised of its own common shares
that are received in respect of Acquisition Claims;
and
(ii) Each Distributed Company agrees to sell in
ordinary open market transactions, as soon as
practicable, any and all Pledged Shares comprised of
common shares of the Company and any other
Distributed Company that are received in respect of
Acquisition Claims.
(iii) The parties further agree and acknowledge that
any Company Common Stock received by the Distributed
Companies pursuant to Section 2.10 and this Schedule
2.10 may be restricted stock (as defined in Rule 144
of the Securities Act) and may not be resold without
registration or an opinion that such shares may be
transferred without registration under the Securities
Act.
3
<PAGE>
Schedule 5.11
Agreement and Plan of Distribution
Terms Applicable to MCI Agreement
1 Travelco will enter into a separate Special Customer Agreement
with MCI Incor porated (the "Travel SCA"). None of the
Company, Printco, Schoolco or Techco shall have any liability
or obligation under the Travel SCA.
2 The Company shall enter into an amended MCI Agreement (the
"Amended Company SCA") pursuant to which the Company will have
reduced obligations to buy capacity from MCI (the "Collective
Minimums"), reflecting the creation of a separate Travel SCA
with its own minimums. The Amended Company SCA will give the
Company the right to have counted toward the Collective
Minimums capacity purchased from MCI by its former
subsidiaries, Printco, Schoolco and Techco (each, an "SCA
Subpurchaser" and, collectively, the "SCA Subpurchasers").
Travelco shall not have any liability or obligation under the
Amended Company SCA, and the SCA Subpurchasers will have no
liabilities or obligations to MCI under the Amended Company
SCA, but will have potential liabilities to the Company under
this Exhibit 5.11 and the Distribution Agreement.
3 The Amended Company SCA will provide that if the Company --
together with the SCA Subpurchasers -- shall collectively fail
to achieve the Collective Minimums, penalties will be imposed
on the Company. In order to allocate fairly the obligations
under the Amended Company SCA, the Company and the SCA
Subpurchasers hereby agree that if any such penalties are
assessed against the Company, such liabilities shall be
allocated among them as follows:
3.1 Attachment I sets forth the Company's and each of the
SCA Subpurchasers' respective minimum purchasing
requirements in four categories -- Annual Minimum,
Local Minimum, Frame Minimum and Core Product Term
Minimum (the "Separate Minimums").
3.2 If a penalty is imposed on the Company because of the
failure to achieve any particular Collective Minimum
under the Amended Company SCA, then each SCA
Subpurchaser that failed to achieve its corresponding
Separate Minimum shall be liable to the Company for
that portion of the penalty imposed on the Company by
MCI with respect to such Collective Minimum
multiplied by the fraction (i) the numerator of which
is the amount by which such SCA Subpurchaser's
Separate Minimum exceeds the amount of such services
actually purchased by such SCA Subpurchaser over the
period for which the penalty applies, and (ii) the
denominator of which is the sum, as to the entities
listed on Attachment I that failed to achieve the
relevant
<PAGE>
Separate Minimum, of the amounts by which each such
entity's relevant Separate Minimum exceeds the amount
of such services actually purchased by such entity
over the relevant term.
4 The liabilities of any SCA Subpurchaser to the Company under
the terms of this Exhibit 5.11 shall be treated under the
Distribution Agreement as a Printco Liability, a Schoolco
Liability or a Techco Liability, as the case may be. Such
liabilities shall not be subject to the limitation on
liabilities set forth in the second proviso to Sections 5.02,
5.03, 5.04 and 5.05. The liabilities of Travelco under the
Travel SCA shall be treated as Travelco Liabilities under the
Distribution Agreement.
<PAGE>
US OFFICE PRODUCTS
MCI VOLUME COMMITMENTS
Table 1: Annual Minimum*
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
---------------------------- ------------------------------ ------------------------------
% $ % $ % $ Average (%)
------------ -------------- -------------- --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
USOP 75.1% 3.83 74.9% 4.42 74.8% 5.09 74.9%
Print 11.7% 0.60 11.6% 0.68 11.6% 0.79 11.6%
Tech 4.0% 0.20 4.6% 0.27 4.7% 0.32 4.4%
Education 9.2% 0.47 8.9% 0.53 8.9% 0.61 9.0%
------------ -------------- -------------- --------------- -------------- -------------- -----------
------------ -------------- -------------- --------------- -------------- -------------- -----------
TOTAL 100.0% 5.10 100.0% 5.90 100.0% 6.80 100.0%
</TABLE>
$ = millions
* Includes inter- and intra-state long distance, international long distance,
local, frame relay, access, leased lines, and dynamic routing.
Table 2: Local Minimum
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
---------------------------- ------------------------------ ------------------------------
% $ % $ % $ Average (%)
------------ -------------- -------------- --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
USOP 92.5% 0.50 85.0% 0.46 85.0% 0.46 87.5%
Print 2.7% 0.01 6.0% 0.03 6.0% 0.03 4.9%
Tech 3.4% 0.02 6.0% 0.03 6.0% 0.03 5.1%
Education 1.4% 0.01 3.0% 0.02 3.0% 0.02 2.5%
------------ -------------- -------------- --------------- -------------- -------------- -----------
------------ -------------- -------------- --------------- -------------- -------------- -----------
TOTAL 100.0% 0.54 100.0% 0.54 100.0% 0.54 100.0%
</TABLE>
$ = millions
<PAGE>
Table 3: Frame Minimum*
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
---------------------------- ------------------------------ ------------------------------
% $ % $ % $ Average (%)
------------ -------------- -------------- --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
USOP 73.6% 0.51 73.6% 0.51 73.6% 0.51 73.6%
Print 15.4% 0.11 15.4% 0.11 15.4% 0.11 15.4%
Tech 0.4% 0.00 0.4% 0.00 0.4% 0.00 0.4%
Education 10.6% 0.07 10.6% 0.07 10.6% 0.07 10.6%
------------ -------------- -------------- --------------- -------------- -------------- -----------
------------ -------------- -------------- --------------- -------------- -------------- -----------
TOTAL 100.0% 0.69 100.0% 0.69 100.0% 0.69 100.0%
</TABLE>
$ = millions
* Includes port and frame relay service but excludes access.
Table 4: Core Product Term Minimum*
<TABLE>
<CAPTION>
% $
------------- --------------
<S> <C> <C>
USOP 74.9% 14.59
Print 11.6% 2.26
Tech 4.4% 0.86
Education 9.0% 1.75
------------- --------------
------------- --------------
TOTAL 100.0% 19.47
</TABLE>
$ = millions
* Includes inter- and intra-state long distance, dynamic routing, frame relay,
and access.
<PAGE>
$400,000,000
U.S. OFFICE PRODUCTS COMPANY
9 3/4% Senior Subordinated Notes due 2008
PLACEMENT AGREEMENT
June 5, 1998
<PAGE>
June 5, 1998
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BT Alex. Brown Incorporated
Chase Securities Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
U.S. Office Products Company, a Delaware corporation (the
"Company"), proposes to issue and sell to the several purchasers named in
Schedule I hereto (the "Placement Agents") $400,000,000 aggregate principal
amount of its 9 3/4% Senior Subordinated Notes due 2008 (the "Notes") to be
issued pursuant to the provisions of an Indenture dated as of June 10, 1998 (the
"Indenture") between the Company and State Street Bank and Trust Company, as
Trustee (the "Trustee"). The obligations of the Company under the Notes and the
Indenture will be guaranteed (the "Guarantees") by (i) the Company's existing
Domestic Subsidiaries (as defined in the Indenture) that upon issuance of the
Notes guarantee the Company's borrowings under the Credit Facility (as defined
below) (the "Guarantors") and (ii) any Future Material Domestic Subsidiaries (as
defined in the Indenture) that guarantee such borrowings on a senior
subordinated basis pursuant to the terms of the Indenture.
The offering and sale of the Notes is a part of the financing
for the Strategic Restructuring Plan (as defined in the Final Memorandum (as
defined below)) approved by the Company's Board of Directors. The Strategic
Restructuring Plan contemplates, among other things, that (i) the Company will
purchase 37,037,037 shares of its Common Stock, par value $.001 per share (the
"Common Stock"), including shares issuable upon exercise of options (vested and
unvested) to purchase Common Stock, at $27.00 per share (or, in the case of
shares underlying stock options, $27.00 minus the exercise price per share of
such options) (the "Equity Tender Offer"), (ii) the Company will distribute to
its stockholders the shares of Aztec Technology Partners, Inc., Workflow
Management, Inc., School Speciality, Inc. and Navigant International, Inc. (the
"Distributions"), (iii) an affiliate of Clayton, Dubilier & Rice will acquire
Common Stock and warrants to purchase Common Stock for $270.0 million (the
"Equity Investment") and (iv) the Company will enter into a senior secured bank
credit facility with terms as described in the Final Memorandum (the "Credit
Facility"). The completion of the Equity Tender Offer, the Distributions, the
Equity Investment and the availability of funds under the Credit Facility are
all conditions to the closing of the sale of the Notes.
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the
<PAGE>
2
exemption from registration provided by Rule 144A under the Securities Act, in
offshore transactions in reliance on Regulation S under the Securities Act
("Regulation S") and to institutional accredited investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that deliver a letter in
the form annexed to the Final Memorandum.
The Placement Agents and their direct and indirect transferees
will be entitled to the benefits of a Registration Rights Agreement dated the
date hereof between the Company and the Placement Agents (the "Registration
Rights Agreement").
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and
will prepare a final offering memorandum dated the date hereof (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") including
or incorporating by reference a description of the terms of the Notes, the terms
of the offering and a description of the Company. As used herein, the term
"Memorandum" shall include in each case portions of the documents incorporated
by reference therein.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated by reference in either Memorandum complied or
will comply when so filed in all material respects with the Exchange
Act and the applicable rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder and (ii) the
Preliminary Memorandum does not contain and the Final Memorandum, in
the form used by the Placement Agents to confirm sales and on the
Closing Date (as defined in Section 4), will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements
or omissions in either Memorandum based upon information relating to
any Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in
<PAGE>
3
good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in each Memorandum or as currently conducted, as the case may be, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; except as set forth in the Final Memorandum, all of
the issued shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Notes have been duly authorized by the Company and,
when executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Placement Agents in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws affecting creditors' rights
generally and general principles of equity, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement.
(f) The Guarantees have been duly authorized by the Guarantors
and, upon execution and delivery of the Indenture and when the Notes
are duly executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Placement Agents
in accordance with this Agreement, will be valid and binding
obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws affecting creditors' rights generally and general principles of
equity.
(g) The Indenture has been duly authorized by the Company and
the Guarantors and, when executed and delivered by the Company and the
Guarantors, will be a valid and binding agreement of the Company and
each Guarantor, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent
<PAGE>
4
transfer, reorganization, moratorium and similar laws affecting
creditors' rights generally and general principles of equity.
(h) The Registration Rights Agreement has been duly authorized
by the Company, executed and delivered by the Company, and is a valid
and binding agreement of the Company, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws affecting
creditors' rights generally and general principles of equity and except
as rights to indemnification and contribution under the Registration
Rights Agreement may be limited under applicable law.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Registration Rights Agreement and the Notes will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, except for such
violations of judgments, orders or decrees as would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance
by the Company of its obligations under this Agreement, the Indenture,
the Registration Rights Agreement or the Notes, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Notes and by Federal and
state securities laws with respect to the Company's obligations under
the Registration Rights Agreement, such consents, approvals,
authorizations, orders or filings as have been made or obtained, such
as disclosed in the Preliminary Memorandum or the Final Memorandum and
such as related to the listing of the Notes in Luxembourg.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Final Memorandum.
(k) There are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in each Memorandum and
proceedings that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or
ability of the
<PAGE>
5
Company to perform its obligations under this Agreement, the Indenture,
the Registration Rights Agreement or the Notes or to consummate the
transactions contemplated by the Final Memorandum.
(l) The Company and its subsidiaries (i) are in compliance in
all material respects with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with
all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(m) Except as set forth in the Final Memorandum, there are no
costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws
or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties)
which would, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(n) The Company is not, and after giving effect to the
offering and sale of the Notes and the application of the proceeds
thereof as described in the Final Memorandum, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(o) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the
Company has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Notes in a manner that would require
the registration under the Securities Act of the Securities or (ii)
engaged in any form of general solicitation or general advertising in
connection with the offering of the Notes (as those terms are used in
Regulation D under the Securities Act), or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(p) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Placement Agents, as to which no
representation is made) has
<PAGE>
6
engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Notes and the Company and
its Affiliates and any person acting on its or their behalf (other than
the Placement Agents, as to which no representation is made) have
complied and will comply with the offering restrictions requirement of
Regulation S.
(q) Assuming the accuracy of the representations of the
Placement Agents contained in Section 7 of this Agreement, and the
compliance of the Placement Agents with the agreements set forth
therein, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner
contemplated by this Agreement to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended.
(r) The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(s) The Notes conform in all material respects to the
description thereof contained in the Final Memorandum under the heading
"Description of the Notes".
(t) Subsequent to the respective dates as of which information
is given in the Final Memorandum, (i) the Company and its subsidiaries
have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any
material change in the capital stock, short-term debt or long-term debt
of the Company and its subsidiaries, except in each case as described
in the Final Memorandum.
(u) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, except as described in the
Final Memorandum, or, to the knowledge of the Company, is imminent.
2. Agreements to Sell and Purchase. The Company hereby agrees
to sell to the several Placement Agents, and each Placement Agent, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Notes set forth in Schedule
I hereto opposite its name at a purchase price of 96.788% of the principal
amount thereof (the "Purchase Price") plus accrued interest, if any, to the
Closing Date.
<PAGE>
7
The Company hereby agrees that, without the prior written
consent of Morgan Stanley & Co. Incorporated on behalf of the Placement Agents,
it will not, during the period beginning on the date hereof and continuing to
and including the Closing Date, offer, sell, contract to sell or otherwise
dispose of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Notes (other than the sale of the Notes under this
Agreement).
3. Terms of Offering. You have advised the Company that the
Placement Agents will make an offering of the Notes purchased by the Placement
Agents hereunder on the terms to be set forth in the Final Memorandum and in
this Agreement, as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
4. Payment and Delivery. Payment for the Notes shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Notes for the respective accounts of the several
Placement Agents at 10:00 a.m., New York City time, on June 10, 1998, or at such
other time on the same or such other date, not later than June 17, 1998, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date".
Certificates for the Notes shall be in definitive form or
global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date. The certificates evidencing the Notes shall be
delivered to you on the Closing Date for the respective accounts of the several
Placement Agents, with any transfer taxes payable in connection with the
transfer of the Notes to the Placement Agents duly paid, against payment of the
Purchase Price therefor plus accrued interest, if any, to the date of payment
and delivery.
5. Conditions to the Placement Agents' Obligations. The
several obligations of the Placement Agents to purchase and pay for the Notes on
the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
<PAGE>
8
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Final Memorandum (exclusive
of any amendments or supplements thereto subsequent to the
date of this Agreement) that, in your judgment, is material
and adverse and that makes it, in your judgment, impracticable
to market the Notes on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in Section 5(a)(i) and
to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and the Company has complied with all of the agreements and satisfied
all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing
Date an opinion of Wilmer, Cutler & Pickering, special counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit A.
Such opinion shall be rendered to the Placement Agents at the request
of the Company and shall so state therein.
(d) The Placement Agents shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel for the Placement
Agents, dated the Closing Date, in form and substance satisfactory to
you.
(e) The Placement Agents shall have received on the date
hereof a letter, dated the date hereof in form and substance
satisfactory to the Placement Agents, from Price Waterhouse LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in or incorporated by reference into
the Final Memorandum.
(f) The Placement Agents shall have received on the date
hereof a letter, dated the date hereof, in form and substance
satisfactory to the Placement Agents, from each of KPMG Peat Marwick
LLP (Norfolk, VA), Deloitte & Touche LLP (Seattle, WA), Ernst & Young
LLP (Milwaukee, WI), Herz, Herson & Company LLP (New York, NY), Rubin,
Koehmstedt and Nadler, PLC (Minneapolis, MN) and BDO Seidman (Atlanta,
GA), independent public accountants, containing statements and
information of the type
<PAGE>
9
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Final
Memorandum.
(g) The Indenture and the Registration Rights Agreement shall
have been executed by the parties thereto and shall be in full force
and effect on the Closing Date.
(h) The Credit Facility shall be in full force and effect on
the Closing Date.
(i) The closing of each of the Equity Tender Offer, the
Distributions and the Equity Investment and the initial borrowings
under the Credit Facility shall have occurred or shall occur
concurrently with the closing of the sale of the Notes hereunder.
(j) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your
counsel.
6. Covenants of the Company. In further consideration of the
agreements of the Placement Agents contained in this Agreement, the Company
covenants with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior
to 3:00 p.m. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section 6(c),
as many copies of the Final Memorandum, any documents incorporated by
reference therein and any supplements and amendments thereto as you may
reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Notes shall have been sold by the
Placement Agents, any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Final Memorandum in
order to make the statements therein, in the light of the circumstances
when the Final Memorandum is delivered to a purchaser, not misleading,
or if, in the reasonable opinion of counsel for the Placement Agents,
it is necessary to amend or supplement the Final Memorandum to comply
with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to
the Final Memorandum so that the statements in the Final Memorandum as
so amended or supplemented will not, in the light of the circumstances
when the Final
<PAGE>
10
Memorandum is delivered to a purchaser, be misleading or so that the
Final Memorandum, as amended or supplemented, will comply with
applicable law.
(d) To use its reasonable best efforts to qualify the Notes
for offer and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request; provided that the
Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the issuance and sale of the Notes and
all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies
thereof to the Placement Agents, in the quantities herein above
specified, (ii) all costs and expenses related to the transfer and
delivery of the Notes to the Placement Agents, including any transfer
or other taxes payable thereon, (iii) the reasonable cost of printing
or producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Notes under state securities laws and
all expenses in connection with the qualification of the Notes for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Placement Agents in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by rating agencies for the rating of
the Notes, (v) all document production charges and expenses of counsel
to the Placement Agents (but not including their fees for professional
services) in connection with the preparation of this Agreement, (vi)
the fees and expenses, if any, incurred in connection with the
admission of the Notes for trading in PORTAL and for listing on the
Luxembourg Stock Exchange, (vii) the costs and charges of the Trustee
and any transfer agent, registrar or depositary, (viii) the cost of the
preparation, issuance and delivery of the Notes, (ix) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of
the Notes, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road
show, and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not
<PAGE>
11
otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 8, and the last paragraph of
Section 10, the Placement Agents will pay all of their costs and
expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Notes by them and any advertising
expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Notes in a manner which would require the
registration under the Securities Act of the Notes.
(g) Not to solicit any offer to buy or offer to sell the Notes
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(h) While any of the Notes remain "restricted securities"
within the meaning of the Securities Act, to make available, upon
request, to any seller of the Notes the information specified in Rule
144A(d)(4) under the Securities Act, unless the Company is then subject
to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its reasonable best efforts to
permit the Notes to be designated PORTAL securities in accordance with
the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Placement Agents) will engage in
any directed selling efforts (as that term is defined in Regulation S)
with respect to the Notes, and the Company and its Affiliates and each
person acting on its or their behalf (other than the Placement Agents)
will comply with the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the
Company will not, will not permit any of its subsidiaries to, and will
use its reasonable best efforts to cause its affiliates (as defined in
Rule 144 under the Securities Act) to not, resell any of the Notes
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them.
(l) To use its reasonable best efforts to obtain as soon as
practicable after the Closing Date and maintain the listing of the
Notes on the Luxembourg Stock Exchange for as long as any of the Notes
are outstanding, and to supply all documents, information
<PAGE>
12
and undertakings and publish all advertisements or other material as
may be necessary or advisable for such purpose.
7. Offering of Securities; Restrictions on Transfer. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Notes by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (ii) it will solicit offers for such Notes only from, and will offer
such Notes only to, persons that it reasonably believes to be (A) in the case of
offers inside the United States, (1) QIBs or (2) other institutional accredited
investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act ("institutional accredited investors") that, prior to their purchase of the
Securities, deliver to such Placement Agent a letter containing the
representations and agreements set forth in Appendix A to the Memorandum and (B)
in the case of offers outside the United States, to persons other than U.S.
persons ("foreign purchasers", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) in reliance upon
Regulation S under the Securities Act that, in each case, in purchasing such
Notes are deemed to have represented and agreed as provided in the Final
Memorandum under the caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) such Placement Agent understands that no action has been
or will be taken in any jurisdiction by the Company that would permit a
public offering of the Notes, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Notes, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Notes or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Notes have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with
Rule 144A or Regulation S under the Securities Act or pursuant to
another exemption from the registration requirements of the Securities
Act;
<PAGE>
13
(iv) such Placement Agent has offered the Notes and will offer
and sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on
its or their behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the
Securities, and any such Placement Agent, its Affiliates and any such
persons have complied and will comply with the offering restrictions
requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and, prior
to the date six months after the Closing Date, will not offer or sell
any Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations
1995; (B) complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United
Kingdom, and (C) only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection
with the issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to
whom such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Notes have not
been and will not be registered under the Securities and Exchange Law
of Japan, and represents that it has not offered or sold, and agrees
not to offer or sell, directly or indirectly, any Notes in Japan or for
the account of any resident thereof except pursuant to any exemption
from the registration requirements of the Securities and Exchange Law
of Japan and otherwise in compliance with applicable provisions of
Japanese law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering
<PAGE>
14
and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act.
Terms used above have the meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to
them by Regulation S.
8. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Placement Agent and each person, if any, who
controls any Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Placement Agent furnished to the Company in writing
by such Placement Agent through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any Preliminary
Memorandum shall not inure to the benefit of any Placement Agent from whom the
person asserting any such losses, claims, damages or liabilities purchased
Notes, or any person controlling such Placement Agent, if it is established that
a copy of the Memorandum (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Placement Agent to such person at or prior to the written
confirmation of the sale of the Notes to such person, and if the Memorandum (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use in
either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"indemnified party") shall promptly notify the person
<PAGE>
15
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being enter into and (iii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with such
request to the extent it considers such request to be reasonable and (ii)
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
<PAGE>
16
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Placement Agents on the
other hand from the offering of the Notes or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company on the one hand and of
the Placement Agents on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Placement Agents on the other hand in
connection with the offering of the Notes shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Notes
(before deducting expenses) received by the Company and the total discounts and
commissions received by the Placement Agents in respect thereof, bear to the
aggregate offering price of the Notes. The relative fault of the Company on the
one hand and of the Placement Agents on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Placement Agents and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Placement Agents'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective principal amount of Notes they have purchased
hereunder, and not joint.
(e) The Company and the Placement Agents agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Placement Agents were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes resold by it in
the initial placement of such Notes were offered to investors exceeds the amount
of any damages that such Placement Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for
<PAGE>
17
in this Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated in the Final
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Placement
Agents shall fail or refuse to purchase Notes that it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Notes
which such defaulting Placement Agent or Placement Agents agreed but failed or
refused to purchase is not more than one-tenth of the aggregate principal amount
of Notes to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Notes set
forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Notes set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Notes which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Notes that any Placement Agent
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such
<PAGE>
18
principal amount of Notes without the written consent of such Placement Agent.
If, on the Closing Date any Placement Agent or Placement Agents shall fail or
refuse to purchase Notes which it or they have agreed to purchase hereunder on
such date and the aggregate principal amount of Notes with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of Notes
to be purchased on such date, and arrangements satisfactory to you and the
Company for the purchase of such Notes are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Placement Agent or of the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Final Memorandum or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Placement
Agent from liability in respect of any default of such Placement Agent under
this Agreement.
If this Agreement shall be terminated by the Placement Agents,
or any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Placement Agents or such
Placement Agents as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the reasonable
fees and disbursements of their counsel) reasonably incurred by such Placement
Agents in connection with this Agreement or the offering contemplated hereunder.
11. Notices. All notices and other communications under this
Agreement shall be in writing and mailed, delivered or sent by facsimile
transmission to: if sent to the Placement Agents, Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, New York 10036, attention: High Yield New
Issues Group, facsimile number (212) 761-0587 and if sent to the Company, to
1025 Thomas Jefferson Street, N.W., Suite 600 East, Washington, D.C. 20007,
Attention: Mark Director, facsimile number (202) 339-6733.
<PAGE>
19
12. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
14. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
U.S. OFFICE PRODUCTS COMPANY
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BT ALEX. BROWN INCORPORATED
CHASE SECURITIES INC.
By: Morgan Stanley & Co. Incorporated
By:
-----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of Notes
Placement Agent to be Purchased
--------------- -------------------------
<S> <C>
Morgan Stanley & Co. Incorporated $140,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $140,000,000
BT Alex. Brown Incorporated $ 60,000,000
Chase Securities Inc. $ 60,000,000
------------
Total:......................................... $400,000,000
------------
------------
</TABLE>
<PAGE>
A-1
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY
<PAGE>
U.S. OFFICE PRODUCTS COMPANY,
as Issuer,
the Note Guarantors named herein and from time to time parties hereto,
as Note Guarantors
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
----------
INDENTURE
Dated as of June 10, 1998
----------
9 3/4% Senior Subordinated Notes Due 2008
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
<S> <C>
Page
Section 101. Definitions.............................................. 2
Section 102. Other Definitions........................................ 36
Section 103. Rules of Construction.................................... 37
Section 104. Incorporation by Reference of TIA........................ 38
Section 105. Conflict with TIA........................................ 39
Section 106. Compliance Certificates and Opinions..................... 39
Section 107. Form of Documents Delivered to Trustee................... 40
Section 108. Acts of Noteholders; Record Dates........................ 40
Section 109. Notices, etc., to Trustee and Company.................... 42
Section 110. Notices to Holders; Waiver............................... 43
Section 111. Effect of Headings and Table of Contents................. 43
Section 112. Successors and Assigns................................... 44
Section 113. Separability Clause...................................... 44
Section 114. Benefits of Indenture.................................... 44
Section 115. GOVERNING LAW............................................ 44
Section 116. Legal Holidays........................................... 44
Section 117. No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders....................... 44
Section 118. Exhibits and Schedules................................... 45
Section 119. Counterparts............................................. 45
ARTICLE 2
NOTE FORMS
Section 201. Forms Generally.......................................... 45
Section 202. Form of Trustee's Certificate of Authentication.......... 47
Section 203. Restrictive and Global Note Legends...................... 47
ARTICLE 3
THE NOTES
Section 301. Title and Terms.......................................... 49
Section 302. Denominations............................................ 50
Section 303. Execution, Authentication and Delivery and Dating........ 50
Section 304. Temporary Notes.......................................... 51
Section 305. Registration, Registration of Transfer and Exchange...... 51
Section 306. Mutilated, Destroyed, Lost and Stolen Notes.............. 52
Section 307. Payment of Interest Rights Preserved..................... 53
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 308. Persons Deemed Owners.................................... 54
Section 309. Cancellation............................................. 55
Section 310. Computation of Interest.................................. 55
Section 311. CUSIP Numbers............................................ 55
Section 312. Book-Entry Provisions for Global Notes................... 55
Section 313. Special Transfer Provisions.............................. 57
Section 314. Payment of Additional Interest........................... 61
ARTICLE 4
COVENANTS
Section 401. Payment of Principal, Premium and Interest............... 61
Section 402. Maintenance of Office or Agency.......................... 61
Section 403. Money for Payments To Be Held in Trust................... 62
Section 404. SEC Reports.............................................. 63
Section 405. Statement as to Default.................................. 63
Section 406. Limitation on Indebtedness............................... 64
Section 407. Limitation on Layering................................... 68
Section 408. Limitation on Restricted Payments........................ 68
Section 409. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.............................. 72
Section 410. Limitation on Sales of Assets and Subsidiary Stock....... 74
Section 411. Limitation on Transactions with Affiliates............... 77
Section 412. Limitation on Liens...................................... 79
Section 413. Future Note Guarantors................................... 79
Section 414. Purchase of Notes Upon a Change in Control............... 80
ARTICLE 5
SUCCESSOR COMPANY
Section 501. When the Company May Merge, etc.......................... 81
Section 502. Successor Company Substituted............................ 82
ARTICLE 6
REMEDIES
Section 601. Events of Default........................................ 83
Section 602. Acceleration of Maturity; Rescission and Annulment....... 85
Section 603. Other Remedies; Collection Suit by Trustee............... 86
Section 604. Trustee May File Proofs of Claim......................... 86
Section 605. Trustee May Enforce Claims Without Possession of Notes... 87
Section 606. Application of Money Collected........................... 87
Section 607. Limitation on Suits...................................... 87
Section 608. Unconditional Right of Holders to Receive Principal and
Interest.......................................... 88
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 609. Restoration of Rights and Remedies....................... 88
Section 610. Rights and Remedies Cumulative........................... 88
Section 611. Delay or Omission Not Waiver............................. 88
Section 612. Control by Holders....................................... 89
Section 613. Waiver of Past Defaults.................................. 89
Section 614. Undertaking for Costs.................................... 90
Section 615. Waiver of Stay, Extension or Usury Laws.................. 90
ARTICLE 7
THE TRUSTEE
Section 701. Certain Duties and Responsibilities...................... 91
Section 702. Notice of Defaults....................................... 92
Section 703. Certain Rights of Trustee................................ 92
Section 704. Not Responsible for Recitals or Issuance of Notes........ 93
Section 705. May Hold Notes........................................... 93
Section 706. Money Held in Trust...................................... 93
Section 707. Compensation and Reimbursement........................... 94
Section 708. Conflicting Interests.................................... 94
Section 709. Corporate Trustee Required; Eligibility.................. 94
Section 710. Resignation and Removal; Appointment of Successor........ 95
Section 711. Acceptance of Appointment by Successor................... 96
Section 712. Merger, Conversion, Consolidation or Succession to
Business......................................... 96
Section 713. Preferential Collection of Claims Against the Company.... 97
Section 714. Appointment of Authenticating Agent...................... 97
ARTICLE 8
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND THE COMPANY
Section 801. The Company to Furnish Trustee Names and Addresses of
Holders.............................................. 97
Section 802. Preservation of Information; Communications to Holders... 98
Section 803. Reports by Trustee....................................... 98
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
Section 901. Without Consent of Holders............................... 98
Section 902. With Consent of Holders.................................. 99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 903. Execution of Amendments, Supplements or Waivers.......... 101
Section 904. Revocation and Effect of Consents........................ 101
Section 905. Conformity with TIA...................................... 101
Section 906. Notation on or Exchange of Notes......................... 102
ARTICLE 10
REDEMPTION OF NOTES
Section 1001. Right of Redemption..................................... 102
Section 1002. Applicability of Article................................ 103
Section 1003. Election to Redeem; Notice to Trustee................... 103
Section 1004. Selection by Trustee of Notes to Be Redeemed............ 104
Section 1005. Notice of Redemption.................................... 104
Section 1006. Deposit of Redemption Price............................. 105
Section 1007. Notes Payable on Redemption Date........................ 105
Section 1008. Notes Redeemed in Part.................................. 106
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 1101. Satisfaction and Discharge of Indenture................. 106
Section 1102. Application of Trust Money.............................. 108
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
Section 1201. The Company's Option to Elect Defeasance or Covenant
Defeasance......................................... 108
Section 1202. Defeasance and Discharge................................ 108
Section 1203. Covenant Defeasance..................................... 109
Section 1204. Conditions to Defeasance or Covenant Defeasance......... 109
Section 1205. Deposited Money and U.S. Government Obligations To Be
held in Trust; Other Miscellaneous Provisions....... 111
Section 1206. Reinstatement........................................... 111
Section 1207. Repayment to the Company................................ 112
ARTICLE 13
NOTE GUARANTEES
Section 1301. Guarantees Generally.................................... 112
Section 1302. Continuing Guarantees................................... 114
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1303. Release of Note Guarantees.............................. 114
Section 1304. Agreement to Subordinate................................ 115
Section 1305. Waiver of Subrogation................................... 115
Section 1306. Notation Not Required................................... 115
Section 1307. Successors and Assigns of Note Guarantors............... 115
Section 1308. Execution and Delivery of Note Guarantees............... 115
Section 1309. Notices................................................. 116
ARTICLE 14
SUBORDINATION
Section 1401. Agreement To Subordinate................................ 116
Section 1402. Liquidation, Dissolution, Bankruptcy.................... 116
Section 1403. Default on Senior Indebtedness.......................... 117
Section 1404. Acceleration of Payment of Notes........................ 118
Section 1405. When a Distribution Must Be Paid Over................... 118
Section 1406. Subrogation............................................. 118
Section 1407. Relative Rights......................................... 118
Section 1408. Subordination May Not Be Impaired by the Company........ 119
Section 1409. Rights of Trustee and Paying Agent...................... 119
Section 1410. Distribution or Notice to Representative................ 119
Section 1411. Article 14 Not To Prevent Events of Default or Limit
Right To Accelerate................................. 119
Section 1412. Trust Moneys Not Subordinated........................... 120
Section 1413. Trustee Entitled To Rely................................ 120
Section 1414. Trustee To Effectuate Subordination..................... 120
Section 1415. Trustee Not Fiduciary for Holders of Senior
Indebtedness ....................................... 120
Section 1416. Reliance by Holders of Senior Indebtedness on
Subordination Provisions............................ 121
Section 1417. Trustee's Compensation Not Prejudiced................... 121
ARTICLE 15
SUBORDINATION OF NOTE GUARANTEES
Section 1501. Agreement To Subordinate................................ 121
Section 1502. Liquidation, Dissolution, Bankruptcy.................... 121
Section 1503. Default on Guarantor Senior Indebtedness................ 122
Section 1504. Acceleration of Payment of Notes........................ 123
Section 1505. When a Distribution Must Be Paid Over................... 124
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1506. Subrogation............................................. 124
Section 1507. Relative Rights......................................... 124
Section 1508. Subordination May Not Be Impaired by Note Guarantors.... 124
Section 1509. Rights of Trustee and Paying Agent...................... 125
Section 1510. Distribution or Notice to Representative................ 125
Section 1511. Article 15 Not To Prevent Events of Default or Limit
Right To Accelerate................................. 125
Section 1512. Trust Moneys Not Subordinated........................... 126
Section 1513. Trustee Entitled To Rely................................ 126
Section 1514. Trustee To Effectuate Subordination..................... 126
Section 1515. Trustee Not Fiduciary for Holders of Guarantor Senior
Indebtedness........................................ 127
Section 1516. Reliance by Holders of Guarantor Senior Indebtedness on
Subordination Provisions............................ 127
Section 1517. Trustee's Compensation Not Prejudiced................... 127
</TABLE>
<PAGE>
Exhibit A Form of Note
Exhibit B Form of Supplemental Indenture
Exhibit C Form of Regulation S Certificate
Exhibit D Form of Certificate of Beneficial Ownership
Exhibit E Form of Accredited Investor Certificate
<PAGE>
Certain Sections of the Indenture relating to Sections 310 through 318
inclusive of the Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
ss.310(a)(1) .......................... 709
(a)(2) .......................... 709
(a)(3) .......................... Not Applicable
(a)(4) .......................... Not Applicable
(b) .......................... 708
ss.311(a) .......................... 713
(b) .......................... 713
(b)(2) .......................... 803
803
ss.312(a) .......................... 801
802
(b) .......................... 802
(c) .......................... 802
ss.313(a) .......................... 803
(b) .......................... 803
(c) .......................... 803
803
(d) .......................... 803
ss.314(a) .......................... 404
(a)(4) .......................... 102
405
(b) .......................... Not Applicable
(c)(1) .......................... 102
(c)(2) .......................... 102
(c)(3) .......................... Not Applicable
(d) .......................... Not Applicable
(e) .......................... 102
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
ss.315(a) ......................... 701
(b) ......................... 702
803
(c) ......................... 701
(d) ......................... 701
(d)(1) ......................... 701
(d)(2) ......................... 701
(d)(3) ......................... 701
(e) ......................... 614
ss.316(a) ......................... 101
612
(a)(1)(A) 602
612
(a)(1)(B ) 613
(a)(2) ......................... Not Applicable
(b) ......................... 608
(c) ......................... 108
ss.317(a)(1) ......................... 603
(a)(2) ......................... 604
(b) ......................... 403
ss.318(a) ......................... 105
</TABLE>
- ----------------------
This cross-reference table shall not for any purpose be deemed to be part of the
Indenture.
<PAGE>
INDENTURE, dated as of June 10, 1998 (as amended, supplemented
or otherwise modified from time to time, the "Indenture"), among U.S. Office
Products Company, a Delaware corporation (as further defined below, the
"Company"), the Note Guarantors (as defined below) named herein and from time to
time parties hereto, and State Street Bank and Trust Company, a Massachusetts
trust company, as trustee (the "Trustee").
RECITALS OF THE COMPANY AND NOTE GUARANTORS
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Notes. Each Note Guarantor
party hereto has duly authorized the execution and delivery of this Indenture to
provide for its guarantee of the Notes, as provided in this Indenture. Each Note
Guarantor party hereto has received good and valuable consideration for its
execution and delivery of the Indenture and its guarantee of the Notes.
All things necessary to make the Original Notes, when executed
and delivered by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, the valid obligation of the Company,
and to make this Indenture a valid agreement of the Company as of the date
hereof, in accordance with the terms of the Original Notes and this Indenture,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the Holders thereof, it is mutually agreed, for the equal and
ratable benefit of all Holders of the Notes, as follows:
<PAGE>
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions.
"Additional Assets" means (i) any property or assets that
replace the property or assets that are the subject of an Asset Disposition;
(ii) any property or assets (other than Indebtedness and Capital Stock) to be
used by the Company or a Restricted Subsidiary in a Related Business; (iii) the
Capital Stock of a Person that is engaged in a Related Business and becomes a
Restricted Subsidiary as a result of the acquisition of such Capital Stock by
the Company or another Restricted Subsidiary; or (iv) Capital Stock of any
Person that at such time is a Restricted Subsidiary, acquired from a third
party.
"Additional Notes" means any notes issued under this Indenture
in addition to the Original Notes (other than any Notes issued in respect of
Original Notes pursuant to Section 304, 305, 306, 312(c), 312(d) or 1008).
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"all or substantially all" has the meaning given to such
phrase in the Revised Model Business Corporation Act and commentary thereto.
"Applicable Premium" means, with respect to a Note at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such Note
and (ii) the excess of (A) the present value at such Redemption Date of (1) the
redemption price of such Note on June 15, 2003 (such redemption price being that
described in paragraph (a) of Section 1001) plus (2) all required remaining
scheduled interest payments due on such Note through June 15, 2003, computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (B)
the principal amount of such Note on such Redemption Date. Calculation of the
Applicable Premium will be made by the Company or on behalf of the Company by
such Person as the Company shall
<PAGE>
designate, provided that such calculation shall not be a duty or obligation of
the Trustee.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares, or (in the case of a Foreign Subsidiary) to the
extent required by applicable law), property or other assets (each referred to
for the purposes of this definition as a "disposition") by the Company or any of
its Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction), other than (i) a disposition to the
Company or a Restricted Subsidiary, (ii) a disposition in the ordinary course of
business, (iii) any disposition or series of related dispositions for aggregate
consideration of less than $5.0 million, (iv) the sale or discount (with or
without recourse, and on customary or commercially reasonable terms) of accounts
receivable or notes receivable arising in the ordinary course of business, or
the conversion or exchange of accounts receivable for notes receivable, (v) a
Restricted Payment Transaction, (vi) a disposition that is governed by the
provisions described under Article 5 hereof, (vii) any Financing Disposition,
(viii) any "fee in lieu" or other disposition of assets to any governmental
authority or agency that continue in use by the Company or any Restricted
Subsidiary, so long as the Company or any Restricted Subsidiary may obtain title
to such assets upon reasonable notice by paying a nominal fee, (ix) any exchange
of like property pursuant to Section 1031 (or any successor section) of the
Code, (x) any financing transaction with respect to property built or acquired
by the Company or any Restricted Subsidiary after the Issue Date, including
without limitation any sale/leaseback transaction or asset securitization, (xi)
any disposition arising from foreclosure, condemnation or similar action with
respect to any property or other assets, (xii) any disposition of Capital Stock,
Indebtedness or other securities of an Unrestricted Subsidiary, (xiii) a
disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement
or other obligation with or to a Person (other than the Company or a Restricted
Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such
Restricted Subsidiary acquired its business and assets (having been newly formed
in connection with such acquisition), entered into in connection with such
acquisition, or (xiv) a disposition of not more than 5% of the outstanding
Capital Stock of a Foreign Subsidiary that has been approved by the Board of
Directors.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 714 to act on behalf of the Trustee to authenticate
Notes of one or more series.
"Average Life" means, as of the date of determination, with
respect to any
<PAGE>
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable under or in
respect of the Senior Credit Facility, including without limitation principal,
premium (if any), interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company or
any Restricted Subsidiary whether or not a claim for post-filing interest is
allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees, other monetary obligations of any nature and all other
amounts payable thereunder or in respect thereof.
"Board of Directors" means the board of directors or other
governing body of the Company or, if the Company is owned or managed by a single
entity, the board of directors or other governing body of such entity, or, in
either case, any committee thereof duly authorized to act on behalf of such
board or governing body (or, for purposes of clause (i) of paragraph (a) of
Section 410, a committee of Officers of the Company designated by such board or
governing body).
"Borrowing Base" means the sum (determined as of the end of
the most recently ended fiscal quarter for which consolidated financial
statements of the Company are available) of (1) 60% of Inventory of the Company
and its Restricted Subsidiaries and (2) 80% of Receivables of the Company and
its Restricted Subsidiaries.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banking institutions are authorized or required by
law to close in New York City.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Capitalized Lease Obligation" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accor dance with GAAP. The Stated Maturity of any
Capitalized Lease Obligation shall
<PAGE>
be the date of the last payment of rent or any other amount due under the
related lease.
"Cash Equivalents" means any of the following: (a) securities
issued or fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof, (b) time deposits, certificates of deposit or
bankers' acceptances of (i) any lender under the Senior Credit Agreement or (ii)
any commercial bank having capital and surplus in excess of $500,000,000 and the
commercial paper of the holding company of which is rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(or if at such time neither is issuing ratings, then a comparable rating of
another nationally recognized rating agency), (c) commercial paper rated at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's (or if at such time neither is issuing ratings, then a
comparable rating of another nationally recognized rating agency) and (d)
investments in money market funds complying with the risk limiting conditions of
Rule 2a-7 or any successor rule of the SEC under the Investment Company Act of
1940, as amended.
"CDR" means Clayton, Dubilier & Rice, Inc.
"CDR Agreements" means, collectively, (i) the Investment
Agreement, dated January 12, 1998, as amended, between the Company and the
Investor, (ii) the Registration Rights Agreement, dated as of June 10, 1998,
between the Company and the Investor, and (iii) the Consulting Agreement and the
Indemnification Agreement, each dated as of June 10, 1998, each between the
Company and CDR (and its permitted successors and assigns thereunder); as each
such CDR Agreement may be amended, supplemented, waived or otherwise modified
from time to time in accordance with the terms thereof and of the Indenture.
"CDR Fund V" means Clayton, Dubilier & Rice Fund V Limited
Partnership, a Cayman Islands exempted limited partnership, and any successor in
interest thereto.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange
<PAGE>
Act), directly or indirectly, of more than 50% of the total voting
power of the Voting Stock of the Company, provided that so long as the
Company is a Subsidiary of a Parent, no Person shall be deemed to be
or become a "beneficial owner" of more than 50% of the total voting
power of the Voting Stock of the Company unless such Person shall be
or become a "beneficial owner" of more than 50% of the total voting
power of the Voting Stock of such Parent;
(ii) the Company merges or consolidates with or into, or sells
or transfers (in one or a series of related transactions) all or
substantially all of the assets of the Company and its Restricted
Subsidiaries to, another Person (other than one or more Permitted
Holders) and any "person" (as defined in clause (i) above), other than
one or more Permitted Holders, is or becomes the "beneficial owner" (as
so defined), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of the surviving Person in such merger
or consolidation, or the transferee Person in such sale or transfer of
assets, as the case may be, provided that so long as such surviving or
transferee Person is a Subsidiary of a parent Person, no Person shall
be deemed to be or become a "beneficial owner" of more than 50% of the
total voting power of the Voting Stock of such surviving or transferee
Person unless such Person shall be or become a "beneficial owner" of
more than 50% of the total voting power of the Voting Stock of such
parent Person; or
(iii) during any period of two consecutive years (during which
period the Company has been a party to this Indenture), individuals who
at the beginning of such period were members of the board of directors
of the Company (together with any new members thereof whose election by
such board of directors or whose nomination for election by holders of
Capital Stock of the Company was approved by one or more Permitted
Holders or by a vote of a majority of the members of such board of
directors then still in office who were either members thereof at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of such board of directors then in office.
"Change of Control Triggering Event" means the occurrence
after the Issue Date of both (a) a Change of Control and (b) the failure of the
Notes to have, on the 30th day after such Change of Control, a rating of at
least "BBB-" (or equivalent successor rating) by S&P and a rating of at least
"Baa3" (or equivalent successor rating) by Moody's.
"Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
"Company" means U.S. Office Products Company, a Delaware
corporation, and any successor in interest thereto.
"Company Request," "Company Order" and "Company Consent" mean,
respectively, a written request, order or consent signed in the name of the
Company by an Officer of the Company.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated EBITDA of the
Company and its Restricted Subsidiaries for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which consolidated financial statements of the Company are available to (ii)
Consolidated Interest Expense for such four fiscal quarters (in each case,
determined, for each fiscal quarter (or portion thereof) of the four fiscal
quarters ending prior to the Issue Date, on a pro forma basis to give effect to
the Strategic Restructuring as if it had occurred at the beginning of such
four-quarter period); provided, that
(1) if since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains
outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, Consolidated EBITDA and Con solidated
Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period (except
that in making such computation, the amount of Indebtedness under any
revolving credit facility outstanding on the date of such calculation
shall be computed based on (A) the average daily balance of such In
debtedness during such four fiscal quarters or such shorter period for
which such facility was outstanding or (B) if such facility was created
after the end of such four fiscal quarters, the average daily balance
of such Indebtedness during the period from the date of creation of
such facility to the date of such calculation),
(2) if since the beginning of such period the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged any Indebtedness (each, a
"Discharge") or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio involves a Discharge of In debtedness
(in each case other than Indebtedness Incurred under any revolving
credit facility unless such Indebtedness has been
<PAGE>
permanently repaid), Consolidated EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a
pro forma basis to such Discharge of such Indebtedness, including with
the proceeds of such new Indebtedness, as if such Discharge had
occurred on the first day of such period,
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any company, any business
or any group of assets constituting an operating unit of a business
(any such disposition, a "Sale"), the Consolidated EBITDA for such
period shall be reduced by an amount equal to the Consolidated EBITDA
(if positive) attributable to the assets that are the subject of such
Sale for such period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by
an amount equal to (A) the Consolidated Interest Expense attributable
to any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, redeemed, defeased or otherwise acquired, retired or
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Sale for such period (including
but not limited to through the assumption of such Indebtedness by
another Person) plus (B) if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its con tinuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such Sale,
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise) shall
have made an Investment in any Person that thereby becomes a Restricted
Subsidiary, or otherwise acquired any company, any business or any
group of assets constituting an operating unit of a business, including
any such Investment or acquisition occurring in connection with a
transaction causing a calculation to be made hereunder (any such
Investment or acquisition, a "Purchase"), Consolidated EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
related Indebtedness) as if such Purchase occurred on the first day of
such period, and
(5) if since the beginning of such period any Person became a
Restricted Subsidiary or was merged or consolidated with or into the
Company or any Restricted Subsidiary, and since the beginning of such
period such Person shall have Discharged any Indebtedness or made any
Sale or Purchase that would
<PAGE>
have required an adjustment pursuant to clause (2), (3) or (4) above if
made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Discharge, Sale or Purchase occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is
to be given to any Sale, Purchase or other transaction, or the amount of income
or earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred or repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged in connection therewith,
the pro forma calculations in respect thereof (including without limitation in
respect of anticipated cost savings or synergies relating to any such Sale,
Purchase or other transaction) shall be as determined in good faith by a
responsible financial or accounting Officer of the Company. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness to the extent of the remaining term of such Interest Rate
Agreement). If any Indebtedness bears, at the option of the Company or a
Restricted Subsidiary, a rate of interest based on a prime or similar rate, a
eurocurrency interbank offered rate or other fixed or floating rate, and such
Indebtedness is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated by applying such optional rate as the Company
or such Restricted Subsidiary may designate. If any Indebtedness that is being
given pro forma effect was Incurred under a revolving credit facility, the
interest expense on such Indebtedness shall be computed based upon the average
daily balance of such Indebtedness during the applicable period. Interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
determined in good faith by a responsible financial or accounting officer of the
Company to be the rate of interest implicit in such Capitalized Lease Obligation
in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) provision for all taxes (whether
or not paid, estimated or accrued) based on income, profits or capital, (ii)
Consolidated Interest Expense and any Receivables Fees, (iii) depreciation,
amortization (including but not limited to amortization of goodwill and
intangibles and amortization and write-off of financing costs) and all other
non-cash charges or non-cash losses, (iv) any expenses or charges related to any
Equity Offering, Investment or Indebtedness permitted by this Indenture
<PAGE>
(whether or not consummated or incurred) and (v) the amount of any minority
interest expense.
"Consolidated Interest Expense" means, for any period, (i) the
total interest expense of the Company and its Restricted Subsidiaries to the
extent deducted in calculating Consolidated Net Income, net of any interest
income of the Company and its Restricted Subsidiaries, including without
limitation any such interest expense consisting of (a) interest expense
attributable to Capitalized Lease Obligations, (b) amortization of debt
discount, (c) the interest portion of any deferred payment obligation, and (d)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, plus (ii) Preferred Stock dividends
paid in cash in respect of Disqualified Stock of the Company held by Persons
other than the Company or a Restricted Subsidiary and minus (iii) to the extent
otherwise included in such interest expense referred to in clause (i) above,
Receivables Fees and amortization or write-off of financing costs, in each case
under clauses (i) through (iii) as determined on a Consolidated basis in
accordance with GAAP; provided that gross interest expense shall be determined
after giving effect to any net payments made or received by the Company and its
Restricted Subsidiaries with respect to Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP and before any reduction in respect
of Preferred Stock dividends; provided that there shall not be included in such
Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not
a Restricted Subsidiary, except that (A) subject to the limitations
contained in clause (iv) below, the Company's equity in the net income
of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount actually dis
tributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other dis tribution to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and (B)
the Company's equity in the net loss of such Person shall be included
to the extent of the aggregate Investment of the Company or any of its
Restricted Subsidiaries in such Person,
(ii) any net income (loss) of any Person acquired by the
Company or a Re stricted Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition,
<PAGE>
(iii) any net income (loss) of any Restricted Subsidiary that
is not a Note Guarantor if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or
the making of similar distributions by such Restricted Subsidiary,
directly or indirectly, to the Company by operation of the terms of
such Restricted Subsidiary's charter or any agreement, instrument,
judgment, decree, order, statute or governmental rule or regulation
applicable to such Restricted Subsidiary or its stockholders (other
than (x) restrictions that have been waived or otherwise released, (y)
restrictions pursuant to the Notes or this Indenture and (z)
restrictions in effect on the Issue Date with respect to a Restricted
Subsidiary and other restrictions with respect to such Restricted
Subsidiary that taken as a whole are not materially less favorable to
the Noteholders than such restrictions in effect on the Issue Date),
except that (A) sub ject to the limitations contained in clause (iv)
below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of any dividend or distribution that
was or that could have been made by such Restricted Subsidiary during
such period to the Company or another Restricted Subsidiary (subject,
in the case of a dividend that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause) and
(B) the net loss of such Restricted Subsidiary shall be included to the
extent of the aggregate Investment of the Company or any of its other
Restricted Subsidiaries in such Restricted Subsidiary,
(iv) any gain or loss realized upon the sale or other
disposition of any asset of the Company or any Restricted Subsidiary
(including pursuant to any sale/leaseback transaction) that is not sold
or otherwise disposed of in the ordinary course of business (as
determined in good faith by the Board of Directors),
(v) any item classified as an extraordinary, unusual or
nonrecurring gain, loss or charge (including without limitation (a) any
compensation expense for stock options that will be cashed out,
converted, exchanged or otherwise retired in connection with the
Strategic Restructuring, (b) any charge or expense incurred for
employee bonuses in connection with the Strategic Restructuring, and
(c) fees, expenses and charges associated with the Strategic
Restructuring or any acquisition, merger or consolidation after the
Issue Date),
(vi) the cumulative effect of a change in accounting
principles,
(vii) all deferred financing costs written off and premiums
paid in connection with any early extinguishment of Indebtedness,
<PAGE>
(viii) any unrealized gains or losses in respect of Currency
Agreements,
(ix) any unrealized foreign currency transaction gains or
losses in respect of Indebtedness of any Person denominated in a
currency other than the functional currency of such Person, and
(x) any non-cash compensation charge arising from any grant of
stock, stock options or other equity-based awards.
In the case of any unusual or nonrecurring gain, loss or
charge not included in Consolidated Net Income pursuant to clause (v) above in
any determination thereof, the Company will deliver an Officer's Certificate to
the Trustee promptly after the date on which Consolidated Net Income is so
determined, setting forth the nature and amount of such unusual or nonrecurring
gain, loss or charge.
"Consolidated Total Assets" means, as of any date of
determination, the total assets shown on the consolidated balance sheet of the
Company and its Restricted Subsidiaries as of the most recent date for which
such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP (and, in the case of any determination relating to any
Incurrence of Indebtedness or any Investment, on a pro forma basis including any
property or assets being acquired in connection therewith), provided that for
purposes of paragraph (b) of Section 406 and the definition of "Permitted
Investment," Consolidated Total Assets shall not be less than $2,006 million.
"Consolidation" means the consolidation of the accounts of
each of the Restricted Subsidiaries with those of the Company in accordance with
GAAP; provided that "Consolidation" will not include consolidation of the
accounts of any Unrestricted Subsidiary, but the interest of the Company or any
Restricted Subsidiary in any Unrestricted Subsidiary will be accounted for as an
investment. The term "Consolidated" has a correlative meaning.
"Convertible Notes" means, collectively, the Company's 5 1/2%
Convertible Subordinated Notes due 2001 and its 5 1/2% Convertible Subordinated
Notes due 2003.
"Corporate Trust Office" means the principal office of the
Trustee, at which at any particular time its corporate trust business shall be
administered, which office on the Issue Date is located at Two International
Place, Boston, MA 02110.
<PAGE>
"Currency Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement (including derivative agreements or arrangements), as to which such
Person is a party or a beneficiary.
"Default" means any event or condition that is, or after
notice or passage of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees
and successors.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness that, at the date of
determination, has an aggregate principal amount equal to or under which, at the
date of determination, the holders thereof are committed to lend up to, at least
$25.0 million and is specifically designated by the Company in an agreement or
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disinterested Director" means, with respect to any Affiliate
Transaction, a member of the Board of Directors having no material direct or
indirect financial interest in or with respect to such Affiliate Transaction. A
member of the Board of Directors shall not be deemed to have such a financial
interest by reason of such member's holding Capital Stock of the Company or a
Parent or any options, warrants or other rights in respect of such Capital
Stock.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock (other than Management Stock) that by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event (other than following the
occurrence of a Change of Control or other similar event described under such
terms as a "change of control," or an Asset Disposition) (i) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii)
is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii)
is redeemable at the option of the holder thereof (other than following the
occurrence of a Change of Control or other similar event described under such
terms as a "change of control," or an Asset Disposition), in whole or in part,
in each case on or prior to the final Stated Maturity of the Notes.
"Domestic Subsidiary" means any Restricted Subsidiary of the
Company other than a Foreign Subsidiary.
<PAGE>
"Equity Offering" means a sale of Capital Stock (other than
Disqualified Stock) (x) that is a sale of Capital Stock of the Company, or (y)
proceeds of which in an amount equal to or exceeding the Redemption Amount are
contributed to the Company or any of its Restricted Subsidiaries.
"Equity Tender Offer" means the self-tender offer by the
Company to purchase shares of its common stock (or options therefor) as part of
the Strategic Restructuring.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Company's 9 3/4% Senior
Subordinated Notes Due 2008, containing terms substantially identical to the
Initial Notes or any Initial Additional Notes (except that (i) such Exchange
Notes shall not contain terms with respect to transfer restrictions and shall be
registered under the Securities Act, and (ii) certain provisions relating to an
increase in the stated rate of interest thereon shall be eliminated), that are
issued and exchanged for (a) the Initial Notes, as provided for in a
registration rights agreement relating to such Initial Notes and this Indenture,
or (b) such Initial Additional Notes as may be provided in any registration
rights agreement relating to such Additional Notes and this Indenture (including
any amendment or supplement hereto).
"Excluded Contribution" means Net Cash Proceeds, or the fair
value, as determined in good faith by the Board of Directors, of property or
assets, received by the Company as capital contributions to the Company after
the Issue Date or from the issuance or sale (other than to a Restricted
Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company, in
each case to the extent designated as an Excluded Contribution pursuant to an
Officer's Certificate of the Company and not previously included in the
calculation set forth in subparagraph (a)(3)(B)(x) of Section 408 for purposes
of determining whether a Restricted Payment may be made.
"Financing Disposition" means any sale, transfer, conveyance
or other disposition of property or assets by the Company or any Subsidiary
thereof to any Receivables Entity, or by any Receivables Subsidiary, in each
case in connection with
<PAGE>
the Incurrence by a Receivables Entity of Indebtedness, or obligations to make
payments to the obligor on Indebtedness, which may be secured by a Lien in
respect of such property or assets.
"Foreign Subsidiary" means (a) any Restricted Subsidiary of
the Company that is not organized under the laws of the United States of America
or any state thereof or the District of Columbia and (b) any Restricted
Subsidiary of the Company that has no material assets other than securities of
one or more Foreign Subsidiaries, and other assets relating to an ownership
interest in any such securities or Subsidiaries.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the Issue Date (for purposes of the
definitions of the terms "Con solidated Coverage Ratio," "Consolidated EBITDA,"
"Consolidated Interest Expense," "Consolidated Net Income" and "Consolidated
Total Assets," all defined terms in this Indenture to the extent used in or
relating to any of the foregoing definitions, and all ratios and computations
based on any of the foregoing definitions) and as in effect from time to time
(for all other purposes of this Indenture), including those set forth in the
opinions and pro nouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person; provided that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Designated Senior Indebtedness" means, with respect
to any Note Guarantor, (i) the Indebtedness of such Note Guarantor in respect of
Bank Indebtedness and (ii) any other Guarantor Senior Indebtedness of such Note
Guarantor that, at the date of determination, has an aggregate principal amount
equal to or under which, at the date of determination, the holders thereof are
committed to lend up to, at least $25.0 million and is specifically designated
by such Note Guarantor in an agreement or instrument evidencing or governing
such Guarantor Senior Indebtedness as "Guarantor Designated Senior Indebtedness"
for purposes of this Indenture.
"Guarantor Senior Indebtedness" means, with respect to any
Note
<PAGE>
Guarantor, the following obligations, whether outstanding on the date of this
Indenture or thereafter issued, without duplication: (i) any Guarantee of Bank
Indebtedness by such Note Guarantor and all other Guarantees by such Note
Guarantor of Senior Indebtedness of the Company or Guarantor Senior Indebtedness
of any other Note Guarantor; (ii) all obligations in respect of any Receivables
Financing; and (iii) all obligations consisting of the principal of and premium,
if any, and accrued and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Note Guarantor regardless of whether post-filing interest is allowed in such
proceeding) on, and fees and other amounts owing in respect of, all other
Indebtedness of the Note Guarantor, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that the obligations in respect of such Indebtedness are not
senior in right of payment to the obligations of such Note Guarantor under its
Note Guarantee; provided, however, that Guarantor Senior Indebtedness shall not
include (1) any obligations of such Note Guarantor to the Company or any other
Subsidiary of the Company, (2) any liability for Federal, state, local, foreign
or other taxes owed or owing by such Note Guarantor, (3) any accounts payable or
other liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of
Indebtedness) that is expressly subordinated in right of payment to any other
Indebtedness of such Note Guarantor (or Guarantee by such Note Guarantor of
Indebtedness), (5) any Capital Stock of such Note Guarantor or (6) that portion
of any Indebtedness of such Note Guarantor that is Incurred by such Note
Guarantor in violation of Section 406 (but no such violation shall be deemed to
exist for purposes of this clause (6) if any holder of such Indebtedness or such
holder's repre sentative shall have received an Officer's Certificate to the
effect that such Incurrence of such Indebtedness does not (or that the
Incurrence by such Note Guarantor of the entire committed amount thereof at the
date on which the initial borrowing thereunder is made would not) violate such
covenant). If any Guarantor Senior Indebtedness is disallowed, avoided or
subordinated pursuant to the provisions of Section 548 of Title 11 of the United
States Code or any applicable state fraudulent conveyance law, such Guarantor
Senior Indebtedness never theless will constitute Guarantor Senior Indebtedness.
"Guarantor Senior Subordinated Indebtedness" means, with
respect to a Note Guarantor, (i) the obligations of such Note Guarantor under
its Note Guarantee and (ii) any other Indebtedness of such Note Guarantor that
ranks pari passu in right of payment with the obligations of such Note Guarantor
under its Note Guarantee.
"Guarantor Subordinated Obligations" means, with respect to a
Note
<PAGE>
Guarantor, any Indebtedness of such Note Guarantor (whether outstanding on the
Issue Date or thereafter Incurred) that is expressly subordinated in right of
payment to the obligations of such Note Guarantor under the Note Guarantee
pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered in the Note Register.
"Holding Company Expenses" means (i) costs (including all
professional fees and expenses) incurred by a Parent to comply with its
reporting obligations under federal or state laws or under this Indenture,
including any reports filed with respect to the Securities Act, Exchange Act or
the respective rules and regulations promulgated thereunder, (ii) in
demnification obligations of a Parent owing to directors, officers, employees or
other Persons under its charter or by-laws or pursuant to written agreements
with any such Person, (iii) fees and expenses payable by a Parent in connection
with the Transactions, (iv) other operational expenses of a Parent incurred in
the ordinary course of business not to exceed $1.0 million in any fiscal year,
and (v) expenses incurred by a Parent in connection with any public offering of
Capital Stock or Indebtedness (x) where the net proceeds of such offering are
intended to be received by or contributed or loaned to the Company or a
Restricted Subsidiary, or (y) in a prorated amount of such expenses in
proportion to the amount of such net proceeds intended to be so received,
contributed or loaned, or (z) otherwise on an interim basis prior to completion
of such offering so long as a Parent shall cause the amount of such expenses to
be repaid to the Company or the relevant Restricted Subsidiary out of the
proceeds of such offering promptly if completed.
"Incur" means issue, assume, enter into any Guarantee of,
incur or otherwise become liable for; provided, however, that any Indebtedness
or Capital Stock of a Person existing at the time such Person becomes a
Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be
deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary.
Accrual of interest, the accretion of accreted value and the payment of interest
in the form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on
which interest is payable through the issuance of additional Indebtedness) shall
be deemed Incurred at the time of original issuance of the Indebtedness at the
initial accreted amount thereof.
<PAGE>
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed
money,
(ii) the principal of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments,
(iii) all reimbursement obligations of such Person in respect
of letters of credit or other similar instruments (the amount of such
obligations being equal at any time to the aggregate then undrawn and
unexpired amount of such letters of credit or other instruments plus
the aggregate amount of drawings thereunder that have not then been
reimbursed),
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property (except Trade Payables), which
purchase price is due more than one year after the date of placing such
property in final service or taking final delivery and title thereto,
(v) all Capitalized Lease Obligations of such Person,
(vi) the redemption, repayment or other repurchase amount of
such Person with respect to any Disqualified Stock of such Person or
(if such Person is a Subsidiary of the Company other than a Note
Guarantor) any Preferred Stock of such Subsidiary, but excluding, in
each case, any accrued dividends (the amount of such obligation to be
equal at any time to the maximum fixed involuntary redemption,
repayment or re purchase price for such Capital Stock, or if less (or
if such Capital Stock has no such fixed price), to the involuntary
redemption, repayment or repurchase price therefor calculated in
accordance with the terms thereof as if then redeemed, repaid or re
purchased, and if such price is based upon or measured by the fair
market value of such Capital Stock, such fair market value shall be as
determined in good faith by the Board of Directors or the board of
directors or other governing body of the issuer of such Capital Stock),
(vii) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed
by such Person; provided that the amount of Indebtedness of such Person
shall be the lesser of (A) the fair market value of such asset at such
date of determination (as
<PAGE>
determined in good faith by the Company) and (B) the amount of such
Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person, and
(ix) to the extent not otherwise included in this definition,
net Hedging Obligations of such Person (the amount of any such
obligation to be equal at any time to the termination value of such
agreement or arrangement giving rise to such Hedging Obligation that
would be payable by such Person at such time).
The amount of Indebtedness of any Person at any date shall be
determined as set forth above or otherwise provided in this Indenture, or
otherwise shall equal the amount thereof that would appear on a balance sheet of
such Person (excluding any notes thereto) prepared in accordance with GAAP.
"Initial Additional Notes" means Additional Notes issued in an
offering not registered under the Securities Act.
"Initial Notes" means the Company's 9 3/4% Senior Subordinated
Notes Due 2008, issued on the Issue Date (and any Notes issued in respect
thereof pursuant to Section 304, 305, 306, 312(c), 312(d) or 1008).
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means, when used with respect to any
Note and any installment of interest thereon, the date specified in such Note as
the fixed date on which such installment of interest is due and payable, as set
forth in such Note.
"Interest Rate Agreement" means, with respect to any Person,
any interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement (including derivative agreements or
arrangements), as to which such Person is party or a beneficiary.
"Inventory" means goods held for sale or lease by a Person in
the
<PAGE>
ordinary course of business, net of any reserve for goods that have been
segregated by such Person to be returned to the applicable vendor for credit, as
determined in accordance with GAAP.
"Investment" in any Person by any other Person means any
direct or indirect advance, loan or other extension of credit (other than to
customers, suppliers, directors, officers or employees of any Person in the
ordinary course of business) or capital contribution (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others) to, or any purchase or acquisition of Capital
Stock, Indebtedness or other similar instruments issued by, such Person. For
purposes of the definition of "Unrestricted Subsidiary" and Section 408, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary
as a Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Com pany's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, (ii) any property transferred to
or from an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer, and (iii) in each case under clause (i) or (ii)
above, fair market value shall be as determined in good faith by the Board of
Directors. Guarantees shall not be deemed to be Investments. The amount of any
Investment outstanding at any time shall be the original cost of such
Investment, reduced (at the Company's option) by any dividend, distribution,
interest payment, return of capital, repayment or other amount or value received
in respect of such Investment; provided that, to the extent that the amount of
Restricted Payments outstanding at any time is so reduced by any portion of any
such amount or value that would otherwise be included in the calculation of
Consolidated Net Income, such portion of such amount or value shall not be so
included for purposes of calculating the amount of Restricted Payments that may
be made pursuant to paragraph (a) of Section 408.
"Investor" means CDR-PC Acquisition, L.L.C., a Delaware
limited liability company, and its successors and assigns.
"Issue Date" means the first date on which Initial Notes are
issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien
<PAGE>
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Management Advances" means (1) loans or advances made to
directors, officers or employees of a Parent, the Company or any Restricted
Subsidiary (x) in respect of travel, entertainment or moving-related expenses
incurred in the ordinary course of business, (y) in respect of moving-related
expenses incurred in connection with any closing or con solidation of any
facility, or (z) in the ordinary course of business and (in the case of this
clause (z)) not exceeding $5.0 million in the aggregate outstanding at any time,
(2) promissory notes of Management Investors acquired in connection with the
issuance of Management Stock to such Management Investors, (3) loans to
Management Investors of funds applied to purchase Management Stock, (4)
Management Guarantees, or (5) other Guarantees of borrowings by Management
Investors in connection with the purchase of Management Stock, which Guarantees
are permitted under Section 406.
"Management Guarantees" means guarantees (x) of up to an
aggregate principal amount of $25.0 million of borrowings by Management
Investors in connection with their purchase of Management Stock or (y) made on
behalf of, or in respect of loans or advances made to, directors, officers or
employees of a Parent, the Company or any Restricted Subsidiary (1) in respect
of travel, entertainment and moving-related expenses incurred in the ordinary
course of business, or (2) in the ordinary course of business and (in the case
of this clause (2)) not exceeding $5.0 million in the aggregate outstanding at
any time.
"Management Investors" means the officers, directors,
employees and other members of the management of a Parent, the Company or any of
their respective Subsidiaries, or family members or relatives thereof, or trusts
or partnerships for the benefit of any of the foregoing, or any of their heirs,
executors, successors and legal representatives, who at any date beneficially
own or have the right to acquire, directly or indirectly, Capital Stock of the
Company or a Parent.
"Management Stock" means Capital Stock of the Company or a
Parent (including any options, warrants or other rights in respect thereof) held
by any of the Manage ment Investors.
"Material Domestic Subsidiary" means a Domestic Subsidiary of
the Company that, as of the end of any fiscal quarter of the Company ending
after the Issue Date, has tangible assets of more than $3.0 million as reflected
in the consolidated
<PAGE>
balance sheet of the Company as of such date.
"Moody's" means Moody's Investors Service, Inc., and its
successors.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other non-cash form) therefrom, in each
case net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition (including as a consequence of any
transfer of funds in connection with the application thereof in accordance with
Section 410), (ii) all payments made, and all installment payments required to
be made, on any Indebtedness that is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon such assets, or that
must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition, or to any other Person (other than the Company or a
Restricted Subsidiary) owning a beneficial interest in the assets disposed of in
such Asset Disposition and (iv) any liabilities or obligations associated with
the assets disposed of in such Asset Disposition and retained by the Company or
any Restricted Subsidiary after such Asset Disposition, including without
limitation pension and other post-employment benefit liabilities, liabilities
related to environmental matters, and liabilities relating to any
indemnification obligations associated with such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of
any securities of the Company or any Subsidiary by the Company or any
Subsidiary, or any capital con tribution, means the cash proceeds of such
issuance, sale or contribution net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such issuance,
sale or contribution and net of taxes paid or payable as a result thereof.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
<PAGE>
"Note Guarantee" means any of (i) the Guarantee of the Notes
by the Domestic Subsidiaries to be entered into on the Issue Date, as provided
in Section 1301, and (ii) any Guarantee that may from time to time be entered
into by a Restricted Subsidiary of the Company pursuant to Section 413.
"Note Guarantor" means any Restricted Subsidiary of the
Company that enters into a Note Guarantee.
"Notes" means the Initial Notes, any Additional Notes, and the
Exchange Notes.
"Officer" means, with respect to the Company or any other
obligor upon the Notes, the Chairman of the Board, the President, the Chief
Executive Officer, the Chief Financial Officer, any Vice President, the
Controller, the Treasurer or the Secretary (a) of such Person or (b) if such
Person is owned or managed by a single entity, of such entity.
"Officer's Certificate" means, with respect to the Company or
any other obligor upon the Notes, a certificate signed by one Officer of such
Person.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Original Notes" means the Initial Notes and any Exchange
Notes issued in exchange therefor.
"Outstanding" when used with respect to Notes means, as of the
date of determination, all Notes theretofore authenticated and delivered under
this Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes, provided that, if
such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor reason ably
satisfactory to the Trustee has been
<PAGE>
made; and
(iii) Notes in exchange for or in lieu of which other Notes
have been authen ticated and delivered pursuant to this Indenture.
A Note does not cease to be Outstanding because the Company or
any Affiliate of the Company holds the Note, provided that in determining
whether the Holders of the re quisite amount of Outstanding Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Notes owned by the Company or any Affiliate of the Company shall be disregarded
and deemed not to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which the
Trustee actually knows are so owned shall be so disregarded. Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right to
act with respect to such Notes and that the pledgee is not the Company or an
Affiliate of the Company.
"Parent" means any Person of which the Company at any time is
or becomes a Subsidiary after the Issue Date.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Notes on behalf of
the Company.
"Permitted Holder" means any of the following: (i) any of the
Investor, Management Investors, CDR, CDR Fund V and their respective Affiliates;
(ii) any investment fund or vehicle managed, sponsored or advised by CDR; (iii)
any limited or general partners of, or other investors in, any of the Investors
and their respective Affiliates, or any such investment fund or vehicle; and
(iv) any Person acting in the capacity of an underwriter in connection with a
public or private offering of Capital Stock of a Parent or the Company.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in, or consisting of, any of the following:
(i) a Restricted Subsidiary, the Company, or a Person that
will, upon the making of such Investment, become a Restricted
Subsidiary;
(ii) another Person if as a result of such Investment such
other Person is
<PAGE>
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, or is liquidated into, the Company or
a Restricted Subsidiary;
(iii) Temporary Cash Investments or Cash Equivalents;
(iv) receivables owing to the Company or any Restricted
Subsidiary, if created or acquired in the ordinary course of business;
(v) any securities or other Investments received as
consideration in, or retained in connection with, sales or other
dispositions of property or assets, including Asset Dispositions made
in compliance with Section 410;
(vi) securities or other Investments received in settlement of
debts created in the ordinary course of business and owing to the
Company or any Restricted Sub sidiary, or as a result of foreclosure,
perfection or enforcement of any Lien, or in satisfaction of judgments,
including in connection with any bankruptcy proceeding or other
reorganization of another Person;
(vii) Investments in existence or made pursuant to legally
binding written commitments in existence on the Issue Date;
(viii) Currency Agreements, Interest Rate Agreements and
related Hedging Obligations, which obligations are Incurred in
compliance with Section 406;
(ix) pledges or deposits (x) with respect to leases or
utilities provided to third parties in the ordinary course of business
or (y) otherwise described in the definition of "Permitted Liens" or
made in connection with Liens permitted under Section 412;
(x) Notes;
(xi) any Investment to the extent made using Capital Stock of
the Company (other than Disqualified Stock), or Capital Stock of a
Parent, as consideration;
(xii) any Investment in a joint venture or similar entity that
is not a Restricted Subsidiary, or in any Related Business, in an
aggregate amount outstanding at any time not to exceed 5% of
Consolidated Total Assets;
(xiii) (1) Investments in any Receivables Subsidiary, or in
connection with
<PAGE>
a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the
arrangements governing such Financing Disposition or any related
Indebtedness, or (2) any promissory note issued by the Company or a
Parent, provided that if such Parent receives cash from the relevant Re
ceivables Entity in exchange for such note, an equal cash amount is
contributed by such Parent to the Company;
(xiv) bonds secured by assets leased to and operated by the
Company or any Restricted Subsidiary that were issued in connection
with the financing of such assets so long as the Company or any
Restricted Subsidiary may obtain title to such assets at any time by
paying a nominal fee, canceling such bonds and terminating the
transaction;
(xv) Management Advances; and
(xvi) other Investments in an aggregate amount outstanding at
any time not to exceed 2.5% of Consolidated Total Assets.
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges
not yet de linquent or the nonpayment of which in the aggregate would
not reasonably be expected to have a material adverse effect on the
Company and its Restricted Subsidiaries, or that are being contested in
good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company or a Sub
sidiary thereof, as the case may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, re pairmen's or other like Liens arising in the ordinary
course of business in respect of obligations that are not overdue for a
period of more than 60 days, or that are bonded or that are being
contested in good faith and by appropriate proceedings;
(c) pledges, deposits or Liens in connection with workers'
compensation, unemployment insurance and other social security and
other similar legislation or other insurance-related obligations
(including, without limitation, pledges or deposits securing liability
to insurance carriers under insurance or self-insurance arrangements);
<PAGE>
(d) pledges, deposits or Liens to secure the performance of
bids, tenders, trade, government or other contracts (other than for
borrowed money), obligations for utilities, leases, licenses, statutory
obligations, completion guarantees, surety, judg ment, appeal or
performance bonds, other similar bonds, instruments or obligations, and
other obligations of a like nature incurred in the ordinary course of
business;
(e) easements (including reciprocal easement agreements),
rights-of-way, building, zoning and similar restrictions, utility
agreements, covenants, reservations, restrictions, encroachments,
changes, and other similar encumbrances or title defects incurred, or
leases or subleases granted to others, in the ordinary course of
business, which do not in the aggregate materially interfere with the
ordinary conduct of the business of the Company and its Subsidiaries,
taken as a whole;
(f) Liens existing on, or provided for under written
arrangements existing on, the Issue Date, or (in the case of any such
Liens securing Indebtedness of the Company or any of its Subsidiaries
existing or arising under written arrangements existing on the Issue
Date) securing any Refinancing Indebtedness in respect of such
Indebtedness so long as the Lien securing such Refinancing Indebtedness
is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or under such written arrangements could
secure) the original Indebtedness;
(g) (i) mortgages, liens, security interests, restrictions,
encumbrances or any other matters of record that have been placed by
any developer, landlord or other third party on property over which the
Company or any Restricted Subsidiary of the Com pany has easement
rights or on any leased property and subordination or similar
agreements relating thereto and (ii) any condemnation or eminent domain
proceedings affecting any real property;
(h) Liens securing Hedging Obligations, Purchase Money
Obligations or Capitalized Lease Obligations Incurred in compliance
with Section 406;
(i) Liens arising out of judgments, decrees, orders or awards
in respect of which the Company shall in good faith be prosecuting an
appeal or proceedings for review, which appeal or proceedings shall not
have been finally terminated, or
<PAGE>
if the period within which such appeal or proceedings may be initiated
shall not have expired;
(j) leases, subleases, licenses or sublicenses to third
parties;
(k) Liens securing (1) Indebtedness Incurred in compliance
with clause (b)(i), (b)(iv), (b)(v), (b)(vii), (b)(viii)(E) or (b)(x)
of Section 406, or clause (b)(iii) thereof (other than Refinancing
Indebtedness Incurred in respect of Indebtedness described in paragraph
(a) thereof), (2) Bank Indebtedness, (3) commercial bank Indebtedness,
(4) Indebtedness of any Restricted Subsidiary that is not a Note
Guarantor, (5) the Notes or (6) Indebtedness or other obligations of
any Receivables Entity;
(l) Liens existing on property or assets of a Person at the
time such Person becomes a Subsidiary of the Company (or at the time
the Company or a Restricted Subsidiary acquires such property or
assets); provided, however, that such Liens are not created in
connection with, or in contemplation of, such other Person becoming
such a Subsidiary (or such acquisition of such property or assets), and
that such Liens are limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or, under the written
arrangements under which such Liens arose, could secure) the
obligations to which such Liens relate;
(m) Liens on Capital Stock or other securities of an
Unrestricted Subsidiary that secure Indebtedness or other obligations
of such Unrestricted Subsidiary;
(n) any encumbrance or restriction (including, but not limited
to, put and call agreements) with respect to Capital Stock of any joint
venture or similar arrangement pursuant to any joint venture or similar
agreement; and
(o) Liens securing Refinancing Indebtedness Incurred in
respect of any Indebtedness secured by, or securing any refinancing,
refunding, extension, renewal or replacement (in whole or in part) of
any other obligation secured by, any other Permitted Liens, provided
that any such new Lien is limited to all or part of the same property
or assets (plus improvements, accessions, proceeds or dividends or dis
tributions in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure) the
obligations to which such Liens relate.
<PAGE>
"Permitted Parent Payments" means loans, advances, dividends
or distributions to a Parent or other payments by the Company or any Restricted
Subsidiary (A) to permit such Parent to satisfy obligations under the CDR
Agreements or (B) to pay or permit such Parent to pay any Holding Company
Expenses or any Related Taxes.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Place of Payment" means a city or any political subdivision
thereof referred to in Article 3 and initially designated under Section 402.
"Predecessor Notes" of any particular Note means every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in lieu of a mutilated, destroyed,
lost or stolen Note shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Note.
"Preferred Stock" as applied to the Capital Stock of any
corporation means Capital Stock of any class or classes (however designated)
that by its terms is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other class
of such corporation.
"Purchase Money Obligations" means any Indebtedness Incurred
to finance or refinance the acquisition, leasing, construction or improvement of
property (real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.
"QIB" or "Qualified Institutional Buyer" means a "qualified
institutional buyer," as that term is defined in Rule 144A under the Securities
Act.
"Receivable" means a right to receive payment arising from a
sale or lease of goods or services by a Person pursuant to an arrangement with
another Person pursuant to which such other Person is obligated to pay for goods
or services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.
<PAGE>
"Receivables Entity" means (x) any Receivables Subsidiary or
(y) any other Person that is engaged in the business of acquiring, selling,
collecting, financing or refinancing Receivables, accounts (as defined in the
Uniform Commercial Code as in effect in any jurisdiction from time to time),
other accounts and/or other receivables, and/or related assets.
"Receivables Fees" means distributions or payments made
directly or by means of discounts with respect to any participation interest
issued or sold in connection with, and other fees paid to a Person that is not a
Restricted Subsidiary in connection with, any Re ceivables Financing.
"Receivables Financing" means any financing of Receivables of
the Company or any Restricted Subsidiary that have been transferred to a
Receivables Entity in a Financing Disposition.
"Receivables Subsidiary" means a Subsidiary of the Company
that (a) is engaged solely in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time) and other
accounts and receivables (including any thereof constituting or evidenced by
chattel paper, instruments or general intangibles), all proceeds thereof and all
rights (contractual and other), collateral and other assets relating thereto,
and any business or activities incidental or related to such business, and (b)
is designated as a "Receivables Subsidiary" by the Board of Directors.
"Redemption Date" when used with respect to any Note to be
redeemed or purchased means the date fixed for such redemption or purchase by or
pursuant to this Indenture and the Notes.
"Redemption Price" when used with respect to any Note to be
redeemed or purchased means the price at which it is to be redeemed or purchased
pursuant to this Indenture and the Notes.
"refinance" means refinance, refund, replace, renew, repay,
modify, restate, defer, substitute, supplement, reissue, resell or extend
(including pursuant to any defeasance or discharge mechanism); and the terms
"refinances," "refinanced" and "refinancing" as used for any purpose in this
Indenture shall have a correlative meaning.
"Refinancing Indebtedness" means Indebtedness that is Incurred
to
<PAGE>
refinance any Indebtedness existing on the Issue Date or Incurred in compliance
with this Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary (to the extent permitted in this
Indenture) and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided that (1) if the Indebtedness being
refinanced is Subordinated Obligations or Guarantor Subordinated Obligations,
the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced, (2) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the sum of (x) the
aggregate principal amount (or if issued with original issue discount, the
aggregate accreted value) then outstanding of the Indebtedness being refinanced,
plus (y) fees, under writing discounts, premiums and other costs and expenses
incurred in connection with such Refinancing Indebtedness and (3) Refinancing
Indebtedness shall not include (x) Indebtedness of a Restricted Subsidiary that
is not a Note Guarantor that refinances Indebtedness of the Company that was
incurred by the Company pursuant to paragraph (a) of Section 406 or (y)
Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the date specified for that purpose in Section 301.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" means a certificate substantially
in the form attached hereto as Exhibit C.
"Related Business" means those businesses in which the Company
or any of its Subsidiaries is engaged on the date of this Indenture, or that are
related, complementary, incidental or ancillary thereto or extensions,
developments or expansions thereof.
"Related Taxes" means (x) any taxes, charges or assessments,
including but not limited to sales, use, transfer, rental, ad valorem,
value-added, stamp, property, consumption, franchise, license, capital, net
worth, gross receipts, excise, occupancy, intangibles or similar taxes, charges
or assessments (other than federal, state or local taxes measured by income and
federal, state or local withholding imposed on payments made by a Parent),
required to be paid by such Parent by virtue of its being incorporated or having
Capital Stock outstanding (but not by virtue of owning stock or
<PAGE>
other equity interests of any corporation or other entity other than the Company
or any of its Subsidiaries), or being a holding company parent of the Company or
having received Capital Stock of the Company as a capital contribution, or
receiving dividends from or other distributions in respect of the Capital Stock
of the Company, or having guaranteed any obligations of the Company or any
Subsidiary thereof, or having made any payment in respect of any of the items
for which the Company is permitted to make payments to such Parent pursuant to
Section 408, or (y) any other federal, state, foreign, provincial or local taxes
measured by income for which such Parent is liable up to an amount not to exceed
with respect to such federal taxes the amount of any such taxes that the Company
would have been required to pay on a separate company basis or on a consolidated
basis if the Company had filed a consolidated return on behalf of an affiliated
group (as defined in Section 1504 of the Code, or an analogous provision of
state, local or foreign law) of which it were the common parent, or with respect
to state and local taxes, on a combined basis if the Company had filed a
combined return on behalf of an affiliated group consisting only of the Company
and its Subsidiaries.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Resale Restriction Termination Date" means, with respect to
any Note, the date that is two years (or such other period as may hereafter be
provided under Rule 144(k) under the Securities Act or any successor provision
thereto as permitting the resale by non-affiliates of Restricted Securities
without restriction) after the later of the original issue date in respect of
such Note and the last date on which the Company or any Affiliate of the Company
was the owner of such Note (or any Predecessor Note thereto).
"Responsible Officer" when used with respect to the Trustee
means any officer in the corporate trust department of the Trustee, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his or her knowledge of and familiarity
with the particular subject.
"Restricted Payment Transaction" means any Restricted Payment
permitted pursuant to Section 408, any Permitted Payment, any Permitted
Investment, or any transaction specifically excluded from the definition of the
term "Restricted Payment."
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee
shall be entitled
2
<PAGE>
to receive, at its request, and conclusively rely on an Opinion of Counsel with
respect to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary. For purposes of clause (i) of the
definition of the term "Consolidated Net Income," Dudley Stationery Limited, a
company organized under the laws of England and Wales, and any successor
thereto, shall be deemed to be a Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreement" means the credit agreement dated as
of June 9, 1998, among the Company, the lenders named therein, The Chase
Manhattan Bank, as administrative agent, Bankers Trust Company, as syndication
agent, and Merrill Lynch Capital Corporation, as documentation agent, as such
agreement may be assumed by any successor in interest, and as such agreement may
be amended, supplemented, waived or otherwise modified from time to time, or
refunded, refinanced, restructured, replaced, renewed, repaid, increased or
extended from time to time (whether in whole or in part, whether with the
original agent and lenders or other agents and lenders or otherwise, and whether
provided under the original Senior Credit Agreement or otherwise).
"Senior Credit Facility" means the collective reference to the
Senior Credit Agreement, any Credit Documents (as defined therein), any notes
and letters of credit issued pursuant thereto and any guarantee and collateral
agreement, patent and trademark security agreement, mortgages, letter of credit
applications and other security agreements and collateral documents, and other
instruments and documents, executed and delivered pursuant to or in connection
with any of the foregoing, in each case as the same may be amended,
supplemented, waived or otherwise modified from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid, increased or extended from
time to time (whether in whole or in part, whether with the original agent and
lenders or other agents and lenders or otherwise, and whether provided under the
original Senior Credit Agreement or one or more other credit agreements,
indentures (including this Indenture) or financing agreements or otherwise).
Without limiting the generality of the foregoing, the term "Senior Credit
Facility" shall include any agreement (i) changing the maturity of any
Indebtedness
<PAGE>
incurred thereunder or contemplated thereby, (ii) adding Subsidiaries of the
Company as additional borrowers or guarantors thereunder, (iii) increasing the
amount of Indebtedness incurred thereunder or available to be borrowed
thereunder or (iv) otherwise altering the terms and conditions thereof.
"Senior Indebtedness" means, with respect to the Company, the
following obligations, whether outstanding on the date of this Indenture or
thereafter issued, without duplication: (i) all Bank Indebtedness, (ii) all
obligations in respect of any Receivables Financing, and (iii) all obligations
consisting of the principal of and premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company regardless of whether
post-filing interest is allowed in such proceeding) on, and fees and other
amounts owing in respect of, all other Indebtedness of the Company, unless, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is expressly provided that the obligations in respect of such
Indebtedness are not senior in right of payment to the Notes; provided, however,
that Senior Indebtedness shall not include (1) any obligation of the Company to
any Subsidiary, (2) any liability for Federal, state, foreign, local or other
taxes owed or owing by the Company, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness of the Company (or Guarantee by the Company of any Indebtedness)
that is expressly subordinated in right of payment to any other Indebtedness of
the Company (or Guarantee by the Company of any Indebtedness), (5) the
Convertible Notes, (6) any Capital Stock of the Company or (7) that portion of
any Indebtedness of the Company that is Incurred by the Company in violation of
Section 406 (but no such violation shall be deemed to exist for purposes of this
clause (7) if any holder of such Indebtedness or such holder's representative
shall have received an Officer's Certificate of the Company to the effect that
such Incurrence of such Indebtedness does not (or that the Incurrence by the
Company of the entire committed amount thereof at the date on which the initial
borrowing thereunder is made would not) violate Section 406). If any Senior
Indebtedness is disallowed, avoided or subordinated pursuant to the provisions
of Section 548 of Title 11 of the United States Code or any applicable state
fraudulent conveyance law, such Senior Indebtedness nevertheless will constitute
Senior Indebtedness.
"Senior Subordinated Indebtedness" means the Notes and any
other In debtedness of the Company that ranks pari passu with the Notes.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a
<PAGE>
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on the Issue Date.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"S&P" means Standard & Poor's Ratings Service, a division of
The McGraw- Hill Companies, Inc., and its successors.
"Spin-off Distributions" means the formation and distribution
by the Company to its stockholders of Capital Stock of four separate companies
that will hold certain technology solutions, print management, education
supplies and corporate travel services businesses previously operated by the
Company.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency).
"Strategic Restructuring" means the comprehensive
restructuring of the Company, involving the Equity Tender Offer, the Spin-off
Distributions, the equity investment by the Investor, and related financing and
other transactions.
"Subordinated Obligations" means any Indebtedness of the
Company (whether outstanding on the date of this Indenture or thereafter
Incurred) that is expressly subordinated in right of payment to the Notes
pursuant to a written agreement. Indebtedness in respect of the Convertible
Notes shall not be deemed to be Subordinated Obligations.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other equity interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person
or (ii) one or more Subsidiaries of such Person.
"Successor Company" shall have the meaning assigned thereto in
clause (i) of Section 501.
<PAGE>
"Temporary Cash Investments" means any of the following: (i)
any investment in (x) direct obligations of the United States of America or any
agency or instrumentality thereof or obligations Guaranteed by the United States
of America or any agency or in strumentality thereof or (y) direct obligations
of any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization),
(ii) overnight bank deposits, and investments in time deposit accounts,
certificates of deposit, bankers' acceptances and money market deposits (or,
with respect to foreign banks, similar instruments) maturing not more than one
year after the date of acquisition thereof issued by (x) any lender under the
Senior Credit Agreement or (y) a bank or trust company that is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital and surplus
aggregating in excess of $250 million (or the foreign currency equivalent
thereof), (iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) or (ii) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than one year after the date
of acquisition, with a rating at the time as of which any Investment therein is
made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according to
S&P (or, in either case, the equivalent of such rating by such organization or,
if no rating of S&P or Moody's then exists, the equivalent of such rating by any
nationally recognized rating organization), (v) Investments in securities
maturing not more than one year after the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's (or, in either case, the equivalent of
such rating by such organization or, if no rating of S&P or Moody's then exists,
the equivalent of such rating by any nationally recognized rating organization),
(vi) investment funds investing 95% of their assets in securities of the type
described in clauses (i)-(v) above (which funds may also hold reasonable amounts
of cash pending investment and/or distribution), (vii) any money market deposit
accounts issued or offered by a domestic commercial bank or a commercial bank
organized and located in a country recognized by the United States of America,
in each case, having capital and surplus in excess of $250 million (or the
foreign currency equivalent thereof), or investments in money market funds
complying with the risk limiting conditions of Rule 2a-7 (or any successor rule)
of the SEC under the Investment Company Act of 1940, as amended, and (viii)
similar short-term investments approved by the Board of Directors in the
ordinary course of business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
sections
<PAGE>
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trade Payables" means, with respect to any Person, any
accounts payable or any indebtedness or monetary obligation to trade creditors
created, assumed or guaranteed by such Person arising in the ordinary course of
business in connection with the acquisition of goods or services.
"Transactions" means, collectively, the Strategic
Restructuring, the initial equity investment by the Investor, the offering and
issuance of the Initial Notes, the initial borrowings under the Senior Credit
Facility, the Equity Tender Offer, the Spin-off Distributions, the 2003 Note
Tender Offer, the 2001 Note Exchange Offer, and all other transactions relating
to the Strategic Restructuring or the financing thereof.
"Treasury Rate" means, with respect to a Redemption Date, the
yield to maturity at the time of computation of United States Treasury
securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) that has become publicly
available at least two Business Days prior to such Redemption Date (or, if such
Statistical Release is no longer published, any publicly available source or
similar market data)) most nearly equal to the period from such Redemption Date
to June 15, 2003; provided, however, that if the period from such Redemption
Date to June 15, 2003 is not equal to the constant maturity of the United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States securities for which
such yields are given, except that if the period from such Re demption Date to
June 15, 2003 is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable pro visions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"2001 Note Exchange Offer" means the offer by the Company to
exchange shares of its common stock for its outstanding 5 1/2% Convertible
Subordinated Notes due 2001.
<PAGE>
"2003 Note Tender Offer" means the offer by the Company to
purchase any and all of its outstanding 5 1/2% Convertible Subordinated Notes
due 2003.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination is an Unrestricted Subsidiary, as
designated by the Board of Directors in the manner provided below, and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; provided that either (A) the Subsidiary to be so designated
has total consolidated assets of $1,000 or less or (B) if such Subsidiary has
consolidated assets greater than $1,000, then such designation would be
permitted under Section 408. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation either (x) the Company could incur at
least $1.00 of additional Indebtedness under paragraph (a) of Section 406 or (y)
the Consolidated Coverage Ratio would be greater than it was immediately prior
to giving effect to such designation. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the resolution of the Company's Board of Directors giving effect to
such designation and an Officer's Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligation" means (x) any security that is
(i) a direct obligation of the United States of America for the payment of which
the full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case under the preceding clause (i) or (ii),
is not callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation that
is specified in clause (x) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation that is so specified
and held, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
<PAGE>
"Vice President" when used with respect to any Person means
any vice president of such Person, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" of an entity means all classes of Capital Stock
of such entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
Section 102. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Act" .................................................... 108
"Affiliate Transaction"...................................... 411
"Agent Members".............................................. 312
"Amendment".................................................. 409
"Authentication Order"....................................... 303
"Bankruptcy Law"............................................. 601
"Blockage Notice"............................................ 1403
"Covenant Defeasance"........................................ 1203
"Custodian".................................................. 601
"Defaulted Interest"......................................... 307
"Defeasance"................................................. 1202
"Defeased Notes"............................................. 1201
"Event of Default"........................................... 601
"Expiration Date"............................................ 108
"Global Notes"............................................... 201
"Guaranteed Obligations"..................................... 1301
"Guarantor Blockage Notice".................................. 1503
"Guarantor Non-payment Default".............................. 1503
"Guarantor Payment Blockage Period".......................... 1503
"Guarantor Payment Default".................................. 1503
"Initial Agreement".......................................... 409
"Initial Lien"............................................... 412
"Non-payment Default"........................................ 1403
"Note Register" and "Note Registrar" ........................ 305
"Offer"...................................................... 410
"Offshore Global Note"....................................... 201
</TABLE>
<TABLE>
<S> <C>
"Offshore Note Exchange Date"................................ 313
"Offshore Physical Note"..................................... 201
"pay its Note Guarantee"..................................... 1503
"pay the Notes".............................................. 1403
"Payment Blockage Period".................................... 1403
"Payment Default"............................................ 1403
"Permitted Payment".......................................... 408
"Physical Notes"............................................. 201
"Private Placement Legend"................................... 203
"Redemption Amount".......................................... 1001
"Refinancing Agreement"...................................... 409
"Restricted Payment"......................................... 408
"Sale" .................................................... 101
"Successor Company".......................................... 501
"Unitary Global Note"........................................ 201
"U.S. Global Note"........................................... 201
"U.S. Physical Notes"........................................ 201
"Voluntary Note Guarantor"................................... 413
</TABLE>
Section 103. Rules of Construction. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Indenture have the meanings
assigned to them in this Indenture;
(2) "or" is not exclusive;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(5) all references to "$" or "dollars" shall refer to the
lawful currency of the United States of America;
(6) the words "include," "included" and "including" as used
herein shall be deemed in each case to be followed by the phrase
"without limitation," if not expressly followed by such phrase or the
phrase "but not limited to";
<PAGE>
(7) words in the singular include the plural, and words in the
plural include the singular; and
(8) any reference to a Section or Article refers to such
Section or Article of this Indenture unless otherwise indicated.
Section 104. Incorporation by Reference of TIA. Whenever this
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. This Indenture is subject to the
mandatory provisions of the TIA, which are incorporated by reference in and made
a part of this Indenture. Any terms incorporated by reference in this Indenture
that are defined by the TIA, defined by any TIA reference to another statute or
defined by SEC rule under the TIA, have the meanings so assigned to them
therein. The following TIA terms have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, any
Note Guarantor and any other obligor on the indenture securities.
Section 105. Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be a part of and govern this Indenture, the latter provision
shall control. If any provision of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the latter provision
shall be deemed (i) to apply to this Indenture as so modified or (ii) to be
excluded, as the case may be.
Section 106. Compliance Certificates and Opinions. Upon any
application or request by the Company or by any other obligor upon the Notes
(including any Note Guar antor) to the Trustee to take any action under any
provision of this Indenture, the Company or such other obligor upon the Notes,
as the case may be, shall furnish to the Trustee such certificates and opinions
as may be required under the TIA. Each such certificate or opinion shall be
given in the form of one or more Officer's
<PAGE>
Certificates, if to be given by an Officer, or an Opinion of Counsel, if to be
given by counsel, and shall comply with the requirements of the TIA and any
other requirements set forth in this Indenture. Notwithstanding the foregoing,
in the case of any such request or application as to which the furnishing of any
Officer's Certificate or Opinion of Counsel is specifically required by any
provision of this Indenture relating to such particular request or application,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 405) shall include:
(1) a statement that the individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or in vestigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or
she made such examination or investigation as is necessary to enable
him or her to express an in formed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
Section 107. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
of counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Officer or Officers to the
effect
<PAGE>
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more appli cations, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 108. Acts of Noteholders; Record Dates. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee, and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 701) conclusive in favor of the Trustee, the Company and
any other obligor upon the Notes, if made in the manner provided in this Section
108.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership or
other entity, on behalf of such corporation or partnership or other entity, such
certificate or affidavit shall also constitute sufficient proof of such Person's
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the person executing the same, may also be proved in any
other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind the Holder
of every Note issued upon the transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done or suf fered to be done by the
Trustee, the Company or any other obligor
<PAGE>
upon the Notes in reliance thereon, whether or not notation of such action is
made upon such Note.
(e) (i) The Company may set any day as a record date for the
purpose of determining the Holders of Outstanding Notes entitled to give, make
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders of Notes, provided that the Company may not set a record date
for, and the provisions of this paragraph shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
paragraph (e)(ii) of this Section 108. If any record date is set pursuant to
this paragraph, the Holders of Outstanding Notes on such record date (or their
duly designated proxies), and no other Holders, shall be entitled to take the
relevant action, whether or not such Persons remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Notes on such record date. Nothing in this paragraph shall
be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Notes in the manner set forth in
Section 110.
(ii) The Trustee may set any day as a record date for the
purpose of deter mining the Holders of Outstanding Notes entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 602, (iii) any request to institute
proceedings referred to in Section 607(2) or (iv) any direction referred to in
Section 612, in each case with respect to Notes. If any record date is set
pursuant to this paragraph, the Holders of Outstanding Notes on such record
date, and no other Holders, shall be entitled to join in such notice,
declaration, request or direction, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Notes on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously
<PAGE>
set shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of Outstanding
Notes on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Notes in the manner set forth in Section 110.
(iii) With respect to any record date set pursuant to this
Section 108, the party hereto that sets such record dates may designate any day
as the "Expiration Date" and from time to time may change the Expiration Date to
any earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the Company or the
Trustee, whichever such party is not setting a record date pursuant to this
Section 108(e) in writing, and to each Holder of Notes in the manner set forth
in Section 110, on or prior to the existing Expiration Date. If an Expiration
Date is not designated with respect to any record date set pursuant to this
Section, the party hereto that set such record date shall be deemed to have
initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
(iv) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular Note may do
so with regard to all or any part of the principal amount of such Note or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
Section 109. Notices, etc., to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or any other
obligor upon the Notes shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the Trustee at
Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (telephone: (617) 664- 5670;
telecopier: (617) 664-5371), or at any other address furnished in
writing to the Company by the Trustee, or
<PAGE>
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder if in writing and delivered in
person or mailed, first-class postage prepaid, to the Company at 1025
Thomas Jefferson Street N.W., Suite 600 East, Washington, D.C. 20007,
Attention: Chief Financial Officer (telephone: (202) 339- 6700;
telecopier: (202) 339-6733), with copies to Wilmer, Cutler & Pickering,
2445 M Street, N.W., Washington, D.C. 20037, Attention: Thomas White,
Esq. (telephone: (202) 663-6000, telecopier: (202) 663-6363) and to
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022,
Attention: David Brittenham, Esq. (telephone: (212) 909-6000;
telecopier: (212) 909-6836), or at any other address previously
furnished in writing to the Trustee by the Company.
Section 110. Notices to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be deemed to have
been given (i) upon the mailing by first class mail, postage prepaid, of such
notices to Holders of Notes at their registered addresses as recorded in the
Note Register and (ii) for so long as the Notes are listed on the Luxembourg
Stock Exchange, upon publication in a leading newspaper of general circulation
in Luxembourg, in each case, not later than the latest date, and not earlier
than the earliest date, prescribed herein for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail notice of any
event as required by any provision of this Indenture, then such notification as
shall be made with the approval of the Trustee (such approval not to be
unreasonably withheld) shall constitute a sufficient notification for every
purpose hereunder.
Section 111. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 112. Successors and Assigns. All covenants and
agreements in
<PAGE>
this Indenture by the Company shall bind its respective successors and assigns,
whether so expressed or not.
Section 113. Separability Clause. In case any provision in
this Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 114. Benefits of Indenture. Nothing in this Indenture
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any Paying Agent and the Holders,
any benefit or any legal or equitable right, remedy or claim under this
Indenture, except as provided in Article 14 and Article 15.
Section 115. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT
THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND
(BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 116. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date or Stated Maturity of any Note shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of the Notes) payment of interest or principal and premium
(if any) need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity.
Section 117. No Personal Liability of Directors, Officers,
Employees, Incorporators and Stockholders. No director, officer, employee,
incorporator or stockholder, as such, of the Company, any Note Guarantor or any
Subsidiary of any thereof shall have any liability for any obligation of the
Company or any Note Guarantor under this Indenture, the Notes or any Note
Guarantee, or for any claim based on, in respect of, or by reason of, any such
obligation or its creation. Each Noteholder, by
<PAGE>
accepting the Notes, waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Section 118. Exhibits and Schedules. All exhibits and
schedules attached hereto are by this reference made a part hereof with the same
effect as if herein set forth in full.
Section 119. Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
ARTICLE 2
NOTE FORMS
Section 201. Forms Generally. The Notes and the Trustee's
certificate of authentication relating thereto shall be in substantially the
forms set forth, or referenced, in this Article 2 and Exhibit A annexed hereto,
which Exhibit is hereby incorporated in and expressly made a part of this
Indenture. The Notes may have such appropriate insertions, omissions,
substitutions, notations, legends, endorsements, identifications and other
variations as are required or permitted by law, stock exchange rule or
depository rule or usage, agreements to which the Company is subject, if any, or
other customary usage, or as may consistently herewith be determined by the
Officer or member of the Company executing such Notes, as evidenced by such
execution (provided always that any such notation, legend, endorsement,
identification or variation is in a form acceptable to the Company). Each Note
shall be dated the date of its authentication. The terms of the Notes set forth
in Exhibit A are part of the terms of this Indenture. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
Initial Notes and any Additional Notes offered and sold in
reliance on Rule 144A under the Securities Act shall, unless the Company
otherwise notifies the Trustee in writing, be issued in the form of one or more
permanent global Notes in substantially the form set forth in Exhibit A (each, a
"U.S. Global Note"), deposited with the Trustee, as custodian for the Depositary
or its nominee, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall contain the Private Placement Legend as set forth
in Section 203. The aggregate principal amount of a U.S. Global Note may from
time to time be increased or decreased by adjustments
<PAGE>
made on the records of the Trustee, as custodian for the Depositary or its
nominee, as provided in Sections 312 and 313.
Initial Notes and Additional Notes offered and sold in
offshore transactions in reliance on Regulation S under the Securities Act shall
be issued (a) in the form of one or more permanent global Notes in substantially
the form set forth in Exhibit A (each, an "Offshore Global Note"), deposited
with the Trustee, as custodian for the Depositary or its nominee, duly executed
by the Company and authenticated by the Trustee as hereinafter provided or (b)
at the Company's option (in the case of Additional Notes), in the form of and as
part of a U.S. Global Note that has been designated by the Company as a "Unitary
Global Note" (any U.S. Global Note that has been so designated, a "Unitary
Global Note") and, in each case, shall contain the Private Placement Legend as
set forth in Section 203. The aggregate principal amount of an Offshore Global
Note, if any, may from time to time be increased or decreased by adjustments
made in the records of the Trustee, as custodian for the Depositary or its
nominee, as provided in Sections 312 and 313.
Initial Notes and Initial Additional Notes offered and sold in
reliance on any exemption under the Securities Act other than Regulation S and
Rule 144A thereunder shall be issued, and (with the consent of the Company)
Notes offered and sold in reliance on Rule 144A may be issued, in the form of
permanent certificated Notes substantially in the form set forth in Exhibit A
and shall contain the Private Placement Legend as set forth in Section 203 (the
"U.S. Physical Notes").
Subject to the limitations on the issuance of certificated
Notes set forth in Sections 312 and 313, Initial Notes and any Initial
Additional Notes issued pursuant to Section 305 in exchange for, or upon
transfer of beneficial interests in, (x) a U.S. Global Note or a U.S. Physical
Note shall be in the form of a U.S. Physical Note or (y) an Offshore Global Note
(if any), on or after the Offshore Note Exchange Date with respect to such
Offshore Global Note, or an Offshore Physical Note shall be in the form of
permanent certificated Notes substantially in the form set forth in Exhibit A
(the "Offshore Physical Notes"), respectively, as hereinafter provided.
The Offshore Physical Notes and the U.S. Physical Notes,
together with any other certificated Notes in registered form, are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Note
and the Offshore Global Note are sometimes collectively referred to as the
"Global Notes." Physical Notes may initially be registered in the name of the
Depositary or a nominee of such Depositary and be delivered to the Trustee as
custodian for such Depositary. Beneficial owners of Physical Notes, however, may
request registration of such Physical Notes in their
<PAGE>
names or the names of their nominees.
Exchange Notes shall be issued substantially in the form set
forth in Exhibit A and, subject to Section 312(b), shall be in the form of one
or more Global Notes.
Section 202. Form of Trustee's Certificate of Authentication.
This is one of the Notes referred to in the within-mentioned Indenture.
--------------------------------
as Trustee
By
-----------------------------
Authorized Officer
Dated:
If an appointment of an Authenticating Agent is made pursuant
to Section 714, the Notes may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternative certificate of authentication in
the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
-----------------------------------
As Trustee
By
-----------------------------
As Authenticating Agent
By
-----------------------------
Authorized Officer
Dated:
Section 203. Restrictive and Global Note Legends. Each Global
Note and Physical Note shall bear the following legend set forth below (the
"Private Placement Legend") on the face thereof until the Private Placement
Legend is removed
<PAGE>
in accordance with Section 313(4):
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT
ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
<PAGE>
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR (OR A NON-U.S. PERSON (IN EITHER CASE, THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER)), THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
Each Global Note, whether or not an Initial Note, shall also
bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRE SENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK COR PORATION ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTIONS 312 AND 313 OF THE INDENTURE.
<PAGE>
ARTICLE 3
THE NOTES
Section 301. Title and Terms. The aggregate principal amount
of Notes that may be authenticated and delivered and Outstanding under this
Indenture is not limited, except as provided in Section 406 and except as may be
limited by applicable law. The Initial Notes will be issued in an aggregate
principal amount of $400,000,000. All the Original Notes shall vote and consent
together on all matters as one class, and none of the Original Notes will have
the right to vote or consent as a class separate from one another on any matter.
Additional Notes (including any Exchange Notes issued in exchange therefor) may
vote (or consent) as a class with the other Notes and otherwise be treated as
Notes for all purposes of this Indenture.
The Notes shall be known and designated as the "9 3/4% Senior
Subordinated Notes Due 2008" of the Company. The final Stated Maturity of the
Notes shall be June 15, 2008. Interest on the Outstanding principal amount of
Notes will accrue at the rate of 9 3/4% per annum and will be payable
semi-annually in arrears on June 15 and December 15 in each year, commencing on
December 15, 1998, to holders of record on the immediately preceding June 1 and
December 1, respectively (each such June 1 and December 1, a "Regular Record
Date"). Interest on the Original Notes will accrue from the most recent date to
which interest has been paid or duly provided for or, if no interest has been
paid, from the Issue Date; and interest on any Additional Notes (and Exchange
Notes issued in exchange therefor) will accrue from the most recent date to
which interest has been paid or duly provided for or, if no interest has been
paid on such Additional Notes, from the date of issuance of such Additional
Notes; provided, that if any Note is surrendered for exchange on or after a
record date for an Interest Payment Date that will occur on or after the date of
such exchange, interest on the Note received in exchange thereof will accrue
from the date of such Interest Payment Date.
The principal of, and premium, if any, and interest, on the
Notes shall be payable at the Corporate Trust Office or at the office or agency
of the Company maintained for that purpose in the Borough of Manhattan, The City
of New York (each, a "Place of Payment") and, for so long as the Notes are
listed on the Luxembourg Stock Exchange, Notes may be presented or surrendered
for payment at an office or agency of the Company maintained for that purpose in
Luxembourg; provided, however, that at the option of the Company payment of
interest on a Note may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the
<PAGE>
Note Register.
Section 302. Denominations. The Notes shall be issuable only
in registered form without coupons and only in denominations of $1,000 and any
integral multiple thereof.
Section 303. Execution, Authentication and Delivery and
Dating. The Notes shall be executed on behalf of the Company by one Officer of
the Company. The signature of such Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of an
individual who was at any time a proper Officer of the Company shall bind the
Company, notwithstanding that such individual has ceased to hold such office
prior to the authentication and delivery of such Notes or did not hold such
office at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication; and the Trustee shall authenticate
and deliver (i) Initial Notes for original issue in the aggregate principal
amount not to exceed $400,000,000 and (ii) Additional Notes from time to time
for original issue in aggregate principal amounts specified by the Company not
to exceed $200,000,000 and (iii) Exchange Notes from time to time for issue in
exchange for a like principal amount of Initial Notes or Initial Additional
Notes, in each case specified in clauses (i) through (iii) above, upon a written
order of the Company in the form of an Officer's Certificate of the Company (an
"Authentication Order"). Such Officer's Certificate shall specify the amount of
Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes, Additional Notes or
Exchange Notes and whether the Notes are to be issued as one or more Global
Notes or Physical Notes and such other information as the Company may include or
the Trustee may reasonably request.
All Notes shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
<PAGE>
Section 304. Temporary Notes. Until definitive Notes are ready
for delivery, the Company may prepare and upon receipt of an Authentication
Order the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute and upon receipt of an Authentication
Order the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes of the same series and tenor.
Section 305. Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided.
Upon surrender for transfer of any Note at the office or
agency of the Company in a Place of Payment, in compliance with all applicable
requirements of this Indenture and applicable law, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes, of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other
Notes, of any authorized denominations and of a like tenor and aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so sur rendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Notes that the
Holder making the exchange is entitled to receive.
All Notes issued upon any transfer or exchange of Notes shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same
<PAGE>
benefits under this Indenture, as the Notes surrendered upon such transfer or
exchange.
Every Note presented or surrendered for transfer or exchange
shall (if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed, by the Holder thereof or such
Holder's attorney duly authorized in writing.
No service charge shall be made for any transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Notes under this Section 305.
The Company shall not be required (i) to issue, transfer or
exchange any Note during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption (or purchase) of Notes
selected for redemption (or purchase) under Section 1004 and ending at the close
of business on the day of such mailing, or (ii) to transfer or exchange any Note
so selected for redemption (or purchase) in whole or in part.
Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If
(i) any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Company or the Trustee that such Note has
been acquired by a bona fide purchaser, the Company shall execute and upon
receipt of an Authentication Order the Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a new Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 306, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the
<PAGE>
fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 306 in lieu of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and ratably with
any and all other Notes duly issued hereunder.
The provisions of this Section 306 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 307. Payment of Interest Rights Preserved. Interest on
any Note that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest specified in Section 301.
Any interest on any Note that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder; and such Defaulted Interest shall be paid by the Company, as
provided in clause (1) or clause (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements reasonably satisfactory
to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit
of the Persons entitled to such Defaulted Interest as provided in this
clause (1). Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15
nor less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice
<PAGE>
of the proposed payment. The Trustee shall promptly notify the Company
of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest, the amount thereof and the Special Record Date and payment
date therefor to be mailed, first class postage prepaid, to each Holder
at such Holder's address as it appears in the Note Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Notes (or their respective Predecessor
Notes) are registered on such Special Record Date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause (2), such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 307, each
Note delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, that were carried by such other Note.
Section 308. Persons Deemed Owners. The Company, any Note
Guarantor, the Trustee and any agent of any of them may treat the Person in
whose name any Note is registered as the owner of such Note for the purpose of
receiving payment of principal of (and premium, if any), and (subject to Section
307) interest on, such Note and for all other purposes whatsoever, whether or
not such Note be overdue, and neither the Company, any Note Guarantor, the
Trustee nor any agent of any of them shall be affected by notice to the
contrary.
Section 309. Cancellation. All Notes surrendered for payment,
redemption, transfer, exchange or conversion shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes
shall be authenticated in lieu of
<PAGE>
or in exchange for any Notes cancelled as provided in this Section 309, except
as expressly permitted by this Indenture. All cancelled Notes held by the
Trustee shall be disposed of as directed by a Company Order of the Company and
in accordance with Section 313.
Section 310. Computation of Interest. Interest on the Notes
shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers. The Company in issuing the Notes
may use "CUSIP", "CINS" and "ISIN" numbers (if then generally in use), and if
so, the Trustee may use such numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that (x) any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP,
CINS or ISIN number printed in the notice or on the Notes, and that reliance may
be placed only on the other identification numbers printed on the Notes and (y)
failure to use CUSIP, CINS or ISIN numbers in any notice of redemption,
repurchase, exchange or otherwise shall not affect the validity or sufficiency
of such notice.
Section 312. Book-Entry Provisions for Global Notes. (a) Each
Global Note initially shall (i) be registered in the name of the Depositary for
such Global Note or the nominee of such Depositary and (ii) be delivered to the
Trustee as custodian for such De positary. Neither the Company nor any agent of
the Company shall have any responsibility or liability for any aspect of the
records relating to, or payments made on account of beneficial ownership
interests of, a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note, and the Depositary may be treated by the Company, any other obligor upon
the Notes, the Trustee and any agent of any of them as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstand ing the foregoing,
nothing herein shall prevent the Company, any other obligor upon the Notes, the
Trustee or any agent of any of them from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Note. The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action that a Holder is
entitled to take under this Indenture or the Notes.
<PAGE>
(b) Transfers of a Global Note shall be limited to transfers
of such Global Note in whole, but, subject to the immediately succeeding
sentence, not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in a Global Note may not be transferred
or exchanged for Physical Notes, unless (i) the Company has consented thereto in
writing, or such transfer or exchange is made pursuant to the next sentence, and
(ii) such transfer or exchange is in accordance with the applicable rules and
procedures of the Depositary and the provisions of Sections 305 and 313. Subject
to the limitation on issuance of Physical Notes set forth in Section 313(3),
U.S. Physical Notes or Offshore Physical Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in the relevant
U.S. Global Note or the relevant Offshore Global Note, respectively, if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for the applicable Global Note or the Depositary ceases to be a
"Clearing Agency" registered under the Exchange Act and a successor depositary
is not appointed by the Company within 90 days, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Physical
Notes under this Indenture or (iii) an Event of Default has occurred and is
continuing and the Note Registrar has received a written request from the
Depositary to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to beneficial owners for Physical
Notes pursuant to paragraph (b) of this Section 312, the Note Registrar shall
record on its books and records (and make a notation on the Global Note of) the
date and a decrease in the principal amount of such Global Note in an amount
equal to the beneficial interest in the Global Note being transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver, one or
more Physical Notes of like tenor and principal amount of authorized
denominations.
(d) In connection with a transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 312, the applicable
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the applicable Global Note, an equal aggregate principal
amount of U.S. Physical Notes (in the case of any U.S. Global Note) or Offshore
Physical Notes (in the case of any Offshore Global Note), as the case may be, of
authorized denominations.
(e) The transfer and exchange of a Global Note or beneficial
interests therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on transfer set forth in
Section 313) and the
<PAGE>
procedures of the Depositary therefor. Any beneficial interest in one of the
Global Notes that is transferred to a Person who takes delivery in the form of
an interest in a different Global Note will, upon transfer, cease to be an
interest in such Global Note and become an interest in the other Global Note
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Note for as long as it remains such an interest. A transferor of a
beneficial interest in a Global Note shall deliver to the Note Registrar a
written order given in accordance with the Depositary's procedures containing
information regarding the participant account of the Depositary to be credited
with a beneficial interest in the relevant Global Note. Subject to Section 313,
the Note Registrar shall, in accordance with such instructions, instruct the
Depositary to credit to the account of the Person specified in such instructions
a beneficial interest in such Global Note and to debit the account of the Person
making the transfer of the beneficial interest in the Global Note being
transferred.
(f) Any Physical Note delivered in exchange for an interest in
a Global Note pursuant to paragraph (b) of this Section 312 shall, unless such
exchange is made on or after the Resale Restriction Termination Date applicable
to such Note and except as otherwise provided in Section 203 and Section 313,
bear the Private Placement Legend.
(g) The Company, any other obligor upon the Notes or the
Trustee, in the discretion of any of them, may treat as the Act of a Holder any
instrument or writing of any Person that is identified by the Depositary as the
owner of a beneficial interest in the Global Note, provided that the fact and
date of the execution of such instrument or writing is proved in accordance with
Section 108(b).
Section 313. Special Transfer Provisions. (1) Transfers to
Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Note that is a Restricted Security to any Institutional Accredited Investor
which is not a QIB or to any Non-U.S. Person: The Note Registrar shall register
such transfer if it complies with all other applicable requirements of this
Indenture (including Section 305) and,
(a) if (x) such transfer is after the relevant Resale
Restriction Termination Date with respect to such Note or (y) (A) in
the case of a transfer to an Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Note Registrar a Certificate substantially in the form
of Exhibit E or (B) the distribution compliance
<PAGE>
period set forth in Regulation S has expired and the proposed
transferor has delivered to the Note Registrar a Regulation S
Certificate and in either case of clause (A) or (B), unless otherwise
agreed by the Company and the Trustee, the Trustee and the Company have
received an opinion of counsel, certifications and other information
satisfactory to the Company and the Trustee, and
(b) if the proposed transferor is or is acting through an
Agent Member holding a beneficial interest in a Global Note, upon
receipt by the Note Registrar of (x) the certificate, opinion,
certifications and other information, if any, required by clause (a)
above and (y) written instructions given in accordance with the
Depositary's and the Note Registrar's procedures;
whereupon (i) the Note Registrar shall reflect on its books and records (and
make a notation on the relevant Global Note of) the date and (if the transfer
does not involve a transfer of any Outstanding Physical Note) a decrease in the
principal amount of the relevant Global Note in an amount equal to the principal
amount of the beneficial interest in the relevant Global Note to be transferred,
and (ii) either (A) if the proposed transferee is a Non-U.S. Person and is or is
acting through an Agent Member holding a beneficial interest in a relevant
Offshore Global Note, the Trustee shall reflect on its books and records (and
make a notation on the relevant Global Note of) the date and an increase in the
principal amount of such Offshore Global Note in an amount equal to the
principal amount of the beneficial interest being so transferred or (B)
otherwise the Company shall execute and the Trustee shall authenticate and
deliver one or more Physical Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note that is a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): The Note
Registrar shall register such transfer if it complies with all other applicable
requirements of this Indenture (including Section 305) and,
(a) if such transfer is being made by a proposed transferor
who has checked the box provided for on the form of such Note stating,
or has otherwise certified to the Company and the Note Registrar in
writing, that the sale has been made in compliance with the provisions
of Rule 144A to a transferee who has signed the certification provided
for on the form of such Note stating, or has otherwise certified to the
Company and the Note Registrar in writing, that it is purchasing such
Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account
is a QIB within the meaning of Rule 144A, and is aware that the sale to
it is being made in
<PAGE>
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations
in order to claim the exemption from registration provided by Rule
144A; and
(b) if the proposed transferee is or is acting through an
Agent Member, and the Note to be transferred consists of a Physical
Note that after transfer is to be evidenced by an interest in a Global
Note or consists of a beneficial interest in a Global Note that after
the transfer is to be evidenced by an interest in a different Global
Note, upon receipt by the Note Registrar of written instructions given
in accordance with the Depositary's and the Note Registrar's
procedures, whereupon the Note Registrar shall reflect on its books and
records (and make a notation on the relevant Global Note of) the date
and an increase in the principal amount of the transferee Global Note
in an amount equal to the principal amount of the Physical Note or such
beneficial interest in such transferor Global Note to be transferred,
and the Trustee shall cancel the Physical Note so transferred or
reflect on its books and records (and make a notation on the relevant
Global Note of) the date and a decrease in the principal amount of such
transferor Global Note, as the case may be.
(3) Limitation on Issuance of Physical Notes. No Physical Note
shall be exchanged for a beneficial interest in any Global Note, except in
accordance with Section 312 and this Section 313.
A beneficial owner of an interest in a Unitary Global Note or
an Offshore Global Note shall not be permitted to exchange such interest for a
Physical Note until a date, which must be after the expiration of the
distribution compliance period set forth in Regulation S, on which the Company
receives a certificate of beneficial ownership substantially in the form of
Exhibit D from such beneficial owner (a "Certificate of Beneficial Ownership").
Such date, as it relates to an Offshore Global Note, is herein referred to as
the "Offshore Note Exchange Date."
(4) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend, unless (i) the requested transfer is after the
relevant Resale Restriction Termination Date with respect
<PAGE>
to such Notes, or (ii) upon written request of the Company after there is
delivered to the Note Registrar an opinion of counsel (which opinion and counsel
are satisfactory to the Company and the Trustee) to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act, or (iii) with
respect to an Offshore Global Note or Offshore Physical Note only, with the
agreement of the Company on or after the Offshore Note Exchange Date with
respect to such Note, or (iv) such Notes are sold or exchanged pursuant to an
effective registration statement under the Securities Act.
(5) Other Transfers. The Note Registrar shall effect and
register, upon receipt of a written request from the Company to do so, a
transfer not otherwise permitted by this Section 313, such registration to be
done in accordance with the otherwise applicable pro visions of this Section
313, upon the furnishing by the proposed transferor or transferee of a written
opinion of counsel (which opinion and counsel are satisfactory to the Company
and the Trustee) to the effect that, and such other certifications or
information as the Company may require to confirm that, the proposed transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act.
A Note that is a Restricted Security may not be transferred
other than as provided in this Section 313. A beneficial interest in a Global
Note that is a Restricted Security may not be exchanged for a beneficial
interest in another Global Note other than through a transfer in compliance with
this Section 313.
(6) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Note Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 312 or this
Section 313 (including all Notes received for transfer pursuant to this Section
313). The Company shall have the right to require the Note Registrar to deliver
to the Company, at the Company's expense, copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Note Registrar.
In connection with any transfer of any Note, the Trustee, the
Note Registrar and the Company shall be entitled to receive, shall be under no
duty to inquire into, may con clusively presume the correctness of, and shall be
fully protected in relying upon the cer tificates, opinions and other
information referred to herein (or in
<PAGE>
the forms provided herein, attached hereto or to the Notes, or otherwise)
received from any Holder and any transferee of any Note regarding the validity,
legality and due authorization of any such transfer, the eligibility of the
transferee to receive such Note and any other facts and circumstances related to
such transfer.
Section 314. Payment of Additional Interest. (a) Under certain
circumstances the Company will be obligated to pay certain additional amounts of
interest to the Holders of certain Initial Notes, as more particularly set forth
in such Initial Notes.
(b) Under certain circumstances the Company may be obligated
to pay certain additional amounts of interest to the Holders of certain Initial
Additional Notes, as may be more particularly set forth in such Initial
Additional Notes.
ARTICLE 4
COVENANTS
Section 401. Payment of Principal, Premium and Interest. The
Company will duly and punctually pay the principal of (and premium, if any) and
interest on the Notes in accordance with the terms of the Notes and this
Indenture. An installment of principal (and premium, if any) or interest shall
be considered paid on the date it is due if the Trustee or Paying Agent or
Paying Agents hold on that date money designated for and sufficient to pay the
installment.
Section 402. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company hereby designates the office of State Street Bank and Trust Company,
N.A., 61 Broadway, 15th Floor, New York, New York, as an initial Place of
Payment and as such office of the Company in the Borough of Manhattan, the City
of New York. The Company will give prompt written notice to the Trustee of the
location, and of any change in the location, of such office or agency. If at any
time the Company shall fail to maintain such office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee. The Company hereby designates the Corporate Trust Office as an initial
Place of Payment and appoints the Trustee its agent to receive
<PAGE>
all such presentations, surrenders, notices and demands so long as such
Corporate Trust Office remains a Place of Payment.
In addition, for so long as the Notes are listed on the
Luxembourg Stock Exchange, the Company will maintain an office or agency where
Notes may be presented or surrendered for payment, where Notes may be
surrendered for transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served.
Section 403. Money for Payments To Be Held in Trust. If the
Company shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal of (and premium, if any) or interest on, any of
the Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
action or failure so to act.
If the Company is not acting as its own Paying Agent, it will,
prior to each due date of the principal of (and premium, if any) or interest on,
any Notes, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest, so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its action or failure so to act.
If the Company is not acting as its own Paying Agent, the
Company will cause any Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of this Section 403, that such Paying
Agent will:
(1) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Notes in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Notes) in the making of any such payment of
principal (and premium, if any) or interest;
(3) at any time during the continuance of any such default,
upon the
<PAGE>
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(4) acknowledge, accept and agree to comply in all respects
with the provisions of this Indenture and TIA relating to the duties,
rights and liabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Note and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable shall be paid in the appropriate proportion to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
Section 404. SEC Reports. Notwithstanding that the Company may
not be required to be or remain subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act, the Company will file with the SEC (unless
such filing is not permitted under the Exchange Act or by the SEC), so long as
Notes are outstanding, the quarterly and annual reports, information, documents
and other reports that the Company is required to file with the Commission
pursuant to such Section 13(a) or 15(d) or would be so required to file if the
Company were so subject. The Company will also, within 15 days after the date on
which the Company was so required to file or would be so required to file if the
Company were so subject, transmit by mail to all Holders, as their names and
addresses appear in the Note Register, and to the Trustee, copies of any such
information, documents and reports (without exhibits) so required to be filed.
The Company will be deemed to have satisfied such requirements if a Parent files
and provides reports, documents and information of the types otherwise so
required, in each case within the applicable time periods, and the Company is
not required to file such reports, documents and information separately under
the
<PAGE>
applicable rules and regulations of the SEC (after giving effect to any
exemptive relief) because of the filings by such Parent. The Company also will
comply with the other provisions of TIA ss. 314(a). For so long as the Notes are
listed on the Luxembourg Stock Exchange, the Company will make all such reports
sent to Holders available at an office or agency of the Company maintained for
such purpose in Luxembourg.
Section 405. Statement as to Default. The Company will deliver
to the Trustee, within 120 days after the end of each fiscal year of the Company
ending after the date hereof, an Officer's Certificate, to the effect that to
the best knowledge of the signer thereof the Company is or is not in default in
the performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or re quirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which such signer may have
knowledge. To the extent required by the TIA, each Note Guarantor shall comply
with TIA ss. 314(a)(4). The individual signing any certificate given by any
Person pursuant to this Section 405 shall be the principal executive or
financial or accounting officer of such Person, in compliance with TIA ss.
314(a)(4).
Section 406. Limitation on Indebtedness. (a) The Company will
not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness;
provided, however, that the Company or any Note Guarantor may Incur Indebtedness
if on the date of the Incurrence of such Indebtedness, after giving effect to
the Incurrence thereof, the Consolidated Coverage Ratio would be greater than
1.75:1.00 if such Indebtedness is Incurred prior to June 15, 2001 or 2.00:1.00
if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a) of this
Section 406, the Company and its Restricted Subsidiaries may Incur the following
Indebtedness:
(i) Indebtedness Incurred pursuant to the Senior Credit
Facility (including but not limited to Indebtedness in respect of
letters of credit or bankers' acceptances issued or created thereunder)
and Indebtedness of any Foreign Subsidiary Incurred other than under
the Senior Credit Facility, and (without limiting the foregoing), in
each case, any Refinancing Indebtedness in respect thereof, in a
maximum principal amount at any time outstanding not exceeding in the
aggregate the amount equal to (A) $1,350.0 million, plus (B) the
amount, if any, by which the Borrowing Base exceeds $400.0 million,
plus (C) in the case of any refinancing of the Senior Credit Facility
or any portion thereof, the aggregate amount of fees, underwriting
discounts, premiums and other costs and expenses incurred in connection
with such refinancing;
<PAGE>
(ii) Indebtedness (A) of any Restricted Subsidiary to the
Company or (B) of the Company or any Restricted Subsidiary to any
Restricted Subsidiary; provided that any subsequent issuance or
transfer of any Capital Stock of such Restricted Subsidiary to which
such Indebtedness is owed, or other event, that results in such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
other subsequent transfer of such Indebtedness (except to the Company
or a Restricted Subsidiary) will be deemed, in each case, an Incurrence
of such Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Notes (other than any
Additional Notes), any Indebtedness (other than the Indebtedness
described in clauses (i) or (ii) above) outstanding on the Issue Date
and any Refinancing Indebtedness Incurred in respect of any
Indebtedness described in this clause (iii) or paragraph (a) of this
Section 406;
(iv) Purchase Money Obligations and Capitalized Lease
Obligations, and any Refinancing Indebtedness with respect thereto, in
an aggregate principal amount at any time outstanding not exceeding an
amount equal to 3.5% of Consolidated Total Assets at any time
outstanding;
(v) Indebtedness of any Foreign Subsidiary Incurred for
working capital purposes;
(vi) (A) Guarantees by the Company or any Restricted
Subsidiary of In debtedness or any other obligation or liability of the
Company or any Restricted Subsidiary (other than any Indebtedness
Incurred by the Company or such Restricted Subsidiary, as the case may
be, in violation of this Section 406), or (B) without limiting Section
412, Indebtedness of the Company or any Restricted Subsidiary arising
by reason of any Lien granted by or applicable to such Person securing
Indebtedness of the Company or any Restricted Subsidiary (other than
any Indebtedness Incurred by the Company or such Restricted Subsidiary,
as the case may be, in violation of this Section 406);
(vii) Indebtedness of the Company or any Restricted Subsidiary
(A) arising from the honoring of a check, draft or similar instrument
of such Person drawn against insufficient funds, provided that such
Indebtedness is extinguished within five Business Days of its
incurrence, or (B) consisting of guarantees, indemnities, obligations
in respect of earnouts or other purchase price adjustments, or similar
obligations, Incurred in connection with the
<PAGE>
acquisition or disposition of any business, assets or Person (including
pursuant to the Strategic Restructuring);
(viii) Indebtedness of the Company or any Restricted
Subsidiary in respect of (A) letters of credit, bankers' acceptances or
other similar instruments or obligations issued, or relating to
liabilities or obligations incurred, in the ordinary course of business
(including those issued to governmental entities in connection with
self-insurance under applicable workers' compensation statutes), or (B)
completion guar antees, surety, judgment, appeal or performance bonds,
or other similar bonds, instruments or obligations, provided, or
relating to liabilities or obligations incurred, in the ordinary course
of business, or (C) Hedging Obligations entered into for bona fide
hedging purposes in the ordinary course of business, or (D) Management
Guarantees, or (E) the financing of insurance premiums in the ordinary
course of business;
(ix) Indebtedness of a Receivables Subsidiary secured by a
Lien on all or part of the assets disposed of in, or otherwise incurred
in connection with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the Company
or any Restricted Subsidiary in connection with its acquisition of
assets from such Person or any Affiliate thereof or is issued and
outstanding on or prior to the date on which such Person was acquired
by the Company or any Restricted Subsidiary or merged or consolidated
with or into any Restricted Subsidiary (other than Indebtedness
Incurred to finance, or otherwise in connection with, such
acquisition), provided that on the date of such acquisition, merger or
consolidation, after giving effect thereto, (x) with respect to any
such Indebtedness of the Company, any Foreign Subsidiary or any Note
Guarantor, (A) the Company could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of this Section 406 or (B) the
Consolidated Coverage Ratio is greater than it was on such date
immediately prior to giving effect to such acquisition and (y) with
respect to any such Indebtedness of any Domestic Subsidiary that is not
a Note Guarantor, the Company could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of this Section 406; and any
Refinancing Indebtedness with respect to any such Indebtedness;
(xi) Indebtedness of any Restricted Subsidiary in an aggregate
principal amount at any time outstanding for all such Indebtedness not
exceeding (A) an amount equal to 5% of Consolidated Total Assets,
provided that either on the date of Incurrence of such Indebtedness
after giving effect thereto, the Company
<PAGE>
could Incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) above, or such Indebtedness is Refinancing Indebtedness
in respect of any such Indebtedness initially so Incurred, or (B)
otherwise, an amount equal to 2.5% of Consolidated Total Assets;
(xii) Indebtedness of the Company or any Restricted Subsidiary
in an amount at any time outstanding not exceeding twice the amount of
Excluded Contributions made after the Issue Date; provided that the
proceeds of such Indebtedness and the related amount of such Excluded
Contributions are used to finance the acquisition of assets of any
Person in a Related Business or the merger or consolidation of such a
Person into or with the Company or any Restricted Subsidiary (including
but not limited to payment of any related fees and expenses), or to
refinance any such acquisition, merger or consolidation with such
Indebtedness being Incurred for such refinancing within nine months of
the closing of such acquisition, merger or consolidation; and any Re
financing Indebtedness with respect to any such Indebtedness; and
(xiii) Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount at any time outstanding not
exceeding an amount equal to 5% of Consolidated Total Assets.
(c) For purposes of determining compliance with, and the
outstanding principal amount of any particular Indebtedness Incurred pursuant
to, and in compliance with, this Section 406, (i) any other obligation of the
obligor on such Indebtedness (or of any other Person who could have Incurred
such Indebtedness under this Section 406) arising under any Guarantee, Lien or
letter of credit, bankers' acceptance or other similar instrument or obligation
supporting such Indebtedness shall be disregarded to the extent that such
Guarantee, Lien or letter of credit, bankers' acceptance or other similar
instrument or obligation secures the principal amount of such Indebtedness; (ii)
in the event that Indebtedness meets the criteria of more than one of the types
of Indebtedness described in paragraph (b) of this Section 406, the Company, in
its sole discretion, shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of such
clauses; and (iii) the amount of Indebtedness issued at a price that is less
than the principal amount thereof shall be equal to the amount of the liability
in respect thereof determined in accordance with GAAP.
(d) For purposes of determining compliance with any
Dollar-denominated restriction on the Incurrence of Indebtedness denominated in
a foreign currency, the
<PAGE>
Dollar-equivalent principal amount of such Indebtedness Incurred pursuant
thereto shall be calculated based on the relevant currency exchange rate in
effect on the date that such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness,
provided that (x) the Dollar-equivalent principal amount of any such In
debtedness outstanding on the Issue Date shall be calculated based on the
relevant currency exchange rate in effect on the Issue Date, (y) if such
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable
Dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such
Dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced and (z) the
Dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency and Incurred pursuant to the Senior Credit Facility shall be calculated
based on the relevant currency exchange rate in effect on, at the Company's
option, (i) the Issue Date, (ii) any date on which any of the respective
commitments under the Senior Credit Facility shall be reallocated between or
among facilities or subfacilities thereunder, or on which such rate is otherwise
calculated for any purpose thereunder, or (iii) the date of such Incurrence. The
principal amount of any Indebtedness Incurred to refinance other Indebtedness,
if Incurred in a different currency from the Indebtedness being refinanced,
shall be calculated based on the currency exchange rate applicable to the
currencies in which such respective Indebtedness is denominated that is in
effect on the date of such refinancing.
Section 407. Limitation on Layering. The Company shall not
Incur any Indebtedness that is expressly subordinated in right of payment to any
Senior Indebtedness of the Company, unless such Indebtedness so Incurred ranks
pari passu in right of payment with the Notes, or is subordinated in right of
payment to the Notes. No Note Guarantor shall Incur any Indebtedness that is
expressly subordinated in right of payment to any Guarantor Senior Indebtedness
of such Note Guarantor, unless such Indebtedness so Incurred ranks pari passu in
right of payment with such Note Guarantor's Note Guarantee, or is subordinated
in right of payment to such Note Guarantor's Note Guarantee. Unsecured
Indebtedness is not deemed to be subordinate or junior to secured Indebtedness
merely because it is unsecured, and In debtedness that is not guaranteed by a
particular Person is not deemed to be subordinate or junior to Indebtedness that
is so guaranteed merely because it is not so guaranteed.
Section 408. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or
<PAGE>
pay any dividend or make any distribution on or in respect of its Capital Stock
(including any such payment in connection with any merger or consolidation to
which the Company is a party) except (x) dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and (y) dividends or
distributions payable to the Company or any Restricted Subsidiary (and, in the
case of any such Restricted Subsidiary making such dividend or distribution, to
other holders of its Capital Stock on no more than a pro rata basis, measured by
value), (ii) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of the Company held by Persons other than the Company or a Restricted
Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, sched uled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than a purchase,
redemption, defeasance or other acquisition or retirement for value in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of such acquisition
or retirement) or (iv) make any Investment (other than a Permitted Investment)
in any Person (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition or retirement or Investment being
herein referred to as a "Restricted Payment"), if at the time the Company or
such Restricted Sub sidiary makes such Restricted Payment and after giving
effect thereto:
(1) a Default shall have occurred and be continuing (or would
result there from);
(2) the Company could not incur at least an additional $1.00
of Indebtedness pursuant to paragraph (a) of Section 406; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in
cash, to be as determined in good faith by the Board of Directors,
whose determination shall be conclusive) declared or made subsequent to
the Issue Date and then outstanding would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from April 25,
1998 to the end of the most recent fiscal quarter ending prior
to the date of such Restricted Payment for which consolidated
financial statements of the Company are available (or, in case
such Consolidated Net Income shall be a negative number, 100%
of such negative number);
(B) the aggregate Net Cash Proceeds, and fair value
(as determined in good faith by the Board of Directors) of
property or assets,
<PAGE>
received (x) by the Company as capital contributions to the
Company after the Issue Date or from the issuance or sale
(other than to a Restricted Subsidiary) of its Capital Stock
(other than Disqualified Stock) after the Issue Date (other
than Excluded Contributions) or (y) by the Company or any
Restricted Subsidiary from the issuance and sale by the
Company or any Restricted Subsidiary after the Issue Date of
Indebtedness that shall have been converted into or exchanged
for Capital Stock of the Company (other than Disqualified
Stock), plus the amount of cash, property or assets
(determined as provided above) received by the Company or any
Restricted Subsidiary upon such conversion or exchange;
(C) the aggregate amount equal to the net reduction
in Investments in Unrestricted Subsidiaries resulting from (i)
dividends, distributions, interest payments, return of
capital, repayments of Investments or other transfers of
assets to the Company or any Restricted Subsidiary from any
Unrestricted Subsidiary, or (ii) the redesignation of any
Unrestricted Subsidiary as a Re stricted Subsidiary (valued in
each case as provided in the definition of "In vestment"), not
to exceed in the case of any such Unrestricted Subsidiary the
aggregate amount of Investments (other than Permitted
Investments) made by the Company or any Restricted Subsidiary
in such Unrestricted Subsidiary after the Issue Date;
(D) in the case of any disposition or repayment of
any Investment constituting a Restricted Payment (without
duplication of any amount deducted in calculating the amount
of Investments at any time outstanding included in the amount
of Restricted Payments), an amount in the aggregate equal to
the lesser of the return of capital, repayment or other
proceeds with respect to all such Investments and the initial
amount of all such Investments; and
(E) the aggregate exercise price of all options
attributable to shares of Capital Stock purchased in the
Equity Tender Offer.
(b) The provisions of paragraph (a) of this Section 408 will
not prohibit any of the following (each, a "Permitted Payment"):
(i) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or
Subordinated
<PAGE>
Obligations made by exchange (including any such exchange pursuant to
the exercise of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of fractional shares) for,
or out of the proceeds of the substantially concurrent issuance or sale
of, Capital Stock of the Company (other than Disqualified Stock and
other than Capital Stock issued or sold to a Subsidiary) or a
substantially concurrent capital contribution to the Company; provided
that the Net Cash Proceeds from such issuance, sale or capital
contribution shall be excluded in subsequent calculations under clause
(3)(B) of the preceding paragraph (a) of this Section 408 and shall not
constitute an Excluded Contribution;
(ii) any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations (x) made by
exchange for, or out of the proceeds of the substantially concurrent
issuance or sale of, Indebtedness of the Company or Refinancing
Indebtedness Incurred in compliance with Section 406, (y) from Net
Available Cash to the extent permitted under Section 410 or (z) to the
extent required by the agreement governing such Subordinated
Obligations, following the occurrence of a Change of Control (or other
similar event described therein as a "change of control"), but only if
the Company shall have complied with Section 414 and, if required,
purchased all Notes tendered pursuant to the offer to repurchase all
the Notes required thereby, prior to purchasing or repaying such
Subordinated Obligations;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with the preceding paragraph (a) of this Section 408;
(iv) Investments in an aggregate amount outstanding at any
time not to exceed the amount of Excluded Contributions (excluding the
amount of Excluded Contributions used to Incur Indebtedness pursuant to
clause (xii) of paragraph (b) of Section 406);
(v) payments by the Company to repurchase or otherwise acquire
Capital Stock (including any options, warrants or other rights in
respect thereof) from Management Investors (including loans, advances,
dividends or distributions by the Company to a Parent to permit such
Parent to make any such repurchase or other acquisition), such
payments, loans, advances, dividends or distributions not to exceed an
amount (net of repayments of any such loans or advances) equal to (1)
$25.0 million, plus (2) $3.0 million multiplied by the number of
calendar years that have commenced since the Issue Date (not to exceed
$9.0
<PAGE>
million in the aggregate), plus (3) the Net Cash Proceeds received by
the Company since the Issue Date from, or as a capital contribution
from, the issuance or sale to Management Investors of Capital Stock
(including any options, warrants or other rights in respect thereof),
to the extent such Net Cash Proceeds are not included in any
calculation under clause (3)(B)(x) of the preceding paragraph (a) of
this Section 408 and do not constitute an Excluded Contribution;
(vi) the payment by the Company of (or loans, advances,
dividends or dis tributions by the Company to a Parent to pay)
dividends on the common stock or equity of the Company (or such Parent)
following a public offering of such common stock or equity, in an
amount not to exceed in any fiscal year 6% of the aggregate gross
proceeds received by the Company in or from such public offering;
(vii) Restricted Payments (including loans or advances) in an
aggregate amount outstanding at any time not to exceed $20.0 million
(net of repayments of any such loans or advances);
(viii) payments by the Company or any Restricted Subsidiary to
satisfy obligations under the CDR Agreements; and Permitted Parent
Payments;
(ix) payments by the Company, or loans, advances, dividends or
distributions by the Company to a Parent to make payments, to holders
of Capital Stock of the Company or such Parent in lieu of issuance of
fractional shares of such Capital Stock, not to exceed $100,000 in the
aggregate outstanding at any time;
(x) dividends or other distributions of Capital Stock,
Indebtedness or other securities of Unrestricted Subsidiaries;
(xi) the Transactions; and
(xii) any purchase, redemption, retirement or other
acquisition of Capital Stock (x) that is used as consideration in
making any Investment that involves an acquisition of a Person,
business or assets and that is permitted as a Restricted Payment
Transaction or (y) deemed to occur upon the exercise of options if such
Capital Stock represents a portion of the exercise price thereof;
provided that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
amount of any
<PAGE>
such Permitted Payment shall be included in subsequent calculations of the
amount of Restricted Payments, (B) in the case of clause (v), at the time of any
calculation of the amount of Restricted Payments, the net amount of Permitted
Payments that have then actually been made under clause (v) that is in excess of
50% of the total amount of Permitted Payments then permitted under clause (v)
shall be included in such calculation of the amount of Restricted Payments, (C)
in all cases other than pursuant to clauses (A) and (B) immediately above, the
net amount of any such Permitted Payment shall be excluded in subsequent
calculations of the amount of Restricted Payments and (D) solely with respect to
clause (vii), no Default or Event of Default shall have occurred or be
continuing at the time of any such Permitted Payment after giving effect
thereto.
Section 409. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the Company, (ii)
make any loans or advances to the Company or (iii) transfer any of its property
or assets to the Company, except any encumbrance or restriction:
(1) pursuant to an agreement or instrument in effect at or
entered into on the Issue Date (including, without limitation, the
Senior Credit Facility), this Indenture or the Notes;
(2) pursuant to any agreement or instrument of a Person, or
relating to Indebtedness or Capital Stock of a Person, which Person is
acquired by or merged or consolidated with or into the Company or any
Restricted Subsidiary, or which agree ment or instrument is assumed by
the Company or any Restricted Subsidiary in connection with an
acquisition of assets from such Person, as in effect at the time of
such acquisition, merger or consolidation (except to the extent that
such Indebtedness was incurred to finance, or otherwise in connection
with, such acquisition, merger or consolidation), provided that for
purposes of this clause (2), if another Person is the Successor
Company, any Subsidiary thereof or agreement or instrument of such
Person or any such Subsidiary shall be deemed acquired or assumed, as
the case may be, by the Company or a Restricted Subsidiary, as the case
may be, when such Person becomes the Successor Company;
(3) pursuant to an agreement or instrument (a "Refinancing
Agreement") effecting a refinancing of Indebtedness Incurred pursuant
to, or that otherwise
<PAGE>
extends, renews, refunds, refinances or replaces, an agreement or
instrument referred to in clause (1) or (2) of this Section 409 or this
clause (3) (an "Initial Agreement") or contained in any amendment,
supplement or other modification to an Initial Agreement (an
"Amendment"); provided, however, that the encumbrances and restrictions
contained in any such Refinancing Agreement or Amendment are not
materially less favorable to the Holders of the Notes taken as a whole
than encumbrances and re strictions contained in the Initial Agreement
or Initial Agreements to which such Refinancing Agreement or Amendment
relates (as determined in good faith by the Company);
(4) (A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or the assignment or transfer of
any lease, license or other contract, (B) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any Restricted Subsidiary not
otherwise pro hibited by this Indenture, (C) contained in mortgages,
pledges or other security agreements securing Indebtedness of a
Restricted Subsidiary to the extent restricting the transfer of the
property or assets subject thereto, (D) pursuant to customary
provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreements of the Company or any
Restricted Subsidiary, (E) pursuant to Purchase Money Obligations that
impose encumbrances or restrictions on the property or assets so
acquired, (F) on cash or other deposits or net worth imposed by
customers under agreements entered into in the ordinary course of
business, (G) pursuant to customary provisions contained in agreements
and instruments entered into in the ordinary course of business
(including but not limited to leases and joint venture and other
similar agreements entered into in the ordinary course of business) or
(H) that arises or is agreed to in the ordinary course of business and
does not detract from the value of property or assets of the Company or
any Restricted Subsidiary in any manner material to the Company or such
Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary (or any of its
property or assets) imposed pursuant to an agreement entered into for
the direct or indirect sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary (or the
property or assets that are subject to such restriction) pending the
closing of such sale or disposition;
(6) required by any applicable law, rule, regulation or order
or by any regu latory authority having jurisdiction over the Company or
any Restricted
<PAGE>
Subsidiary or any of their businesses; or
(7) pursuant to an agreement or instrument (A) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue Date
pursuant to the provisions of Section 406 if the Company determines
that such encumbrance or restriction will not cause the Company not to
have the funds necessary to pay the principal of or interest on the
Notes, (B) relating to any sale of receivables by a Foreign Subsidiary
or (C) relating to Indebtedness of or a Financing Disposition to or by
any Receivables Entity.
Section 410. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company will not, and will not permit any Restricted Subsidiary
to, make any Asset Dis position unless
(i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person
assuming responsibility for, any liabilities, contingent or otherwise)
at the time of such Asset Disposition at least equal to the fair market
value of the shares and assets subject to such Asset Disposition, as
such fair market value may be determined (and shall be determined, to
the extent such Asset Disposition involves aggregate consideration in
excess of $10.0 million) in good faith by the Board of Directors, whose
determination shall be conclusive (including as to the value of all
noncash consideration),
(ii) in the case of any Asset Disposition having a fair market
value of $10.0 million or more, at least 75% of the consideration
therefor (excluding, in the case of an Asset Disposition of assets, any
consideration by way of relief from, or by any other Person assuming
responsibility for, any liabilities, contingent or otherwise, that are
not Indebtedness) received by the Company or such Restricted Subsidiary
is in the form of cash, and provided that this clause (ii) shall not
apply to any Asset Disposition involving assets that accounted for less
than two percent of Consolidated EBITDA during the period of the most
recent four consecutive fiscal quarters ending prior to the date of
such Asset Disposition for which consolidated financial statements of
the Company are available, and
(iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or any Restricted
Subsidiary, as the case may be) as follows:
<PAGE>
(A) first, either (x) to the extent the Company
elects (or is required by the terms of any Senior Indebtedness
or Indebtedness of a Restricted Sub sidiary), to prepay, repay
or purchase Senior Indebtedness or such Indebtedness of a
Restricted Subsidiary (in each case other than Indebtedness
owed to the Company or a Restricted Subsidiary) within 365
days after the date of such Asset Disposition, or (y) to the
extent the Company or such Restricted Sub sidiary elects, to
reinvest in Additional Assets (including by means of an
investment in Additional Assets by a Restricted Subsidiary
with Net Available Cash received by the Company or another
Restricted Subsidiary) within 365 days from the date of such
Asset Disposition, or, if such reinvestment in Additional
Assets is a project that is authorized by the Board of
Directors that will take longer than such 365 days to
complete, the period of time necessary to complete such
project;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A)
above (such balance, the "Excess Proceeds"), to make an offer
to purchase Notes and (to the extent the Company or such
Restricted Subsidiary elects, or is required by the terms
thereof) to purchase, redeem or repay any other Senior
Subordinated Indebtedness or Guarantor Senior Subordinated
Indebtedness, pursuant and subject to Section 410(b) and
Section 410(c) and the agreements governing such other
Indebtedness; and
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A) and (B) above, to fund (to the extent consistent with any
other applicable provision of this Indenture) any general
corporate purpose (including but not limited to the
repurchase, repayment or other acquisition or retirement of
any Subordinated Obligations);
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A)(x) or (B) above, the Company or such
Restricted Sub sidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 410,
the Company and the Restricted Subsidiaries shall not be required to apply any
Net Available Cash in accordance with this Section 410 except to the extent that
the
<PAGE>
aggregate Net Available Cash from all Asset Dispositions that is not applied
in accordance with this Section 410 exceeds $15.0 million. If the aggregate
principal amount of Notes, Senior Subordinated Indebtedness and Guarantor Senior
Subordinated Indebtedness validly tendered and not withdrawn (or otherwise
subject to purchase, redemption or repayment) in connection with an offer
pursuant to clause (B) above exceeds the Excess Proceeds, the Excess Proceeds
will be apportioned between the Notes and such Senior Subordinated Indebtedness
and Guarantor Senior Subordinated Indebtedness, with the portion of the Excess
Proceeds payable in respect of the Notes to equal the lesser of (x) the Excess
Proceeds amount multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Notes and the denominator of which is the
sum of the outstanding principal amount of the Notes and the outstanding
principal amount of the relevant Senior Subordinated Indebtedness and Guarantor
Senior Subordinated Indebtedness, and (y) the aggregate principal amount of
Notes validly tendered and not withdrawn.
For the purposes of clause (ii) of paragraph (a) of this
Section 410, the following are deemed to be cash: (1) Temporary Cash Investments
and Cash Equivalents, (2) the assumption of Indebtedness of the Company (other
than Disqualified Stock of the Company) or any Restricted Subsidiary and the
release of the Company or such Restricted Subsidiary from all liability on
payment of such Indebtedness in connection with such Asset Disposition, (3)
Indebtedness of any Restricted Subsidiary that is no longer a Restricted
Subsidiary as a result of such Asset Disposition, to the extent that the Company
and each other Restricted Subsidiary is released from any Guarantee of payment
of such Indebtedness in connection with such Asset Disposition, (4) securities
received by the Company or any Restricted Subsidiary from the transferee that
are converted by the Company or such Restricted Subsidiary into cash and (5)
consideration consisting of Indebtedness of the Company or any Restricted
Subsidiary.
(b) In the event of an Asset Disposition that requires the
purchase of Notes pursuant to clause (iii)(B) of paragraph (a) of this Section
410, the Company will be required to purchase Notes tendered pursuant to an
offer by the Company for the Notes (the "Offer") at a purchase price of 100% of
their principal amount plus accrued and unpaid interest to the purchase date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in this Indenture. If the aggregate purchase price
of the Notes tendered pursuant to the Offer is less than the Net Available Cash
allotted to the purchase of Notes, the remaining Net Available Cash will be
available to the Company for use in accordance with clause (iii)(B) of paragraph
(a) of this Section 410 (to repay Senior Subordinated Indebtedness or Guarantor
Senior Subordinated Indebtedness) or clause (iii)(C) of paragraph (a) of this
Section 410. The
<PAGE>
Company shall not be required to make an Offer for Notes pursuant to this
Section 410 if the Net Available Cash available therefor (after application of
the proceeds as provided in clause (iii)(A) of paragraph (a) of this Section
410) is less than $15.0 million for any particular Asset Disposition (which
lesser amounts shall be carried forward for purposes of determining whether an
Offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition).
(c) The Company will, not later than 45 days after the Company
becomes obligated to make an Offer pursuant to this Section 410, mail a notice
to each Holder with a copy to the Trustee (and publish notice in Luxembourg in
accordance with Section 110) stating: (1) that an Asset Disposition that
requires the purchase of a portion of the Notes has occurred and that such
Holder has the right (subject to the prorating described below) to require the
Company, to purchase a portion of such Holder's Notes at a purchase price in
cash equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase (subject to Section 307); (2) the
circumstances and relevant facts and financial information regarding such Asset
Disposition; (3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); (4) the instructions
determined by the Company, consistent with this Section 410, that a Holder must
follow in order to have its Notes purchased; and (5) the amount of the Offer.
If, upon the expiration of the period for which the Offer remains open, the
aggregate principal amount of Notes surrendered by Holders exceeds the amount of
the Offer, the Company will select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000 or integral multiples thereof, shall be
purchased).
(d) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section 410. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 410, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 410 by virtue
thereof.
Section 411. Limitation on Transactions with Affiliates. (a)
The Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless (i) the terms of such Affiliate Transaction are not
materially less favorable to the Company or such Restricted
<PAGE>
Subsidiary, as the case may be, than those that could be obtained at the time in
a transaction with a Person who is not such an Affiliate and (ii) if such
Affiliate Transaction involves aggregate consideration in excess of $10.0
million, the terms of such Affiliate Transaction have been approved by a
majority of the Disinterested Directors. For purposes of this Section 411(a),
any Affiliate Transaction shall be deemed to have satisfied the requirements set
forth in this Section 411(a) if (x) such Affiliate Transaction is approved by a
majority of the Disinterested Directors or (y) in the event there are no
Disinterested Directors, a fairness opinion is provided by a nationally
recognized appraisal or investment banking firm with respect to such Affiliate
Transaction.
(b) The provisions of the preceding paragraph (a) of this
Section 411 will not apply to:
(i) any Restricted Payment Transaction,
(ii) (1) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan,
program or arrangement, related trust agreement or any other similar
arrangement for or with any employee, officer or director heretofore or
hereafter entered into in the ordinary course of business, including
vacation, health, insurance, deferred compensation, severance,
retirement, savings or other similar plans, programs or arrangements,
(2) the payment of compensation, performance of indemnification or
contribution obligations, or any issuance, grant or award of stock,
options, other equity-related interests or other securities, to
employees, officers or directors in the ordinary course of business,
(3) the payment of fees to directors of the Company or any of its
Subsidiaries, (4) any transaction with an officer or director in the
ordinary course of business not involving more than $250,000 in any one
case, or (5) Management Advances and payments in respect thereof,
(iii) any transaction with the Company, any Restricted
Subsidiary, or any Receivables Entity,
(iv) any transaction arising out of agreements or instruments
in existence on the Issue Date, and any payments made pursuant thereto,
(v) execution, delivery and performance of the CDR Agreements,
including (1) payment to CDR or any Affiliate of CDR of a fee of $15.0
million
<PAGE>
plus out-of-pocket expenses in connection with the Transactions, and
(2) payment to CDR or any Affiliate of CDR of fees of up to $1.0
million in any fiscal year plus all out-of-pocket expenses incurred by
CDR or any such Affiliate in connection with its performance of
management consulting, monitoring, financial advisory or other services
with respect to the Company and its Restricted Subsidiaries,
(vi) the Transactions, all transactions in connection
therewith (including but not limited to the financing thereof), and all
fees or expenses paid or payable in connection with the Transactions,
(vii) any transaction in the ordinary course of business on
terms not materially less favorable to the Company or the relevant
Restricted Subsidiary than those that could be obtained at the time in
a transaction with a Person who is not an Affiliate of the Company, and
(viii) any transaction in the ordinary course of business, or
approved by a majority of the Board of Directors, between the Company
or any Restricted Subsidiary and any Affiliate of the Company
controlled by the Company that is a joint venture or similar entity.
Section 412. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock of any other Person), whether owned on the Issue
Date or thereafter acquired, securing any Indebtedness of the Company or any
Note Guarantor that by its terms is expressly subordinated in right of payment
to or ranks pari passu in right of payment with the Notes or such Note
Guarantor's Note Guarantee (the "Initial Lien"), unless contemporaneously
therewith effective provision is made to secure the Indebtedness due under this
Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary's
property or assets, any Note Guarantee of such Restricted Subsidiary, equally
and ratably with such obligation for so long as such obligation is so secured by
such Initial Lien. Any such Lien thereby created in favor of the Notes or any
such Note Guarantee will be automatically and unconditionally released and
discharged upon (i) the release and discharge of the Initial Lien to which it
relates, or (ii) any sale, exchange or transfer to any Person (other than a
Restricted Subsidiary of the Company) of the property or assets secured by such
Initial Lien, or of all of the Capital Stock held by the Company or any
Restricted Subsidiary in, or all or substantially all the assets of, any
Restricted Subsidiary creating such Lien.
<PAGE>
Section 413. Future Note Guarantors. After the Issue Date, the
Company will cause each Material Domestic Subsidiary that guarantees payment by
the Company of Bank Indebtedness to execute and deliver to the Trustee a
supplemental indenture or other instrument pursuant to which such Subsidiary
will guarantee payment of the Notes, whereupon such Subsidiary will become a
Note Guarantor for all purposes under this Indenture. In addition, the Company
may cause any Subsidiary that is not a Note Guarantor so to guarantee payment of
the Notes and become a Note Guarantor (any such Note Guarantor being herein
called a "Voluntary Note Guarantor").
Section 414. Purchase of Notes Upon a Change in Control. (a)
Upon a Change of Control Triggering Event, each Holder will have the right to
require the Company to repurchase all or any part of such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided, however, that, the Company
shall not be obligated to repurchase Notes pursuant to this Section 414 in the
event that it has exercised its right to redeem all of the Notes pursuant to
Article 10.
(b) In the event that, at the time of such Change of Control
Triggering Event, the terms of the Bank Indebtedness restrict or prohibit the
repurchase of Notes pursuant to this Section 414, then prior to the mailing of
the notice to Holders provided for in paragraph (c) of this Section 414, but in
any event not later than 30 days following the date the Company obtains actual
knowledge of any Change of Control Triggering Event (unless the Company has
exercised its right to redeem all the Notes as provided in Article 10), the
Company shall (i) repay in full all Bank Indebtedness or offer to repay in full
all Bank Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer or (ii) obtain the requisite consent under the agreements
governing the Bank Indebtedness to permit the repurchase of the Notes as
provided for in paragraph (c) of this Section 414. The Company shall first
comply with the provisions of the immediately preceding sentence before it shall
be required to repurchase Notes pursuant to the provisions of paragraph (c) of
this Section 414. The Company's failure to comply with the provisions of (x) the
first sentence of this paragraph (b) or (y) paragraph (c) of this Section 414
shall constitute an Event of Default described in clause (4) and not in clause
(2) under Section 601.
(c) Unless the Company has exercised its right to redeem all
the Notes as set forth in Article 10, the Company shall, not later than 30 days
following the date the Company obtains actual knowledge of any Change of Control
Triggering Event having occurred, mail a notice to each Holder with a copy to
the Trustee (and publish notice in Luxembourg in accordance with Section 110)
stating: (1) that a Change of
<PAGE>
Control Triggering Event has occurred or may occur and that such Holder has, or
upon such occurrence will have, the right to require the Company to purchase
such Holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date); (2) the
circumstances and relevant facts and financial information regarding such Change
of Control; (3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); (4) the instructions
determined by the Company, consistent with this Section 414, that a Holder must
follow in order to have its Notes purchased; and (5) if such notice is mailed
prior to the occurrence of a Change of Control or Change of Control Triggering
Event, that such offer is conditioned on the occurrence of such Change of
Control Triggering Event.
(d) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section 414. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 414, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 414, by virtue
thereof.
ARTICLE 5
SUCCESSOR COMPANY
Section 501. When the Company May Merge, etc. The Company will
not consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") will be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia and the Successor Company (if not the Company) will
expressly assume all the obligations of the Company under the Notes and
this Indenture by executing and delivering to the Trustee a
supplemental indenture or one or more other documents or instruments in
form reasonably satisfactory to the Trustee;
<PAGE>
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default will have
occurred and be continuing;
(iii) immediately after giving effect to such transaction,
either (A) the Suc cessor Company could Incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of Section 406, or
(B) the Consolidated Coverage Ratio of the Successor Company would
equal or exceed the Consolidated Coverage Ratio of the Company
immediately prior to giving effect to such transaction;
(iv) each Note Guarantor (other than any party to any such
consolidation or merger) shall have delivered a supplemental indenture
or other document or instrument in form reasonably satisfactory to the
Trustee, confirming its Note Guarantee; and
(v) the Company will have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each to the effect
that such consolidation, merger or transfer complies with the
provisions described in this paragraph of this Section 501, provided
that (x) in giving such opinion such counsel may rely on an Officer's
Certificate as to compliance with the foregoing clauses (ii) and (iii)
and as to any matters of fact, and (y) no Opinion of Counsel will be
required for a consolidation, merger or transfer described in the last
paragraph of this Section 501.
Any Indebtedness that becomes an obligation of the Company or
any Restricted Subsidiary (or that is deemed to be Incurred by any Restricted
Subsidiary that becomes a Restricted Subsidiary) as a result of any such
transaction undertaken in compliance with this Section 501, and any Refinancing
Indebtedness with respect thereto, shall be deemed to have been Incurred in
compliance with Section 406.
Clauses (ii) and (iii) of the first paragraph of this Section
501 will not apply to any transaction in which (1) any Restricted Subsidiary
consolidates with, merges into or transfers all or part of its assets to the
Company or (2) the Company consolidates or merges with or into or transfers all
or substantially all its assets to (x) an Affiliate incorporated or organized
for the purpose of reincorporating or reorganizing the Company in another
jurisdiction or changing its legal structure to an entity other than a
corporation (or, if the Company is then not a corporation, to a corporation) or
(y) a
<PAGE>
Restricted Subsidiary of the Company so long as all assets of the Company
and the Restricted Subsidiaries immediately prior to such transaction (other
than Capital Stock of such Restricted Subsidiary) are owned by such Restricted
Subsidiary and its Restricted Subsidiaries immediately after the consummation
thereof.
Section 502. Successor Company Substituted. Upon any
transaction involving the Company in accordance with Section 501, in which the
Company is not the Successor Company, the Successor Company will succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture, and thereafter the predecessor Company shall be relieved of all
obligations and covenants under this Indenture.
ARTICLE 6
REMEDIES
Section 601. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Note when due whether or not such payment shall be prohibited by
Article 14, and such default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Note when the same becomes due, at its Stated Maturity, upon
optional redemption, upon required purchase, upon declaration of
acceleration or otherwise, whether or not such payment shall be
prohibited by Article 14;
(3) the Company fails to comply with Article 5 and such
failure continues for 30 days after the notice specified in the
penultimate paragraph of this Section 601;
(4) the Company fails to comply with Section 414 (other than a
failure to purchase the Notes), and such failure continues for 30 days
after the notice specified in the penultimate paragraph of this Section
601;
(5) the Company fails to comply with any of its agreements in
the Notes or this Indenture (other than those referred to in (1), (2),
(3) and (4) above) and such failure continues for 60 days after the
notice specified in the penultimate
<PAGE>
paragraph of this Section 601;
(6) the Company or any Significant Subsidiary fails to pay any
issue or issues of Indebtedness within any applicable grace period
after final maturity or the acceleration of any such Indebtedness by
the holders thereof because of a default, if the total amount of such
Indebtedness unpaid or accelerated exceeds $25,000,000 or its foreign
currency equivalent;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an in voluntary case;
(C) consents to the appointment of a Custodian of it
or for any sub stantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Sig nificant Subsidiary;
and the order or decree remains unstayed and in effect for 60 days;
(9) there is rendered any judgment or decree for the payment
of money in an amount (net of any insurance or indemnity payments
actually received in respect thereof prior to or within 90 days from
the entry thereof, or to be received in respect thereof in the event
any appeal thereof shall be unsuccessful) in excess of $25,000,000 or
its foreign currency equivalent against the Company or a Significant
Subsidiary by a court or other adjudicatory authority of competent
<PAGE>
jurisdiction that is not discharged, or bonded or insured by a third
Person, if such judgment or decree remains outstanding for a period of
90 days following such judgment or decree and is not discharged, waived
or stayed; or
(10) any Note Guarantee by a Note Guarantor that is a
Significant Subsidiary fails to be in full force and effect (except as
contemplated by the terms thereof or of this Indenture) or any Note
Guarantor that is a Significant Subsidiary denies or disaffirms in
writing its obligations under this Indenture or its Note Guarantee
(other than by reason of the termination of this Indenture or such Note
Guarantee or the release of such Note Guarantee in accordance with such
Note Guarantee or this Indenture), if such Default continues for 10
days.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (3), (4) or (5) is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the Outstanding Notes notify the Company (and the Trustee in the case of a
notice by Holders) of the Default and the Company does not cure such Default
within the time specified therein after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default." When a Default or an Event of Default is cured, it ceases.
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officer's Certificate
of any Event of Default under clause (6) or (9) and any event that with the
giving of notice or the lapse of time would become an Event of Default under
clause (3), (4) or (5), its status and what action the Company is taking or
proposes to take with respect thereto.
Section 602. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 601 with respect to the Company) occurs and is
continuing, the Trustee by notice to the
<PAGE>
Company, or the Holders of at least a majority in principal amount of the
Outstanding Notes by notice to the Company and the Trustee, in either case
specifying in such notice the respective Event of Default and that such notice
is a "notice of acceleration," may declare the principal of and accrued but
unpaid interest on all the Notes to be due and payable, provided that so long as
any Designated Senior Indebtedness shall be outstanding, such acceleration shall
not be effective until the earlier to occur of (x) five Business Days following
delivery of a written notice of such acceleration of the Notes to the Company
and the holders of all Designated Senior Indebtedness or each Representative
thereof and (y) the acceleration of any Designated Senior Indebtedness. Upon the
effectiveness of such a declaration, such principal and interest will be due and
payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (7) or (8) of Section 601 with respect to the Company occurs
and is continuing, then the principal of and any accrued interest on all the
Outstanding Notes will ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the Outstanding Notes by notice
to the Company and the Trustee may rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except non-payment of
principal or interest that has become due solely because of such acceleration.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
Notwithstanding the foregoing, in the event of a declaration
of acceleration in respect of the Notes because an Event of Default specified in
clause (6) of Section 601 shall have occurred and be continuing, such
declaration of acceleration of the Notes and such Event of Default and all
consequences thereof (including without limitation any acceleration or resulting
payment default) shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, and be of no further effect,
if within 60 days after such Event of Default arose (x) the Indebtedness that is
the basis for such Event of Default has been discharged, or (y) the holders
thereof have rescinded or waived the acceleration, notice or action (as the case
may be) giving rise to such Event of Default, or (z) the default in respect of
such Indebtedness that is the basis for such Event of Default has been cured.
Section 603. Other Remedies; Collection Suit by Trustee. If an
Event of Default occurs and is continuing, the Trustee may, but is not obligated
under this Section 603 to, pursue any available remedy to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture. If an Event of Default specified in
Section 601(1) or 601(2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an
<PAGE>
express trust against the Company for the whole amount then due and owing
(together with interest on any unpaid interest to the extent lawful) and the
amounts provided for in Section 707.
Section 604. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company or any other obligor upon the
Notes, its creditors or its property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 707.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 605. Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 606. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article 6 shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Notes and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
First: to the payment of all amounts due the Trustee under
Section 707;
<PAGE>
Second: to holders of Senior Indebtedness to the extent
required by Article 14;
Third: to the payment of the amounts then due and unpaid upon
the Notes for principal (and premium, if any) and interest, in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal (and premium, if
any) and interest, respectively; and
Fourth: to the Company.
Section 607. Limitation on Suits. No Holder may pursue any
remedy with respect to this Indenture or the Notes unless:
(1) such Holder has previously given the Trustee written
notice that an Event of Default is continuing;
(2) Holders of at least 25% in principal amount of the
Outstanding Notes have requested the Trustee in writing to pursue the
remedy;
(3) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee has not complied with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Outstanding Notes have not given the Trustee a direction inconsistent
with the request within such 60-day period.
A Holder may not use this Indenture to affect, disturb or
prejudice the rights of another Holder, to obtain a preference or priority over
another Holder or to enforce any right under this Indenture except in the manner
herein provided and for the equal and ratable benefit of all Holders.
Section 608. Unconditional Right of Holders to Receive
Principal and Interest. Notwithstanding any other provision in this Indenture,
the Holder of any Note shall have the absolute and unconditional right to
receive payment of the principal of
<PAGE>
and all (subject to Section 307) interest on such Note on the respective Stated
Maturity or Interest Payment Dates expressed in such Note and to institute suit
for the enforcement of any such payment on or after such respective Stated
Maturity or Interest Payment Dates, and such right shall not be impaired without
the consent of such Holder.
Section 609. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture or any Note and such proceeding has been
discontinued or abandoned for any reason, or has been deter mined adversely to
the Trustee or to such Holder, then and in every such case the Company, any
other obligor upon the Notes, the Trustee and the Holders shall, subject to any
determina tion in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 610. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 611. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Note to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article 6 or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 612. Control by Holders. The Holders of not less than
a majority in aggregate principal amount of the Outstanding Notes shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
<PAGE>
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture or, subject to Section 701, that
the Trustee determines is unduly prejudicial to the rights of other Holders
or would involve the Trustee in personal liability; provided, however, that
the Trustee may take any other action deemed proper by the Trustee that is
not inconsistent with such direction. Prior to taking any action under this
Indenture, the Trustee shall be entitled to indemnification satisfactory to
it in its sole discretion against all losses and expenses caused by taking or
not taking such action. This Section 612 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.
Section 613. Waiver of Past Defaults. The Holders of not less
than a majority in aggregate principal amount of the Outstanding Notes may on
behalf of the Holders of all the Notes waive any past Default hereunder and its
consequences, except a Default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note (which may only be waived with the consent of each
Holder of Notes affected), or
(2) in respect of a covenant or provision hereof that pursuant
to the second paragraph of Section 902 cannot be modified or amended
without the consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon. In case of any such waiver, the Company, any other
obligor upon the Notes, the Trustee and the Holders shall be restored to
their former positions and rights hereunder and under the Notes,
respectively. This paragraph of this Section 613 shall be in lieu of Section
316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.
Section 614. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to
<PAGE>
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture or the Notes, or in any
suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant. This Section 614 shall not apply
to any suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal amount of
the Outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Note on or after the respective Stated Maturity or Interest Payment Dates
expressed in such Note.
Section 615. Waiver of Stay, Extension or Usury Laws. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other similar
law wherever enacted, now or at any time hereafter in force, that would prohibit
or forgive the Company from paying all or any portion of the principal of (or
premium, if any) or interest on the Notes contemplated herein or in the Notes or
that may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE 7
THE TRUSTEE
Section 701. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions
<PAGE>
expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the re quirements of this Indenture; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture, but need not
verify the contents thereof.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that (i) this
paragraph does not limit the effect of paragraph (a) of this Section 701; (ii)
the Trustee shall not be liable for any error of judgment made in good faith by
a Trust Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 612.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties here under or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
Sections 701 and 703 hereof.
Section 702. Notice of Defaults. Within 90 days after the
occurrence of any Default, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Note Register, notice of such Default
hereunder known to the Trustee unless such Default shall have been cured or
waived; provided, however, that, except in the case of a Default in the payment
of the principal of, premium (if any) or interest on, any Note, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of Responsible Officers
of the Trustee in good faith determines that the withholding of
<PAGE>
such notice is in the interests of the Holders.
Section 703. Certain Rights of Trustee. Subject to the
provisions of Section 701:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
thereof, and any resolution of any Person's board of directors shall be
sufficiently evidenced if certified by an Officer of such Person as
having been duly adopted and being in full force and effect on the date
of such certificate;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically pre scribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate of the Company;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note, other evidence of indebtedness or other
paper or document; and
<PAGE>
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
Section 704. Not Responsible for Recitals or Issuance of
Notes. The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Note Guarantors, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes, except that the Trustee represents that it is duly authorized to execute
and deliver this Indenture, authenticate the Notes and perform its obligations
hereunder and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Company and the Note Guarantors in
connection with the registration of any Notes and any Note Guarantees issued
hereunder are and will be true and accurate subject to the qualifications set
forth therein. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Notes or the proceeds
thereof.
Section 705. May Hold Notes. The Trustee, any Authenticating
Agent, any Paying Agent, any Note Registrar or any other agent of the Company,
in its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Section 708 and Section 713, may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent.
Section 706. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
Section 707. Compensation and Reimbursement. The Company
agrees,
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by the Trustee hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable out-of-pocket
expenses incurred by
<PAGE>
the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on the Trustee's part, arising out of or in connection with
the administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
The Company need not pay for any settlement made without its consent.
Section 708. Conflicting Interests. If the Trustee has or
shall acquire a conflicting interest within the meaning of the TIA, the Trustee
shall either eliminate such conflicting interest, apply to the SEC for
permission to continue as Trustee with such conflicting interest, or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
TIA and this Indenture. To the extent permitted by such Act, the Trustee shall
not be deemed to have a conflicting interest by virtue of being a trustee under
this Indenture with respect to Original Notes and Additional Notes, or a trustee
under any other indenture between the Company and the Trustee.
Section 709. Corporate Trustee Required; Eligibility. There
shall at all times be one (and only one) Trustee hereunder. The Trustee shall be
a Person that is eligible pursuant to the TIA to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
709 and to the extent permitted by the TIA, the combined capital and surplus of
such Person 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 the Trustee
shall cease to be eligible in accordance with the provisions of this Section
709, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 710. Resignation and Removal; Appointment of
Successor. No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 711.
<PAGE>
The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 711 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Notes, delivered to the
Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 708 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 709
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company may remove the Trustee, or (B) subject
to Section 614, any Holder who has been a bona fide Holder of a Note for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company shall promptly appoint a successor Trustee and shall comply with the
applicable requirements of Section 711. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Notes delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of
Section 711, become the successor Trustee and to that extent supersede the
successor Trustee appointed by the Company. If no successor
<PAGE>
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 711, then, subject to Section 614,
any Holder who has been a bona fide Holder of a Note for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 110. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
Section 711. Acceptance of Appointment by Successor. In case
of the appointment hereunder of a successor Trustee, every such successor
Trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or con veyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to above.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article 7.
Section 712. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article 7, without the execution or filing of any paper or any further act
<PAGE>
on the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 713. Preferential Collection of Claims Against the
Company. If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the TIA regarding the collection of claims against the Company (or
any such other obligor).
Section 714. Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent acceptable to the Company to authenticate
the Notes. Any such appointment shall be evidenced by an instrument in writing
signed by a Trust Officer, a copy of which instrument shall be promptly
furnished to the Company. Unless limited by the terms of such appointment, an
Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication (or execution of a certificate of
authentication) by the Trustee includes authentication (or execution of a
certificate of authen tication) by such Authenticating Agent. An Authenticating
Agent has the same rights as any Registrar, Paying Agent or agent for service of
notices and demands.
ARTICLE 8
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND THE COMPANY
Section 801. The Company to Furnish Trustee Names and
Addresses of Holders. The Company will furnish or cause to be furnished to the
Trustee
(1) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
<PAGE>
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished pursuant to this Section 801.
Section 802. Preservation of Information; Communications to
Holders. The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list, if any, furnished to the Trustee as provided in Section 801 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar; provided, however, that if and so long as the Trustee shall be the
Note Registrar, the Note Register shall satisfy the requirements relating to
such list. None of the Company, any Note Guarantor or the Trustee or any other
Person shall be under any responsibility with regard to the accuracy of such
list. The Trustee may destroy any list furnished to it as provided in Section
801 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Notes, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
TIA.
Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the TIA.
Section 803. Reports by Trustee. The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the TIA at the times and in the manner provided
pursuant thereto. A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Notes are listed, with the SEC and with the Company. The Company will
notify the Trustee when any Notes are listed on any stock exchange.
ARTICLE 9
AMENDMENT, SUPPLEMENT OR WAIVER
Section 901. Without Consent of Holders. Without the consent
of any Holder, the Company, the Trustee and (as applicable) any Note Guarantor
may enter into one or more indentures supplemental hereto, for any of the
following purposes:
<PAGE>
(1) to cure any ambiguity, omission, defect or inconsistency,
(2) to provide for the assumption by a successor of the
obligations of the Company under this Indenture,
(3) to provide for uncertificated Notes in addition to or in
place of certificated Notes,
(4) to add Guarantees with respect to the Notes, to secure the
Notes, to confirm and evidence the release, termination or discharge of
any Guarantee or Lien with respect to or securing the Notes when such
release, termination or discharge is pro vided for under this
Indenture,
(5) to add to the covenants of the Company for the benefit of
the Noteholders or to surrender any right or power conferred upon the
Company,
(6) to provide that any Indebtedness that becomes or will
become an obligation of a Successor Company or a Note Guarantor
pursuant to a transaction governed by Article 5 (and that is not a
Subordinated Obligation) is Senior Subordinated In debtedness or
Guarantor Senior Subordinated Indebtedness for purposes of this
Indenture,
(7) to provide for or confirm the issuance of Additional
Notes,
(8) to make any change that does not adversely affect the
rights of any Holder under the Notes or this Indenture, or
(9) to comply with any requirement of the SEC in connection
with the quali fication of this Indenture under the TIA or otherwise.
Section 902. With Consent of Holders. Subject to Section 608,
the Company, the Trustee and (if applicable) any Note Guarantor may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Notes (including consents obtained in connection with a tender offer or exchange
offer for Notes), and the Holders of not less than a majority in aggregate
principal amount of the Outstanding Notes by written notice to the Trustee
(including consents obtained in connection with a tender offer or exchange offer
for Notes) may waive any existing Default or Event of Default or compliance by
the Company or any Note Guarantor with any provision of this Indenture, the
Notes or any Note Guarantee.
<PAGE>
Notwithstanding the provisions of this Section 902, without
the consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 613, may not:
(i) reduce the principal amount of the Notes whose Holders
must consent to an amendment or waiver;
(ii) reduce the rate of or extend the time for payment of
interest on any Note;
(iii) reduce the principal or extend the Stated Maturity of
any Note;
(iv) reduce the premium payable upon the redemption of any
Note or change the date on which any Note may be redeemed as described
in Section 1001;
(v) make any Note payable in money other than that stated in
the Note;
(vi) make any change in Article 14 or Article 15 that
adversely affects the rights of any Holder in any material respect;
(vii) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes; or
(viii) make any change in the amendment or waiver provisions
described in this sentence.
Notwithstanding Section 901 and the foregoing provisions of
this Section 902, no amendment to Article 14 or Article 15 of this Indenture or
the definitions relating thereto that adversely affects the rights of any Holder
of Senior Indebtedness at the time outstanding (which Senior Indebtedness has
been previously designated in writing by the Company to the Trustee for this
purpose) may be made unless the holders of such Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent in writing
to such amendment.
It shall not be necessary for the consent of the Holders under
this Section 902 to approve the particular form of any proposed amendment,
supplement or waiver,
<PAGE>
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
902 becomes effective, the Company shall mail to the Holders of each Note
affected thereby, with a copy to the Trustee, a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any supplemental indenture or the effectiveness of any such
amendment, supplement or waiver.
Section 903. Execution of Amendments, Supplements or Waivers.
The Trustee shall sign any amendment, supplement or waiver authorized pursuant
to this Article 9 if the amendment, supplement or waiver does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment, supplement or waiver, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel to the effect that the execution of such amendment,
supplement or waiver has been duly authorized, executed and delivered by the
Company and that, subject to applicable bankruptcy, insolvency, fraudulent
transfer, fraudulent conveyance, reorganization, mora torium and other laws now
or hereinafter in effect affecting creditors' rights or remedies generally and
the general principles of equity (including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness), whether considered in
a proceeding at law or at equity, such amendment, supplement or waiver is a
valid and binding agreement of the Company, enforceable against it in accordance
with its terms.
Section 904. Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of that Note
or any Note that evidences all or any part of the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. Subject
to the following paragraph of this Section 904, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Note by notice to the Trustee
or the Company received by the Trustee or the Company, as the case may be,
before the date on which the Trustee receives an Officer's Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver. The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to consent to
any amendment, supplement or waiver as set forth in Section 108.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder of Notes, unless it makes a change described in any of
clauses
<PAGE>
(i) through (viii) of the second paragraph of Section 902. In that case,
the amendment, supplement or waiver shall bind each Holder of a Note who has
consented to it and every subsequent Holder of such Note or any Note that
evidences all or any part of the same debt as the consenting Holder's Note.
Section 905. Conformity with TIA. Every amendment or
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the TIA as then in effect.
Section 906. Notation on or Exchange of Notes. If an
amendment, supplement or waiver changes the terms of a Note, the Trustee shall
(if required by the Company and in accordance with the specific direction of the
Company) request the Holder of the Note to deliver it to the Trustee. The
Trustee shall (if required by the Company and in accordance with the specific
direction of the Company) place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue and the
Trustee shall authen ticate a new Note that reflects the changed terms. Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.
ARTICLE 10
REDEMPTION OF NOTES
Section 1001. Right of Redemption. (a) Except as set forth in
this Section 1001, the Notes will not be redeemable at the option of the Company
prior to June 15, 2003. Thereafter, the Notes will be redeemable, at the
Company's option, in whole or in part, and from time to time on and after June
15, 2003 and prior to maturity. Such redemption may be made upon notice mailed
by first-class mail to each Holder's registered address and upon publication in
Luxembourg in accordance with Section 1005. Any such redemption and notice may,
in the Company's discretion, be subject to the satisfaction of one or more
conditions precedent. The Notes will be so redeemable at the following
Redemption Prices (expressed as a percentage of principal amount), plus accrued
interest, if any, to the relevant Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), if redeemed during the 12-month period
commencing on June 15 of the years set forth below:
<PAGE>
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- ------------
<S> <C>
2003............................................... 104.875%
2004............................................... 103.250%
2005............................................... 101.625%
2006 and thereafter................................ 100.000%
</TABLE>
(b) In addition, at any time and from time to time prior to
June 15, 2001, the Company at its option may redeem the Notes in an aggregate
principal amount equal to up to 35% of the original aggregate principal amount
of the Notes (including the principal amount of any Additional Notes), with
funds in an aggregate amount (the "Redemption Amount") not exceeding the
aggregate proceeds of one or more Equity Offerings, at a Redemption Price
(expressed as a percentage of principal amount thereof) of 109.750% plus accrued
interest, if any, to the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that an aggregate principal amount of
the Notes equal to at least 65% of the original aggregate principal amount of
the Notes (including the principal amount of any Additional Notes) must remain
outstanding after each such redemption. The Company may make such redemption
upon notice mailed by first-class mail to each Holder's registered address and
upon publication in Luxembourg in accordance with Section 1005 (but in no event
more than 90 days after the completion of the related Equity Offering). Any such
notice may be given prior to the completion of the related Equity Offering, and
any such redemption or notice may, at the Company's discretion, be subject to
the satisfaction of one or more conditions precedent, including but not limited
to the completion of the related Equity Offering.
(c) At any time on or prior to June 15, 2003, the Notes may
also be redeemed or purchased (by the Company or any other Person) in whole but
not in part, at the Company's option, upon the occurrence of a Change of
Control, at a price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date). Such
redemption or purchase may be made upon notice mailed by first-class mail to
each Holder's registered address and upon publication in Luxembourg in
accordance with Section 1005 (but in no event more than 180 days after the
occurrence of such Change of Control). The Company may provide in such notice
that payment of the Redemption Price and performance of the Company's
obligations with respect to such redemption or purchase may be performed by
another Person. Any such notice may be given prior to the occurrence of the
related Change of Control,
<PAGE>
and any such redemption, purchase or notice may, at the Company's discretion, be
subject to the satisfaction of one or more conditions precedent, including but
not limited to the occurrence of the related Change of Control.
Section 1002. Applicability of Article. Redemption or purchase
of Notes as permitted by Section 1001 shall be made in accordance with this
Article 10.
Section 1003. Election to Redeem; Notice to Trustee. In case
of any re demption at the election of the Company of less than all of the Notes,
the Company shall, at least 30 days prior to the Redemption Date initially fixed
by the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed.
Section 1004. Selection by Trustee of Notes to Be Redeemed. In
the case of any partial redemption, selection of the Notes for redemption will
be made not more than 60 days prior to the Redemption Date by the Trustee on a
pro rata basis, by lot or by such other method as the Trustee in its sole
discretion shall deem to be fair and appropriate, although no Note of $1,000 in
original principal amount or less will be redeemed in part, provided that, in
the case of any partial redemption of any Global Note, selection for redemption
will be made by the Depositary in accordance with the procedures of the
Depositary therefor.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. On and after
the Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Notes shall
relate, in the case of any Note redeemed or to be redeemed only in part, to the
portion of the principal of such Note that has been or is to be redeemed.
Section 1005. Notice of Redemption. Notice of redemption or
purchase as provided in Section 1001 shall be deemed to have been given (i) upon
the mailing by first class mail, postage prepaid, of such notice to each Holder
of Notes to be redeemed, at his registered address as recorded in the Note
Register and (ii) for so long as the Notes are listed on the Luxembourg Stock
Exchange, upon publication in a leading newspaper of general circulation in
Luxembourg, in each case, not later than 30 nor more than 60 days prior to the
Redemption Date.
<PAGE>
Any such notice shall state:
(1) the expected Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note, and that, unless the
Company defaults in making such redemption payment or any Paying Agent
is prohibited from making such payment pursuant to the terms of this
Indenture, interest thereon shall cease to accrue from and after said
date,
(5) the place where such Notes are to be surrendered for
payment of the Redemption Price and the name and address of the Paying
Agent or Paying Agents,
(6) the CUSIP and other security identification numbers, if
any, subject to Section 311 hereof, and
(7) the section of this Indenture pursuant to which the Notes
are to be redeemed.
In addition, if such redemption, purchase or notice is subject to satisfaction
of one or more conditions precedent, as permitted by Section 1001, such notice
shall describe each such condition, and if applicable, shall state that, in the
Company's discretion, the Redemption Date may be delayed until such time as any
or all such conditions shall be satisfied, or such redemption or purchase may
not occur and such notice may be rescinded in the event that any or all such
conditions shall not have been satisfied by the Redemption Date, or by the
Redemption Date as so delayed.
Notice of such redemption or purchase of Notes to be so
redeemed or purchased at the election of the Company shall be given by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively
<PAGE>
presumed to have been given, whether or not the Holder receives such notice. In
any case, failure to give such notice by mail or any defect in the notice to the
Holder of any Note designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Note.
Section 1006. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, the Company shall
segregate and hold in trust as provided in Section 403) an amount of money
sufficient to pay the Redemption Price of, and any accrued and unpaid interest
on, all the Notes or portions thereof which are to be redeemed on that date.
Section 1007. Notes Payable on Redemption Date. Notice of
redemption having been given as provided in this Article 10, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price herein specified and from and after such date (unless Company shall
default in the payment of the Redemption Price or any Paying Agent is prohibited
from paying the Redemption Price pursuant to the terms of this Indenture) such
Notes shall cease to bear interest. Upon surrender of such Notes for redemp tion
in accordance with such notice, such Notes shall be paid by the Company at the
Re demption Price. Installments of interest whose Interest Payment Date is on or
prior to the Redemption Date shall be payable to the Holders of such Notes
registered as such on the relevant Regular Record Dates according to their terms
and the provisions of Section 307.
On and after any Redemption Date, if money sufficient to pay
the Redemption Price of and any accrued and unpaid interest on Notes called for
redemption shall have been made available in accordance with Section 1006, the
Notes (or the portions thereof) called for redemption will cease to accrue
interest and the only right of the Holders of such Notes (or portions thereof)
will be to receive payment of the Redemption Price of and subject to the last
sentence of the preceding paragraph of this Section 1007, any accrued and unpaid
interest on such Notes (or portions thereof) to the Redemption Date. If any Note
(or portion thereof) called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Note (or portion
thereof).
Section 1008. Notes Redeemed in Part. Any Note that is to be
redeemed only in part shall be surrendered at a Place of Payment (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his
<PAGE>
attorney duly authorized in writing) and the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized de nomination as
requested by such Holder in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Note so surrendered.
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 1101. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any surviving rights
of conversion or transfer or exchange of Notes herein expressly provided for),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 306, and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section 403)
have been delivered to the Trustee cancelled or for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee
cancelled or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements reasonably satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,
<PAGE>
(2) the Company has irrevocably deposited or caused to be
deposited with the Trustee an amount in United States dollars, U.S.
Government Obligations, or a combination thereof, sufficient to pay and
discharge the entire Indebtedness on such Notes not theretofore
delivered to the Trustee cancelled or for cancellation, for principal
(and premium, if any) and interest to the date of such deposit (in the
case of Notes that have become due and payable), or to the Stated
Maturity or Redemption Date, as the case may be;
(3) the Company has paid or caused to be paid all other sums
then payable hereunder by the Company; and
(4) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each to the effect that all
conditions precedent provided for in this Section 1101 relating to the
satisfaction and discharge of this Indenture have been complied with,
provided that any such counsel may rely on any Officer's Certificate as
to matters of fact (including as to compliance with the foregoing
clauses (1), (2) and (3)).
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 707 and,
if money shall have been deposited with the Trustee pursuant to clause (2) of
this Section 1101, the obligations of the Trustee under Section 1102, shall
survive.
Section 1102. Application of Trust Money. Subject to the
provisions of the last paragraph of Section 403, all money deposited with the
Trustee pursuant to Section 1101 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest on the Notes; but such money
need not be segregated from other funds except to the extent required by law.
ARTICLE 12
DEFEASANCE OR COVENANT DEFEASANCE
Section 1201. The Company's Option to Elect Defeasance or
Covenant Defeasance. The Company may, at its option, at any time, elect to have
terminated
<PAGE>
the obligations of the Company with respect to the Outstanding Notes and to have
terminated the obligations of any or all Note Guarantors with respect to the
Note Guarantees, in each case as set forth in this Article 12, and elect to have
either Section 1202 or Section 1203 be applied to all of the Outstanding Notes
(the "Defeased Notes"), upon compliance with the conditions set forth in Section
1204. Either Section 1202 or Section 1203 may be applied to the Defeased Notes
to any Redemption Date or the Stated Maturity of the Notes.
Section 1202. Defeasance and Discharge. Upon the Company's
exercise under Section 1201 of the option applicable to this Section 1202, the
Company shall be deemed to have been released and discharged from its
obligations with respect to the Defeased Notes on the date the relevant
conditions set forth in Section 1204 below are satisfied (hereinafter,
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Defeased Notes, which shall thereafter be deemed to be "Outstanding" only for
the purposes of Section 1205 and the other Sections of this Indenture referred
to in clauses (a) and (b) below, and the Company and each of the Note Guarantors
shall be deemed to have satisfied all other obligations under such Notes and
this Indenture insofar as such Notes are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following, which shall survive until otherwise terminated
or discharged hereunder: (a) the rights of Holders of Defeased Notes to receive,
solely from the trust fund described in Section 1204 and as more fully set forth
in such Section, payments in respect of the principal of and premium, if any,
and interest on such Notes when such payments are due, (b) the Company's
obligations with respect to such Defeased Notes under Sections 304, 305, 306,
402 and 403, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including the Trustee's rights under Section 707, and (d)
this Article 12. Subject to compliance with this Article 12, the Company may, at
its option and at any time, exercise its option under this Section 1202
notwithstanding the prior exercise of its option under Section 1203 with respect
to the Notes.
Section 1203. Covenant Defeasance. Upon the Company's exercise
under Section 1201 of the option applicable to this Section 1203, (a) the
Company and any Note Guarantors shall be released from their respective
obligations under any covenant or provision contained in Section 404 and
Sections 406 through 414 and the provisions of clauses (iii), (iv) and (v) of
Section 501 shall not apply, and (b) the occurrence of any event specified in
clause (3) (with respect to clauses (iii), (iv) and (v) of Section 501), (4) and
(5) (with respect to Section 404, Sections 406 through 414,
<PAGE>
inclusive, and any such covenants provided pursuant to Section 901(5)),
inclusive, (6), (7) and (8) (with respect to Subsidiaries), or (9) of Section
601 shall be deemed not to be or result in an Event of Default, in each case
with respect to the Defeased Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not to be "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the conse
quences of any thereof) in connection with such covenants or provisions, but
shall continue to be deemed "Outstanding" for all other purposes hereunder. For
this purpose, such Covenant Defeasance means that, with respect to the
Outstanding Notes, the Company and any Note Guarantors may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant or provision, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or provision or by
reason of any reference in any such covenant or provision to any other provision
herein or in any other document and such omission to comply shall not constitute
a Default or an Event of Default under Section 601, but, except as specified
above, the remainder of this Indenture and such Outstanding Notes shall be
unaffected thereby.
Section 1204. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 1202 or
Section 1203 to the Outstanding Notes:
(1) The Company shall have irrevocably deposited or caused to
be deposited with the Trustee in trust cash, in United States dollars, or U.S.
Government Obligations or a combination thereof, in amounts as will be
sufficient, in the opinion of a nationally recognized accounting or investment
banking firm expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the principal of, and premium, if any, and
interest on the Defeased Notes on the Stated Maturity or relevant Redemption
Date in accordance with the terms of this Indenture and the Notes;
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Section 601(7) or 601(8)
is concerned, at any time during the period ending on the ninety-first day after
the date of such deposit;
(3) Such deposit shall not result in a breach or violation of,
or constitute a Default or Event of Default under, this Indenture or any other
material agreement or in strument to which the Company is a party or by which it
is bound;
(4) In the case of an election under Section 1202, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that (x)
the Company
<PAGE>
has received from, or there has been published by, the Internal Revenue Service
a ruling or (y) since the Issue Date, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm to the effect that, the Holders of the Outstanding
Notes will not recognize income, gain or loss for Federal income tax purposes as
a result of such Defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Defeasance had not occurred;
(5) In the case of an election under Section 1203, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Out standing Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; and
(6) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each to the effect that all
conditions precedent provided for in this Section 1204 relating to either the
Defeasance under Section 1202 or the Covenant Defeasance under Section 1203, as
the case may be, have been complied with. In rendering such Opinion of Counsel,
counsel may rely on any Officer's Certificate as to compliance with the
foregoing clauses (1), (2) and (3) of this Section 1204 or as to any matters of
fact.
From and after the time of any deposit pursuant to clause (1)
of the first paragraph of this Section 1204, the money or U.S. Government
Obligations so deposited shall not be subject to the rights of the holders of
Senior Indebtedness or Guarantor Senior In debtedness pursuant to the
subordination provisions of Article 14 or Article 15.
Section 1205. Deposited Money and U.S. Government Obligations
To Be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions
of the last paragraph of Section 403, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or such other
Person that would qualify to act as successor trustee under Article 7,
collectively and solely for purposes of this Section 1205, Section 1412 and
Section 1512, the "Trustee") pursuant to Section 1204 in respect of the Defeased
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Notes of all sums due and
<PAGE>
to become due thereon in respect of principal, premium, if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee and its agents
and hold them harmless against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
1204 or the principal, premium, if any, and interest received in respect
thereof, other than any such tax, fee or other charge that by law is for the
account of the Holders of the Defeased Notes.
Anything in this Article 12 to the contrary notwithstanding,
the Trustee shall deliver to the Company from time to time upon Company Request
any money or U.S. Government Obligations held by it as provided in Section 1204
hereof that, in the opinion of a nationally recognized accounting or investment
banking firm expressed in a written cer tification thereof to the Trustee, are
in excess of the amount thereof that would then be required to be deposited to
effect an equivalent Defeasance or Covenant Defeasance. Subject to Article 7,
the Trustee shall not incur any liability to any Person by relying on such
opinion.
Section 1206. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 1202 or 1203, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations of the Company and any Note
Guarantor under this Indenture, the Notes and any Note Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to Section
1202 or 1203, as the case may be, until such time as the Trustee or Paying Agent
is permitted to apply all such money and U.S. Government Obligations in
accordance with Section 1202 or 1203, as the case may be; provided, however,
that if either the Company and any Note Guarantor makes any payment of
principal, premium, if any, or interest on any Note following the reinstatement
of its obligations, then the Company and any Note Guarantor shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money and U.S. Government Obligations held by the Trustee or Paying Agent.
Section 1207. Repayment to the Company. The Trustee shall pay
to the Company upon Company Request any money held by it for the payment of
principal or interest that remains unclaimed for two years. After payment to the
Company, Holders entitled to money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
Person and all liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
<PAGE>
ARTICLE 13
NOTE GUARANTEES
Section 1301. Guarantees Generally. (a) Note Guarantees. Each
Note Guarantor, as primary obligor and not merely as surety, hereby jointly and
severally, irrevocably and fully and unconditionally Guarantees, on a senior
subordinated basis, the punctual payment when due, whether at Stated Maturity,
by acceleration or otherwise, of all monetary obligations of the Company under
this Indenture and the Notes, whether for principal of or interest on the Notes,
expenses, indemnification or otherwise (all such obligations guaranteed by such
Note Guarantors being herein called the "Guaranteed Obligations").
Any term or provision of this Indenture notwithstanding, each
Note Guarantee shall not exceed the maximum amount that can be guaranteed by the
applicable Note Guarantor without rendering the Note Guarantee, as it relates to
such Note Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
(b) Further Agreements of Each Note Guarantor. (i) Each Note
Guarantor hereby agrees that (to the fullest extent permitted by law) its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of this Indenture, the Notes or the obligations of
the Company or any other Note Guarantor to the Holders or the Trustee hereunder
or thereunder, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, any
release of any other Note Guarantor, the recovery of any judgment against the
Company, any action to enforce the same, whether or not a notation concerning
its respective Note Guarantee is made on any particular Note, or any other
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor.
(ii) Each Note Guarantor hereby waives (to the fullest extent
permitted by law) the benefit of diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that (except as otherwise
provided in Section 1303) its Note Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes, this Indenture,
and its Note Guarantee. Such Note Guarantee is a guarantee of payment and not of
collection. Each Note Guarantor further agrees (to the fullest extent
<PAGE>
permitted by law) that, as between it, on the one hand, and the Holders of Notes
and the Trustee, on the other hand, subject to this Article 13 and Article 15,
(1) the maturity of the obligations guaranteed by its Note Guarantee may be
accelerated as and to the extent provided in Article 6 for the purposes of such
Note Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed by such
Note Guarantee, and (2) in the event of any acceleration of such obligations as
provided in Article 6, such obligations (whether or not due and payable) shall
forthwith become due and payable by such Note Guarantor in accordance with the
terms of this Section 1301 for the purpose of such Note Guarantee. Neither the
Trustee nor any other Person shall have any obligation to enforce or exhaust any
rights or remedies or to take any other steps under any security for the
Guaranteed Obligations or against the Company or any other Person or any
property of the Company or any other Person before the Trustee is entitled to
demand payment and performance by any or all Note Guarantors of their
obligations under their respective Note Guarantees or under this Indenture.
(iii) Until terminated in accordance with Section 1303, each
Note Guarantee shall remain in full force and effect and continue to be
effective should any petition be filed by or against the Company for liquidation
or reorganization, should the Company become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of the Company's assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Notes are, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee on such Notes, whether as a "voidable preference," "fraudulent
transfer" or otherwise, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Notes shall, to the fullest extent permitted by law,
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
(c) Each Note Guarantor that makes a payment or distribution
under its Note Guarantee shall have the right to seek contribution from the
Company or any non-paying Note Guarantor that has also Guaranteed the Guaranteed
Obligations in respect of which such payment or distribution is made, so long as
the exercise of such right does not impair the rights of the Holders under this
Note Guarantee.
(d) Each Note Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and
<PAGE>
that its Note Guarantee and the waiver set forth in Section 1305 is knowingly
made in contemplation of such benefits.
(e) Each Note Guarantor also hereby agrees to pay any and all
reasonable out-of-pocket expenses (including reasonable counsel fees and
expenses) incurred by the Trustee or the Holders in enforcing any rights under
its Note Guarantee.
Section 1302. Continuing Guarantees. Each Note Guarantee shall
be a continuing Guarantee and shall (i) remain in full force and effect until
payment in full of the principal amount of all outstanding Notes (whether by
payment at maturity, purchase, redemption, defeasance, retirement or other
acquisition) and all other Guaranteed Obligations then due and owing, unless
earlier terminated as provided in Section 1303, (ii) be binding upon such Note
Guarantor and (iii) inure to the benefit of and be enforceable by the Trustee,
the Holders and their permitted successors, transferees and assigns.
Section 1303. Release of Note Guarantees. Notwithstanding the
provisions of Section 1302, any Note Guarantee will be subject to termination
and discharge under the circumstances described in this Section 1303:
(a) Any Note Guarantor will automatically and unconditionally
be released from all obligations under its Note Guarantee, and such
Note Guarantee shall thereupon terminate and be discharged and of no
further force or effect, (i) concurrently with any sale or disposition
(by merger or otherwise) of any Note Guarantor or any interest therein
in accordance with the terms of the Indenture (including Section 410)
by the Company or a Restricted Subsidiary, following which such Note
Guarantor is no longer a Restricted Subsidiary of the Company, (ii)
pursuant to the terms of its Note Guarantee (in the case of any
Voluntary Note Guarantor), (iii) at any time that such Note Guarantor
is released from all of its obligations under all of its Guarantees of
payment by the Company of Bank Indebtedness of the Company, (iv) upon
the merger or consolidation of any Note Guarantor with and into the
Company or another Note Guarantor that is the surviving Person in such
merger or consolidation, (v) upon legal or covenant defeasance of the
Company's obligations, or satisfaction and discharge of this Indenture
as provided in Article 11 or Article 12, or (vi) subject to clause
(b)(iii) of Section 1301, upon payment in full of the aggregate
principal amount of all Notes then outstanding and all other Guaranteed
Obligations then due and owing.
(b) Upon 30 days' notice by the Company to the Trustee, any
Voluntary Note Guarantor shall be unconditionally released from all
obligations under its
<PAGE>
Note Guarantee, and such Note Guarantee shall thereupon terminate and
be discharged and of no further force or effect.
Upon any such occurrence specified in this Section 1303, the
Trustee shall execute any documents reasonably required in order to evidence
such release, discharge and termination in respect of such Note Guarantee.
Section 1304. Agreement to Subordinate. Each Note Guarantee
is, to the extent and in the manner set forth in Article 15, subordinated and
subject in right of payment to the prior payment in full of all Guarantor Senior
Indebtedness of the relevant Note Guarantor giving such Note Guarantee and each
Note Guarantee is made subject to such provisions of this Indenture.
Section 1305. Waiver of Subrogation. Each Note Guarantor
hereby irrevocably waives any claim or other rights that it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforcement of the Company's obligations under the Notes and this Indenture
or such Note Guarantor's obligations under its Note Guarantee and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, until this Indenture is discharged and all of the Notes are discharged and
paid in full. If any amount shall be paid to a Note Guarantor in violation of
the preceding sentence and the Notes shall not have been paid in full, such
amount shall have been deemed to have been paid to such Note Guarantor for the
benefit of, and held in trust for the benefit of, the Holders of the Notes, and
shall forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Notes, whether matured or unmatured, in accordance
with the terms of this Indenture.
Section 1306. Notation Not Required. Neither the Company nor
any Note Guarantor shall be required to make a notation on the Notes to reflect
any Note Guarantee or any such release, termination or discharge thereof.
Section 1307. Successors and Assigns of Note Guarantors. All
covenants and agreements in this Indenture by each Note Guarantor shall bind its
respective successors and assigns, whether so expressed or not.
Section 1308. Execution and Delivery of Note Guarantees. The
Company shall cause each Material Domestic Subsidiary that is required to become
a
<PAGE>
Note Guarantor pursuant to Section 413, and each Subsidiary of the Company
that the Company causes to become a Note Guarantor pursuant to Section 413, to
promptly execute and deliver to the Trustee a supplemental indenture
substantially in the form set forth in Exhibit B to this Indenture, or otherwise
in form and substance reasonably satisfactory to the Trustee, evidencing its
Note Guarantee on substantially the terms set forth in this Article 13.
Concurrently therewith, the Company shall deliver to the Trustee an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee to the
effect that such supplemental indenture has been duly authorized, executed and
delivered by such Restricted Subsidiary and that, subject to the applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and other laws now or hereafter in effect affecting
creditors' rights or remedies generally and the general principles of equity
(including standards of materiality, good faith, fair dealing and
reasonableness), whether considered in a proceeding at law or at equity such
supplemental indenture is a valid and binding agreement of such Restricted
Subsidiary, enforceable against such Restricted Subsidiary in accordance with
its terms.
Section 1309. Notices. Notice to any Note Guarantor shall be
sufficient if addressed to such Note Guarantor care of the Company at the
address, place and manner provided in Section 109.
ARTICLE 14
SUBORDINATION
Section 1401. Agreement To Subordinate. The Company agrees,
and each Noteholder by accepting a Note agrees, that the Indebtedness evidenced
by the Notes is subordinated in right of payment, to the extent and in the
manner provided in this Article 14, to the prior payment in full (when due) of
all existing and future Senior Indebtedness and that the subordination is for
the benefit of and enforceable by the holders of Senior Indebtedness of the
Company. The Notes shall in all respects rank pari passu with all other Senior
Sub ordinated Indebtedness of the Company and only Indebtedness of the Company
that is Senior Indebtedness shall rank senior to the Notes in accordance with
the provisions set forth herein. All provisions of this Article 14 shall be
subject to Section 1412.
Section 1402. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company upon a total or partial
liquidation or dissolution or reorganization of or similar proceeding relating
to the Company or its
<PAGE>
property, or in a bankruptcy, insolvency, receivership or similar proceeding
relating to the Company or its property, (i) the holders of Senior Indebtedness
will be entitled to receive payment in full of the Senior Indebtedness before
the Noteholders are entitled to receive any payment, and (ii) until the Senior
Indebtedness is paid in full, any payment or distribution to which Noteholders
would be entitled but for this Article 14 will be made to holders of the Senior
Indebtedness as their interests may appear, except that Noteholders may receive
shares of stock and any debt securities that are subordinated to at least the
same extent as the Notes.
Section 1403. Default on Senior Indebtedness. The Company may
not pay principal of, or premium (if any) or interest on, the Notes or make any
deposit pursuant to the provisions of Article 12 and may not otherwise purchase,
redeem or otherwise retire any Notes (collectively, "pay the Notes") if (i) any
Senior Indebtedness is not paid when due in cash or Cash Equivalents or (ii) any
other default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms (either such event, a
"Payment Default") unless, in either case, (x) the Payment Default has been
cured or waived and any such acceleration has been rescinded in writing or (y)
such Senior Indebtedness has been paid in full in cash or Cash Equivalents;
provided that the Company may pay the Notes without regard to the foregoing if
the Company and the Trustee receive written notice approving such payment from
the Representative for the Designated Senior Indebtedness with respect to which
the Payment Default has occurred and is continuing.
In addition, during the continuance of any default (other than
a Payment Default) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace period (a "Nonpayment Default"), the
Company may not pay the Notes for the period specified as follows (a "Payment
Blockage Period"). The Payment Blockage Period shall commence upon the receipt
by the Trustee (with a copy to the Company) of written notice (a "Blockage
Notice") of such Non-payment Default from the Representative for such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period
and shall end on the earliest to occur of the following events: (i) 179 days
shall have elapsed since such receipt of such Blockage Notice, (ii) the
Non-payment Default giving rise to such Blockage Notice is no longer continuing
(and no other Payment Default or Non-payment Default is then continuing), (iii)
such Designated Senior Indebtedness shall have been discharged or repaid in full
in cash or Cash Equivalents or (iv) such Payment Blockage Period shall have been
terminated by written notice to the Trustee and the Company from the Person or
Persons who gave
<PAGE>
such Blockage Notice. The Company shall promptly resume payments on the Notes,
including any missed payments, after such Payment Blockage Period ends, unless
the holders of such Designated Senior Indebtedness or the Representative of such
holders have accelerated the maturity of such Designated Senior Indebtedness, or
any Payment Default otherwise exists. Not more than one Blockage Notice may be
given in any 360 consecutive day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness during such period, except that
if any Blockage Notice within such 360-day period is given by or on behalf of
any holders of Designated Senior Indebtedness other than Bank Indebtedness, a
Representative of holders of Bank Indebtedness may give another Blockage Notice
within such period. In no event may the total number of days during which any
Payment Blockage Period is in effect extend beyond 179 days from the date of
receipt by the Trustee of the relevant Blockage Notice, and there must be a 181
consecutive day period during any 360 consecutive day period during which no
Payment Blockage Period is in effect.
Section 1404. Acceleration of Payment of Notes. If payment of
the Notes is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representative) of the acceleration. If any Designated Senior
Indebtedness is outstanding, such acceleration will not be effective and the
Company may not pay the Notes until five Business Days after such holders or the
Representative of each Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, the Company may pay the Notes only if this Article
14 otherwise permits payment.
Section 1405. When a Distribution Must Be Paid Over. If a
distribution is made to Noteholders that because of provisions of this Article
14 should not have been made to them, the Noteholders who received the
distribution are required to hold it in trust for the holders of Senior
Indebtedness and pay it over to them as their interests may appear.
Section 1406. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Notes are paid in full, Holders shall
be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. For purposes of such
subrogation, a distribution made under this Article 14 to holders of Senior
Indebtedness that otherwise would have been made to Holders is not, as between
the Company, its creditors other than the holders of such Senior Indebtedness
and Holders, a payment by the Company on such Senior Indebtedness, it being
understood that the provisions of this Article 14 are and are intended solely
for the purpose of defining the relative rights of the Holders, on the one hand,
and the holders of Senior Indebtedness of the Company, on the other hand.
<PAGE>
Section 1407. Relative Rights. This Article 14 defines the
relative rights of Holders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(i) impair, as between the Company and Holders, the obligation
of the Com pany which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms; or
(ii) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness to receive distributions otherwise payable to
Holders.
Section 1408. Subordination May Not Be Impaired by the
Company. No right of any holder of Senior Indebtedness of the Company to enforce
the subordination of the Indebtedness evidenced by the Notes shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
Section 1409. Rights of Trustee and Paying Agent. The Company
shall give prompt written notice to the Trustee of any fact known to the Company
that would prohibit the making of any payment to or by the Trustee in respect of
the Notes. Failure to give such notice shall not affect the subordination of the
Notes to Senior Indebtedness of the Company. Notwithstanding Section 1403, the
Trustee or Paying Agent may continue to make payments on the Notes and shall not
be charged with knowledge of the existence of facts that would prohibit the
making of any such payments unless, not less than two Business Days prior to the
date of such payment, a Trust Officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article 14. The
Company, the Registrar or co-registrar, the Paying Agent, or a Representative or
holder of Senior Indebtedness may give the notice; provided, however, that, if
an issue of Senior Indebtedness has a Representative, only the Representative
may give the notice. The Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself or itself to be a holder of
any Senior Indebtedness (or a Representative of such holder) to establish that
such notice has been given by a holder of such Senior Indebtedness or
Representative thereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 14 with respect to any Senior Indebtedness that may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its
<PAGE>
rights as such holder. Nothing in this Article 14 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 707.
Section 1410. Distribution or Notice to Representative.
Whenever a dis tribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
Section 1411. Article 14 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the Notes
by reason of any provision in this Article 14 shall not be construed as
preventing the occurrence of a Default. Subject to Section 1404, nothing in this
Article 14 shall have any effect on the right of the Holders or the Trustee to
accelerate the maturity of the Notes.
Section 1412. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 12 by the Trustee for
the payment of principal of and premium, if any, and interest on the Notes shall
not be subordinated to the prior payment of any Senior Indebtedness of the
Company or subject to the restrictions set forth in this Article 14, and none of
the Holders shall be obligated to pay over any such amount to the Company or any
holder of Senior Indebtedness of the Company or any other creditor of the
Company.
Section 1413. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 14, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 1402
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the Representatives for the holders of Senior Indebtedness
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 14. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to par ticipate in any payment or distribution pursuant to
this Article 14, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article 14, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the
<PAGE>
right of such Person to receive such payment. The provisions of Sections 701 and
703 shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 14.
Section 1414. Trustee To Effectuate Subordination. Each Holder
by accepting a Note authorizes and directs the Trustee on such Holder's behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of the Company as provided in this Article 14 and appoints the
Trustee as attorney-in-fact for any and all such purposes.
Section 1415. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders or the
Company or any other Person, money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 14 or otherwise. With
respect to the holders of Senior Indebtedness of the Company, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article 14 or Article 15 and no implied
covenants or obligations with respect to holders of Senior Indebtedness of the
Company shall be read into this Indenture against the Trustee.
Section 1416. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
Section 1417. Trustee's Compensation Not Prejudiced. Nothing
in this Article 14 shall apply to amounts due to the Trustee pursuant to other
Sections of this Indenture.
ARTICLE 15
SUBORDINATION OF NOTE GUARANTEES
<PAGE>
Section 1501. Agreement To Subordinate. (a) Each Note
Guarantor agrees, and each Noteholder by accepting a Note agrees, that all
payments pursuant to such Note Guarantor's Note Guarantee made by or on behalf
of such Note Guarantor are subordinated in right of payment, to the extent and
in the manner provided in this Article 15, to the prior payment in full (when
due) of all existing and future Guarantor Senior Indebtedness of such Note
Guarantor and that the subordination is for the benefit of and enforceable by
the holders of Guarantor Senior Indebtedness of such Note Guarantor. Such Note
Guarantee shall in all respects rank pari passu with all other Guarantor Senior
Subordinated Indebtedness of such Note Guarantor and only Indebtedness of such
Note Guarantor that is Guarantor Senior Indebtedness shall rank senior to such
Note Guarantee in accordance with the provisions set forth herein.
(b) All provisions of this Article 15 shall be subject to
Section 1512.
Section 1502. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of a Note Guarantor upon a total or
partial liquidation or dissolution or reorganization of or similar proceeding
relating to such Note Guarantor or its property, or in a bankruptcy, insolvency,
receivership or similar proceeding relating to such Note Guarantor or its
property,
(i) the holders of Guarantor Senior Indebtedness of such Note
Guarantor will be entitled to receive payment in full of such Guarantor
Senior Indebtedness before the Noteholders are entitled to receive any
payment from such Note Guarantor; and
(ii) until the Guarantor Senior Indebtedness of such Note
Guarantor is paid in full, any payment or distribution from such Note
Guarantor to which Noteholders would be entitled but for this Article
15 will be made to holders of such Guarantor Senior Indebtedness as
their interests may appear, except that Noteholders may receive shares
of stock and any debt securities that are subordinated to such
Guarantor Senior Indebtedness to at least the same extent as the Note
Guarantee of such Note Guarantor.
Section 1503. Default on Guarantor Senior Indebtedness. No
Note Guarantor may make any payment pursuant to its Note Guarantee and may not
otherwise purchase, redeem or otherwise retire or defease any Notes
(collectively, "pay its Note Guarantee") if (i) any Guarantor Senior
Indebtedness of such Note Guarantor is not paid when due or (ii) any other
default on Guarantor Senior Indebtedness of such
<PAGE>
Note Guarantor occurs and the maturity of such Guarantor Senior Indebtedness is
accelerated in accordance with its terms (either such event, a "Guarantor
Payment Default") unless, in either case, (x) the Guarantor Payment Default has
been cured or waived and any such acceleration has been rescinded in writing or
(y) such Guarantor Senior Indebtedness has been paid in full; provided, however,
a Note Guarantor may pay its Note Guarantee without regard to the foregoing if
such Note Guarantor and the Trustee receive written notice approving such
payment from the Representative for the Designated Senior Indebtedness with
respect to which the Guarantor Payment Default has occurred and is continuing.
In addition, no Note Guarantor may pay its Note Guarantee
during the continuance of a Payment Blockage Period after receipt by the Company
and the Trustee of a Blockage Notice under Section 1403. Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions of the first paragraph of this Section 1503), a Note Guarantor shall
promptly resume payments, if any are required, pursuant to its Note Guarantee,
including any missed payments, after such Payment Blockage Period ends, unless
the holders of such Designated Senior Indebtedness or the Representative of such
holders have accelerated the maturity of such Designated Senior Indebtedness, or
any Payment Default otherwise exists.
In addition, during the continuance of any default (other than
a Guarantor Payment Default) with respect to any Guarantor Designated Senior
Indebtedness of a Note Guarantor pursuant to which the maturity thereof may be
accelerated immediately without further notice except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
period (a "Guarantor Non-payment Default"), such Note Guarantor may not pay its
Note Guarantee for the period specified as follows (a "Guarantor Payment
Blockage Period"). The Guarantor Payment Blockage Period shall commence upon the
receipt by the Trustee (with copy to such Note Guarantor) of written notice (a
"Guarantor Blockage Notice") of such Guarantor Non-payment Default from the
Representative for such Guarantor Designated Senior Indebtedness specifying an
election to effect a Guarantor Payment Blockage Period and shall end on the
earliest to occur of the following events: (i) 179 days shall have elapsed since
such receipt of such Guarantor Blockage Notice, (ii) the Guarantor Non-payment
Default giving rise to such Blockage Notice is no longer continuing (and no
other Guarantor Payment Default or Guarantor Non-payment Default is then con
tinuing), (iii) such Guarantor Designated Senior Indebtedness shall have been
discharged or repaid in full in cash or Cash Equivalents or (iv) such Guarantor
Payment Blockage Period shall have been terminated by written notice to the
Trustee and such Note Guarantor from the Person or Persons who gave such
<PAGE>
Guarantor Blockage Notice. A Note Guarantor may pay its Note Guarantee, after
such Guarantor Payment Blockage Period ends, unless the holders of such
Guarantor Designated Senior Indebtedness or the Representative of such holders
have accelerated the maturity of such Guarantor Designated Senior Indebtedness,
or any Guarantor Payment Default otherwise exists. Not more than one Guarantor
Blockage Notice to a Note Guarantor in the aggregate may be given in any 360
consecutive day period, irrespective of the number of defaults with respect to
Guarantor Designated Senior Indebtedness of such Note Guarantor during such
period, except that if any Guarantor Blockage Notice within such 360-day period
is given by or on behalf of any holders of Guarantor Designated Senior
Indebtedness of such Note Guarantor other than Bank Indebtedness, a
Representative of holders of Bank Indebtedness that is Guaranteed by such Note
Guarantor may give another Guarantor Blockage Notice within such period. In no
event may the total number of days during which any Guarantor Payment Blockage
Period is in effect extend beyond 179 days from the date of receipt by the
Trustee of the relevant Guarantor Blockage Notice, and there must be a 181
consecutive day period during any 360 consecutive day period during which no
Guarantor Payment Blockage Period is in effect.
Section 1504. Acceleration of Payment of Notes. If payment of
the Notes is accelerated because of an Event of Default, the relevant Note
Guarantor or the Trustee shall promptly notify the holders of the Guarantor
Designated Senior Indebtedness of such Note Guarantor (or the Representative of
such holders) of the acceleration. If any Guarantor Designated Senior
Indebtedness of a Note Guarantor is outstanding, any demand for payment under
such Note Guarantor's Note Guarantee will not be effective with respect to such
Note Guarantor, and such Note Guarantor may not pay its Note Guarantee, until
five Business Days after such holders or the Representative of each Designated
Senior Indebtedness of such Note Guarantor receive notice of such demand and,
thereafter, such Note Guarantor may pay its Note Guarantee only if this Article
15 otherwise permits payment. If a demand for payment is made on such Note
Guarantor pursuant to Article 13, the Trustee shall promptly notify the holders
of the Guarantor Designated Senior Indebtedness of such Note Guarantor (or their
Representatives) of such demand.
Section 1505. When a Distribution Must Be Paid Over. If a
distribution from a Note Guarantor is made to Holders that because of the
provisions of this Article 15 should not have been made to them, the Holders who
receive the distribution shall hold it in trust for holders of Guarantor Senior
Indebtedness of such Note Guarantor and pay it over to them as their interests
may appear.
<PAGE>
Section 1506. Subrogation. After all Guarantor Senior
Indebtedness of a Note Guarantor is paid in full and until the Notes are paid in
full, Holders shall be subrogated to the rights of holders of Guarantor Senior
Indebtedness of such Note Guarantor to receive distributions applicable to such
Guarantor Senior Indebtedness. For purposes of such subrogation, a distribution
made under this Article 15 to holders of Guarantor Senior Indebtedness of a Note
Guarantor that otherwise would have been made to Holders is not, as between such
Note Guarantor, its creditors other than the holders of such Guarantor Senior
Indebtedness, and Holders, a payment by such Note Guarantor on such Guarantor
Senior Indebtedness, it being understood that the provisions of this Article 15
are and are intended solely for the purpose of defining the relative rights of
the Holders, on the one hand, and the holders of Guarantor Senior Indebtedness
of such Note Guarantors, on the other hand.
Section 1507. Relative Rights. This Article 15 defines the
relative rights of Holders and holders of Guarantor Senior Indebtedness of each
Note Guarantor. Nothing in this Indenture shall:
(i) impair, as between a Note Guarantor and Holders, the
obligation of such Note Guarantor to pay the Guaranteed Obligations in
accordance with the terms of its respective Note Guarantee; or
(ii) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Guarantor Senior Indebtedness of a Note Guarantor to receive
distributions otherwise payable to Holders.
Section 1508. Subordination May Not Be Impaired by Note
Guarantors. No right of any holder of Guarantor Senior Indebtedness of a Note
Guarantor to enforce the subordination of the payments pursuant to such Note
Guarantor's respective Note Guarantee shall be impaired by any act or failure to
act by such Note Guarantor or by its failure to comply with this Indenture.
Section 1509. Rights of Trustee and Paying Agent. A Note
Guarantor shall give prompt written notice to the Trustee of any fact known to
it that would prohibit the making of any payment to or by the Trustee in respect
of its Note Guarantee. Failure to give such notice shall not affect the
subordination of the payments pursuant to its Note Guarantee to Guarantor Senior
Indebtedness of such Note Guarantor. Notwithstanding Section 1503, the Trustee
or Paying Agent may continue to make payments pursuant to such Note Guarantee
and shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payments unless,
<PAGE>
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 15. The Company or any Note Guarantor, the Registrar
or co-registrar, the Paying Agent, or a Representative or holder of Guarantor
Senior Indebtedness of any Note Guarantor may give the notice; provided, that,
if an issue of Guarantor Senior Indebtedness of a Note Guarantor has a
Representative, only the Representative may give the notice. The Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Guarantor Senior
Indebtedness of a Note Guarantor (or a Representative of such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or Representative thereof.
The Trustee in its individual or any other capacity may hold
Guarantor Senior Indebtedness of a Note Guarantor with the same rights it would
have if it were not Trustee. The Registrar and co-registrar and the Paying Agent
may do the same with like rights. The Trustee shall be entitled to all the
rights set forth in this Article 15 with respect to any Guarantor Senior
Indebtedness of a Note Guarantor which may at any time be held by it, to the
same extent as any other holder of Guarantor Senior Indebtedness of such Note
Guarantor; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 15 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 707.
Section 1510. Distribution or Notice to Representative.
Whenever a distribu tion is to be made or a notice given to holders of Guarantor
Senior Indebtedness of a Note Guarantor, the distribution may be made and the
notice given to their Representative (if any).
Section 1511. Article 15 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to a Note
Guarantee by reason of any provision in this Article 15 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 15 shall have
any effect on the right of the Holders or the Trustee to accelerate the maturity
of the Notes or make a demand for payment on a Note Guarantor pursuant to
Article 13 or the relevant Note Guarantee.
Section 1512. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 12 by the Trustee for
the payment of principal, premium, if any, or interest on the Notes shall not be
subordinated to the prior payment of any Guarantor Senior Indebtedness of any
Note Guarantor or subject to the
<PAGE>
restrictions set forth in this Article 15, and none of the Holders shall be
obligated to pay over any such amount to any Note Guarantor or any holder of
Guarantor Senior Indebtedness or any other creditor of any Note Guarantor.
Section 1513. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 15, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 1502
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the Representatives for the holders of Guarantor Senior
Indebtedness or any Note Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Guarantor Senior Indebtedness and other Indebtedness of such Note Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 15. In the
event that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of such Guarantor Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article 15, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Guarantor Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 15, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 701 and 703 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 15.
Section 1514. Trustee To Effectuate Subordination. Each Holder
by accepting a Note authorizes and directs the Trustee on such Holder's behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Guarantor
Senior Indebtedness of any Note Guarantor as provided in this Article 15 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 1515. Trustee Not Fiduciary for Holders of Guarantor
Senior In debtedness. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Guarantor Senior Indebtedness of any Note Guarantor and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Holders or the Company or any other Person, money or assets to which any
holders of Guarantor Senior Indebtedness shall be entitled by virtue of this
Article 15 or otherwise. With
<PAGE>
respect to the holders of Guarantor Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article 15 and no implied covenants or
obligations with respect to holders of Guarantor Senior Indebtedness of any Note
Guarantor shall be read into this Indenture against the Trustee.
Section 1516. Reliance by Holders of Guarantor Senior
Indebtedness on Subordination Provisions. Each Holder by accepting a Note
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any
Guarantor Senior Indebtedness of any Note Guarantor, whether such Guarantor
Senior Indebtedness was created or acquired before or after the issuance of the
Notes, to acquire and continue to hold, or to continue to hold, such Guarantor
Senior Indebtedness and such holder of such Guarantor Senior Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Guarantor
Senior Indebtedness.
Section 1517. Trustee's Compensation Not Prejudiced. Nothing
in this Article 15 shall apply to amounts due to the Trustee pursuant to other
Sections of this Indenture.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
U.S. OFFICE PRODUCTS COMPANY,
as Issuer
By:
---------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
Name:
Title:
ACTION WHOLESALE SERVICE, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
AFFORDABLE INTERIOR SYSTEMS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
<PAGE>
Title:
AMERICAN LOOSE LEAF/BUSINESS
PRODUCTS, INC., as a Note Guarantor
By:
---------------------------------
Name:
Title:
ANDREWS OFFICE SUPPLY & EQUIPMENT
CO., as a Note Guarantor
By:
---------------------------------
Name:
Title:
BINDERY SYSTEMS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
BOB BRINES OFFICE SUPPLY CO.,
as a Note Guarantor
By:
---------------------------------
Name:
<PAGE>
Title:
CARITHERS-WALLACE-COURTENAY, LLC,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
CAROLINA OFFICE EQUIPMENT COMPANY,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
CENTRAL TEXAS OFFICE PRODUCTS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
COPENHAVER HOLDINGS, LLC,
as a Note Guarantor
By:
---------------------------------
<PAGE>
Name:
Title:
COURTLAND-CAIN, INC., as a Note Guarantor
By:
---------------------------------
Name:
Title:
DAMERON-PIERSON COMPANY, LIMITED,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
DULWORTH OFFICE FURNITURE COMPANY,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
EXPERT OFFICE SERVICES, INC.,
as a Note Guarantor
<PAGE>
By:
---------------------------------
Name:
Title:
FORT SMITH OFFICE SUPPLY, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
FORTY-FIFTEEN PAPIN REDEVELOPMENT
CORPORATION, as a Note Guarantor
By:
---------------------------------
Name:
Title:
GENERAL OFFICE PRODUCTS COMPANY,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
GLOBAL MAILBOX EXPRESS, LLC,
as a Note Guarantor
<PAGE>
By:
---------------------------------
Name:
Title:
J.H. WHITLEY CO., INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
KENTWOOD OFFICE FURNITURE, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
LANDMARK INDUSTRIES INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
LANIER ACQUISITION CORP.,
as a Note Guarantor
<PAGE>
By:
---------------------------------
Name:
Title:
MAIL BOXES, ETC., as a Note Guarantor
By:
---------------------------------
Name:
Title:
MAIL BOXES ETC., USA, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
<PAGE>
MCWHORTER'S, INC., as a Note Guarantor
By:
---------------------------------
Name:
Title:
MILE HIGH OFFICE SUPPLY, LLC,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
MILLS MORRIS BUSINESS PRODUCTS, INC., as
a Note Guarantor
By:
---------------------------------
Name:
Title:
MODERN FOODS SYSTEMS, INC., as a Note
Guarantor
By:
---------------------------------
Name:
Title:
<PAGE>
MODERN VENDING, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
MORRIS OFFICE MACHINES, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
NATIONAL OFFICE SUPPLY, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
NEW MEXICO OFFICE SOLUTIONS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
<PAGE>
PEAR COMMERCIAL INTERIORS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
PRICE MODERN, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
RADAR BUSINESS SYSTEMS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
RAINEN BUSINESS INTERIORS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
<PAGE>
SAGOT OFFICE INTERIORS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
SLETTEN VENDING SERVICE, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
STURGIS ACQUISITION CORP.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
SWEITZER'S OFFSET SERVICES, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
<PAGE>
BUSINESSWORKS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
THE H.H. WEST COMPANY,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
THE J. THAYER COMPANY, LLC,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
THE OFFICE FURNITURE STORE, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
<PAGE>
Title:
THE OFFICE WORKS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
THE SYSTEMS HOUSE, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
USOP MERCHANDISING COMPANY,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
U.S. OFFICE FURNITURE, INC.,
as a Note Guarantor
By:
---------------------------------
<PAGE>
Name:
Title:
U.S. OFFICE FURNITURE RENTALS, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
U.S. OFFICE PRODUCTS-GREAT LAKES, INC.,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
U.S. OFFICE PRODUCTS-MIDWEST, LLC, as a
Note Guarantor
By:
---------------------------------
Name:
Title:
U.S. OFFICE PRODUCTS OF NORTHERN
WISCONSIN, INC., as a Note Guarantor
<PAGE>
By:
---------------------------------
Name:
Title:
U.S. OFFICE PRODUCTS SOUTHERN
CALIFORNIA, as a Note Guarantor
By:
---------------------------------
Name:
Title:
VEND-RITE SERVICE CORPORATION,
as a Note Guarantor
By:
---------------------------------
Name:
Title:
WHITTINGTON, INC., as a Note Guarantor
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF NOTE(1)
U.S. OFFICE PRODUCTS COMPANY,
Issuer
9 3/4% Senior Subordinated Notes Due 2008
No. CUSIP No. [_______](2) [_______](3)
$_________
U.S. Office Products Company, a Delaware corporation (and
its successors and assigns) (the "Company"), promises to pay to ,
or registered assigns, the principal sum of $( United States Dollars)
on June 15, 2008 [(or such lesser or greater amount as shall be outstanding
hereunder from time to time in accordance with Sections 312 and 313 of the
Indenture referred to on the reverse hereof)](4).
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
Additional provisions of this Note are set forth on the
other side of this Note.
- --------
1. Insert any applicable legends from Article 2.
2. Include this or other appropriate CUSIP Number for Initial Note that is
not registered under the Securities Act.
3. Include this or other appropriate CUSIP Number for Exchange Note or
Initial Note that is registered under the Securities Act.
4. Include only if the Note is issued in global form, and only if applicable.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
U.S. OFFICE PRODUCTS COMPANY, as Issuer
By:
---------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Notes referred to in the within-named Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
[FORM OF REVERSE SIDE OF NOTE]
9 3/4% Senior Subordinated Note Due 2008
1. Interest
The Company promises to pay interest on the principal
amount of this Note semi-annually on June 15 and December 15 in each year,
commencing December 15, 1998, at the rate of 9 3/4% per annum [(subject to
adjustment as provided below)](5) [, except that interest accrued on this
Note for periods prior to the date on which the Initial Note was surrendered
in exchange for this Note will accrue at the rate or rates borne by such
Initial Note from time to time during such periods](6), until such principal
amount is paid or made available for payment. [Interest on this Note will
accrue from the most recent date to which interest on this Note or any of its
Predecessor Notes has been paid or duly provided for or, if no interest has
been paid, from the Issue Date.](7) []Interest on this Note will accrue from
the most recent date to which interest on this Note or any of its Predecessor
Notes has been paid or duly provided for or, if no such interest has been
paid, from [_________, ____](8).](9) Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name
this Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which shall be the
June 1 or December 1 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is registered at
the close of business on
- --------
5. Include only for Initial Note when additional interest provisions, set
forth in the next paragraph, are included.
6. Include only for Exchange Note.
7. Include only for Original Notes.
8. Insert first date of issuance of Additional Note and its Predecessor
Notes.
9. Include only for Additional Notes (and Exchange Notes issued in the
exchange therefor).
<PAGE>
a Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes not more than 15
days nor less than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement (the "Registration Rights Agreement"), dated June
5, 1998, among U.S. Office Products Company, Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, BT Alex. Brown Incorporated
and Chase Securities Inc. Until (i) the date on which this Note has been
exchanged for an Exchange Note (as defined in the Registration Rights Agreement)
in the Exchange Offer (as defined in the Registration Rights Agreement), (ii)
the date on which this Note has been effectively registered under the Securities
Act in accordance with the Shelf Registration Statement (as defined in the
Registration Rights Agreement), or (iii) the date on which such Note is
distributed to the public pursuant to Rule 144 of the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act (or otherwise is
eligible for resale pursuant to Rule 144 (or any successor provision) under the
Securities Act without volume restriction, if any): From and including the date
on which a Registration Default (as defined below) shall occur to but excluding
the date on which such Registration Default has been cured, additional interest
will accrue on this Note at the rate of (a) prior to March 10, 1999 (for so long
as such period is continuing), 0.25% per annum and (b) thereafter (for so long
as such period is continuing), 0.50% per annum. Any such additional interest
shall not exceed such respective rates for such respective periods, and shall
not in any event exceed 0.50% per annum in the aggregate, regardless of the
number of Registration Defaults that shall have occurred and be continuing. Any
such additional interest shall be paid in the same manner and on the same dates
as interest payments in respect of this Note. Following the cure of all
Registration Defaults, the accrual of such additional interest will cease. All
Registration Defaults shall be deemed cured upon the consummation of the
Exchange Offer. For purposes of the foregoing, each of the following events is a
"Registration Default": (i) the Exchange Offer is not consummated on or before
December 10, 1998 or (ii) if a Shelf Registration Statement is required to be
filed under the Registration Rights Agreement, (A) the Shelf Registration
Statement is not declared effective by the SEC on December 10, 1998 (or, in the
case of a Shelf Registration Statement required to be filed in response to any
change in applicable interpretation of the SEC, if later, on or
<PAGE>
before the 90th day after the publication of such change) or (B) after such
Shelf Registration Statement is declared effective and during the time that the
Company is required to use its reasonable best efforts to keep the Shelf
Registration Statement in effect, such Shelf Registration Statement ceases to be
effective and continues not to be effective (other than in connection with the
consummation of the Exchange Offer).](10)(11)
2. Method of Payment
Payment of the principal of (and premium, if any) and interest
on this Note will be made at the office or agency of the Company maintained for
that purpose, in accordance with Articles 3 and 4 of the Indenture.
3. Paying Agent and Registrar
Initially, State Street Bank and Trust Company, a
Massachusetts trust company, the Trustee, will act as Paying Agent and
Registrar. The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company or any domestically incorporated
subsidiary of the Company may act as Paying Agent, Registrar or co-registrar.
4. Indenture
This Note is one of the duly authorized issue of 9 3/4% Senior
Subordinated Notes Due 2008 of the Company (herein called the "Notes"), issued
under an Indenture, dated as of June 10, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Indenture," which term shall have the
meanings assigned to it in such instrument), among U.S. Office Products Company,
the Note Guarantors (which term has the meaning ascribed thereto in the
Indenture) named therein and from time to time parties thereto and State Street
Bank and Trust Company, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the
- --------
10. Include only for Initial Note when required by the Registration Rights
Agreement.
11. For an Initial Additional Note, add any similar provision, if any, as
may be agreed by the Company with respect to additional interest on
such Initial Additional Note.
<PAGE>
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, any other obligor upon this Note, the Trustee and the Holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The terms of the Notes include those stated in the
Indenture and those made a part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, as in effect from time to time (the "TIA").
The Notes are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of such terms. Additional Notes may be
issued under the Indenture which may vote (or consent) as a class with the Notes
and otherwise be treated as Notes for all purposes of the Indenture.
All terms used in this Note that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Note is entitled to the benefits of the certain senior
subordinated Note Guarantees of the Note Guarantors and may hereafter be
entitled to certain other senior subordinated Note Guarantees made for the
benefit of the Holders. Reference is made to Article Thirteen of the Indenture
and to the Note Guarantees for terms relating to such Note Guarantees, including
the release, termination and discharge thereof. Neither the Company nor any Note
Guarantor shall be required to make any notation on this Note to reflect any
Note Guarantee or any such release, termination or discharge.
5. Optional Redemption
(a) The Notes will be redeemable, at the Company's option, in
whole or in part, and from time to time on and after June 15, 2003 and prior to
maturity. Such redemption may be made upon notice mailed by first-class mail to
each Holder's registered address and upon publication in Luxembourg in
accordance with the Indenture. Any such redemption and notice may, in the
Company's discretion, be subject to the satisfaction of one or more conditions
precedent. The Notes will be so redeemable at the following Redemption Prices
(expressed as a percentage of principal amount), plus accrued interest, if any,
to the relevant Redemption Date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date) if redeemed during the 12-month period commencing on June 15 of
the years set forth below:
<PAGE>
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- ------------
<S> <C>
2003............................................... 104.875%
2004............................................... 103.250%
2005............................................... 101.625%
2006 and thereafter................................ 100.000%
</TABLE>
(b) In addition, at any time and from time to time prior to
June 15, 2001, the Company at its option may redeem the Notes in an aggregate
principal amount equal to up to 35% of the original aggregate principal amount
of the Notes (including the principal amount of any Additional Notes), with
funds in an aggregate amount not exceeding the aggregate proceeds of one or more
Equity Offerings, at a Redemption Price (expressed as a percentage of principal
amount thereof) of 109.750% plus accrued interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that an aggregate principal amount of the Notes equal to at least 65% of the
original aggregate principal amount of the Notes (including the principal amount
of any Additional Notes) must remain outstanding after each such redemption. The
Company may make such redemption upon notice mailed by first-class mail to each
Holder's registered address and upon publication in Luxembourg in accordance
with the Indenture (but in no event more than 90 days after the completion of
the related Equity Offering). Any such notice may be given prior to the
completion of the related Equity Offering, and any such redemption or notice
may, at the Company's discretion, be subject to the satisfaction of one or more
conditions precedent, including but not limited to the completion of the related
Equity Offering.
(c) At any time on or prior to June 15, 2003, the Notes may
also be redeemed or purchased (by the Company or any other Person), in whole but
not in part, at the Company's option, upon the occurrence of a Change of
Control, at a price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date). Such
redemption or purchase may be made upon notice mailed by first-class mail to
each Holder's registered address and upon publication in Luxembourg in
accordance with the Indenture (but in no event more than 180 days after the
occurrence of such Change of Control). The Company may provide in such notice
that payment of such price and performance of the Company's obligations with
respect to such redemption or purchase may be performed by another Person. Any
such notice may be given prior to the occurrence of
<PAGE>
the related Change of Control, and any such redemption, purchase or notice may,
at the Company's discretion, be subject to the satisfaction of one or more
conditions precedent, including but not limited to the occurrence of the related
Change of Control.
6. No Sinking Fund
The Notes will not be entitled to the benefit of a sinking
fund.
7. Subordination
The Notes are subordinated to Senior Indebtedness of the
Company, and the Note Guarantees are subordinated to Guarantor Senior
Indebtedness of the relevant Note Guarantor. To the extent provided in the
Indenture, Senior Indebtedness and Guarantor Senior Indebtedness must be paid
before the Notes or the relevant Note Guarantee, as the case may be, may be
paid. The Company and the Note Guarantors agree, and each Noteholder by
accepting a Note agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purposes.
8. Put Provisions
The Indenture provides that, upon the occurrence of a Change
of Control Triggering Event, each Holder will have the right to require that the
Company repurchase all or any part of such Holder's Notes at a repurchase price
in cash equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest, if any, to the date of such repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided, however, that the Company
shall not be obligated to purchase Notes in the event it has exercised its right
to redeem all of the Notes.
9. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Notes in accordance with the Indenture and subject to certain
limitations set forth therein. No service charge shall be made for any
<PAGE>
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. The Company shall not be required (i) to issue, transfer
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption (or purchase) of
Notes selected for redemption (or purchase) under Section 1004 of the Indenture
and ending at the close of business on the day of such mailing, or (ii) to
transfer or exchange any Note so selected for redemption (or purchase) in whole
or in part.
10. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner
of it for all purposes.
11. Unclaimed Money
The Trustee shall pay to the Company upon a Company Request
any money held by it for the payment of principal (and premium, if any) or
interest that remains unclaimed for two years. After payment to the Company,
Holders entitled to money must look to the Company for payment as general
creditors and all liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Notes and the Indenture if
the Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal of, premium (if any) and interest on the Notes to
redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions, (i) the Indenture may be
amended with the consent of the Holders of a majority in principal amount of
the Notes then outstanding and (ii) any past default or compliance with any
provisions may be waived with the consent of the Holders of a majority in
principal amount of the Notes then outstanding (including in each case,
<PAGE>
consents obtained in connection with a tender offer or exchange offer for
Notes). In certain instances provided in the Indenture, the Indenture may be
amended without the consent of any Holder.
14. Defaults and Remedies
If an Event of Default with respect to the Notes occurs and is
continuing, the Notes may be declared due and payable immediately in the manner
and with the effect provided in the Indenture.
15. No Recourse Against Others
No director, officer, employee, incorporator, member or
stockholder, as such, of the Company, any Note Guarantor or any subsidiary of
any thereof shall have any liability for any obligation of the Company, or any
Note Guarantor on the Notes under this Indenture, the Notes, or any Note
Guarantee, or for any claim based on, in respect of, or by reason of, any such
obligation or its creation. Each Noteholder, by accepting the Notes, waives and
releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes.
16. Governing Law.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF
THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES
FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR
THE NOTES.
17. Authentication
<PAGE>
This Note shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Note.
18. Abbreviations
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed hereon.
<PAGE>
[FORM OF TRANSFER NOTICE]
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Note and the
Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Note
Registrar shall not be obligated to register this Note in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 313 of the Indenture
shall have been satisfied.](12)
Date:
--------------------
- --------
12. Include only for an Initial Note or an Initial Additional Note that
bears the Private Placement Legend, in accordance with the Indenture.
<PAGE>
NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of the
within-mentioned instrument
in every particular, without
alteration or any change
whatsoever.
Signature Guarantee:
-----------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
[TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
-----------------------
--------------------------------
NOTICE: To be executed by an
<PAGE>
executive officer](13)
- --------
13. Include only for an Initial Note or an Initial Additional Note
that bears the Private Placement Legend, in accordance with the
Indenture.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by
the Company pursuant to Section 410 or 414 of the Indenture, check the box: [ ].
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 410 or 414 of the Indenture, state
the amount (in principal amount):
$
Date: Signed:
------------------------- --------------------------------------
(Sign exactly as your name appears on the
other side of the Note)
Signature Guarantee:
-----------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have
been made:
Date of Amount of Amount of Principal amount Signature
Exchange decreases in increases in of this Global of authorized
Principal Principal Note following officer or Trustees
Amount of this Amount of this such decreases of Securities
Global Note Global Note or increases Custodian
<PAGE>
EXHIBIT B
Form of Supplemental Indenture in Respect of Note Guarantee
SUPPLEMENTAL INDENTURE, dated as of [_________] (this
"Supplemental Indenture"), among [name of [New Note Guarantor[s](14)] (the "New
Note Guarantor[s]"), U.S. Office Products Company (the "Company"), [any] [the]
[each other] then existing Note Guarantor[s] under the Indenture referred to
below (the "Existing Guarantor[s]") and State Street Bank and Trust Company, as
Trustee (the "Trustee") under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, [the] [any] Existing Guarantor[s] and
the Trustee have heretofore become parties to an Indenture, dated as of June 10,
1998, as amended (as amended, supplemented, waived or otherwise modified, the
"Indenture"), providing for the issuance of 9 3/4% Senior Subordinated Notes Due
2008 of the Company (the "Notes");
WHEREAS, Section 1308 of the Indenture provides that the
Company is required to, or may cause the New Note Guarantor[s] to, execute and
deliver to the Trustee a supplemental indenture pursuant to which the New Note
Guarantor[s] shall guarantee the Notes pursuant to a Note Guarantee on the terms
and conditions set forth herein and in Article Thirteen of the Indenture;
WHEREAS, [the][each] New Note Guarantor desires to enter into
this Supplemental Indenture for good and valuable consideration, including
substantial economic benefit in that the financial performance and condition of
such New Note Guarantor is dependent on the financial performance and condition
of the Company and on [the] [such] New Note Guarantor's access to working
capital through the Company's access to revolving credit borrowings under the
Senior Credit Agreement; and
WHEREAS, pursuant to Section 901 of the Indenture, the parties
hereto are authorized to execute and deliver this Supplemental Indenture to
amend the Indenture, without the consent of any Holder;
- --------
14. Insert as appropriate.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the New Note Guarantor[s], the Company, [the Existing
Guarantor[s]] and the Trustee mutually covenant and agree for the benefit of the
Holders of the Notes as follows:
1. Defined Terms. As used in this Supplemental Indenture,
terms defined in the Indenture or in the preamble or recital hereto are used
herein as therein defined. The words "herein," "hereof" and "hereby" and other
words of similar import used in this Supplemental Indenture refer to this
Supplemental Indenture as a whole and not to any particular section hereof.
2. Agreement to Guarantee. [The] [Each] New Note Guarantor
hereby agrees, jointly and severally with [all] [any] other New Note
Guarantor[s] and [all] [any] Existing Guarantor[s], fully and unconditionally,
to guarantee the Guaranteed Obligations under the Indenture and the Notes on the
terms and subject to the conditions set forth in Article Thirteen of the
Indenture and to be bound by (and shall be entitled to the benefits of) all
other applicable provisions of the Indenture as a Note Guarantor. The Note
Guarantee of each New Note Guarantor is subject to the subordination provisions
of the Indenture.
3. Termination, Release and Discharge. [The] [Each] New Note
Guarantor's Note Guarantee shall terminate and be of no further force or effect,
and [the] [each] New Note Guarantor shall be released and discharged from all
obligations in respect of such Note Guarantee, as and when provided in Section
1303 of the Indenture.
4. Parties. Nothing in this Supplemental Indenture is intended
or shall be construed to give any Person, other than the Holders and the
Trustee, any legal or equitable right, remedy or claim under or in respect of
[the] [each] New Note Guarantor's Note Guarantee or any provision contained
herein or in Article Thirteen of the Indenture.
5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT
THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND
(BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS, AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT
<PAGE>
LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
6. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every Holder of Notes heretofore or
hereafter authenticated and delivered shall be bound hereby. The Trustee makes
no representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
7. Counterparts. The parties hereto may sign one or more
copies of this Supplemental Indenture in counterparts, all of which together
shall constitute one and the same agreement.
8. Headings. The section headings herein are for convenience
of reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
[NAME OF NEW NOTE GUARANTOR],(15)
as New Note Guarantor
By:
-------------------------------
Name:
Title:
U.S. OFFICE PRODUCTS COMPANY,
as Issuer
By:
-------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
-------------------------------
Name:
Title:
- --------
15. Add a signature block for each New Note Guarantor.
<PAGE>
EXHIBIT C
Form of Regulation S Certificate
Regulation S Certificate
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Re: U.S. OFFICE PRODUCTS COMPANY (the "Company")
9 3/4% Senior Subordinated Notes Due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_____ aggregate
principal amount of Notes, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S ("Regulation S") under the Securities Act
of 1933, as amended (the "Securities Act"), and accordingly, we hereby certify
as follows:
1. The offer of the Notes was not made to a person in the
United States (unless such person or the account held by it for which
it is acting is excluded from the definition of "U.S. person" pursuant
to Rule 902(k) of Regulation S under the circumstances described in
Rule 902(h)(3) of Regulation S) or specifically targeted at an
identifiable group of U.S. citizens abroad.
2. Either (a) at the time the buy order was originated, the
buyer was outside the United States or we and any person acting on our
behalf reasonably believed that the buyer was outside the United States
or (b) the transaction was executed in, on or through the facilities of
a designated offshore securities market, and neither we nor any person
acting on our behalf knows that the transaction was pre-arranged with a
buyer in the United States.
3. No directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(a)(2) or Rule
904(a)(2) of Regulation S, as applicable.
<PAGE>
4. The proposed transfer of Notes is not part of a plan or
scheme to evade the registration requirements of the Securities Act.
5. If we are a dealer or a person receiving a selling
concession or other fee or remuneration in respect of the Notes, and
the proposed transfer takes place before the Offshore Note Exchange
Date referred to in the Indenture, dated as of June 10, 1998, among the
Company, the Note Guarantors (which term has the meaning ascribed
thereto in the Indenture) named therein and from time to time parties
thereto and the Trustee, or we are an officer or director of the
Company or a distributor, we certify that the proposed transfer is
being made in accordance with the provisions of Rules 903 and 904 of
Regulation S.
6. We have advised the transferee of the transfer restrictions
applicable to the Notes.
You, the Company and counsel for the Company are entitled to
rely upon this Certificate and are irrevocably authorized to produce this
Certificate or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in Regulation S.
Very truly yours,
[NAME OF SELLER]
By:----------------------
Name:
Title:
Address:
Date of this Certificate: _________________, 199_
<PAGE>
EXHIBIT D
Form of Certificate of Beneficial Ownership
On or after July 21, 1998
State Street Bank and Trust Company
Two International Place
4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Re: U.S. OFFICE PRODUCTS COMPANY (the "Company")
9 3/4% Senior Subordinated Notes Due 2008 (the "Notes")
Ladies and Gentlemen:
This letter relates to $___________ principal amount of Notes
represented by the offshore global note certificate (the "Offshore Global
Note"). Pursuant to Section 313(4) of the Indenture dated as of June 10, 1998
relating to the Notes (the "Indenture"), we hereby certify that (1) we are the
beneficial owner of such principal amount of Notes represented by the Offshore
Global Note and (2) we are either (i) a Non-U.S. Person to whom the Notes could
be transferred in accordance with Rule 904 of Regulation S ("Regulation S")
promulgated under the Securities Act of 1933, as amended (the "Act") or (ii) a
U.S. Person who purchased securities in a transaction that did not require
registration under the Act. Accordingly, you are hereby requested to issue an
Offshore Physical Note representing the undersigned's interest in the principal
amount of Notes represented by the Offshore Global Note, all in the manner
provided by the Indenture.
You, the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
----------------------
Authorized Signature
<PAGE>
EXHIBIT E
Form of Accredited Investor Certificate
Transferee Letter of Representation
State Street Bank & Trust Company, as Trustee
Two International Place
4th Floor
Boston, Massachusetts 02110
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate
principal amount of the 9 3/4% Senior Subordinated Notes due 2008 (the "Notes")
of U.S. Office Products Company (the "Issuer"), we confirm that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended (the "Securities Act"), purchasing for our own account or for
the account of such an institutional "accredited investor", and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
account for which we are acting are each able to bear the economic risk of our
or its investment.
2. We understand and acknowledge that the Notes have not been
registered under the Securities Act or any other applicable securities law, and
that the Notes may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any account for which we
are acting, that if we should sell any Notes within the time period referred to
in Rule 144(k) of the Securities Act, we will do so only (A) to the Issuer or
any subsidiary thereof, (B) in accordance with Rule 144A under the Securities
Act to a "qualified institutional buyer" (as defined therein), (C) to an
institutional "accredited investor" (as defined above) that, prior to such
transfer, furnishes to the Trustee under the Indenture a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes (the form of which letter can be obtained from the
Trustee) and, if such transfer is in respect of an aggregate principal amount of
less than $100,000, an opinion of counsel acceptable to the Issuer that such
transfer is in compliance with the Securities Act, (D) outside the Untied States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available) or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Issuer and the Trustee such certifications,
<PAGE>
legal opinions and other information as the Issuer and the Trustee may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
4. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
5. We are acquiring the Notes for investment purposes and not
with a view to distribution thereof or with any present intention of offering or
selling any Notes, except as permitted above; provided that the disposition of
our property and property of any accounts for which we are acting as fiduciary
will remain at all times within our control.
You and the Issuer are entitled to rely upon this letter and
you are irrevocably authorized to produce this letter or a copy hereto to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF, OTHER THAN ANY MANDATING THE APPLICATION OF SUCH LAWS).
Very truly yours,
(Name of Purchaser)
By:
----------------------
Name:
Title:
Date:
--------------------
Upon transfer, the Notes would be registered in the name of
the new beneficial owner as follows:
By:
--------------------------
Date:
------------------------
Taxpayer ID number:
------------------------
<PAGE>
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated June 5, 1998
between
U.S. OFFICE PRODUCTS COMPANY
and
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BT ALEX. BROWN INCORPORATED
CHASE SECURITIES INC.
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into June 5, 1998, between U.S. OFFICE PRODUCTS COMPANY, a Delaware
corporation (the "Company"), and MORGAN STANLEY & CO. INCORPORATED, MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BT ALEX. BROWN INCORPORATED and
CHASE SECURITIES INC. (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement
dated June 5, 1998, between the Company and the Placement Agents (the "Placement
Agreement"), which provides for the sale by the Company to the Placement Agents
of an aggregate of $400,000,000 principal amount of the Company's 9 3/4% Senior
Subordinated Notes Due 2008 (the "Notes"). In order to induce the Placement
Agent to enter into the Placement Agreement, the Company has agreed to provide
to the Placement Agents and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company
of Exchange Notes for Registrable Notes pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
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"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchange Notes" shall mean notes issued by the Company under
the Indenture containing terms identical to the Notes (except that the
Exchange Notes will not bear legends restricting the transfer thereof
or include provisions relating to additional interest and will contain
terms of an administrative nature that differ from those of the Notes)
and to be offered to Holders of Notes in exchange for Notes pursuant to
the Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as they
own any Registrable Notes, and each of their successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Notes under the Indenture; provided that for purposes of
Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Notes
dated as of June 10, 1998 between the Company and State Street Bank and
Trust Company, as trustee, and as the same may be amended from time to
time in accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes; provided
that whenever the consent or approval of Holders of a specified
percentage of Registrable Notes is required hereunder, Registrable
Notes held by the Company or any of its affiliates (as such term is
defined in Rule 405 under the 1933 Act) (other than the Placement
Agents or subsequent Holders of Registrable Notes if such subsequent
holders are deemed to be such affiliates solely by reason of their
holding of such Registrable Notes) shall not be counted in determining
whether such consent or approval was given by the Holders of such
required percentage or amount.
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization,
or a government or agency or political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with
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respect to the terms of the offering of any portion of the Registrable
Notes covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case
including all material incorporated by reference therein.
"Registrable Note" shall mean each Note; provided, however,
that such Note shall cease to be a Registrable Note (i) when a
Registration Statement with respect to such Note shall have been
declared effective under the 1933 Act and such Note shall have been
disposed of or exchanged for an Exchange Note pursuant to such
Registration Statement, (ii) when such Note has been sold to the public
pursuant to Rule 144 (or any similar provision then in force, but not
Rule 144A) under the 1933 Act or is saleable pursuant to Rule 144(k)
under the Securities Act (or is otherwise eligible for resale pursuant
to Rule 144 or any successor provision) under the Securities Act
without volume restriction, if any, or (iii) when such Note shall have
ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange Notes or
Registrable Notes), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements and
other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and disbursements
relating to the qualification of the Indenture under applicable
securities laws, (vi) the fees and disbursements of the Trustee and its
counsel, (vii) the fees and disbursements of counsel for the Company
and, in the case of a Shelf Registration Statement, the reasonable fees
and disbursements of one counsel for the Holders (which counsel shall
be selected by the Majority Holders and which counsel may also be
counsel for the Placement Agents) and (viii) the fees and disbursements
of the independent public accountants of the Company, including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, but excluding fees and
expenses of counsel to the underwriters (other than fees and expenses
set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the
sale or disposition of Registrable Notes by a Holder. The Placement
Agents shall bear any fees and expenses of their counsel incurred in
connection with the Exchange Offer.
"Registration Statement" shall mean any registration statement
of the Company that covers any of the Exchange Notes or Registrable
Notes pursuant to the provisions of this Agreement and all amendments
and supplements to any such Registration Statement,
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including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable
Notes (but no other notes unless approved by the Holders of a majority
of Registrable Notes are covered by such Shelf Registration Statement)
on an appropriate form under Rule 415 under the 1933 Act, or any
similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"Trustee" shall mean the trustee with respect to the Notes
under the Indenture.
"Underwriter" shall have the meaning set forth in Section 3
hereof.
"Underwritten Registration" or "Underwritten Offering" shall
mean a registration in which Registrable Notes are sold to an
Underwriter for reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company shall use its
reasonable best efforts to cause to be filed an Exchange Offer Registration
Statement covering the offer by the Company to the Holders to exchange all of
the Registrable Notes for Exchange Notes and to have such Registration Statement
remain effective until the closing of the Exchange Offer. The Company shall
commence the Exchange Offer promptly after the Exchange Offer Registration
Statement has been declared effective by the SEC and use its reasonable best
efforts to have the Exchange Offer consummated not later than 60 days after such
effective date. The Company shall commence the Exchange Offer by mailing the
related exchange offer Prospectus and accompanying documents to each Holder
stating, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Notes validly
tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
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(iii) that any Registrable Note not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Note
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Note, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Notes delivered for
exchange and a statement that such Holder is withdrawing his election
to have such Notes exchanged.
As soon as practicable after the last Exchange Date, the
Company shall:
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by the Company and issue, and cause the Trustee to promptly
authenticate and deliver to each Holder, an Exchange Note equal in
principal amount to the principal amount of the Registrable Notes
surrendered by such Holder.
The Company shall use its reasonable best efforts to complete the Exchange Offer
as provided above and shall comply in all material respects with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company shall inform the Placement Agents of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agents shall have
the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Notes in the Exchange Offer.
Each Holder participating in the Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Exchange Offer (i) any Exchange Notes received by such Holder will be acquired
in the ordinary course of business, (ii) such Holder will have no arrangements
or understanding with any person to participate in the distribution of the Notes
or the Exchange Notes within the meaning of the 1933 Act, (iii) such
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<PAGE>
Holder is not an"affiliate" as defined in Rule 405 of the 1933 Act, of the
Company or if it is an affiliate, such Holder will comply with the registration
and prospectus delivery requirements of the 1933 Act to the extent applicable,
(iv) if such Holder is a broker-dealer, that it will receive Exchange Notes for
its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities and that it will deliver a
prospectus in connection with any resale of such Exchange Notes and (v) that it
is not acting on behalf of any person that could not truthfully make the
foregoing representations.
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply (to
the extent applicable) solely with respect to Notes held by the Placement Agents
as provided in (and subject to) Section 2(b)(iii), and the Company shall have no
further obligation to register Notes (other than such Notes of the Placement
Agents) pursuant to Section 2(b) of this Agreement.
(b) In the event that (i) the Company determines that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of the
Staff of the SEC, (ii) the Exchange Offer is not for any other reason
consummated by December 10, 1998 or (iii) any Holder (other than a Participating
Broker-Dealer) shall, within 30 days after consummation of the Exchange Offer,
notify the Company in writing that such Holder (x) is prohibited by applicable
law or SEC policy from participating in the Exchange Offer, or (y) may not
resell Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder (other than, in either case, due solely to such Holder's inability to
make the representations referred to in the penultimate paragraph of Section
2(a)), the Company shall use its reasonable best efforts (x) to cause to be
filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the applicable Holders of all
of their Registrable Notes and (y) to have such Shelf Registration Statement
declared effective by the SEC. In the event the Company is required to file a
Shelf Registration Statement solely as a result of the matters referred to in
clause (iii) of the preceding sentence, the Company shall use its reasonable
best efforts to file and have declared effective by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect to all
Registrable Notes and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Notes held by the Placement Agents
after completion of the Exchange Offer. The Company agrees to use its reasonable
best efforts to keep the Shelf Registration Statement continuously effective
until the expiration of the period referred to in Rule 144(k) with respect to
the Registrable Notes (or for a period of one year in the case of a Shelf
Registration effected at the request of a Placement Agent) or such shorter
period that will terminate when all of the Registrable Notes covered by the
Shelf Registration Statement (i) have been sold pursuant to the Shelf
Registration Statement or (ii) are no longer restricted securities (as defined
in Rule 144 under the 1933 Act, or any
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<PAGE>
successor rule thereof). The Company further agrees to supplement or amend the
Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder with respect to information relating to such Holder, and to use its
reasonable best efforts to cause any such amendment to become effective and such
Shelf Registration Statement to become usable as soon as thereafter practicable.
The Company agrees to furnish to the Holders of Registrable Notes copies of any
such supplement or amendment promptly after its being used or filed with the
SEC.
(c) The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or Section 2(b). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable Notes
pursuant to any Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Notes pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Notes pursuant to
such Registration Statement may legally resume. As provided for in and subject
to the Indenture, in the event the Exchange Offer is not consummated and the
Shelf Registration Statement is not declared effective on or prior to December
10, 1998, the interest rate on the Notes will be increased by (a) prior to March
10, 1999, 0.25% per annum and (b) thereafter, 0.50% per annum, in either case
until the Exchange Offer is consummated or the Shelf Registration Statement is
declared effective by the SEC.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, the Company acknowledges that any failure by the Company
to comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect
to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof,
the Company shall as expeditiously as practicable:
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<PAGE>
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form (x) shall be
selected by the Company, (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Notes by the
selling Holders thereof and (z) shall comply as to form in all material
respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith or
incorporated by reference therein, and use its reasonable best efforts
to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; keep each Prospectus current
during the period described under Section 4(3) and Rule 174 under the
1933 Act that is applicable to transactions by brokers or dealers with
respect to the Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish (during the
applicable period for such Shelf Registration Statement) to each Holder
of Registrable Notes covered by such Shelf Registration Statement, to
counsel for the Placement Agents, to counsel for the Holders (selected
by the Majority Holders) and to each Underwriter of an Underwritten
Offering of Registrable Notes, if any, and, in the case of an Exchange
Offer Registration, any Participating Broker-Dealer, without charge, as
many copies of each Prospectus, including each preliminary Prospectus,
and any amendment or supplement thereto and such other documents as
such Holder, Underwriter or Participating Broker-Dealer may reasonably
request, in order to facilitate the public sale or other disposition of
the Registrable Notes; and consent to the use of such Prospectus and
any amendment or supplement thereto during the applicable period in
accordance with applicable law by each of the selling Holders of
Registrable Notes, any such Underwriters and any such Participating
Broker-Dealers in connection with the offering and sale of the
Registrable Notes covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with
applicable law;
(d) use its reasonable best efforts to register or qualify the
Registrable Notes under all applicable state securities or "blue sky"
laws of such jurisdictions as any Holder of Registrable Notes covered
by a Registration Statement shall reasonably request in writing by the
time the applicable Registration Statement is declared effective by the
SEC, to cooperate with such Holders in connection with any filings
required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in each such jurisdiction of such Registrable Notes
owned by such Holder; provided, however, that the Company shall not be
required to (i) qualify as a
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foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this
Section 3(d), (ii) file any general consent to service of process or
(iii) subject itself to taxation in any such jurisdiction if it is not
so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes, counsel for the Holders (selected by the Majority
Holders), counsel for the Placement Agents and, in the case of an
Exchange Offer Registration, counsel for any Participating
Broker-Dealers, promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Notes covered
thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the sale of such Registrable Notes cease
to be true and correct in all material respects or if the Company
receives any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or
the initiation of any proceeding for such purpose, (v) of the happening
of any event during the period a Shelf Registration Statement is
effective which requires the making of any changes in such Registration
Statement or Prospectus in order that such Registration Statement or
the related Prospectus do not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading and (vi) of any determination by the Company that a
post-effective amendment to a Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible time and provide notice as promptly as
practicable to each Holder and Participating Broker-Dealer of the
withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Notes covered by such Shelf Registration
Statement and, in the case of an Exchange Offer Registration, to each
Participating Broker-Dealer, without charge, at least one conformed
copy of each Registration Statement relating to such Shelf Registration
or Exchange Offer Registration, as the case may be, and any
post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless reasonably requested);
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(h) cooperate, in the case of a Shelf Registration, with the
selling Holders of Registrable Notes or, in the case of an Exchange
Offer Registration, with the Participating Broker-Dealers, to
facilitate the timely preparation and delivery of certificates
representing Registrable Notes to be sold and not bearing any
restrictive legends and enable such Registrable Notes to be in such
denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or Participating
Broker-Dealers may reasonably request at least one business day prior
to the closing of any sale of Registrable Notes pursuant to such
Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any event contemplated by Section
3(e)(v) hereof, use its reasonable best efforts to prepare and file
with the SEC a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Notes or
delivered by Participating Broker-Dealers, as applicable, such
Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading. The Company agrees to notify the Holders and any
Participating Broker-Dealer to suspend use of the Prospectus as
promptly as practicable after the occurrence of such an event, and each
Holder and each Participating Broker-Dealer hereby agrees to suspend
use of the Prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide a reasonable
number of copies of such document to the Placement Agents and their
counsel (and (i) in the case of a Shelf Registration Statement, the
Holders and counsel for the Holders (selected by the Majority Holders)
and (ii) in the case of an Exchange Offer Registration, any
Participating Broker-Dealers) and make such of the representatives of
the Company as shall be reasonably requested by the Placement Agents or
their counsel (and (i) in the case of a Shelf Registration Statement,
the Holders or counsel for the Holders (selected by the Majority
Holders) and (ii) in the case of an Exchange Offer Registration, the
Participating Broker-Dealers) available for discussion of such
document;
(k) obtain a CUSIP number for all Exchange Notes or
Registrable Notes, as the case may be, not later than the effective
date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Notes or Registrable Notes, as the case
may be, cooperate with the Trustee to effect such changes
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to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and execute, and use
its reasonable best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes and all other forms
and documents required to be filed with the SEC to enable the Indenture
to be so qualified in a timely manner;
(m) in the case of a Shelf Registration or an Exchange Offer
Registration, upon execution of customary confidentiality agreements
reasonably satisfactory to the Company and its counsel, make reasonably
available for inspection by a representative of the Holders of the
Registrable Notes, any Underwriter participating in any disposition
pursuant to a Shelf Registration Statement, the Participating
Broker-Dealers and attorneys and accountants designated by the Holders
(such representative, underwriter, attorney or accountant, an
"Inspector"), at reasonable times and in a reasonable manner, all
financial and other records, pertinent documents and properties of the
Company, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement as shall be reasonably
necessary to enable such persons to conduct a reasonable investigation
within the meaning of Section 11 of the 1933 Act;
(n) use its reasonable best efforts to cause the Exchange
Notes or Registrable Notes, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
(o) if reasonably requested by any Holder of Registrable Notes
covered by a Shelf Registration Statement, (i) as promptly as
practicable incorporate in a Prospectus supplement or post-effective
amendment such information with respect to such Holder as such Holder
reasonably requests to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of
the matters to be incorporated in such filing; and
(p) in the case of a Shelf Registration or an Exchange Offer
Registration, enter into such customary agreements and take all such
other actions in connection therewith (including those requested by the
Holders of a majority of the Registrable Notes being sold) in order to
expedite or facilitate the disposition of such Registrable Notes
including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible, make such representations and
warranties to the Holders of such Registrable Notes, any Underwriters
of such Registrable Notes or any Participating Broker-Dealer with
respect to the business of the Company and its subsidiaries as then
conducted, the Registration Statement, Prospectus and documents
incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same
if and when requested, (ii) use its reasonable best efforts to obtain
opinions of
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counsel to the Company (which counsel and opinions, in form, scope and
substance, shall be reasonably satisfactory to the Holders of a
majority in principal amount of the Registrable Notes being sold, any
managing underwriter on behalf of such Underwriters, such Participating
Broker-Dealers and their respective counsel) addressed to each selling
Holder, Underwriter of Registrable Notes or the Participating
Broker-Dealers, covering the matters customarily covered in opinions
requested in underwritten offerings (it being understood that the
matters to be covered by such opinion may be subject to customary or
other reasonable qualifications and exceptions), (iii) use its
reasonable best efforts to obtain "cold comfort" letters from the
independent certified public accountants of the Company (and, if
necessary, any other certified public accountant of any subsidiary of
the Company, or of any business acquired by the Company for which
financial statements and financial data are or are required to be
included in the Registration Statement) addressed to each Underwriter
of Registrable Notes or the Participating Broker-Dealers and use its
reasonable best efforts to have such letter addressed to each selling
Holder of Registrable Notes, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings, and (iv) deliver
such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Notes
being sold or the Underwriters, if any, or the Participating
Broker-Dealers, and which are customarily delivered in underwritten
offerings, to evidence the continued validity of the representations
and warranties of the Company made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in an
underwriting agreement.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Notes to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Notes as the Company may from time to time reasonably request
in writing. The Company may exclude from such registration the Registrable Notes
of any seller who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
In the case of a Shelf Registration Statement, each Holder
and, in the case of an Exchange Offer Registration, each Participating
Broker-Dealer, agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(e)(v) hereof, such
Holder or such Participating Broker-Dealer will forthwith discontinue
disposition of Registrable Notes pursuant to a Registration Statement until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and, if so directed by the Company, such
Holder or Participating Broker-Dealer will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then in
such Holder's or Participating Broker- Dealer's possession, of the Prospectus
covering such Registrable Notes current at the time of receipt of such notice.
Each Holder or Participating Broker-Dealer agrees to indemnify the
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Company, the Placement Agents, and the other selling Holders and each of their
respective officers and directors who sign the Registration Statement and each
person, if any, who controls any such person for any losses, claims, damages and
liabilities caused by the failure of such Holder or Participating Broker-Dealer
to discontinue disposition of Registrable Securities after receipt of the notice
referred to in the preceding sentence or the failure of such Holder or
Participating Broker-Dealer to comply with applicable prospectus delivery
requirements with respect to any Prospectus (including, but not limited to, any
amended or supplemented Prospectus) provided by the Company for such use. If the
Company shall give any such notice to suspend the disposition of Registrable
Notes pursuant to a Registration Statement, the Company shall extend the period
during which the Registration Statement shall be maintained effective pursuant
to this Agreement by the number of days during the period from and including the
date of the giving of such notice to and including the date when the Company
shall have made available to Holders or Participating Broker-Dealers (x) copies
of the supplemented or amended Prospectus necessary to resume such dispositions
or (y) the Advice. The Company may give any such notice only twice during any
365-day period and any such suspensions may not exceed 30 days for each
suspension and there may not be more than two suspensions in effect during any
365-day period.
The Holders of Registrable Notes covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Notes in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Holders of a majority in
principal amount of the Registrable Notes included in such offering, subject to
the consent of the Company (which consent shall not be unreasonably withheld).
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Notes for its own account in the Exchange
Offer in exchange for Notes that were acquired by such broker-dealer as a result
of market-making or other trading activities (a "Participating Broker-Dealer"),
may be deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Notes.
The Company understands that it is the Staff's position that
if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange Notes,
without naming the Participating Broker-Dealers or specifying the amount of
Exchange Notes owned by them, such Prospectus may be delivered by Participating
Broker- Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Notes for their own accounts, so long
as the Prospectus otherwise meets the requirements of the 1933 Act.
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(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company agrees that the provisions of Sections
3(c), (e), (f), (g), (h), (i), (j), (m) and (p) and the penultimate paragraph of
Section 3 of this Agreement as they relate to a Shelf Registration shall also
apply to an Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Placement Agents,
in consultation with the Company, in each case as provided in clauses (i) and
(ii) below, in order to expedite or facilitate the disposition of any Exchange
Notes by them in their capacity as Participating Broker-Dealers consistent with
the positions of the Staff recited in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration Statement,
as would otherwise be contemplated by Section 3(i), for a period
exceeding 90 days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of Section 3 of this
Agreement) and Participating Broker-Dealers shall not be authorized by
the Company to deliver and shall not deliver such Prospectus after such
period in connection with the resales contemplated by this Section 4;
and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 to an Exchange Offer Registration, to the extent not
required by the positions of the Staff of the SEC or the 1933 Act and
the rules and regulations thereunder, will be in conformity with the
reasonable request to the Company by the representative of the
Participating Broker-Dealers; provided that, in connection with such
application of the procedures set forth in Section 3 to an Exchange
Offer Registration, the Company shall be obligated to deal only with
one entity representing the Participating Broker-Dealers, which shall
be Morgan Stanley & Co. Incorporated unless it elects not to act as
such representative.
(c) For purposes of Section 3 and Section 4(b), only the
Placement Agents will be Participating Broker-Dealers and shall have any rights
with respect to such Sections. The Placement Agents shall have no liability to
any Holder with respect to any request that it may make pursuant to Section 4(b)
above.
5. Indemnification and Contribution.
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(a) The Company agrees to indemnify and hold harmless the
Placement Agents, each selling Holder of Notes covered thereby and each Person,
if any, who controls the any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by the Placement
Agents, any Holder or any such controlling or affiliated Person in connection
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Exchange
Notes or Registrable Notes were registered under the 1933 Act, including all
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to the Placement Agents or any Holder furnished to the
Company in writing by Morgan Stanley & Co. Incorporated or any selling Holder
expressly for use therein; provided, however, that the foregoing indemnity
agreement with respect to any preliminary Prospectus shall not inure to the
benefit of any Holder to the extent that any such losses, claims, damages or
liabilities result from the fact that such Holder sold securities to a person to
whom there was not sent or given by or on behalf of such Holder (if required by
law so to have been delivered) a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) at or prior to the written confirmation of the sale of the Registrable
Securities to such person, and if the losses, claims, damages or liabilities
result from an untrue statement or alleged untrue statement or an omission or
alleged omission contained in such preliminary Prospectus that was corrected in
the Prospectus (as so amended or supplemented), unless such failure is the
result of noncompliance by the Company with its obligations to deliver copies of
the Prospectus to the Holders, nor shall this indemnity agreement inure to the
benefit of any Holder from whom the person asserting any such losses, claims,
damages or liabilities purchased the Notes concerned to the extent that at the
time of such purchase such Holder had received advice from the Company that the
use of such Prospectus, amendment, supplement or preliminary Prospectus was
suspended as provided in the penultimate paragraph of Section 3. In connection
with any Underwritten Offering permitted by Section 3, the Company will also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the 1933 Act and the 1934 Act) to the same extent as provided above
with respect to the indemnification of the Holders, if requested in connection
with any Registration Statement.
15
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(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Placement Agents and the other
selling Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, any
Placement Agent and any other selling Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as
the foregoing indemnity from the Company to the Placement Agents and the
Holders, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
law firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate law firm (in addition to any local counsel)
for the Company, its directors, its officers who sign the Registration Statement
and each Person, if any, who controls the Company within the meaning of either
such Section and (c) the fees and expenses of more than one separate law firm
(in addition to any local counsel) for all Holders and all Persons, if any, who
control any Holders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In such case
involving the Placement Agents and Persons who control the Placement Agents,
such firm shall be designated in writing by Morgan Stanley & Co. Incorporated.
In such case involving the Holders and such Persons who control Holders, such
firm shall be designated in writing by the Majority Holders. In all other cases,
such firm shall be designated by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but, if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying
16
<PAGE>
party to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. Notwithstanding the immediately
preceding sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, an indemnifying party shall not be liable for any settlement effected
without its consent if such indemnifying party (i) reimburses such indemnified
party in accordance with such request to the extent it considers such request to
be reasonable and (ii) provides written notice to the indemnified party
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which such indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Holders shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Notes of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred
17
<PAGE>
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding any other provision of this Section 5(e), with
respect to any untrue or alleged untrue statement or omission or alleged
omission referred to in Section 5(a) hereof (other than in the first exception
thereto, to the fullest extent permitted by law, a Holder of Notes shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holder from the sale of Notes pursuant to the
applicable Registration Statement exceeds the amount of damages that such Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any Person controlling any Placement
Agent or any Holder, or by or on behalf of the Company, its officers or
directors or any Person controlling the Company, (iii) acceptance of any of the
Exchange Notes and (iv) any sale of Registrable Notes pursuant to a Shelf
Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered
into, and on or after the date of this Agreement will not enter into, any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's other issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification, supplement, waiver
or consent.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company,
initially at the
18
<PAGE>
Company's address set forth in the Placement Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 6(c).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms of the Placement Agreement. If any transferee of
any Holder shall acquire Registrable Notes, in any manner, whether by operation
of law or otherwise, such Registrable Notes shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Notes such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such Person shall be
entitled to receive the benefits hereof. The Placement Agents (in their capacity
as Placement Agents) shall have no liability or obligation to the Company with
respect to any failure by a Holder to comply with, or any breach by any Holder
of, any of the obligations of such Holder under this Agreement.
(e) Purchases and Sales of Notes. The Company shall not, and
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act) not to, purchase and then resell or otherwise transfer any Notes
prior to consummation of the Exchange Offer or a Shelf Registration Statement
being declared effective.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Placement Agents, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
19
<PAGE>
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by the
laws of the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
20
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
U.S. OFFICE PRODUCTS COMPANY
By --------------------------------
Name:
Title:
Confirmed and accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BT ALEX. BROWN INCORPORATED
CHASE SECURITIES INC.
By: MORGAN STANLEY & CO. INCORPORATED
By -----------------------------
Name:
Title:
21
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EXECUTION COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
among
U.S. OFFICE PRODUCTS COMPANY,
BLUE STAR GROUP LIMITED,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
BANKERS TRUST COMPANY,
as syndication agent
MERRILL LYNCH CAPITAL CORPORATION,
as documentation agent
and
THE CHASE MANHATTAN BANK,
as administrative agent
DATED AS OF JUNE 9, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CHASE SECURITIES INC., BT ALEX. BROWN INCORPORATED and MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED,
as Co-Arrangers
<PAGE>
Table of Contents
<TABLE>
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SECTION 1. DEFINITIONS............................................................................................2
1.1 Defined Terms.................................................................................2
1.2 Other Definitional Provisions............................................................... 33
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................................................... 33
2.1 Revolving Credit Commitments................................................................ 33
2.2 Revolving Credit Notes...................................................................... 34
2.3 Procedure for Revolving Credit Borrowing.................................................... 34
2.4 Termination or Reduction of Revolving Credit Commitments.................................... 35
2.5 Swing Line Commitments...................................................................... 35
2.6 Term Loans.................................................................................. 37
2.7 Tranche A Term Notes........................................................................ 37
2.8 Tranche B Term Notes........................................................................ 38
2.9 Multi-Draw Term Notes....................................................................... 39
2.10 Procedure for Term Loan Borrowing........................................................... 40
2.11 Termination or Reduction of Multi-Draw Term Loan Commitments................................ 41
2.12 Repayment of Loans.......................................................................... 41
2.13 Qualified Foreign Lender Notes.............................................................. 42
SECTION 3. LETTERS OF CREDIT.................................................................................... 43
3.1 L/C Commitment.............................................................................. 43
3.2 Procedure for Issuance of Letters of Credit................................................. 44
3.3 Fees, Commissions and Other Charges......................................................... 45
3.4 L/C Participations.......................................................................... 46
3.5 Reimbursement Obligation of the Borrower.................................................... 47
3.6 Obligations Absolute........................................................................ 47
3.7 Letter of Credit Payments................................................................... 48
3.8 Application................................................................................. 48
SECTION 4. GENERAL PROVISIONS APPLICABLE TO
LOANS AND LETTERS OF CREDIT..................................................................................... 49
4.1 Interest Rates and Payment Dates............................................................ 49
4.2 Conversion and Continuation Options......................................................... 49
4.3 Minimum Amounts of Tranches................................................................. 50
4.4 Optional Prepayments and Mandatory Prepayments and Commitment
Reductions............................................................................... 50
4.5 Commitment Fees; Administrative Agent's Fee; Other Fees..................................... 54
4.6 Computation of Interest and Fees............................................................ 54
4.7 Inability to Determine Interest Rate........................................................ 55
4.8 Pro Rata Treatment and Payments............................................................. 55
4.9 Illegality.................................................................................. 57
4.10 Requirements of Law......................................................................... 58
4.11 Taxes....................................................................................... 59
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4.12 Indemnity................................................................................... 62
4.13 Certain Rules Relating to the Payment of Additional Amounts................................. 62
SECTION 5. REPRESENTATIONS AND WARRANTIES....................................................................... 64
5.1 Financial Condition......................................................................... 64
5.2 No Change; Solvent.......................................................................... 65
5.3 Corporate Existence; Compliance with Law.................................................... 66
5.4 Corporate Power; Authorization; Enforceable Obligations..................................... 66
5.5 No Legal Bar................................................................................ 67
5.6 No Material Litigation...................................................................... 67
5.7 No Default.................................................................................. 67
5.8 Ownership of Property; Liens................................................................ 67
5.9 Intellectual Property....................................................................... 67
5.10 No Burdensome Restrictions.................................................................. 67
5.11 Taxes....................................................................................... 68
5.12 Federal Regulations......................................................................... 68
5.13 ERISA....................................................................................... 68
5.14 Collateral.................................................................................. 69
5.15 Investment Company Act; Other Regulations................................................... 70
5.16 Subsidiaries................................................................................ 70
5.17 Purpose of Loans............................................................................ 70
5.18 Environmental Matters....................................................................... 70
5.19 No Material Misstatements................................................................... 71
5.20 Delivery of the Transaction Documents....................................................... 72
5.21 Representations and Warranties Contained in the Transaction
Documents................................................................................ 72
5.22 Labor Matters............................................................................... 72
5.23 Public Utility Holding Company Act.......................................................... 72
5.24 Subordinated Debt........................................................................... 73
5.25 Year 2000................................................................................... 73
5.26 Spin-Off Tax Liability...................................................................... 73
5.27 Blue Star Parties........................................................................... 73
SECTION 6. CONDITIONS PRECEDENT................................................................................. 74
6.1 Conditions to Initial Extension of Credit................................................... 74
6.2 Conditions to Initial Blue Star Extensions of Credit........................................ 79
6.3 Conditions to Each Other Extension of Credit................................................ 80
SECTION 7. AFFIRMATIVE COVENANTS................................................................................ 81
7.1 Financial Statements........................................................................ 81
7.2 Certificates; Other Information............................................................. 82
7.3 Payment of Obligations...................................................................... 83
7.4 Conduct of Business and Maintenance of Existence............................................ 83
7.5 Maintenance of Property; Insurance.......................................................... 84
7.6 Inspection of Property; Books and Records; Discussions...................................... 84
</TABLE>
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<TABLE>
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7.7 Notices..................................................................................... 84
7.8 Environmental Laws.......................................................................... 86
7.9 After-Acquired Real Property and Fixtures................................................... 87
7.10 Acquired Subsidiaries; Further Security and Guarantees...................................... 88
7.11 Interest Rate Protection Agreement.......................................................... 89
7.12 Surveys..................................................................................... 89
SECTION 8. NEGATIVE COVENANTS APPLICABLE TO ALL
COMMITMENTS AND LOANS OTHER THAN THE
TRANCHE B TERM LOAN COMMITMENTS AND
TRANCHE B TERM LOANS................................................................. 89
8.1 Financial Condition Covenants............................................................... 90
8.2 Limitation on Indebtedness.................................................................. 91
8.3 Limitation on Liens......................................................................... 93
8.4 Limitation on Guarantee Obligations......................................................... 95
8.5 Limitation on Fundamental Changes........................................................... 97
8.6 Limitation on Sale of Assets................................................................ 98
8.7 Limitation on Restricted Payments/Dividends................................................. 99
8.8 Limitation on Capital Expenditures..........................................................100
8.9 Limitation on Investments, Loans and Advances...............................................101
8.10 Limitations on Certain Acquisitions.........................................................103
8.11 Limitation on Transactions with Affiliates..................................................103
8.12 Limitation on Sales and Leasebacks..........................................................105
8.13 Limitations on Dispositions of Collateral...................................................105
8.14 Limitation on Changes in Fiscal Year........................................................105
8.15 Limitation on Negative Pledge Clauses.......................................................105
8.16 Limitation on Lines of Business; Creation of Subsidiaries...................................106
8.17 Limitation on Optional Payments and Modifications of Debt
Instruments and other Material Agreements................................................106
8.18 Limitation on Optional Payments and Modifications of Tranche B
Terms....................................................................................107
SECTION 9. COVENANTS APPLICABLE TO TRANCHE B TERM LOAN
COMMITMENTS AND TRANCHE B TERM LOANS.................................................................107
SECTION 10. EVENTS OF DEFAULT...........................................................................107
10.1 Certain Bankruptcy Events...................................................................107
10.2 Other Events of Default Applicable to the Tranche A Commitments,
Revolving Credit Commitments, Multi-Draw Term Loan
Commitments and Amounts Owing Thereunder.................................................109
10.3 Certain Events of Default Applicable to Tranche B Term Loan
Commitments and Amounts Owing Thereunder.................................................112
10.4 Certain Provisions Applicable to Letters of Credit..........................................114
10.5 Certain Waivers.............................................................................115
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
SECTION 11. THE ADMINISTRATIVE AGENT....................................................................115
11.1 Appointment.................................................................................115
11.2 Delegation of Duties........................................................................115
11.3 Exculpatory Provisions......................................................................115
11.4 Reliance by Administrative Agent............................................................116
11.5 Notice of Default...........................................................................116
11.6 Acknowledgements and Representations by Lenders.............................................117
11.7 Indemnification.............................................................................118
11.8 Administrative Agent in Its Individual Capacity.............................................118
11.9 Successor Administrative Agent..............................................................119
11.10 Swing Line Lender...........................................................................119
11.11 Release of Liens in Connection with Permitted Receivables
Securitization...........................................................................119
SECTION 12. MISCELLANEOUS...............................................................................119
12.1 Amendments and Waivers......................................................................119
12.2 Notices.....................................................................................122
12.3 No Waiver; Cumulative Remedies..............................................................123
12.4 Survival of Representations and Warranties..................................................124
12.5 Payment of Expenses and Taxes...............................................................124
12.6 Successors and Assigns; Participations and Assignments......................................125
12.7 Adjustments; Set-off........................................................................129
12.8 Counterparts................................................................................129
12.9 Severability................................................................................130
12.10 Integration.................................................................................130
12.11 GOVERNING LAW...............................................................................130
12.12 Submission To Jurisdiction; Waivers.........................................................130
12.13 Acknowledgements............................................................................131
12.14 WAIVER OF JURY TRIAL........................................................................132
12.15 Judgment Currency...........................................................................132
12.16 Confidentiality.............................................................................133
SCHEDULES
I Commitments and Addresses
II Applicable Margin and Commitment Fee Step-Downs
III Indicative Terms of Permitted Receivables Securitizations
IV Equity Investors
V Subsidiary Guarantors
1.1 Existing Revolving Letters of Credit
5.1 Disposition of Assets Prior to Effective Date
5.2(a) Material Adverse Effect Disclosure
5.4 Consents, Authorizations, Notices and Filings Required
5.6 Material Litigation
5.9 Intellectual Property Claims
5.14 Filing Jurisdictions and Lien Searches
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
5.16 Subsidiaries
6.1(a) Effective Date Mortgages
6.1(l) Index of Environmental Reports
7.9(a) Post-Closing Mortgage Properties
8.2(e) Permitted Indebtedness
8.3(l) Permitted Liens
8.4(a) Guarantee Obligations
8.9(c) Permitted Investments
8.11(iv) Permitted Transactions with Affiliates
9(a) Negative Covenants Applicable to Tranche B Term Loans
EXHIBITS
A-1 Form of Revolving Credit Note
A-2 Form of Swing Line Note
A-3 Form of Tranche A Term Note
A-4 Form of Tranche B Term Note
A-5 Form of Multi-Draw Term Note
A-6 Form of QFL Revolving Credit Note
A-7 Form of QFL Tranche A Term Note
A-8 Form of QFL Tranche B Term Note
A-9 Form of QFL Multi-Draw Term Note
B Form of Guarantee and Collateral Agreement
C Form of U.S. Tax Compliance Certificate
D Form of Prepayment Option Notice
E Form of Mortgage
F Form of Landlord Consent
G-1 Form of Opinion of Special Counsel to Borrower
G-2 Form of Opinion of New Zealand Counsel to Borrower
G-3 Form of Opinion of Australian Counsel to Borrower
H Form of Assignment and Acceptance
I Form of Swing Line Loan Participation Certificate
J Form of Borrowing Certificate
K Form of Blue Star Representation Certificate
L Form of Equitable Mortgage of Securities
</TABLE>
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<PAGE>
CREDIT AGREEMENT, dated as of June 9, 1998, among U.S. OFFICE
PRODUCTS COMPANY, a Delaware corporation (the "Borrower"), Blue Star Group
Limited, a New Zealand corporation ("Blue Star Group"), the several banks and
other financial institutions from time to time parties to this Agreement (the
"Lenders"), BANKERS TRUST COMPANY, a New York banking corporation, as
syndication agent (in such capacity, the "Syndication Agent"), MERRILL LYNCH
CAPITAL CORPORATION, a Delaware corporation, as documentation agent for the
Lenders hereunder (in such capacity, the "Documentation Agent") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent").
The parties hereto hereby agree as follows:
WHEREAS, prior to, and as part of, a strategic restructuring plan that
includes the Equity Investment (as defined herein) the Borrower intends to
purchase from its stockholders approximately 37,000,000 outstanding shares of
Borrower Common Stock or share equivalents at a price of $27 per share (the
"Stock Repurchase"); contribute its corporate travel services, educational
supplies, print management and technology solutions businesses to four newly
formed corporations (the "Spin-Cos"); and distribute the shares it holds in each
of the Spin-Cos to the holders of Borrower Common Stock after the Stock
Repurchase (the "Spin-Offs");
WHEREAS, in connection with the strategic restructuring plan, the
Borrower intends to effect the refinancing of existing debt (the "Debt
Refinancing"), including a tender (the "Debt Tender Offer") for all of the
Borrower's Convertible Notes Due 2003 and a conversion of all or part of the
Borrower's Convertible Notes Due 2001 into equity of the Borrower and the
issuance of fixed-rate senior subordinated debt by the Borrower for at least
$400,000,000 in gross cash proceeds (the "Subordinated Debt Financing")
(collectively the Equity Investment, the Stock Repurchase, the Spin-Offs, the
Debt Tender Offer, the Debt Refinancing and the Subordinated Debt Financing,
together with the payment of fees and expenses in connection therewith, the
"Transactions");
WHEREAS, Clayton, Dubilier & Rice, Inc. ("CD&R") proposes a
transaction pursuant to which CDR-PC Acquisition, L.L.C. ("CDR-PC Acquisition"),
an entity formed by Clayton, Dubilier & Rice Fund V Limited Partnership ("CD&R
Fund V"), a private investment partnership managed by CD&R, intends to invest
(the "Equity Investment") approximately $270,000,000 to acquire 24.9% of the
outstanding common stock, par value $.001 per share, of the Borrower (the
"Borrower Common Stock"), warrants to permit CDR-PC Acquisition to buy
additional shares of common stock to maintain its 24.9% ownership position (the
"Special Warrants") and warrants that will give CDR-PC Acquisition the right to
buy one share of Borrower Common Stock for each share of common stock purchased
by CDR-PC Acquisition in the Equity Investment and each share that CDR-PC
Acquisition has the right to buy pursuant to the Special Warrants (the
"Warrants"); and
WHEREAS, to finance (i) a portion of the Transactions, (ii) Permitted
Acquisitions (as defined herein), (iii) the payment of fees and expenses related
to Permitted Acquisitions and the Transactions and (iv) the working capital
needs of the Borrower and its subsidiaries in connection with and following the
Transactions, and subject to and upon the conditions herein set forth, the
Lenders are willing to make available the credit facilities provided for herein;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by Chase as its prime rate in effect
at its principal office in New York City (the Prime Rate not being intended
to be the lowest rate of interest charged by Chase in connection with
extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction,
the numerator of which is one and the denominator of which is one minus the
C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such day
(or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board of Governors of the Federal Reserve System (the "Board")
through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 A.M., New York City
time, on such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from three New York
City negotiable certificate of deposit dealers of recognized standing
selected by it; and "Federal Funds Effective Rate" shall mean, for any day,
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 on the next succeeding 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 the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. Any change in the ABR due to
a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Acceleration": as defined in Section 10.2(e).
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<PAGE>
"Accepting Lenders": as defined in subsection 4.4(h).
"Accounts": as defined in the Uniform Commercial Code as in effect in
the State of New York; and, with respect to the Borrower and its Domestic
Subsidiaries, all such Accounts of such Persons, whether now existing or
existing in the future, including, without limitation, (i) all accounts
receivable of such Person (whether or not specifically listed on schedules
furnished to the Administrative Agent) including, without limitation, all
accounts created by or arising from all of such Person's sales of goods or
rendition of services made under any of its trade names, or through any of
its divisions, (ii) all unpaid rights of such Person (including rescission,
replevin, reclamation and stopping in transit) relating to the foregoing or
arising therefrom, (iii) all rights to any goods represented by any of the
foregoing, including returned or repossessed goods, (iv) all reserves and
credit balances held by such Person with respect to any such accounts
receivable or any Obligors, (v) all letters of credit, guarantees or
collateral for any of the foregoing and (vi) all insurance policies or
rights relating to any of the foregoing.
"Acquired Business": shall mean each individual product or line or
unit of business (including the related assets) or Person acquired pursuant
to a Permitted Acquisition as permitted by subsection 8.10.
"Adjustment Date": each date occurring after the completion of the
first fiscal quarter of the Borrower after the Effective Date that is the
second Business Day following receipt by the Lenders of both (i) the
financial statements required to be delivered pursuant to subsection 7.1(a)
or 7.1(b), as applicable, for the most recently completed fiscal period and
(ii) the related compliance certificate required to be delivered pursuant
to subsection 7.2(b) with respect to such fiscal period.
"Administrative Agent": as defined in the Preamble hereto.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 20% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Agents": collectively, the Administrative Agent, the Documentation
Agent and the Syndication Agent.
"Aggregate Outstanding Revolving Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Revolving
Credit Lender then outstanding, (b) such Revolving Credit Lender's
Revolving Credit Commitment Percentage of the L/C Obligations then
outstanding and (c) such Revolving Credit Lender's Revolving Credit
Commitment Percentage of the Swing Line Loans then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented, waived
or
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<PAGE>
otherwise modified from time to time.
"Applicable Margin": as applied to a given Type of Revolving Credit
Loans, Multi-Draw Term Loans, Tranche A Term Loans or Tranche B Term Loans,
the rate per annum determined as follows: During the period from the
Effective Date until the first Adjustment Date, the Applicable Margin (A)
in respect of Revolving Credit Loans, Multi-Draw Term Loans and Tranche A
Term Loans shall equal (i) with respect to ABR Loans, 1.25% per annum and
(ii) with respect to Eurodollar Loans, 2.25% per annum; and (B) in respect
of Tranche B Term Loans shall equal (i) with respect to ABR Loans, 1.50%
per annum and (ii) with respect to Eurodollar Loans, 2.50% per annum. Such
Applicable Margin will be adjusted on each Adjustment Date to the
applicable rate per annum set forth under the heading "ABR Loans Applicable
Margin" or "Eurodollar Loans Applicable Margin" on Schedule II which
corresponds to the achievement of certain performance criteria determined
from the financial statements and compliance certificate relating to the
end of the fiscal quarter immediately preceding such Adjustment Date;
provided that in the event that the financial statements required to be
delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the
related compliance certificate required to be delivered pursuant to
subsection 7.2(b), are not delivered when due, then
(a) if such financial statements and certificate are delivered
after the date such financial statements and certificate were required
to be delivered (without giving effect to any applicable cure period)
and the Applicable Margin increases from that previously in effect as
a result of the delivery of such financial statements, then the
Applicable Margin during the period from the date upon which such
financial statements were required to be delivered (without giving
effect to any applicable cure period) until the date upon which they
actually are delivered shall, except as otherwise provided in clause
(c) below, be the Applicable Margin as so increased;
(b) if such financial statements and certificate are delivered
after the date such financial statements and certificate were required
to be delivered and the Applicable Margin decreases from that
previously in effect as a result of the delivery of such financial
statements, then such decrease in the Applicable Margin shall not
become applicable until the date upon which the financial statements
and certificate actually are delivered; and
(c) if such financial statements and certificate are not
delivered prior to the expiration of the applicable cure period, then,
effective upon such expiration, for the period from the date upon
which such financial statements and certificate were required to be
delivered (after the expiration of the applicable cure period) until
two Business Days following the date upon which they actually are
delivered, the Applicable Margin in respect of Revolving Credit Loans,
Multi-Draw Term Loans and Tranche A Term Loans shall be 2.25% per
annum, in the case of Eurodollar Loans, and 1.25% per annum, in the
case of ABR Loans, and the Applicable Margin in respect of Tranche B
Term Loans shall be 2.50% per annum, in the case of Eurodollar Loans,
and 1.50% per annum, in the case of ABR Loans (it being understood
that the foregoing shall not limit the rights of the Administrative
Agent and the Lenders set forth in Section 10).
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<PAGE>
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Approved Fund": with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans which is
managed or advised by the same investment advisor as such Lender or by an
affiliate of such investment advisor.
"Asset Sale": any sale, issuance, conveyance, transfer, lease or other
disposition (a "Disposition") by the Borrower or any of its Subsidiaries,
in one or a series of related transactions, of any real or personal,
tangible or intangible, property (including, without limitation, Capital
Stock of any Subsidiary of the Borrower, but excluding Capital Stock of the
Borrower) of the Borrower or such Subsidiary to any Person (other than to
the Borrower or any of its Domestic Subsidiaries that are Wholly Owned
Subsidiaries) which yields gross proceeds to the Borrower or any of its
Subsidiaries (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued
at fair market value in the case of other non-cash proceeds) in excess of
$2,500,000 other than any of the Transactions and the other transactions
expressly contemplated by the Transaction Documents, including, without
limitation, the Spin-Offs.
"Assignee": as defined in subsection 12.6(c).
"Assignment and Acceptance": as defined in subsection 12.6(c).
"Australian Pledge Agreement": the Equitable Mortgage of Securities to
be executed and delivered by the Borrower and the Administrative Agent,
substantially in the form of Exhibit L, as the same may be amended,
supplemented, waived or otherwise modified from time to time.
"Available Multi-Draw Term Loan Commitment": as to any Multi-Draw Term
Loan Lender at any time, an amount equal to the excess, if any, of (a) the
amount of such Multi-Draw Term Loan Lender's Multi-Draw Term Loan
Commitment at such time over (b) such Multi-Draw Term Loan Lender's
Multi-Draw Term Loan Commitment Percentage of the aggregate principal
amount of Multi-Draw Term Loans theretofore made hereunder (whether or not
such Multi-Draw Term Loans shall then remain outstanding).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) the
amount of such Revolving Credit Lender's Revolving Credit Commitment at
such time over (b) the sum of (i) the aggregate unpaid principal amount at
such time of all Revolving Credit Loans made by such Revolving Credit
Lender, (ii) an amount equal to such Revolving Credit Lender's Revolving
Credit Commitment Percentage of the aggregate unpaid principal amount at
such time of all Swing Line Loans, provided that for purposes of
calculating Available Revolving Credit Commitments pursuant to subsection
4.5(a) such amount shall be zero, and (iii) an amount equal to such
Revolving Credit Lender's Revolving Credit Commitment Percentage of the
outstanding L/C Obligations at such time; collectively, as to all the
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<PAGE>
Lenders, the "Available Revolving Credit Commitments".
"Base CD Rate": as defined in the definition of the term "ABR" in this
subsection 1.1.
"Basic Lender": a Revolving Credit Lender, a Tranche A Term Loan
Lender or a Multi-Draw Term Loan Lender; collectively, the "Basic Lenders".
"Benefitted Lender": as defined in subsection 12.7.
"Blue Star Credit Facility": any credit facility so designated by the
Borrower, arranged by the Other Representatives, the administrative agent
of which shall be an affiliate of the Administrative Agent, in aggregate
principal amount (or Dollar Equivalent thereof if such facility is
denominated in NZ Dollars) not to exceed $180,000,000, that may be entered
into by Blue Star Group, the terms and conditions of which shall be
satisfactory to the Agents. Without limiting the foregoing, (i) the Blue
Star Credit Facility shall require mandatory prepayments in the event that
its Dollar Equivalent would not otherwise be fully covered by the Blue Star
Letters of Credit, (ii) all obligations of Blue Star Group under the Blue
Star Credit Facility shall be unconditionally guaranteed by the Company,
(iii) the Blue Star Credit Facility shall be for an initial period of one
year with annual extensions at Blue Star Group's option and (iv) the Blue
Star Credit Facility shall be guaranteed and collateralized by Blue Star
Group and its Material Subsidiaries in a manner reasonably satisfactory to
the Administrative Agent.
"Blue Star Group": as defined in the Preamble hereto.
"Blue Star Guarantee and Security Documents": the Guarantee and
Security Documents (including a guarantee by the Borrower of the
obligations of Blue Star Group) to be executed and delivered by Blue Star
Group and each Material Subsidiary of Blue Star Group in existence on the
date of the first Borrowing Date for the Blue Star Group, in form and
substance reasonably satisfactory to the Administrative Agent, as the same
may be amended, supplemented, waived or otherwise modified from time to
time. The Blue Star Guarantee and Security Documents shall provide for
guarantees supporting and security interests and liens securing only the
obligations of the Blue Star Group hereunder (and not the obligations of
the Borrower hereunder).
"Blue Star Intercompany Notes": the Intercompany Notes in the
aggregate principal amount outstanding on the Effective Date owing by Blue
Star Group to the Borrower or one of its Domestic Subsidiaries, as such
Intercompany Notes may be increased, repaid or reduced or amended,
supplemented or otherwise modified from time to time.
"Blue Star L/C Issuing Lender": any of the Agents or their respective
affiliates and/or any Lender satisfactory to the Agents and the Borrower in
its capacity as issuer of any Blue Star Letter of Credit.
"Blue Star Letters of Credit": as defined in subsection 3.1(b).
6
<PAGE>
"Blue Star Mortgages": each of the mortgages to be executed and
delivered by Blue Star Group and its Material Subsidiaries on the date of
the first Borrowing Date for the Blue Star Group, in form and substance
reasonably satisfactory to the Administrative Agent, as the same may be
amended, supplemented, waived or otherwise modified from time to time.
"Blue Star Party": any Loan Party which is either Blue Star Group or a
Subsidiary of Blue Star Group.
"Blue Star Representation Certificate": The Blue Star Representation
Certificate to be executed and delivered by Blue Star Group, substantially
in the form of Exhibit K.
"Board": as defined in the definition of the term "ABR" in this
subsection 1.1.
"Borrower": as defined in the preamble hereto.
"Borrower Common Stock": as defined in the Recitals hereto.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.3, 2.5, 2.10 or 3.2 as a date on which the Borrower requests
the Lenders to make Loans hereunder or the Issuing Lender to issue Letters
of Credit hereunder.
"BSIN Subsidiary": any Subsidiary of the Borrower formed to hold one
or more of the Blue Star Intercompany Notes, following a contribution or
other transfer to it of such Blue Star Intercompany Notes, provided that
such Subsidiary has been organized and is maintained as "bankruptcy remote"
from the Borrower and its other Subsidiaries in a manner reasonably
satisfactory to the Administrative Agent and that in connection with such
contribution and transfer such Subsidiary agrees for the benefit of the
Lenders and the Agents hereunder that such Subsidiary shall not incur any
material liabilities or engage in any material business activities other
than as may be incidental to the holding of the Blue Star Intercompany
Notes contributed or transferred to it and its organization and maintenance
in existence.
"Business": as defined in subsection 5.18(a).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by
law to close, except that, when used in connection with a Eurodollar Loan
with respect to which the Eurodollar Rate is determined based upon the
Telerate British Bankers Assoc. Interest Settlement Rates Page in
accordance with the definition of Eurodollar Base Rate, "Business Day"
shall mean any Business Day on which dealings in Dollars between banks may
be carried on in London, England and New York, New York.
"Capital Expenditures": with respect to any Person for any period, the
sum of the aggregate of all expenditures (excluding capital expenditures
made for acquisitions permitted by subsection 8.10) by such Person and its
consolidated Subsidiaries during such period which, in accordance with
GAAP, are or should be included in "capital
7
<PAGE>
expenditures" or similar items reflected in the consolidated statement of
cash flows of such Person for such period.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities issued or fully guaranteed or
insured by the United States Government or any agency or instrumentality
thereof, (b) time deposits, certificates of deposit or bankers' acceptances
of (i) any Lender or (ii) any commercial bank having capital and surplus in
excess of $500,000,000 and the commercial paper of the holding company of
which is rated at least A-2 or the equivalent thereof by Standard & Poor's
Ratings Group (a division of McGraw Hill Inc.) or any successor rating
agency ("S&P") or at least P-2 or the equivalent thereof by Moody's
Investors Service, Inc. or any successor rating agency ("Moody's") (or if
at such time neither is issuing ratings, then a comparable rating of such
other nationally recognized rating agency as shall be approved by the
Administrative Agent in its reasonable judgment), (c) commercial paper
rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the
equivalent thereof by Moody's (or if at such time neither is issuing
ratings, then a comparable rating of such other nationally recognized
rating agency as shall be approved by the Administrative Agent in its
reasonable judgment) and (d) investments in money market funds complying
with the risk limiting conditions of Rule 2a-7 or any successor rule of the
Securities and Exchange Commission under the Investment Company Act, in
each case provided in clauses (a), (b), (c) and (d) above, maturing within
twelve months after the date of acquisition.
"CD&R": as defined in the Recitals hereto.
"CD&R Fund V": as defined in the Recitals hereto.
"CD&R Group": CDR-PC Acquisition, CD&R and their Affiliates (other
than any Persons who are Affiliates solely by virtue of their direct or
indirect ownership interests in the Borrower) and any other investment fund
or vehicle managed, sponsored or advised by CD&R, or any Affiliate (other
than any Person who is an Affiliate solely by virtue of its direct or
indirect ownership interest in the Borrower) of or successor to CD&R, CD&R
Fund V or any such other investment fund or vehicle.
"CDR Agreements": collectively, (i) the Investment Agreement, (ii) the
Registration Rights Agreement, (iii) the Consulting Agreement and (iv) the
Indemnification Agreement, as each such agreement may be amended,
supplemented, waived or otherwise modified from time to time.
"CDR-PC Acquisition": as defined in the Recitals hereto.
"C/D Assessment Rate": for any day as applied to any ABR Loan, the
annual assessment rate in effect on such day which is payable by a member
of the Bank Insurance Fund classified as well-capitalized and within
supervisory subgroup "B" (or a
8
<PAGE>
comparable successor assessment risk classification) within the meaning of
12 C.F.R. Section 327.4 (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the
United States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars of $100,000 or more
having a maturity of 30 days or more.
"Change in Consolidated Working Capital": for any period, the amount
of Consolidated Working Capital at the beginning of such period minus the
amount of Consolidated Working Capital at the end of such period.
"Change of Control": the occurrence of any of the following events:
(i) any Person or "group" (within the meaning of Section 13(d) or 14(d) of
the Exchange Act), other than one or more of the Equity Investors and their
Affiliates, shall have acquired beneficial ownership of more than 35% of
the outstanding shares of Voting Stock of the Borrower, (ii) the board of
directors of the Borrower shall cease to consist of a majority of
Continuing Directors of the Borrower or (iii) a change of control shall
have occurred under the Senior Subordinated Note Indenture or any other
indenture pursuant to which the Borrower has issued and outstanding
Indebtedness; as used in this paragraph "Voting Stock" shall mean shares of
Capital Stock entitled to vote generally in the election of directors.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
"Chief Financial Officer": the chief financial officer of the
Borrower.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security
Document.
"Commercial Letter of Credit": as defined in subsection 3.1(a).
"Commitment Fee Rate": 1/2 of 1% per annum; provided, that on and
after the first Adjustment Date, the Commitment Fee Rate will be the
applicable rate per annum set forth on Schedule II under the heading
"Commitment Fee" (determined on each Adjustment Date in the same manner as
described in the definition of "Applicable Margin").
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
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"Consolidated EBITDA": for any period, Consolidated Net Income for
such period adjusted to exclude the following items (without duplication)
of income or expense to the extent that such items are included in the
calculation of Consolidated Net Income: (a) Consolidated Interest Expense,
(b) any non-cash expenses and charges, (c) total income tax expense, (d)
depreciation expense, (e) the expense associated with amortization of
intangible and other assets (including amortization or other expense
recognition of any costs associated with asset write-ups in accordance with
APB Nos. 16 and 17), (f) non-cash provisions for reserves for discontinued
operations, (g) any extraordinary, unusual or non-recurring gains or losses
or charges or credits, (h) any gain or loss associated with the sale or
write-down of assets not in the ordinary course of business and (i) any
income or loss accounted for by the equity method of accounting (except (i)
in the case of income of Dudley and (ii) in the case of income to the
extent of the amount of cash dividends or cash distributions paid to the
Borrower or any Subsidiary by the entity accounted for by the equity method
of accounting); provided, that (x) for the purposes of calculating the
Consolidated Interest Coverage Ratio and the Leverage Ratio there shall be
included in determining Consolidated EBITDA of the Borrower and its
Subsidiaries for any period, the Consolidated EBITDA calculated on a pro
forma basis of each Acquired Business acquired by the Borrower or any
Subsidiary during such period for the portion of such period prior to such
acquisition (calculated in accordance with the foregoing provisions) and
(y) for the purposes of calculating the Consolidated Interest Coverage
Ratio and the Leverage Ratio for any period that commenced prior to the
Effective Date, Consolidated EBITDA shall be calculated on a pro forma
basis for the portion of such period ending on the Effective Date as though
the Spin-Offs had occurred on the first day of such period. For the
purposes of this definition, the relevant testing period shall be (x) in
the case of subsection 8.1 (and the definitions used therein), the four
consecutive fiscal quarters ending on the applicable testing date, (y) in
the case of subsections 4.4(d) and 8.8 (and the definitions used therein),
the applicable fiscal year, and (z) in the case of subsection 8.10 (and the
definitions used therein), the four most recently ended fiscal quarters.
"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) an amount equal to Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Consolidated Interest Expense": for any period, the sum of (a) interest
expense (accrued and paid or payable in cash for such period, and in any
event excluding any amortization or write-off of financing costs) on
Indebtedness of the Borrower and its consolidated Subsidiaries for such
period minus (b) interest income (accrued and received or receivable in
cash for such period) of the Borrower and its consolidated Subsidiaries for
such period, in each case determined on a consolidated basis in accordance
with GAAP; provided that Consolidated Interest Expense shall be adjusted to
include (x) the Consolidated Interest Expense for each Acquired Business
acquired by the Borrower or any Subsidiary during such period for the
portion of such period prior to such acquisition, (y) the additional
interest that would have been paid on all Indebtedness incurred by the
Borrower and its other Subsidiaries to finance each Permitted Acquisition
permitted by subsection 8.10 effected during such period as if, in each
such case, such Indebtedness had been incurred on the first day of such
period (with appropriate adjustment for any such Indebtedness refinancing
Indebtedness of the related Acquired Business), as
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reasonably determined by the Borrower in a manner satisfactory to the
Administrative Agent, and (z) in the event of the consummation of a
Permitted Receivables Securitization, an amount equal to the interest (or
other fees in the nature of interest or discount accrued and paid or
payable in cash for such period) on such Permitted Receivables
Securitization.
"Consolidated Net Income": for any period, net income of the Borrower
and its consolidated Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Senior Debt": all Consolidated Total Funded Indebtedness
other than Subordinated Debt.
"Consolidated Total Funded Indebtedness": at the date of determination
thereof, the sum of (i) all Indebtedness of the Borrower and its
consolidated Subsidiaries which by its terms matures more than one year
after the date of calculation, and any such Indebtedness maturing within
one year from such date which is renewable or extendable at the option of
the obligor to a date more than one year from such date including, in any
event, all current maturities and current sinking fund payments in respect
of such Indebtedness whether or not required to be paid within one year
from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans, in each case determined on a
consolidated basis in accordance with GAAP plus (ii) without duplication of
amounts included in clause (i) above, an amount equal to the aggregate cash
proceeds received by the Borrower or any Subsidiary from an unrelated third
party (net of amounts repaid) from the financing of Accounts pursuant to
any Permitted Receivables Securitization which are outstanding at the date
of determination. In determining under clause (i) of this definition the
Indebtedness of the Borrower and its consolidated Subsidiaries under or in
respect of any Permitted Receivables Securitization or under clause (ii) of
this definition the amount equal to the aggregate cash proceeds received by
the Borrower or any such Subsidiary from the financing of any Accounts
pursuant to any Permitted Receivables Securitization, such Indebtedness or
amount shall be reduced by any escrowed or pledged cash proceeds which
effectively secure such Indebtedness or the obligations of the Borrower or
any such Subsidiary under such Permitted Receivables Securitization.
"Consolidated Working Capital": at the date of determination thereof,
the aggregate amount of all current assets (excluding cash, Cash
Equivalents and deferred taxes recorded as assets) minus the aggregate
amount of all current liabilities (excluding the Revolving Credit Loans,
current maturities of long-term debt, working capital debt of Foreign
Subsidiaries and deferred taxes recorded as liabilities), in each case
determined on a consolidated basis for the Borrower and its consolidated
Subsidiaries.
"Consulting Agreement": Consulting Agreement, dated as of June 10,
1998, between CD&R (and its permitted successors and assigns thereunder)
and the Borrower.
"Continuing Directors": the directors of the Borrower on the Effective
Date, after giving effect to the Transactions and the other transactions
contemplated hereby, and each other director, if, in each case, such other
director's nomination for election to the board
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of directors of the Borrower is recommended by at least a majority of the
then Continuing Directors or such other director receives the vote of the
Equity Investors in his or her election by the shareholders of the
Borrower.
"Contractual Obligation": as to any Person, any provision of any
material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by which
it or any of its property is bound.
"Convertible Notes due 2001": the Borrower's 5 1/2% Convertible
Subordinated Notes due 2001.
"Convertible Notes due 2001 Exchange Offer Documents": Registration
Statement on Form S-4, dated May 4, 1998, relating to the Offering
Circular/Prospectus to Exchange, and a Letter of Transmittal, dated May 4,
1998.
"Convertible Notes due 2003": the Borrower's 5 1/2% Convertible
Subordinated Notes due 2003.
"Convertible Notes due 2003 Repurchase Documents": Schedule 13E-4,
dated May 5, 1998, relating to the Offer to Purchase, and a Letter of
Transmittal, dated May 5, 1998.
"CSI": Chase Securities Inc., a New York corporation.
"Debt Tender Offer": as defined in the Recitals hereto.
"Default": any of the events specified in Section 10, whether or not
any requirement for the giving of notice (other than, in the case of
Section 10.2(e) or 10.3(f), a Default Notice), the lapse of time, or both,
or any other condition, has been satisfied.
"Debt Refinancing": as defined in the Recitals hereto.
"Default Notice": as defined in Section 10.2(e).
"Disinterested Director": as defined in subsection 8.11.
"Disposition": as defined in the definition of the term "Asset Sale"
in this subsection 1.1.
"Distribution Agreement": Distribution Agreement, dated as of June 9,
1998, by and among the Borrower and the Spin-Cos, as such agreement may be
amended, supplemented, waived or otherwise modified from time to time.
"Dollar Equivalent": at any date, for any amount denominated in NZ
Dollars, such amount multiplied by the spot rate of exchange for NZ Dollars
into Dollars as determined by the Administrative Agent in accordance with
customary procedures.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
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"Domestic Subsidiary": any Subsidiary of the Borrower which is not a
Foreign Subsidiary or Foreign Subsidiary Holdco.
"Dudley": Dudley Stationery Limited, a corporation organized under the
laws of the United Kingdom.
"ECF Percentage": 50%; provided, that with respect to any fiscal year
of the Borrower ending on or after April 24, 1999, the ECF Percentage shall
be reduced to 0% if the Leverage Ratio as of the last day of such fiscal
year is less than 3.5 to 1.0.
"Effective Date": the date on or before June 30, 1998 on which all the
conditions precedent set forth in subsection 6.1 shall be satisfied or
waived.
"Employee Benefits Services and Liabilities Agreement": Employee
Benefits Agreement, dated as of June 9, 1998, by and among the Borrower and
the Spin-Cos, as such agreement may be amended, supplemented, waived or
otherwise modified from time to time.
"Environmental Costs": any and all costs or expenses (including,
without limitation, attorney's and consultant's fees, investigation and
laboratory fees, response costs, court costs and litigation expenses,
fines, penalties, damages, settlement payments, judgments and awards), of
whatever kind or nature, known or unknown, contingent or otherwise, arising
out of, or in any way relating to any violation of, noncompliance with or
liability under any Environmental Laws or any orders, requirements,
demands, or investigations of any person related to any Environmental Laws.
Environmental Costs include any and all of the foregoing, without regard to
whether they arise out of or are related to any past, pending or threatened
proceeding of any kind.
"Environmental Laws": any and all applicable foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority having the force
and effect of law or other Requirements of Law (including, without
limitation, common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or human
health as related to the environment, as now or at any relevant time
hereafter in effect.
"Environmental Reports": the various reports contained in the binders
prepared for the Borrower by Environmental Strategies Corp., which were
previously delivered to the Administrative Agent and counsel to the
Administrative Agent and as referenced in Schedule 6.1(l) attached hereto.
"Equity Investment": as defined in the Recitals hereto.
"Equity Investors": CDR-PC Acquisition, CD&R Fund V, the CD&R Group
and the other equity investors arranged by CD&R and satisfactory to the
Agents as set forth on Schedule IV.
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"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined by
the Administrative Agent to be the arithmetic mean (rounded to the nearest
1/100th of 1%) of the offered rates for Dollar deposits with a term
comparable to such Interest Period that appears on the Telerate British
Bankers Assoc. Interest Settlement Rates Page (as defined below) at
approximately 11:00 A.M., London time, on the second full Business Day
preceding the first day of such Interest Period; provided, however, that if
there shall at any time no longer exist a Telerate British Bankers Assoc.
Interest Settlement Rates Page, "Eurodollar Base Rate" shall mean, with
respect to each day during each Interest Period pertaining to a Eurodollar
Loan, the rate per annum equal to the rate at which Chase is offered Dollar
deposits at or about 10:00 A.M., New York City time, two Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery on
the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar Loan to
be outstanding during such Interest Period. "Telerate British Bankers
Assoc. Interest Settlement Rates Page" shall mean the display designated as
Dow Jones Market Page 3750 (or such other page as may replace such page for
the purpose of displaying the rates at which Dollar deposits are offered by
leading banks in the London interbank deposit market).
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upwards to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 10,
provided that any requirement for the giving of notice, the lapse of time,
or both, and any other condition, has been satisfied.
"Excess Cash Flow": for any period, Consolidated EBITDA minus (i) any
Capital
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Expenditures made in cash during such period, minus (ii) any principal
payments (other than principal payments during such period pursuant to
subsection 4.4(c) or 4.4(d) unless and to the extent that the event giving
rise to such mandatory prepayment causes an increase in Consolidated
EBITDA) on the Term Loans made during such period, minus (iii) any
principal payments on any Indebtedness other than Indebtedness arising
hereunder of the Borrower or any of its consolidated Subsidiaries made
during such period, minus (iv) any portion of Consolidated Interest Expense
for such period, minus (v) any taxes paid or payable in cash during such
period, minus (vi) the Net Cash Proceeds from any Asset Sale to the extent
that such Net Cash Proceeds (A) consist of any Reinvested Amount or are
otherwise applied in accordance with subsection 4.4(c) and (B) are included
in the calculation of Consolidated EBITDA, minus (vii) (without duplication
of clause (i) of this definition) any Investment made in accordance with
subsection 8.9(e), (g), (i), (l) or (n) minus (viii) any earnings included
in Consolidated EBITDA for such period (except to the extent that any such
earnings are used for any purposes described in clauses (i) through (vii)
above) of a Receivables Subsidiary to the extent the terms of any Permitted
Receivables Securitization prohibit the distribution thereof to the
Borrower or any of its other Subsidiaries, plus (ix) the Change in
Consolidated Working Capital for such period.
"Exchange Act": the Securities Exchange Act of 1934, as amended.
"Exchange Note": as defined in subsection 2.13(a).
"Existing Revolving Letters of Credit": at any time, the letters of
credit issued by Bankers Trust Company and listed or described on Schedule
1.1 that are outstanding on such date.
"Extension of Credit": as to any Lender, the making of a Loan by such
Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.
"Federal Funds Effective Rate": as defined in the definition of the
term "ABR" in this subsection 1.1.
"Final Maturity Date": June 9, 2006.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"FIRREA": the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended.
"Foreign Subsidiary": any Subsidiary of the Borrower which is
organized and existing under the laws of any jurisdiction outside of the
United States of America.
"Foreign Subsidiary Holdco": any BSIN Subsidiary or any other
Subsidiary of the Borrower that has no material assets other than
securities of one or more Foreign Subsidiaries, and other assets relating
to an ownership interest in any such securities or Subsidiaries.
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"Former Plan": any employee benefit plan in respect of which the
Borrower or a Commonly Controlled Entity has engaged in a transaction
described in Section 4069 or Section 4212(c) of ERISA.
"GAAP": with respect to the covenants contained in subsections 8.1 and
8.8 and all defined terms relating thereto, generally accepted accounting
principles in the United States of America in effect on the Effective Date
and, for all other purposes under this Agreement, generally accepted
accounting principles in the United States of America in effect from time
to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower, each Domestic
Subsidiary of the Borrower listed on Schedule V attached hereto and in
existence on the Effective Date and the Administrative Agent, substantially
in the form of Exhibit B, as the same may be amended, supplemented, waived
or otherwise modified from time to time (including by supplements adding as
parties thereto Material Domestic Subsidiaries created or acquired after
the Effective Date).
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any such obligation of the guaranteeing
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 (1) for the purchase or payment
of any such primary obligation or (2) 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
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. As to the Borrower, Guarantee Obligation shall include
any Letter of Credit in respect of any joint venture or similar arrangement
in which the Borrower or any of its Subsidiaries is an investor, but shall
exclude any Existing Revolving Letter of Credit supported by any Letter of
Credit issued hereunder. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
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instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Guarantees": the collective reference to the Guarantee and Collateral
Agreement, the guarantees included in the Blue Star Guarantee and Security
Documents, and any other guarantee hereafter delivered to the
Administrative Agent (a copy of which will be provided to each Lender)
guaranteeing the obligations and liabilities of the Borrower hereunder,
under any Interest Rate Protection Agreements or Permitted Hedging
Arrangements entered into with any Lender or any affiliate thereof, under
any Notes and/or under any of the other Loan Documents.
"Guarantor": any Person delivering a Guarantee pursuant to this
Agreement.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (b)
any other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person in respect of bankers'
acceptances issued or created for the account of such Person, (e) for
purposes of subsection 8.2 and Section 10.2(e) only, all obligations of
such Person in respect of interest rate protection agreements, interest
rate futures, interest rate options, interest rate caps and any other
interest rate hedge arrangements, (f) for the purposes of subsection 8.2
only, all preferred stock issued by such Person which, pursuant to its
terms, is subject to mandatory redemption, retirement or acquisition by
such Person on or prior to the Final Maturity Date and which redemption,
retirement or acquisition is not contingent on any condition (other than
the passage of time) yet to be satisfied and (g) all indebtedness or
obligations of the types referred to in the preceding clauses (a) through
(f) secured by any Lien on any property owned by such Person, to the extent
of the value of such property, even though such Person has not assumed or
otherwise become liable for the payment thereof. Contingent payment
obligations owing to sellers of businesses acquired by the Borrower and its
Subsidiaries shall not be deemed to be Indebtedness unless such contingent
payment obligations are required to be classified as indebtedness on the
consolidated financial statements of the Borrower in accordance with GAAP.
"Indemnification Agreement": Indemnification Agreement, dated as of
June 10, 1998, by and among the Borrower, CD&R, CDR-PC Acquisition and CD&R
Fund V (and their permitted successors and assigns thereunder).
"Indemnified Liabilities": as defined in subsection 12.5.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
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"Intellectual Property": as defined in subsection 5.9.
"Intercompany Notes": as defined in the Guarantee and Collateral
Agreement.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar Loan having an Interest
Period longer than three months, (x) each day which is three months, or a
whole multiple thereof, after the first day of such Interest Period and (y)
the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or six months thereafter,
as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date (in the case of the Tranche A Term Loans, the
Multi-Draw Term Loans and the Revolving Credit Loans) or beyond the
Final Maturity Date (in the case of the Tranche B Term Loans) shall
(for all purposes other than subsection 4.12) end on the Termination
Date or the Final Maturity Date, as the case may be;
(3) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
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(4) the Borrower shall select Interest Periods so as not to
require a scheduled payment of any Eurodollar Loan during an Interest
Period for such Loan.
"Interest Rate Protection Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate cap or
collar or other interest rate hedge arrangement with a financial
institution reasonably acceptable to the Administrative Agent, to or under
which the Borrower is a party or a beneficiary on the Effective Date or
becomes a party or a beneficiary after the Effective Date, provided that
any such agreement or other arrangement is not entered into for purposes of
speculation.
"Inventory": as defined in the Uniform Commercial Code as in effect in
the State of New York.
"Investment Agreement": Investment Agreement, dated as of January 12,
1998, between the Borrower and CDR-PC Acquisition, as amended by Amendment
No. 1 dated as of February 3, 1998 and as may be amended, restricted and
supplemented from time to time.
"Investment Company Act": the Investment Company Act of 1940, as
amended.
"Investments": as defined in subsection 8.9.
"Issuing Lender": the collective reference to any Blue Star L/C
Issuing Lender and any Revolving L/C Issuing Lender.
"L/C Fee Payment Date": with respect to any Letter of Credit, (a) the
last day of each March, June, September and December occurring after the
date of issuance thereof and prior to the expiration thereof and (b) if
such Letter of Credit is outstanding on such day, the last day of the
Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to subsection 3.5(a).
"L/C Participants": as to any Letter of Credit, the collective
reference to all the Revolving Credit Lenders other than the Issuing Lender
for such Letter of Credit.
"Lenders": as defined in the Preamble hereto.
"Letters of Credit": the collective reference to all of the Blue Star
Letters of Credit and all of the Revolving Letters of Credit.
"Leverage Ratio": for any period, the ratio of (a) Consolidated Total
Funded Indebtedness as at the last day in such period to (b) Consolidated
EBITDA for such period.
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"Lien": any mortgage, pledge, hypothecation, assignment, security
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing).
"Loan": a Revolving Credit Loan, a Tranche A Term Loan, a Tranche B
Term Loan, a Multi-Draw Term Loan or a Swing Line Loan, as the context
shall require; collectively, the "Loans".
"Loan Documents": this Agreement, any Notes, the Applications, the
Guarantees, the Security Documents and the Blue Star Representation
Certificate.
"Loan Parties": the Borrower, Blue Star Group and each Subsidiary of
the Borrower which is a party to a Loan Document; individually, a "Loan
Party".
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and the Subsidiaries taken as a whole or (b) the
validity or enforceability of this Agreement, any of the Notes or any of
the other Loan Documents taken as a whole or the rights and remedies of the
Administrative Agent and the Lenders under the Loan Documents taken as a
whole.
"Material Domestic Subsidiary": any Material Subsidiary which is a
Domestic Subsidiary.
"Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in respect of or under any Environmental Law for
remedial costs, compliance costs, compensatory damages, fines, penalties,
or any combination thereof in an amount that would reasonably be expected
to have a Material Adverse Effect.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials, wastes, pollutants or
contaminants, defined or regulated as such in or under or which may give
rise to liability under any Environmental Law, including, without
limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Material Subsidiary": any Subsidiary of the Borrower that had total
assets of more than $3,000,000 as of the last day of the most recently
completed fiscal quarter of the Borrower for which financial statements
have been furnished pursuant hereto.
"Moody's": as defined in the definition of the term "Cash Equivalents"
in this subsection 1.1.
"Mortgages": each of the mortgages to be executed and delivered by the
Borrower and its Subsidiaries substantially in the form of Exhibit E, as
the same may be amended, supplemented, waived or otherwise modified from
time to time.
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"Multi-Draw Term Loan": as defined in subsection 2.6.
"Multi-Draw Term Loan Commitment": as to any Multi-Draw Term Loan
Lender, its obligation to make Multi-Draw Term Loans to the Borrower in an
aggregate amount not to exceed at any one time outstanding the amount set
forth opposite such Multi-Draw Term Loan Lender's name in Schedule I under
the heading "Multi-Draw Term Loan Commitment" or, in the case of any Lender
that is an Assignee, the amount of the assigning Lender's Multi-Draw Term
Loan Commitment assigned to such Assignee pursuant to subsection 12.6(c)
(in each case as such amount may be adjusted from time to time as provided
herein); collectively, as to all the Multi-Draw Term Loan Lenders, the
"Multi-Draw Term Loan Commitments".
"Multi-Draw Term Loan Lender": any Term Loan Lender having a
Multi-Draw Term Loan Commitment or having a Multi-Draw Term Loan
outstanding hereunder.
"Multi-Draw Term Loan Percentage": as to any Multi-Draw Term Loan
Lender, the percentage of the aggregate Available Multi-Draw Term Loan
Commitments and outstanding Multi-Draw Term Loans constituted by its
Available Multi-Draw Term Loan Commitment and outstanding Multi-Draw Term
Loans (or, if the Multi-Draw Term Loan Commitments have terminated or
expired, the percentage which (i) such Lender's then outstanding Multi-Draw
Term Loans then constitutes of (ii) the aggregate Multi-Draw Term Loans of
all the Multi-Draw Term Loan Lenders then outstanding).
"Multi-Draw Term Note": as defined in subsection 2.9(a).
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": with respect to any Asset Sale (including any
Sale and Leaseback Transaction permitted under subsection 8.12), any
issuance of any debt securities or any borrowings by the Borrower or any of
its Subsidiaries (other than issuances and borrowings permitted pursuant to
subsection 8.2), any Permitted Receivables Securitization, an amount equal
to the gross proceeds in cash and Cash Equivalents of such Asset Sale,
sale, issuance, borrowing or Permitted Receivables Securitization, net of
(i) reasonable attorneys' fees, accountants' fees, brokerage, consultant
and other customary fees, underwriting commissions and other reasonable
fees and expenses actually incurred in connection with such Asset Sale,
sale, issuance, borrowing or Permitted Receivables Securitization, (ii)
taxes paid or reasonably estimated to be payable as a result thereof, (iii)
appropriate amounts provided or to be provided by the Borrower or any of
its Subsidiaries as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Borrower or
any such Subsidiary after such Asset Sale and other appropriate amounts to
be used by the Borrower or any of its Subsidiaries to discharge or pay on a
current basis any other liabilities associated with such Asset Sale, (iv)
in the case of a sale or Sale and Leaseback Transaction of or involving an
asset subject to a Lien securing any Indebtedness, payments made and
installment payments required to be made to repay such Indebtedness (other
than the Loans), including payments in respect of principal, interest and
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prepayment premiums and penalties, (v) in the case of any Permitted
Receivables Securitization, any escrowed or pledged cash proceeds which
effectively secure, or are required to be maintained as reserves by the
applicable Receivables Subsidiary for, the Indebtedness of the Borrower and
its Subsidiaries in respect of, or the obligations of the Borrower and its
Subsidiaries under, such Permitted Receivables Securitization and (vi) in
the case of any cash or Cash Equivalents not denominated in Dollars, any
costs associated with, or foreign exchange losses resulting from, the
actual conversion of such cash or Cash Equivalents into Dollars.
"Non-Excluded Taxes": as defined in subsection 4.11(a).
"Notes": the collective reference to the Revolving Credit Notes, the
Swing Line Note, the Tranche A Term Notes, the Tranche B Term Notes and the
Multi-Draw Term Loan Term Notes.
"NZ Dollars" and "NZ$": dollars in lawful currency of New Zealand.
"Obligor": any purchaser of goods or services or other Person
obligated to make payment to the Borrower or a Subsidiary in respect of a
purchase of such goods or services.
"Offer to Purchase": Offer to Purchase, dated May 5, 1998, to purchase
for cash any and all of the Convertible Notes due 2003.
"Offering Circular/Prospectus to Exchange": Offering
Circular/Prospectus, dated May 4, 1998, to exchange up to 8,889,920 Shares
of Borrower Common Stock for Convertible Notes due 2001 at a temporarily
reduced note conversion price.
"Offering Circular to Repurchase Stock": Offering Circular, dated May
4, 1998, to purchase for cash, 37,370,037 shares of Borrower Common Stock
at $27 per share.
"Option Purchases": as defined in subsection 8.7(b).
"Other Representatives": CSI, BT Alex. Brown Incorporated and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, each in its capacity as
co-arranger of the Revolving Credit Commitments and the Term Loans
hereunder, and the Documentation Agent, the Syndication Agent and the
Issuing Lender, in their capacities as such.
"Participants": as defined in subsection 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor thereto).
"Permitted Acquisition": any acquisition of a type described in
subsection 8.10 that is permitted by said subsection to be effected by the
Borrower or any of its Subsidiaries.
"Permitted Acquisition Target": any Person or all or substantially all
of the assets of any Person or any product line or unit of business of any
Person, provided that such
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Person, assets, product line or unit of business (a) is engaged in a
line of business that is the same as or related to the businesses in which
the Borrower and its Subsidiaries are engaged on the date hereof and (b)
has positive Consolidated EBITDA for its most recent fiscal year,
calculated on a pro forma basis after giving effect to the acquisition
hereof by the Borrower or any of its Subsidiaries.
"Permitted Hedging Arrangement": any agreement or arrangement relating
to currency, commodity or other hedging, to the extent and only to the
extent that such agreement or arrangement is entered into, purchased or
otherwise acquired in the ordinary course of business of the Borrower or
any of its Subsidiaries, and not for purposes of speculation, with (i) any
Lender or any affiliate of any Lender or (ii) any other reputable financial
institution that is rated at least A by S&P or A2 by Moody's.
"Permitted Receivables Securitization": any transaction or series of
related transactions providing for the securitization of any Receivables;
provided that any such transaction shall be consummated (i) on terms that
include terms substantially as described on Schedule III or as the Required
Lenders may otherwise consent, such consent not to be unreasonably
withheld, and (ii) pursuant to documentation in form and substance
reasonably satisfactory to the Administrative Agent, as evidenced by its
written approval thereof.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": any employee benefit plan which is covered by ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.
"Pledged Securities": all securities of the Loan Parties, now owned or
hereafter acquired, pledged pursuant to any Security Document.
"Prepayment Date": as defined in subsection 4.4(h).
"Prepayment Option Notice": as defined in subsection 4.4(h).
"Prime Rate": as defined in the definition of the term "ABR" in this
subsection 1.1.
"Pro Forma Balance Sheet": as defined in subsection 5.1(b).
"Pro Forma Date": as defined in subsection 5.1(b).
"Properties": as defined in subsection 5.18(a).
"QFL Notes": as defined in subsection 2.13(a).
"QFL Revolving Credit Note": as defined in subsection 2.13(a).
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"QFL Tranche A Term Note": as defined in subsection 2.13(a).
"QFL Tranche B Term Note": as defined in subsection 2.13(a).
"Qualified Foreign Lender": as defined in subsection 2.13(a).
"Receivables": all Accounts and accounts receivable of the Borrower or
any of its Subsidiaries (including any thereof constituting or evidenced by
chattel paper, instruments or general intangibles), and all proceeds
thereof and rights (contractual and other) and collateral related thereto.
"Receivables Subsidiary": any special purpose, bankruptcy-remote
Subsidiary that purchases, on a revolving basis, Receivables generated by
the Borrower or any of its Subsidiaries.
"Refunded Swing Line Loans": as defined in subsection 2.5(c).
"Register": as defined in subsection 12.6(d).
"Registration Rights Agreement": Registration Rights Agreement, dated
as of June 10, 1998, between the Borrower and CDR-PC Acquisition (and its
permitted successors and assigns thereunder).
"Regulation D": Regulation D of the Board as in effect from time to
time.
"Regulation T": Regulation T of the Board as in effect from time to
time.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Regulation X": Regulation X of the Board as in effect from time to
time.
"Reimbursement Obligations": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to subsection 3.5(a) for amounts
drawn under Letters of Credit.
"Reinvested Amount": with respect to any Asset Sale, that portion of
the Net Cash Proceeds thereof as shall, according to a certificate of a
Responsible Officer delivered to the Administrative Agent on the date of
such Asset Sale, be reinvested in the business of the Borrower and its
Subsidiaries within 365 days of the receipt of such Net Cash Proceeds;
provided that any Net Cash Proceeds not so reinvested by such 365th day
shall be utilized on such day to prepay the Loans pursuant to subsection
4.4(c).
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsection .22, .23, .25, .27 or .28 of PBGC Reg. Section 4043
or any successor regulation thereto.
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"Required Basic Lenders": at any time, Basic Lenders the Total Credit
Percentages (calculated for this purpose without giving effect to any
outstanding Tranche B Term Loans) of which aggregate more than 50%.
"Required Lenders": at any time, Lenders the Total Credit Percentages
of which aggregate more than 50%.
"Required Release Lenders": at any time, (i) Revolving Credit Lenders,
Multi-Draw Term Loan Lenders and Tranche A Term Loan Lenders the Total
Credit Percentages (calculated for this purpose without reference to
outstanding Tranche B Term Loans) of which aggregate more than 50%, (ii)
Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which
aggregate more than 50% and (iii) Lenders the Total Credit Percentages of
which aggregate more than 80%.
"Required Tranche B Term Loan Lenders": at any time, Tranche B Term
Loan Lenders the Tranche B Term Loan Percentages of which aggregate more
than 50%.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, statute, ordinance, code, decree, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its material property or to which such Person or any of
its material property is subject; provided that the foregoing shall not
apply to any non-binding recommendation of any Governmental Authority.
"Responsible Officer": as to the Borrower, any of its following
officers: (i) the chief executive officer or the president of the Borrower;
(ii) the chief financial officer, the vice president-finance, the treasurer
or the controller of the Borrower; (iii) with respect to legal matters, the
general counsel or deputy general counsel of the Borrower, (iv) the
divisional president of North American Office Products Group; (v) the chief
executive officer of Blue Star Group; (vi) the chief executive officer of
Mail Boxes, Etc. and (vii) with respect to ERISA related matters, the vice
president of human resources of the Borrower.
"Restricted Payment": as defined in subsection 8.7.
"Revolving Credit Commitment": as to any Revolving Credit Lender, its
obligation to make Revolving Credit Loans to, and/or make or participate in
Swing Line Loans made to, and/or issue or participate in Letters of Credit
issued on behalf of, the Borrower or Blue Star Group in an aggregate amount
not to exceed at any one time outstanding the amount set forth opposite
such Revolving Credit Lender's name in Schedule I under the heading
"Revolving Credit Commitment" or, in the case of any Lender that is an
Assignee, the amount of the assigning Lender's Revolving Credit Commitment
assigned to such Assignee pursuant to subsection 12.6(c) (in each case as
such amount may be adjusted from time to time as provided herein);
collectively, as to all the Revolving Credit Lenders, the "Revolving Credit
Commitments".
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"Revolving Credit Commitment Percentage": as to any Revolving Credit
Lender, the percentage of the aggregate Revolving Credit Commitments
constituted by its Revolving Credit Commitment (or, if the Revolving Credit
Commitments have terminated or expired, the percentage which (i) the sum of
(a) such Lender's then outstanding Revolving Credit Loans plus (b) such
Lender's interests in the aggregate L/C Obligations and Swing Line Loans
then outstanding then constitutes of (ii) the sum of (a) the aggregate
Revolving Credit Loans of all the Revolving Credit Lenders then outstanding
plus (b) the aggregate L/C Obligations and Swing Line Loans then
outstanding).
"Revolving Credit Commitment Period": the period from and including
the Effective Date to but not including the Termination Date, or such
earlier date as the Revolving Credit Commitments shall terminate as
provided herein.
"Revolving Credit Lender": any Lender having a Revolving Credit
Commitment hereunder or having a Revolving Credit Loan outstanding
hereunder.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.2.
"Revolving L/C Issuing Lender": Chase or any of its affiliates
(including without limitation, Chase Manhattan Delaware), in its capacity
as issuer of any Revolving Letter of Credit.
"Revolving Letters of Credit": as defined in subsection 3.1(a).
"Sale and Leaseback Transaction": as defined in subsection 8.12.
"Securities Act": the Securities Act of 1933, as amended.
"Security Documents": the collective reference to the Mortgages, the
Guarantee and Collateral Agreement, the Blue Star Guarantee and Security
Documents, the Australian Pledge Agreement and all other similar security
documents hereafter delivered to the Administrative Agent on behalf of the
Lenders (and the Administrative Agent will provide each Lender with a copy
thereof) granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower or Blue Star Group hereunder,
under any Notes and/or under any of the other Loan Documents or to secure
any guarantee of any such obligations and liabilities.
"Senior Subordinated Note Indenture": the Indenture, dated as of June
10, 1998, entered into by the Borrower in connection with the issuance of
the Senior Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower in connection therewith, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with subsection 8.17.
"Senior Subordinated Notes": the fixed rate subordinated notes of the
Borrower issued on the Effective Date pursuant to the Senior Subordinated
Note Indenture.
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"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent" and "Solvency": with respect to any Person on a particular
date, the condition that, on such date, (a) the fair value of the property
of such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities mature, and (d)
such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's property
would constitute an unreasonably small amount of capital.
"S&P": as defined in the definition of the term "Cash Equivalents" in
this subsection 1.1.
"Special Warrants": as defined in the Recitals hereto.
"Spin-Cos": as defined in the Recitals hereto.
"Spin-Offs": as defined in the Recitals hereto.
"Standby Letter of Credit": as defined in subsection 3.1(a).
"Stock Repurchase": as defined in the Recitals hereto.
"Stock Repurchase Offer to Purchase": Schedule 13E-4, dated May 4,
1998, relating to an Offering Circular to Repurchase Stock, Special
Instructions for Holders of Certain Types of Shares, dated May 4, 1998, and
a Letter of Transmittal, dated May 4, 1998.
"Subordinated Debt": any unsecured Indebtedness of the Borrower or any
of its Subsidiaries (a) having no scheduled principal payments (whether by
way of mandatory sinking fund, mandatory redemption, mandatory prepayment
or otherwise) prior to six months after the Final Maturity Date, (b) the
payment of the principal of and interest on which and other obligations of
the Borrower and its Subsidiaries in respect thereof are subordinated, on
terms and conditions reasonably satisfactory to the Administrative Agent
(as evidenced by its prior written approval) in light of the terms and
conditions customarily contained in indentures for publicly issued high
yield subordinated debt securities, to the prior payment in full of the
principal of and interest (including post-petition interest) on the Loans
and all other payment obligations of the Loan Parties to the Agents, the
Other Representatives and the Lenders hereunder and under the other Loan
Documents.
"Subordinated Subsidiary Guarantees": the subordinated guarantees
delivered by the Subsidiaries of the Borrower guaranteeing the obligations
and liabilities of the
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Borrower in respect of the Senior Subordinated Notes.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership, limited liability company or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Swing Line Commitment": the Swing Line Lender's obligation to make
Swing Line Loans pursuant to subsection 2.5.
"Swing Line Lender": Chase, in its capacity as provider of the Swing
Line Loans.
"Swing Line Loan Participation Certificate": a certificate in
substantially the form of Exhibit I.
"Swing Line Loans": as defined in subsection 2.5(a).
"Swing Line Note": as defined in subsection 2.5(b).
"Syndication Agent": as defined in the Preamble hereto.
"Tax Allocation Agreement": Tax Allocation Agreement, dated as of June
10, 1998, by and among the Borrower and the Spin-Cos, as such agreement may
be amended, supplemented, waived or otherwise modified from time to time.
"Tax Indemnification Agreement": Tax Indemnification Agreement, dated
as of June 10, 1998, by and among the Spin-Cos, as such agreement may be
amended, supplemented, waived or otherwise modified from time to time.
"Telerate British Bankers Assoc. Interest Settlement Rates Page": as
defined in the definition of the term "Eurodollar Base Rate" in this
subsection 1.1.
"Termination Date": June 9, 2005.
"Term Loan": a Tranche A Term Loan, a Tranche B Term Loan or a
Multi-Draw Term Loan, as the context shall require; collectively, the "Term
Loans".
"Term Loan Lender": any Lender having a Term Loan outstanding
hereunder.
"Term Note": a Tranche A Term Note, a Tranche B Term Note or a
Multi-Draw Term Loan Note, as the context shall require; collectively, the
"Term Notes".
"Three-Month Secondary CD Rate": as defined in the definition of the
term
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"ABR" in this subsection 1.1.
"Title Insurance Company": the title insurance company issuing the
policy referred to in subsection 7.12.
"Total Credit Percentage": as to any Lender at any time, the
percentage of the aggregate Revolving Credit Commitments, Available
Multi-Draw Term Loan Commitments, outstanding Tranche A Term Loans,
outstanding Tranche B Term Loans and outstanding Multi-Draw Term Loans then
constituted by its Revolving Credit Commitment, Available Multi-Draw Term
Loan Commitment, outstanding Tranche A Term Loan, outstanding Tranche B
Term Loan and outstanding Multi-Draw Term Loans (or, if the Revolving
Credit Commitments have terminated or expired, the percentage of the
aggregate Available Multi-Draw Term Loan Commitments, outstanding Revolving
Credit Loans, outstanding Term Loans and interests in the outstanding L/C
Obligations and Swing Line Loans then constituted by its Available
Multi-Draw Term Loan Commitments, outstanding Revolving Credit Loans,
outstanding Term Loans and interests in outstanding L/C Obligations and
Swing Line Loans).
"Tranche": the collective reference to Eurodollar Loans, the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Tranche A Term Loan": as defined in subsection 2.6.
"Tranche A Term Loan Lender": any Term Loan Lender having a Tranche A
Term Loan outstanding hereunder.
"Tranche A Term Loan Percentage": as to any Term Loan Lender at any
time, the percentage which (i) such Term Loan Lender's Tranche A Term Loan
then outstanding constitutes of (ii) the aggregate Tranche A Term Loans of
all the Term Loan Lenders then outstanding.
"Tranche A Term Note": as defined in subsection 2.7(a).
"Tranche B Prepayment Amount": as defined in subsection 4.4(g).
"Tranche B Term Loan": as defined in subsection 2.6.
"Tranche B Term Loan Lender": any Term Loan Lender having a Tranche B
Term Loan outstanding hereunder.
"Tranche B Term Loan Percentage": as to any Term Loan Lender at any
time, the percentage which (i) such Term Loan Lender's Tranche B Term Loan
then outstanding constitutes of (ii) the aggregate Tranche B Term Loans of
all the Term Loan Lenders then outstanding.
"Tranche B Term Note": as defined in subsection 2.8(a).
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"Transaction Documents": the collective reference to the CDR
Agreements, the Senior Subordinated Note Indenture, the Distribution
Agreement, the Tax Allocation Agreement, the Tax Indemnification Agreement,
the Stock Repurchase Offer to Purchase, the Convertible Notes due 2003
Repurchase Documents, the Convertible Notes due 2001 Exchange Offer
Documents and the Employee Benefits Services and Liabilities Agreement.
"Transactions": as defined in the Recitals hereto.
"Transferee": as defined in subsection 12.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Underfunding": an excess of all accrued benefits under a Plan (based
on those assumptions used to fund such Plan), determined as of the most
recent annual valuation date, over the value of the assets of such Plan
allocable to such accrued benefits.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"U.S. Tax Compliance Certificate": as defined in subsection 4.11(b).
"Voting Stock": as defined in the definition of the term "Change of
Control" in this subsection 1.1.
"Warrants": as defined in the Recitals hereto.
"Wholly Owned Subsidiary": as to any Person, any Subsidiary of such
Person of which such Person owns, directly or indirectly through one or
more Wholly Owned Subsidiaries, all of the Capital Stock of such Subsidiary
other than directors qualifying shares or shares held by nominees.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes, any other Loan Document or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in any Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in 1.1, the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
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(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower or Blue Star
Group, as the case may be, from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Revolving Credit Lender's Revolving Credit Commitment
Percentage of the sum of the then outstanding L/C Obligations and the then
outstanding Swing Line Loans, does not exceed the amount of such Revolving
Credit Lender's Revolving Credit Commitment then in effect, provided that in no
event shall Revolving Credit Loans be made available to Blue Star Group in
aggregate principal amount outstanding in excess of $50,000,000. During the
Revolving Credit Commitment Period the Borrower and Blue Star Group may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower or Blue Star Group, as the case may be, and notified to the
Administrative Agent in accordance with subsections 2.3 and 4.2, provided that
no Revolving Credit Loan shall be made as a Eurodollar Loan after the day that
is one month prior to the Termination Date.
(c) The Borrower agrees that neither it nor the Blue Star Group shall
borrow Revolving Credit Loans, Swing Line Loans or Multi-Draw Term Loans,
request the issuance of any Letter of Credit or optionally reduce or terminate
the Revolving Credit Commitments or the Multi-Draw Term Loan Commitments, if the
effect of such borrowing, issuance, reduction or termination would be to cause
the sum of the Available Revolving Credit Commitments and the Available
Multi-Draw Term Loan Commitments to be less than the aggregate principal amount
outstanding of the Borrower's Convertible Notes due 2001 and its Convertible
Notes due 2003.
2.2 Revolving Credit Notes. Each of the Borrower and Blue Star Group
agrees that, upon the request to the Administrative Agent by any Revolving
Credit Lender made on or prior to the Effective Date or in connection with any
assignment of its Loan or Revolving Credit Commitment, in order to evidence such
Revolving Credit Lender's Revolving Credit Loans the Borrower and Blue Star
Group will execute and deliver to such Revolving Credit Lender a promissory note
substantially in the form of Exhibit A-1, with appropriate insertions as to
payee, date and principal amount (each, as amended, supplemented, replaced or
otherwise modified from time to time, a "Revolving Credit Note"), payable to the
order of such Revolving Credit Lender and in a principal amount equal to the
lesser of (a) the amount set forth opposite such Revolving Credit Lender's name
in Schedule I under the heading "Revolving Credit Commitment" and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Revolving Credit Lender. Each Revolving Credit Note shall (x) be dated the
Effective Date, (y) be stated to mature on the Termination Date and (z) provide
for the payment of interest in accordance with subsection 4.1.
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2.3 Procedure for Revolving Credit Borrowing. The Borrower or Blue
Star Group, as the case may be, may borrow under the Revolving Credit
Commitments during the Revolving Credit Commitment Period on any Business Day,
provided that the Borrower or Blue Star Group shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent prior to (a) 12:30 P.M., New York City time, at least three Business Days
prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans, or (b) 11:00 A.M.,
New York City time, on the requested Borrowing Date, otherwise), specifying (i)
whether the Loans are to be borrowed by the Borrower or Blue Star Group, (ii)
the amount to be borrowed, (iii) the requested Borrowing Date, (iv) whether the
borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof and
(iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of ABR Loans, except
any ABR Loan to be used solely to pay a like amount of outstanding Reimbursement
Obligations or Swing Line Loans, $5,000,000 or a whole multiple of $1,000,000 in
excess thereof (or, if the then Available Revolving Credit Commitments are (A)
less than $5,000,000, $1,000,000 or a whole multiple thereof or (B) less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of
any such notice from the Borrower or Blue Star Group, as the case may be, the
Administrative Agent shall promptly notify each Revolving Credit Lender thereof.
Notwithstanding the foregoing, the initial borrowing of Revolving Credit Loans
on the Effective Date shall be in a maximum aggregate principal amount of
$150,000,000. Subject to the satisfaction of the conditions precedent specified
in subsection 6.3, each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing of Revolving Credit Loans available to the
Administrative Agent for the account of the Borrower or Blue Star Group, as the
case may be, at the office of the Administrative Agent specified in subsection
12.2 prior to 12:00 Noon (or 10:00 A.M., in the case of the initial borrowing
hereunder on the Effective Date), New York City time, on the Borrowing Date
requested by the Borrower or Blue Star Group, as the case may be, in Dollars and
in funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower or Blue Star Group, as the case may be,
by the Administrative Agent crediting the account of the Borrower or Blue Star
Group, as the case may be, on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Revolving Credit
Lenders and in like funds as received by the Administrative Agent.
2.4 Termination or Reduction of Revolving Credit Commitments. Subject
to subsection 2.1(c), the Borrower shall have the right, upon not less than
three Business Days' notice to the Administrative Agent (which will promptly
notify the Lenders thereof), to terminate the Revolving Credit Commitments or,
from time to time, to reduce the amount of the Revolving Credit Commitments;
provided that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit Loans and
Swing Line Loans made on the effective date thereof, the aggregate principal
amount of the Revolving Credit Loans then outstanding, when added to the sum of
the then outstanding L/C Obligations and the then outstanding Swing Line Loans,
would exceed the Revolving Credit Commitments then in effect. Any such reduction
shall be in an amount equal to $1,000,000 or a whole multiple of $1,000,000 in
excess thereof and shall reduce permanently the Revolving Credit Commitments
then in effect.
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<PAGE>
2.5 Swing Line Commitments. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make swing line loans (individually, a
"Swing Line Loan"; collectively, the "Swing Line Loans") to the Borrower from
time to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed $15,000,000, provided
that at no time may the sum of the then outstanding Swing Line Loans, Revolving
Credit Loans and L/C Obligations exceed the Revolving Credit Commitments then in
effect. Amounts borrowed by the Borrower under this subsection 2.5 may be repaid
and, through but excluding the Termination Date, reborrowed. All Swing Line
Loans shall be made as ABR Loans and shall not be entitled to be converted into
Eurodollar Loans. The Borrower shall give the Swing Line Lender irrevocable
notice (which notice must be received by the Swing Line Lender prior to 2:00
p.m., New York City time) on the requested Borrowing Date specifying the amount
of the requested Swing Line Loan which shall be in a minimum amount of
$1,000,000 or whole multiples of $100,000 in excess thereof. The proceeds of the
Swing Line Loan will be made available by the Swing Line Lender to the Borrower
at the office of the Swing Line Lender by crediting the account of the Borrower
at such office with such proceeds in Dollars.
(b) The Borrower agrees that, upon the request to the Administrative
Agent by the Swing Line Lender, in order to evidence the Swing Line Loans the
Borrower will execute and deliver to the Swing Line Lender a promissory note
substantially in the form of Exhibit A-2, with appropriate insertions (as the
same may be amended, supplemented, replaced or otherwise modified from time to
time, the "Swing Line Note"), payable to the order of the Swing Line Lender and
representing the obligation of the Borrower to pay the amount of the Swing Line
Commitment or, if less, the unpaid principal amount of the Swing Line Loans,
with interest thereon as prescribed in subsection 4.1. The Swing Line Note shall
(a) be dated the Effective Date, (b) be stated to mature on the Termination Date
and (c) provide for the payment of interest in accordance with subsection 4.1.
(c) The Swing Line Lender, at any time in its sole and absolute
discretion may, and, at any time as there shall be a Swing Line Loan outstanding
for more than seven Business Days, the Swing Line Lender shall, on behalf of the
Borrower (which hereby irrevocably directs and authorizes the Swing Line Lender
to act on its behalf), request each Revolving Credit Lender, including the Swing
Line Lender, to make a Revolving Credit Loan as an ABR Loan in an amount equal
to such Revolving Credit Lender's Revolving Credit Commitment Percentage of the
principal amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date such notice is given; provided that the provisions of
this subsection shall not affect the Borrower's obligations to prepay Swing Line
Loans in accordance with the provisions of subsection 4.4(e). Unless the
Revolving Credit Commitments shall have expired or terminated (in which event
the procedures of paragraph (d) of this subsection 2.5 shall apply), each
Revolving Credit Lender will make the proceeds of its Revolving Credit Loan
available to the Administrative Agent for the account of the Swing Line Lender
at the office of the Administrative Agent prior to 12:00 Noon, New York City
time, in funds immediately available on the Business Day next succeeding the
date such notice is given. The proceeds of such Revolving Credit Loans shall be
immediately applied to repay the Refunded Swing Line Loans.
(d) If the Revolving Credit Commitments shall expire or terminate at
any time while Swing Line Loans are outstanding, each Revolving Credit Lender
shall, at the option of the
33
<PAGE>
Swing Line Lender exercised reasonably, either (i)
notwithstanding the expiration or termination of the Revolving Credit
Commitments, make a Revolving Credit Loan as an ABR Loan or (ii) purchase an
undivided participating interest in such Swing Line Loans, in either case in an
amount equal to such Revolving Credit Lender's Revolving Credit Commitment
Percentage determined on the date of, and immediately prior to, expiration or
termination of the Revolving Credit Commitments of the aggregate principal
amount of such Swing Line Loans. Each Revolving Credit Lender will make the
proceeds of any Revolving Credit Loan made pursuant to the immediately preceding
sentence available to the Administrative Agent for the account of the Swing Line
Lender at the office of the Administrative Agent prior to 12:00 Noon, New York
City time, in funds immediately available on the Business Day next succeeding
the date on which the Revolving Credit Commitments expire or terminate. The
proceeds of such Revolving Credit Loans shall be immediately applied to repay
the Swing Line Loans outstanding on the date of termination or expiration of the
Revolving Credit Commitments. In the event that the Revolving Credit Lenders
purchase undivided participating interests pursuant to the first sentence of
this paragraph (d), each Revolving Credit Lender shall immediately transfer to
the Swing Line Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swing Line Lender will deliver to
such Revolving Credit Lender a Swing Line Loan Participation Certificate,
substantially in the form of Exhibit I, dated the date of receipt of such funds
and in such amount.
(e) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Revolving Credit Lender's participating
interest in a Swing Line Loan, the Swing Line Lender receives any payment on
account thereof, the Swing Line Lender will distribute to such Revolving Credit
Lender its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Revolving Credit Lender's participating interest was outstanding and funded);
provided, however, that in the event that such payment received by the Swing
Line Lender is required to be returned, such Revolving Credit Lender will return
to the Swing Line Lender any portion thereof previously distributed by the Swing
Line Lender to it.
2.6 Term Loans. Subject to the terms and conditions hereof (including,
without limitation, subsection 2.1(c)), each Term Loan Lender severally agrees
(a) to make a term loan to the Borrower (a "Tranche A Term Loan"), on the
Effective Date in the principal amount set forth opposite such Term Loan
Lender's name in Schedule I under the heading "Tranche A Term Loan Commitment";
(b) to make a term loan to the Borrower (a "Tranche B Term Loan") on the
Effective Date in the principal amount set forth opposite such Term Loan
Lender's name in Schedule I under the heading "Tranche B Term Loan Commitment"
and (c) to make term loans to the Borrower ("Multi-Draw Term Loans"), from time
to time from the Effective Date to and including the third anniversary of the
Effective Date in an aggregate principal amount up to but not exceeding the
amount set forth opposite such Term Loan Lender's name in Schedule I under the
heading "Multi-Draw Term Loan Commitment". The Term Loans may from time to time
be (a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with subsections 2.9 and 4.2.
2.7 Tranche A Term Notes. (a) The Borrower agrees that, upon the
request to the Administrative Agent by any Tranche A Term Loan Lender made on or
prior to the Effective Date or in connection with any assignment of its Loan, in
order to evidence such Term Loan Lender's Tranche A Term Loans the Borrower will
execute and deliver to such Term Loan
34
<PAGE>
Lender one or more promissory notes substantially in the form of
Exhibit A-3 (each, as amended, supplemented, replaced or otherwise
modified from time to time, a "Tranche A Term Note"), with appropriate
insertions therein as to payee, date and principal amount, payable to
the order of such Term Loan Lender and in an aggregate principal
amount equal to the lesser of (a) the amount set forth opposite such
Term Loan Lender's name on Schedule I under the heading "Tranche A
Term Loan Commitment" and (b) the unpaid principal amount of the
Tranche A Term Loans made by such Term Loan Lender. Each Tranche A
Term Note shall (i) be dated the Effective Date, (ii) be payable as
provided in subsection 2.7(b) and (iii) provide for the payment of
interest in accordance with subsection 4.1.
(b) The aggregate Tranche A Term Loans of all the Term Loan Lenders
shall be payable in 27 consecutive quarterly installments on the dates and in a
principal amount equal to the amount set forth below (together with all accrued
interest thereon) opposite the applicable installment date (or, if less, the
aggregate amount of the Tranche A Term Loans then outstanding):
<TABLE>
<CAPTION>
Dates Amounts
----- -------
<S> <C>
January 24, 1999 $4,166,666
April 24, 1999 $4,166,667
July 24, 1999 $4,166,667
October 24, 1999 $3,750,000
January 24, 2000 $3,750,000
April 24, 2000 $3,750,000
July 24, 2000 $3,750,000
October 24, 2000 $3,750,000
January 24, 2001 $3,750,000
April 24, 2001 $3,750,000
July 24, 2001 $3,750,000
October 24, 2001 $3,750,000
January 24, 2002 $3,750,000
April 24, 2002 $3,750,000
July 24, 2002 $3,750,000
October 24, 2002 $3,750,000
January 24, 2003 $3,750,000
April 24, 2003 $3,750,000
July 24, 2003 $3,750,000
October 24, 2003 $3,750,000
January 24, 2004 $3,750,000
April 24, 2004 $3,750,000
July 24, 2004 $3,750,000
October 24, 2004 $3,125,000
January 24, 2005 $3,125,000
April 24, 2005 $3,125,000
Termination Date $3,125,000
</TABLE>
2.8 Tranche B Term Notes. (a) The Borrower agrees that, upon the
request to the Administrative Agent by any Tranche B Term Loan Lender made on or
prior to the Effective Date or in connection with any assignment of its Loan, in
order to evidence such Term Loan Lender's Tranche B Term Loan the Borrower will
execute and deliver to such Term Loan Lender
35
<PAGE>
a promissory note substantially in the form of Exhibit A-4 (each, as
amended, supplemented, replaced or otherwise modified from time to time, a
"Tranche B Term Note"), with appropriate insertions therein as to payee,
date and principal amount, payable to the order of such Term Loan Lender
and in a principal amount equal to the lesser of (a) the amount set forth
opposite such Term Loan Lender's name on Schedule I under the heading
"Tranche B Term Loan Commitment" and (b) the unpaid principal amount of the
Tranche B Term Loan made by such Term Loan Lender. Each Tranche B Term Note
shall (i) be dated the Effective Date, (ii) be payable as provided in
subsection 2.8(b) and (iii) provide for the payment of interest in
accordance with subsection 4.1.
(b) The aggregate Tranche B Term Loans of all the Term Loan Lenders
shall be payable in 31 consecutive quarterly installments on the dates and in a
principal amount equal to the amount set forth below (together with all accrued
interest thereon) opposite the applicable installment date (or, if less, the
aggregate amount of the Tranche B Term Loans then outstanding):
<TABLE>
<CAPTION>
Dates Amount
----- ------
<S> <C>
January 24, 1999 $ 333,333
April 24, 1999 $ 333,333
July 24, 1999 $ 333,334
October 24, 1999 $ 250,000
January 24, 2000 $ 250,000
April 24, 2000 $ 250,000
July 24, 2000 $ 250,000
October 24, 2000 $ 250,000
January 24, 2001 $ 250,000
April 24, 2001 $ 250,000
July 24, 2001 $ 250,000
October 24, 2001 $ 250,000
January 24, 2002 $ 250,000
April 24, 2002 $ 250,000
July 24, 2002 $ 250,000
October 24, 2002 $ 250,000
January 24, 2003 $ 250,000
April 24, 2003 $ 250,000
July 24, 2003 $ 250,000
October 24, 2003 $ 250,000
January 24, 2004 $ 250,000
April 24, 2004 $ 250,000
July 24, 2004 $ 250,000
October 24, 2004 $ 23,000,000
January 24, 2005 $ 23,000,000
April 24, 2005 $ 23,000,000
July 24, 2005 $ 23,000,000
October 24, 2005 $144,250,000
January 24, 2006 $144,250,000
April 24, 2006 $144,250,000
Final Maturity Date $144,250,000
</TABLE>
2.9 Multi-Draw Term Notes. (a) The Borrower agrees that, upon the request
to
36
<PAGE>
the Administrative Agent by any Multi-Draw Term Loan Lender made on or prior
to the Effective Date or in connection with any assignment of its Loan, in order
to evidence such Multi-Draw Term Loan Lender's Multi-Draw Term Loans the
Borrower will execute and deliver to such Term Loan Lender promissory notes
substantially in the form of Exhibit A-5 (each, as amended, supplemented,
replaced or otherwise modified from time to time, a "Multi-Draw Term Note"),
with appropriate insertions therein as to payee, date and principal amount,
payable to the order of such Term Loan Lender and in an aggregate principal
amount equal to the lesser of (a) the amount set forth opposite such Term Loan
Lender's name on Schedule I under the heading "Multi-Draw Term Loan Commitment"
and (b) the unpaid principal amount of the Multi-Draw Term Loans made by such
Term Loan Lender. Each Multi-Draw Term Note shall (i) be dated the Effective
Date, (ii) be payable as provided in subsection 2.9(b) and (iii) provide for the
payment of interest in accordance with subsection 4.1.
(b) The aggregate Multi-Draw Term Loans of all the Term Loan Lenders
outstanding on the third anniversary of the Effective Date shall be payable in
16 consecutive quarterly installments on the dates and in a principal amount
equal to the aggregate principal amount of the Multi-Draw Term Loans outstanding
on the third anniversary of the Effective Date multiplied by the percentage set
forth below (together with all accrued interest thereon) opposite the applicable
installment date (or, if less, the aggregate amount of the Multi-Draw Term Loans
then outstanding):
<TABLE>
<CAPTION>
Dates Percentage
----- ----------
<S> <C>
October 24, 2001 2.625%
January 24, 2002 2.625%
April 24, 2002 2.625%
July 24, 2002 2.625%
October 24, 2002 7.875%
January 24, 2003 7.875%
April 24, 2003 7.875%
July 24, 2003 7.875%
October 24, 2003 11.625%
January 24, 2004 11.625%
April 24, 2004 11.625%
July 24, 2004 11.625%
October 24, 2004 2.875%
January 24, 2005 2.875%
April 24, 2005 2.875%
Termination Date 2.875%
</TABLE>
2.10 Procedure for Term Loan Borrowing. The Borrower may borrow the Term
Loans (i) on the Effective Date, in the case of the Tranche A Term Loans and the
Tranche B Term Loans, or (ii) on any Business Day during the period from the
Effective Date to and including the third anniversary of the Effective Date, in
the case of the Multi-Draw Term Loans, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:30 P.M., New York City time, at least (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
Term Loans are to be initially Eurodollar Loans or (b) one Business Day prior to
the requested Borrowing Date, otherwise) requesting that the Term Loan Lenders
make the Term Loans on the
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<PAGE>
requested Borrowing Date and specifying (i) in the case of Tranche A Term
Loans, Tranche B Term Loans and Multi-Draw Term Loans, the amount to be
borrowed, (ii) whether the Term Loans are to be initially Eurodollar Loans, ABR
Loans or a combination thereof, and (iii) if the Term Loans are to be entirely
or partly Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Periods therefor. Each borrowing
under the Multi-Draw Term Loan Commitments shall be in an amount at least equal
to $25,000,000. Upon receipt of such notice the Administrative Agent shall
promptly notify each Term Loan Lender thereof. Each Term Loan Lender will make
the amount of its pro rata share of the Term Loans available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 12.2 prior to 12:00 Noon (or 10:00
A.M., in the case of the borrowings of Tranche A Term Loans and Tranche B Term
Loans on the Effective Date), New York City time, on the requested Borrowing
Date in Dollars and in funds immediately available to the Administrative Agent.
The Administrative Agent shall on such date credit the account of the Borrower
on the books of such office of the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Term Loan Lenders
and in like funds as received by the Administrative Agent.
2.11 Termination or Reduction of Multi-Draw Term Loan Commitments.
Subject to subsection 2.1(c), the Borrower shall have the right, upon not less
than three Business Days' notice to the Administrative Agent (which will
promptly notify the Lenders thereof), to terminate the Multi-Draw Term Loan
Commitments or, from time to time, to reduce the amount of the Multi-Draw Term
Loan Commitments. Any such reduction shall be in an amount equal to $5,000,000
or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently
the Multi-Draw Term Loan Commitments then in effect.
2.12 Repayment of Loans. (a) The Borrower hereby unconditionally
promises to pay and, with respect to the Loans made to Blue Star Group, the
Borrower hereby unconditionally promises to cause Blue Star Group and Blue Star
Group hereby unconditionally promises to pay to the Administrative Agent for the
account of (i) each Revolving Credit Lender, the then unpaid principal amount of
each Revolving Credit Loan of such Revolving Credit Lender, on the Termination
Date (or such earlier date on which the Revolving Credit Loans become due and
payable pursuant to Section 10); (ii) the Swing Line Lender, the then unpaid
principal amount of the Swing Line Loans, on the Termination Date (or such
earlier date on which the Swing Line Loans become due and payable pursuant to
Section 10); (iii) each Tranche A Term Loan Lender, the amounts specified in
subsection 2.7(b) (or, if less, the aggregate amount of the Tranche A Term Loans
then outstanding), on the dates specified in subsection 2.7(b) (or such earlier
date on which the Tranche A Term Loans become due and payable pursuant to
Section 10); (iv) each Tranche B Term Loan Lender, the amounts specified in
subsection 2.8(b) (or, if less, the aggregate amount of the Tranche B Term Loans
then outstanding), on the dates specified in subsection 2.8(b) (or such earlier
date on which the Tranche B Term Loans become due and payable pursuant to
Section 10) and (v) each Multi-Draw Term Loan Lender, the amounts specified in
subsection 2.9(b) (or, if less, the aggregate amount of the Multi-Draw Term
Loans then outstanding), on the dates specified in subsection 2.9(b) (or such
earlier date on which the Multi-Draw Term Loans become due and payable pursuant
to Section 10). The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 4.1.
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<PAGE>
(b) Each Lender (including the Swing Line Lender) shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower or Blue Star Group to such Lender resulting from
each Loan of such Lender from time to time, including the amounts of principal
and interest payable and paid to such Lender from time to time under this
Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 12.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower or Blue
Star Group to each Lender hereunder and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Borrower or Blue Star
Group and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 12.6(d) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower and Blue Star Group therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to maintain
the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower or Blue Star Group to repay (with
applicable interest) the Loans made to the Borrower or Blue Star Group by such
Lender in accordance with the terms of this Agreement.
2.13 Qualified Foreign Lender Notes. (a) Any Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that is in compliance
with the requirements of subsection 4.11(b)(Y) of this Agreement (a "Qualified
Foreign Lender") shall upon receipt of the written request of the Borrower or
the Administrative Agent, and may upon its own written request to the
Administrative Agent, (i) exchange any Revolving Credit Note held by or assigned
to it for a QFL Revolving Credit Note in the form attached hereto as Exhibit A-6
(a "QFL Revolving Credit Note"), (ii) exchange any Tranche A Term Note held by
or assigned to it for a QFL Tranche A Term Note in the form attached hereto as
Exhibit A-7 (a "QFL Tranche A Term Note"), (iii) exchange any Tranche B Term
Note held by or assigned to it for a QFL Tranche B Term Note in the form
attached hereto as Exhibit A-8 (a "QFL Tranche B Term Note") and (iv) exchange
any Multi-Draw Term Note held by an assignment to it for a QFL Multi-Draw Term
Note in the form attached hereto as Exhibit A-9 (a "QFL Multi-Draw Term Note";
together with any QFL Revolving Credit Notes, QFL Tranche A Term Notes and QFL
Tranche B Term Note, the "QFL Notes"), provided that, prior to any exchange of
Notes, such Lender shall have delivered to the Borrower the certificates,
documents and forms described in Section 4.11(b)(Y) of this Agreement. Any QFL
Notes issued in exchange for any existing Notes pursuant to this subsection
shall be (i) dated the Effective Date, (ii) issued in the names of the entities
in whose names such existing Notes were issued and (iii) issued in the same
principal amounts as such existing Notes. Any Revolving Credit Note, Tranche A
Term Note, Tranche B Term Note and Multi-Draw Term Note exchanged pursuant to
this subsection is sometimes referred to herein as an exchange note ("Exchange
Note").
(b) The Borrower agrees that, upon the request of or delivery of a
request to a Qualified Foreign Lender pursuant to paragraph (a) of this
subsection, it shall execute and deliver QFL Notes to the Administrative Agent
in exchange for the Exchange Notes surrendered in
39
<PAGE>
connection with such request conforming to the requirements of such
paragraph. Each Qualified Foreign Lender shall surrender its Notes to the
Administrative Agent in connection with any exchange pursuant to this
subsection. Upon receipt by the Administrative Agent of the existing Notes to be
exchanged for such QFL Notes in accordance with this paragraph, the
Administrative Agent shall forward the QFL Notes to the Qualified Foreign Lender
which surrendered its existing Notes for exchange and shall forward the existing
Notes to the Borrower marked "cancelled." Once issued, QFL Notes (i) shall be
deemed to and shall be "Notes", "Tranche A Term Notes", "Tranche B Term Notes",
"Multi-Draw Term Notes" or "Revolving Credit Notes", as the case may be, for all
purposes under this Agreement, the Security Documents and the other Loan
Documents, (ii) may not be exchanged for Revolving Credit Notes, Tranche A Term
Notes, Tranche B Term Notes or Multi-Draw Term Notes, notwithstanding anything
to the contrary in this Agreement, and (iii) shall at all times thereafter be
QFL Notes, including, without limitation, following any transfer or assignment
thereof.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Revolving L/C Issuing Lender, in reliance on the agreements of the other
Revolving Credit Lenders set forth in subsection 3.4(a), agrees to continue
outstanding under this Agreement the Existing Revolving Letters of Credit and
issue letters of credit (such letters of credit, "Revolving Letters of Credit"),
for the account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Revolving L/C Issuing Lender, provided that the Revolving L/C Issuing Lender
shall not issue any Revolving Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations in respect of Revolving Letters of Credit
would exceed $50,000,000 or (ii) the Aggregate Outstanding Revolving Credit of
all the Revolving Credit Lenders would exceed the Revolving Credit Commitments
of all the Revolving Credit Lenders then in effect. Each Letter of Credit shall
(i) be denominated in Dollars and shall be either (x) a standby letter of credit
issued to support obligations of the Borrower or any of its Subsidiaries or a
joint venture or similar arrangement in which the Borrower or any of its
Subsidiaries is an investor, contingent or otherwise, which finance the working
capital and business needs of the Borrower and its Subsidiaries or such joint
venture or other arrangement incurred in the ordinary course of business (a
"Standby Letter of Credit"), or (y) a commercial letter of credit in respect of
the purchase of goods or services by the Borrower, any of its Subsidiaries or a
joint venture or similar arrangement in which the Borrower or any of its
Subsidiaries is an investor in the ordinary course of business (a "Commercial
Letter of Credit"), (ii) expire no later than the date five Business Days prior
to the Termination Date, and (iii) expire no later than 365 or 366 days, as the
case may be, after its date of issuance in the case of Standby Letters of
Credit, and 180 days after its date of issuance in the case of Commercial
Letters of Credit, provided that any Standby Letter of Credit with a one-year
term may provide for the renewal thereof for additional one-year periods (which
shall in no event extend beyond the date referred to in clause (ii)).
(b) Subject to the terms and conditions hereof, the Blue Star L/C
Issuing Lenders, in reliance on the agreements of the other Revolving Credit
Lenders set forth in subsection 3.4(a), each agree to issue stand-by letters of
credit ("Blue Star Letters of Credit") to support borrowings under the Blue Star
Credit Facility for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by
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the Blue Star L/C Issuing Lender, provided that the Blue Star L/C
Issuing Lenders shall not issue any Blue Star Letters of Credit if, after giving
effect to such issuance, (i) the L/C Obligations in respect of the Blue Star
Letters of Credit would exceed the lesser of $200,000,000 or 110% of the
aggregate principal amount of the loans outstanding at any time under the Blue
Star Credit Facility or (ii) the Aggregate Outstanding Revolving Credit of all
the Revolving Credit Lenders would exceed the Revolving Credit Commitments of
all the Revolving Credit Lenders then in effect and provided, further that the
Blue Star Credit Facility shall be in an aggregate principal amount (i) not less
than $25,000,000 and (ii) not in excess of $180,000,000, including 90 days
interest thereon. Each Blue Star Letter of Credit shall (i) be denominated in
Dollars, (ii) expire no later than the date five Business Days prior to the
Termination Date, and (iii) expire no later than 365 or 366 days, as the case
may be, after its date of issuance, provided that any Blue Star Letter of Credit
with a one-year term may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond to date referred to in clause
(ii)). Each Blue Star Letter of Credit shall provide for a drawing thereunder in
the event of an acceleration of the Blue Star Credit Facility or a bankruptcy or
similar event of any obligor thereunder.
(c) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. (a) The Borrower may
from time to time request that the Revolving L/C Issuing Lender issue a
Revolving Letter of Credit by delivering to the Revolving L/C Issuing Lender, at
its address for notices specified herein, an Application therefor, completed to
the reasonable satisfaction of the Revolving L/C Issuing Lender, and such other
certificates, documents and other papers and information as the Revolving L/C
Issuing Lender may reasonably request. Upon receipt of any Application, the
Revolving L/C Issuing Lender will process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Revolving Letter of Credit requested thereby (but in no event shall the
Revolving L/C Issuing Lender be required to issue any Letter of Credit earlier
than three Business Days after its receipt of the Application therefor and all
such other certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise maybe agreed by the Revolving L/C Issuing Lender and the
Borrower. The Revolving L/C Issuing Lender shall furnish a copy of such
Revolving Letter of Credit to the Borrower promptly following the issuance
thereof.
(b) The Borrower may from time to time request that the Blue Star L/C
Issuing Lenders issue a single Letter of Credit to which they are all parties or
ratable Letters of Credit by delivering to the Blue Star L/C Issuing Lenders, at
their addresses for notices specified herein, an Application therefor, completed
to the reasonable satisfaction of each of the Blue Star L/C Issuing Lenders, and
such other certificates, documents and other papers and information as the Blue
Star L/C Issuing Lenders may reasonably request, provided that any such
Application shall specify the aggregate amount of Blue Star Letters of Credit
requested and each of the Blue Star L/C Issuing Lenders shall issue Blue Star
Letters of Credit or join in a single Blue Star Letter of Credit as follows: (i)
the Administrative Agent or an affiliate thereof shall issue a Blue Star
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Letter of Credit in an amount equal to 40% of the aggregate amount
requested or be responsible for 40% of such a single Blue Star Letter of Credit,
(ii) the Syndication Agent or an affiliate thereof shall issue a Blue Star
Letter of Credit in an amount equal to 40% of the aggregate amount requested or
be responsible for 40% of such a single Blue Star Letter of Credit and (iii) the
Documentation Agent or an affiliate thereof, shall issue a Blue Star Letter of
Credit in an amount equal to 20% of the aggregate amount requested or be
responsible for 20% of such a single Blue Star Letter of Credit. Notwithstanding
the foregoing proviso, in the event that any Lender other than the
Administrative Agent, the Syndication Agent or the Documentation Agent becomes a
Blue Star L/C Issuing Lender with respect to the single Blue Star Letter of
Credit or Blue Star Letters of Credit to be issued pursuant to any Application,
such other Lender shall join in such single Blue Star Letter of Credit in its
agreed percentage or issue a Blue Star Letter of Credit in an amount equal to
its agreed percentage of the aggregate amount requested by the Borrower, as the
case may be, and the agreed percentages of the other Blue Star L/C Issuing
Lenders shall be ratably reduced as determined by the Administrative Agent. Upon
receipt of any Application, each of the Blue Star L/C Issuing Lenders will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue or join in a Blue Star Letter of
Credit as requested thereby (but in no event shall such Blue Star L/C Issuing
Lender be required to issue or join in any Blue Star Letter of Credit earlier
than three Business Days after its receipt of the Application therefor and all
such other certificates, documents and other papers and information relating
thereto) by issuing the original of such Blue Star Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Blue Star L/C Issuing
Lender and the Borrower. Each of the Blue Star L/C Issuing Lenders shall furnish
a copy of such Blue Star Letter of Credit to the Borrower promptly following the
issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to
the Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from and including the date of issuance of such
Letter of Credit to the expiration date of such Letter of Credit, computed at
the rate per annum equal to the Applicable Margin in effect for Revolving Credit
Loans that are Eurodollar Loans, calculated on the basis of a 365- (or 366-, as
the case may be) day year, of the aggregate amount available to be drawn under
such Letter of Credit, payable (without duplication) quarterly in arrears on
each L/C Fee Payment Date to occur while such Letter of Credit remains
outstanding and on the expiration date of such Letter of Credit and the
Termination Date. Such commission shall be payable to the Administrative Agent
for the account of the Revolving Credit Lenders to be shared ratably among them
in accordance with their respective Revolving Credit Commitment Percentages. The
Borrower shall also pay to the Administrative Agent, for the account of the
Issuing Lender, a fee equal to 1/4 of 1% per annum of the aggregate amount
available to be drawn under such Letter of Credit, payable quarterly in arrears
on each L/C Fee Payment Date to occur while such Letter of Credit remains
outstanding and on the expiration date of such Letter of Credit. Such
commissions shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof,
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distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection. The Administrative Agent shall notify the Lenders
at least monthly of the aggregate outstanding Letters of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage (determined on the date of
issuance of the relevant Letter of Credit) in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with subsection 3.5(a), such
L/C Participant shall pay to the Issuing Lender upon demand at the Issuing
Lender's address for notices specified herein an amount equal to such L/C
Participant's Revolving Credit Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed; provided that nothing in
this paragraph shall relieve the Issuing Lender of any liability resulting from
the gross negligence or willful misconduct as determined by a court of competent
jurisdiction of the Issuing Lender, or otherwise affect any defense or other
right that any L/C Participant may have as a result of such gross negligence or
willful misconduct.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
not paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
subsection 3.4(a) is not in fact made available to the Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans that are Revolving Credit Loans. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of Collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will, if such payment is received prior to 1:00 P.M., New York
City time, on a Business Day, distribute to such L/C Participant its pro rata
share thereof prior to the end of such Business
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Day and otherwise the Issuing Lender will distribute such payment on the next
succeeding Business Day; provided, however, that in the event that any such
payment received by the Issuing Lender shall be required to be returned by the
Issuing Lender, such L/C Participant shall return to the Issuing Lender the
portion thereof previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender, upon receipt of notice from the Issuing Lender of
the date and amount of a draft presented under any Letter of Credit and paid by
the Issuing Lender, for the amount of (i) such draft so paid and (ii) any taxes,
fees, charges or other costs or expenses reasonably incurred by the Issuing
Lender in connection with such payment. Each such payment shall be made to the
Issuing Lender, at its address for notices specified herein in Dollars and in
immediately available funds, on the date on which the Borrower receives such
notice, if received prior to 11:00 A.M., New York City time, on a Business Day
and otherwise on the next succeeding Business Day.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this subsection (i) from the date the draft presented under
the affected Letter of Credit is paid to the date on which the Borrower is
required to pay such amounts pursuant to paragraph (a) above at the rate which
would then be payable on any outstanding ABR Loans that are Revolving Credit
Loans and (ii) thereafter until payment in full at the rate which would be
payable on any outstanding ABR Loans that are Tranche B Term Loans which were
then overdue.
3.6 Obligations Absolute. (a) The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, any L/C Participant or
any beneficiary of a Letter of Credit, provided that this paragraph shall not
relieve the Issuing Lender or any L/C Participant of any liability resulting
from the gross negligence or willful misconduct of the Issuing Lender or such
L/C Participant, or otherwise affect any defense or other right that the
Borrower may have as a result of any such gross negligence or willful
misconduct.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender and the L/C Participants shall not be responsible for, and the Borrower's
Reimbursement Obligations under subsection 3.5(a) shall not be affected by,
among other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or (iii) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee, provided that this paragraph shall not relieve the Issuing Lender or
any L/C Participant of any liability resulting from the gross negligence or
willful misconduct as determined by a court of competent jurisdiction of the
Issuing Lender or such L/C Participant, or otherwise affect any defense or other
right that the Borrower may have as a result of any such gross negligence or
willful misconduct.
(c) Neither the Issuing Lender nor any L/C Participant shall be liable
for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or
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omissions caused by such Person's gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender or any L/C Participant to the
Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in substantial conformity with such Letter
of Credit, provided that this paragraph shall not relieve the Issuing Lender of
any liability resulting from the gross negligence or willful misconduct as
determined by a court of competent jurisdiction of the Issuing Lender, or
otherwise affect any defense or other right that the Borrower may have as a
result of any such gross negligence or willful misconduct.
3.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO
LOANS AND LETTERS OF CREDIT
4.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin in effect for such day.
(b) Each ABR Loan shall bear interest for each day that it is
outstanding at a rate per annum equal to the ABR for such day plus the
Applicable Margin in effect for such day.
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the relevant foregoing provisions of
this subsection plus 2.00% or (y) in the case of overdue interest, fees or other
amounts, the rate described in paragraph (b) of this subsection for ABR Loans
that are Tranche B Term Loans plus 2.00%, in each case from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this subsection
shall be payable from time to
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time on demand.
(e) It is the intention of the parties hereto to comply strictly with
applicable usury laws; accordingly, it is stipulated and agreed that the
aggregate of all amounts which constitute interest under applicable usury laws,
whether contracted for, charged, taken, reserved, or received, in connection
with the indebtedness evidenced by this Agreement or any Notes, or any other
document relating or referring hereto or thereto, now or hereafter existing,
shall never exceed under any circumstance whatsoever the maximum amount of
interest allowed by applicable usury laws.
4.2 Conversion and Continuation Options. (a) The Borrower or Blue Star
Group, as the case may be, may elect from time to time to convert outstanding
Term Loans and Revolving Credit Loans from Eurodollar Loans to ABR Loans by
giving the Administrative Agent at least two Business Days' prior irrevocable
notice of such election, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto. The
Borrower or Blue Star Group, as the case may be, may elect from time to time to
convert outstanding Term Loans and Revolving Credit Loans from ABR Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election. Any such notice of conversion
to Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each affected Lender thereof. All or any part of
outstanding Eurodollar Loans and ABR Loans may be converted as provided herein,
provided that (i) (unless the Required Lenders otherwise consent) no Loan may be
converted into a Eurodollar Loan when any Default or Event of Default has
occurred and is continuing and, in the case of any Default, the Administrative
Agent has given notice to the Borrower that no such conversions may be made and
(ii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to either the Termination Date (in the case of conversions of
Revolving Credit Loans) or the date of the final installment of principal of the
Term Loans (in the case of conversions of Term Loans).
(b) Any Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower or Blue
Star Group, as the case may be, giving notice to the Administrative Agent, of
the length of the next Interest Period to be applicable to such Loans,
determined in accordance with the applicable provisions of the term "Interest
Period" set forth in subsection 1.1, provided that no Eurodollar Loan may be
continued as such (i) (unless the Required Lenders otherwise consent) when any
Default or Event of Default has occurred and is continuing and, in the case of
any Default, the Administrative Agent has given notice to the Borrower that no
such continuations may be made or (ii) after the date that is one month prior to
either the Termination Date (in the case of continuations of Revolving Credit
Loans, Tranche A Term Loans or Multi-Draw Term Loans) or the Final Maturity Date
(in the case of continuations of Tranche B Term Loans), and provided, further,
that if the Borrower or Blue Star Group, as the case may be, shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice of continuation pursuant to
this subsection 4.2(b), the Administrative Agent shall promptly notify each
affected Lender thereof.
4.3 Minimum Amounts of Tranches. All borrowings, conversions and
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continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Tranche shall be equal to $10,000,000 or a
whole multiple of $1,000,000 in excess thereof and so that there shall not be
more than twenty Tranches at any one time outstanding.
4.4 Optional Prepayments and Mandatory Prepayments and Commitment
Reductions. (a) The Borrower or Blue Star Group, as the case may be, may at
any time and from time to time prepay the Loans (including the Reimbursement
Obligations in respect of Letters of Credit issued for the Borrower's
account), in whole or in part, without premium or penalty (other than, in the
case of prepayments of Tranche B Term Loans not required pursuant to
subsections 4.4(c), 4.4(d) or 4.4(e) made on or prior to the date which is
eighteen months following the Effective Date, which shall incur a premium in
an amount equal to 1% of the amount prepaid), upon at least three Business
Days' irrevocable notice to the Administrative Agent (in the case of
Eurodollar Loans, at least one Business Day's irrevocable notice to the
Administrative Agent (in the case of ABR Loans other than Swing Line Loans)
or same-day irrevocable notice to the Administrative Agent (in the case of
Swing Line Loans), specifying the date and amount of prepayment or reduction,
as the case may be, and whether the prepayment is (i) of Loans of the
Borrower or Blue Star Group, or a combination thereof, (ii) of Term Loans,
Revolving Credit Loans or Swing Line Loans, or a combination thereof, and
(iii) of Eurodollar Loans, ABR Loans or a combination thereof, and, in each
case if a combination thereof, the principal amount allocable to each and, in
the case of any prepayment of Reimbursement Obligations, the date and amount
of prepayment, the identity of the applicable Letter of Credit or Letters of
Credit and the amount allocable to each of such Reimbursement Obligations.
Upon the receipt of any such notice the Administrative Agent shall promptly
notify each affected Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with (if a Eurodollar Loan is prepaid other than at the end
of the Interest Period applicable thereto) any amounts payable pursuant to
subsection 4.12 and, in the case of prepayments of the Term Loans only,
accrued interest to such date on the amount prepaid plus premiums, if any.
Partial prepayments of (i) the Term Loans shall be applied (x) pro rata
(based on outstanding principal amount) to the Tranche A Term Loans, the
Tranche B Term Loans, and the Multi-Draw Term Loans, and (y) pro rata to the
respective installments of principal thereof, provided that, at the option of
the Borrower, any such partial payment may be applied, first, to the extent
of the aggregate amount of the installments of principal of the Tranche A
Term Loans and the Multi-Draw Term Loans and, if no Tranche B Term Loan
Lenders decline such prepayment, the Tranche B Term Loans due within twelve
months of the date of prepayment, to such installments, and, thereafter (and
after giving effect to the application in the first clause of this proviso)
as provided above without regard to this proviso, and (ii) the Revolving
Credit Loans and the Letters of Credit shall be applied, first, to payment of
the Swing Line Loans then outstanding, second, to payment of the Revolving
Credit Loans then outstanding, third, to payment of any Reimbursement
Obligations then outstanding and, last, to cash collateralize any outstanding
L/C Obligation on terms reasonably satisfactory to the Administrative Agent.
Partial prepayments pursuant to this subsection 4.4(a) shall be in an
aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(b) If, at any time during the Revolving Credit Commitment Period, the
Aggregate Outstanding Revolving Credit with respect to all of the Revolving
Credit Lenders (including the Swing Line Lender) exceeds the aggregate Revolving
Credit Commitments then in
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effect, the Borrower shall, or shall cause Blue Star Group to, without notice or
demand, immediately repay the Revolving Credit Loans and the Swing Line Loans in
an aggregate principal amount equal to such excess, together with interest
accrued to the date of such payment or prepayment and any amounts payable under
subsection 4.12. To the extent that after giving effect to any prepayment of the
Loans required by the preceding sentence, such Aggregate Outstanding Revolving
Credit exceeds the aggregate Revolving Credit Commitments then in effect, the
Borrower shall, without notice or demand, immediately cash collateralize the
then outstanding L/C Obligations in an amount equal to such excess upon terms
reasonably satisfactory to the Administrative Agent.
(c) If (i) the Borrower or any of its Subsidiaries shall incur
Indebtedness for borrowed money (other than Indebtedness permitted pursuant to
subsection 8.2) pursuant to a public offering or private placement or otherwise
or (ii) the Borrower or any of its Subsidiaries shall make an Asset Sale (other
than pursuant to subsections 8.6(a), (b), (c), (e), (f) and (h)), then, in each
case, the Borrower shall prepay the Loans and cash collateralize the L/C
Obligations in an amount equal to (x) in the case of the incurrence of any such
Indebtedness, 100% of the Net Cash Proceeds thereof and (y) in the case of any
such Asset Sale, 100% of the Net Cash Proceeds thereof minus any Reinvested
Amounts, in each such case, with such prepayment to be made on the date of
receipt of any such Net Cash Proceeds. Nothing in this paragraph (c) shall limit
the rights of the Administrative Agent and the Lenders set forth in Section 10.
(d) Commencing July 31, 1999, and on each July 31 thereafter, the
Borrower shall apply toward the prepayment of the Loans and the cash
collateralization the L/C Obligations as set forth in subsection 4.4(g) the ECF
Percentage of the Borrower's Excess Cash Flow for the fiscal year ending on the
immediately preceding April 30th (or, in the case of the first such payment, the
fiscal period beginning on the Effective Date and ending on April 24, 1999).
(e) If the Borrower or any of its Subsidiaries shall enter into a
Permitted Receivables Securitization, then an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied first to permanently reduce the Revolving
Credit Commitments (but not to an aggregate amount below $200,000,000), second
to permanently reduce the Multi-Draw Term Loan Commitment by up to the then
Available Multi-Draw Term Loan Commitments, provided that at the written request
of the Borrower delivered to the Administrative Agent, the Multi-Draw Term Loan
Commitments shall not be so reduced, third to prepay the Multi-Draw Term Loans
pro rata to the respective installments of principal thereof, provided that at
the written request of the Borrower delivered to the Administrative Agent, the
Multi-Draw Term Loans shall not be so prepaid, fourth to prepay the other Term
Loans pro rata (based on outstanding principal amount) to the Tranche A Term
Loans, and the Tranche B Term Loans and pro rata to the respective installments
of principal thereof, provided that, at the option of the Borrower, any such
partial payment may be applied, first, to the extent of the aggregate amount of
the installments of principal of the Tranche A Term Loans and the Multi-Draw
Term Loans and, if no Tranche B Term Loan Lenders decline such prepayment, the
Tranche B Term Loans due within twelve months of the date of prepayment, to such
installments, and, thereafter (and after giving effect to the application in the
first clause of this proviso) as provided above without regard to this proviso.
(f) The Borrower shall prepay all Swing Line Loans then outstanding
simultaneously with each borrowing of Revolving Credit Loans.
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(g) Prepayments pursuant to subsections 4.4(c) and 4.4(d) shall be
applied, first, to prepay Term Loans then outstanding, second, to prepay Swing
Line Loans then outstanding, third, to prepay Revolving Credit Loans then
outstanding, fourth, to pay any Reimbursement Obligations then outstanding,
fifth, to cash collateralize any outstanding L/C Obligations on terms reasonably
satisfactory to the Administrative Agent, sixth to permanently reduce the
Revolving Credit Commitments and, last, to permanently reduce the Multi-Draw
Term Loan Commitments. Prepayments of Term Loans pursuant to subsections 4.4(c)
and 4.4(d) shall be applied (x) pro rata (based on outstanding principal amount)
to the Tranche A Term Loans, the Tranche B Term Loans and the Multi-Draw Term
Loans and (y) pro rata to the respective installments of principal thereof,
provided that, at the option of the Borrower, any such partial payment may be
applied, first, to the extent of the aggregate amount of the installments of
principal of the Tranche A Term Loans and the Multi-Draw Term Loans and, if no
Tranche B Term Loan Lenders decline such prepayment, the Tranche B Term Loans
due within twelve months of the date of prepayment, to such installments, and,
thereafter (and after giving effect to the application in the first clause of
this proviso) as provided in clauses (x) and (y) above without regard to this
proviso.
(h) (i) Notwithstanding anything to the contrary in this subsection 4.4,
so long as any Tranche A Term Loans or Multi-Draw Term Loans are outstanding,
each Tranche B Term Loan Lender may, at its option, decline the portion of any
optional prepayment or mandatory payment applicable to the Tranche B Term Loans
of such Lender; accordingly, with respect to the amount of any optional or
mandatory prepayment described in this subsection 4.4 that is allocated to
Tranche B Term Loans (such amount, the "Tranche B Prepayment Amount"), the
Borrower will, in lieu of applying such amount to the prepayment of Tranche B
Term Loans as provided in subsections 4.4(a), 4.4(c), 4.4(d) and 4.4(e), on the
date specified in this subsection 4.4 for such prepayment, give the
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Tranche B
Term Loan Lender a notice (each, a "Prepayment Option Notice") as described
below. As promptly as practicable after receiving such notice from the Borrower,
the Administrative Agent will send to each Tranche B Term Loan Lender a
Prepayment Option Notice, which shall be in the form of Exhibit D, and shall
include an offer by the Borrower to prepay on the date (each, a "Prepayment
Date") that is ten Business Days after the date of the Prepayment Option Notice,
the Tranche B Term Loans of such Lender by an amount equal to the Tranche B
Prepayment Amount indicated in such Lender's Prepayment Option Notice. On the
Prepayment Date, (i) the Borrower shall pay to the Administrative Agent the
aggregate amount necessary to prepay that portion of the outstanding Tranche B
Term Loans in respect of which Tranche B Term Loan Lenders have accepted
prepayment as described above (such Lenders, the "Accepting Lenders"), and such
amount shall be applied to reduce the Tranche B Prepayment Amounts with respect
to each Accepting Lender and (ii) the Borrower shall pay to the Administrative
Agent an amount equal to the portion of the Tranche B Prepayment Amount not
accepted by the Accepting Lenders, and such amount shall be applied ratably to
the prepayment of the Tranche A Term Loans and the Multi-Draw Term Loans then
outstanding.
(i) Notwithstanding anything to the contrary in this subsection 4.4, in
the event no Tranche A Term Loans or Multi-Draw Term Loans are outstanding, any
prepayment of Tranche B Term Loans made on or prior to the date which is
eighteen months following the Effective Date with the proceeds of any
Indebtedness issued after the Effective Date shall be deemed an optional
prepayment and shall incur a premium in an amount equal to 1% of the
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amount prepaid.
(j) Amounts prepaid on account of Term Loans pursuant to subsection
4.4(a), 4.4(c), 4.4(d) or 4.4(e) may not be reborrowed.
(k) The Revolving Credit Commitments shall be permanently reduced by the
amount of all prepayments of Revolving Credit Loans, payments of Reimbursement
Obligations and cash collateralizations of L/C Obligations made under subsection
4.4(c), 4.4(d).
4.5 Commitment Fees; Administrative Agent's Fee; Other Fees. (a) The
Borrower agrees to pay to the Administrative Agent for the account of each
Revolving Credit Lender, a commitment fee for the period from and including the
first day of the Revolving Credit Commitment Period to the Termination Date,
computed at the Commitment Fee Rate on the average daily amount of the Available
Revolving Credit Commitment of such Revolving Credit Lender during the period
for which payment is made, payable quarterly in arrears on the last day of each
March, June, September and December and on the Termination Date or such earlier
date as the Revolving Credit Commitments shall terminate as provided herein,
commencing on the first of such days following the Effective Date.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Multi-Draw Term Loan Lender, a commitment fee for the period
from and including the Effective Date to and including the third anniversary of
the Effective Date, computed at the Commitment Fee Rate on the average daily
amount of the Available Multi-Draw Term Loan Commitment of such Multi-Draw Term
Loan Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
third anniversary of the Effective Date or such earlier date as the Multi-Draw
Term Loan Commitments shall terminate as provided herein, commencing on the
first of such days following the Effective Date.
(c) The Borrower shall pay to the Administrative Agent an annual
administration fee of $500,000 in respect of the period from the Effective Date
to the first anniversary thereof and of $250,000 in respect of each annual
period subsequent thereto, which fee shall be payable in equal quarterly
installments in advance on the Effective Date in respect of the quarter in which
the Effective Date occurs (prorated for the period from the Effective Date to
the end of such quarter) and on the last day of each January, April, July and
October thereafter (pro rated for the quarterly installment paid immediately
prior to the first anniversary of the Effective Date based on the $500,000
amount for the period from the scheduled date of payment of such quarterly
installment to such first anniversary and based on the $250,000 amount for the
remainder of the quarterly period for which such payment is made).
(d) The Borrower shall pay (without duplication, including of any fee
payable under subsections 4.5(a), 4.5(b) and 4.5(c)) to Chase, for its account
and, as specified therein, for the account of the Lenders, the other fees
required to be paid pursuant to (i) the Commitment Letter, dated March 24, 1998,
among the Borrower, the Agents and the Co-Arrangers and (ii) the Fee Letter,
dated March 24, 1998, among the Borrower, the Agents and the Co-Arrangers, in
each case in the amounts and on the dates set forth therein.
4.6 Computation of Interest and Fees. (a) Interest (other than interest
based on
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the Prime Rate) shall be calculated on the basis of a 360-day year for the
actual days elapsed; and commitment fees and interest based on the Prime Rate
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the affected Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR, the Eurocurrency Reserve Requirements, the C/D Assessment
Rate or the C/D Reserve Percentage shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the affected Lenders
of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing in reasonable detail the calculations used by the
Administrative Agent in determining any interest rate pursuant to subsection
4.1, excluding any Eurodollar Base Rate which is based upon the Telerate British
Bankers Assoc. Interest Settlement Rates Page and any ABR which is based upon
the Prime Rate.
4.7 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period, the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, the
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to or continued as Eurodollar
Loans shall be converted to or continued as ABR Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the first day of such Interest Period,
to ABR Loans. Until such notice has been withdrawn by the Administrative Agent,
no further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower or Blue Star Group, as the case may be, have the right to convert ABR
Loans to Eurodollar Loans.
4.8 Pro Rata Treatment and Payments. (a) Each borrowing of Revolving
Credit Loans (other than Swing Line Loans) by the Borrower or Blue Star Group,
as the case may be, from the Revolving Credit Lenders hereunder shall be made,
each payment by the Borrower on account of any commitment fee in respect of the
Revolving Credit Commitments hereunder shall be allocated by the Administrative
Agent, and any reduction of the Revolving Credit Commitments of the Revolving
Credit Lenders shall be allocated by the Administrative Agent, pro rata
according to the relevant Revolving Credit Commitment Percentages of the
Revolving Credit Lenders. Each borrowing of Multi-Draw Term Loans by the
Borrower from the Multi-Draw Term Loan Lenders hereunder shall be made, each
payment by the Borrower on account of any commitment fee in respect of the
Multi-Draw Term Loan Commitments hereunder shall be allocated by the
Administrative Agent, and any reduction of the Multi-Draw Term Loan Commitments
of the Multi-Draw Term Loan Lenders shall be allocated by the Administrative
Agent, pro rata according to the relevant Multi-Draw Term Loan Percentages of
the Multi-Draw Term Loan Lenders. Each payment (including each prepayment) by
the Borrower or Blue Star Group, as the case may be, on account of principal of
and interest on any Revolving Credit Loans shall be allocated by the
Administrative Agent pro rata according to the respective outstanding
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principal amounts of such Revolving Credit Loans then held by the Revolving
Credit Lenders. Each payment (including each prepayment) by the Borrower on
account of principal of and interest on any Term Loans shall, subject to
subsection 4.4(h), be allocated by the Administrative Agent pro rata according
to the respective outstanding principal amounts of such Term Loans then held by
the Term Loan Lenders. All payments (including prepayments) to be made by the
Borrower or Blue Star Group, as the case may be, hereunder and under any Notes,
whether on account of principal, interest, fees, Reimbursement Obligations or
otherwise, shall be made without set-off, counterclaim or, except as permitted
under Subsection 4.11, other deduction and shall be made prior to 1:00 P.M., New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders holding the relevant Loans or the L/C Participants, as
the case may be, at the Administrative Agent's office specified in subsection
12.2, in Dollars and in immediately available funds. Payments received by the
Administrative Agent after such time shall be deemed to have been received on
the next Business Day. The Administrative Agent shall distribute such payments
to such Lenders, if any such payment is received prior to 1:00 P.M., New York
City time, on a Business Day, in like funds as received prior to the end of such
Business Day and otherwise the Administrative Agent shall distribute such
payment to such Lenders on the next succeeding Business Day. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, the maturity of such payment shall be
extended to the next succeeding Business Day, and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension. If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Business Day, the maturity of such payment shall be extended to
the next succeeding Business Day (and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension) unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing
by any Revolving Credit Lender prior to a borrowing that such Revolving Credit
Lender will not make the amount that would constitute its Revolving Credit
Commitment Percentage of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Revolving Credit Lender is making
such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower or Blue
Star Group, as the case may be, a corresponding amount. If such amount is not
made available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Revolving Credit Lender shall pay to the Administrative
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Revolving Credit
Lender makes such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Revolving Credit Lender
with respect to any amounts owing under this subsection shall be conclusive in
the absence of manifest error. If such Revolving Credit Lender's Revolving
Credit Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Revolving Credit Lender within three Business Days
of such Borrowing Date, (x) the Administrative Agent shall notify the Borrower
or Blue Star Group, as the case may be, of the failure of such Revolving Credit
Lender to make such amount available to the Administrative Agent and the
Administrative Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Revolving Credit Loans which are ABR
Loans hereunder, on demand, from the Borrower or Blue Star Group, as the case
may be, and (y) then
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the Borrower or Blue Star Group, as the case may be, may, without waiving any
rights it may have against such Revolving Credit Lender, borrow a like amount on
an unsecured basis from any commercial bank for a period ending on the date upon
which such Revolving Credit Lender does in fact make such borrowing available,
provided that at the time such borrowing is made and at all times while such
amount is outstanding the Borrower or Blue Star Group, as the case may be, would
be permitted to borrow such amount pursuant to subsection 2.1.
(c) Unless the Administrative Agent shall have been notified in writing
by any Multi-Draw Term Loan Lender prior to a borrowing that such Multi-Draw
Term Loan Lender will not make the amount that would constitute its Multi-Draw
Term Loan Percentage of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Multi-Draw Term Loan Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Multi-Draw Term
Loan Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Multi-Draw Term Loan Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Multi-Draw Term Loan Lender with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Multi-Draw Term Loan Lender's Multi-Draw Term Loan
Percentage of such borrowing is not made available to the Administrative Agent
by such Multi-Draw Term Loan Lender within three Business Days of such Borrowing
Date, (x) the Administrative Agent shall notify the Borrower of the failure of
such Multi-Draw Term Loan Lender to make such amount available to the
Administrative Agent and the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Multi-Draw Term Loans which are ABR Loans hereunder, on demand, from the
Borrower and (y) then the Borrower may, without waiving any rights it may have
against such Multi-Draw Term Loan Lender, borrow a like amount on an unsecured
basis from any commercial bank for a period ending on the date upon which such
Multi-Draw Term Loan Lender does in fact make such borrowing available, provided
that at the time such borrowing is made and at all times while such amount is
outstanding the Borrower would be permitted to borrow such amount pursuant to
clause (c) of the first sentence of subsection 2.6.
4.9 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Effective Date shall make it unlawful
for any Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Administrative Agent (which notice shall
be withdrawn whenever such circumstances no longer exist), (b) the commitment of
such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as
such and convert ABR Loans to Eurodollar Loans shall forthwith be cancelled and,
until such time as it shall no longer be unlawful for such Lender to make or
maintain Eurodollar Loans, such Lender shall then have a commitment only to make
an ABR Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to ABR
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then current Interest Period with respect
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thereto, the Borrower shall or shall cause Blue Star Group to pay to such Lender
such amounts, if any, as may be required pursuant to subsection 4.12.
4.10 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive of general
application (whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the Effective Date
(or, if later, the date on which such Lender becomes a Lender):
(i) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Application or any
Eurodollar Loans made by it or its obligation to make Eurodollar Loans, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by subsection 4.11 (including
Non-Excluded Taxes imposed solely by reason of any failure of such Lender to
comply with its obligations (if any) under subsection 4.11(b) or 4.11(c)) and
changes in taxes measured by or imposed upon the overall net income, or
franchise taxes, or taxes measured by or imposed upon overall capital or net
worth, or branch taxes (in the case of such capital, net worth or branch
taxes, imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination of
the Eurodollar Rate hereunder, or
(iii) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall or
shall cause Blue Star Group to promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable, provided that, in any such case, the Borrower or
Blue Star Group, as the case may be, may elect to convert the Eurodollar Loans
made by such Lender hereunder to ABR Loans by giving the Administrative Agent at
least one Business Day's notice of such election, in which case the Borrower
shall or shall cause Blue Star Group to promptly pay to such Lender, upon
demand, without duplication, such amounts, if any, as may be required pursuant
to subsection 4.12. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall provide prompt notice thereof to
the Borrower, through the Administrative Agent, certifying (x) that one of the
events described in this paragraph (a) has occurred and describing in reasonable
detail the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event and (z) as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional
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amounts payable pursuant to this subsection submitted by such Lender, through
the Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive of general
application regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority, in each case, made subsequent to the Effective
Date (or, if later, the date on which such Lender becomes a Lender), does or
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or under or
in respect of any Letter of Credit to a level below that which such Lender or
such corporation could have achieved but for such change or compliance (taking
into consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, within ten Business Days after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request therefor
certifying (x) that one of the events described in this paragraph (b) has
occurred and describing in reasonable detail the nature of such event, (y) as to
the reduction of the rate of return on capital resulting from such event and (z)
as to the additional amount or amounts demanded by such Lender and a reasonably
detailed explanation of the calculation thereof, the Borrower shall or shall
cause Blue Star Group to pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction. Such a certificate as to any
additional amounts payable pursuant to this subsection submitted by such Lender,
through the Administrative Agent, to the Borrower shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
4.11 Taxes. (a) Except as provided below in this subsection, all
payments made by the Borrower or Blue Star Group under this Agreement and any
Notes shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding taxes measured by or imposed upon the overall net income of the
Administrative Agent or any Lender or its applicable lending office, or any
branch or affiliate of either, and all franchise taxes, branch taxes, taxes on
doing business or taxes measured by or imposed upon the overall capital or net
worth of the Administrative Agent or any Lender or its applicable lending
office, or any branch or affiliate of either in each case imposed: (i) by the
jurisdiction under the laws of which the Administrative Agent or such Lender,
applicable lending office, branch or affiliate is organized or is located, or in
which its principal executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii) by reason
of any connection between the jurisdiction imposing such tax and the
Administrative Agent or such Lender, applicable lending office, branch or
affiliate other than a connection arising solely from the Administrative Agent
or such Lender having executed, delivered or performed its obligations under, or
received payment under or enforced, this Agreement or any Notes. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under any Notes,
the
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amounts so payable to the Administrative Agent or such Lender shall be increased
to the extent necessary to yield to the Administrative Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
any Notes, provided, however, that the Borrower or Blue Star Group, as the case
may be, shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to any Lender with
respect to Non-Excluded Taxes that are attributable to such Lender's failure to
comply with the requirements of paragraph (b) and (c) of this subsection.
Whenever any Non-Excluded Taxes are payable by the Borrower or Blue Star Group,
as the case may be, as promptly as possible thereafter the Borrower or Blue Star
Group, as the case may be, shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Borrower or Blue Star Group, as
the case may be, showing payment thereof. If the Borrower or Blue Star Group, as
the case may be, fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not a United States person as defined in Section
7701(a)(30) of the Code shall:
(X) (i) on or before the date of any payment by the Borrower or Blue
Star Group, as the case may be, under this Agreement or any Notes to such
Lender, deliver to the Borrower and the Administrative Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
or successor applicable form, as the case may be and such other forms and
certifications as may be required under applicable law, in order to establish
that it is entitled to receive payments under this Agreement and any Notes
without deduction or withholding of any United States federal income taxes
and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be, certifying that it is entitled to an exemption from
United States backup withholding tax;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the Borrower
or the Administrative Agent; or
(Y) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that is not entitled to
comply with subparagraph (X) hereof, (i) represent to the Borrower (for the
benefit of the Borrower, Blue Star Group and the Administrative Agent) that
it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (ii)
agree to furnish to the Borrower on or before the date of
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any payment by the Borrower, with a copy to the Administrative Agent, (A) a
certificate substantially in the form of Exhibit C (any such certificate a
"U.S. Tax Compliance Certificate") and (B) two accurate and complete
original signed copies of Internal Revenue Service Form W-8, or successor
applicable form certifying to such Lender's legal entitlement at the date
of such certificate to an exemption from U.S. withholding tax under the
provisions of Section 871(h) or 881(c) of the Code with respect to payments
to be made under this Agreement and any Notes (and to deliver to the
Borrower and the Administrative Agent two further copies of such form on or
before the date it expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the
Borrower or the Administrative Agent for filing and completing such forms),
and (iii) agree, to the extent legally entitled to do so, upon reasonable
request by the Borrower, to provide to the Borrower (for the benefit of the
Borrower, Blue Star Group and the Administrative Agent) such other forms as
may be reasonably required in order to establish the legal entitlement of
such Lender to an exemption from withholding with respect to payments under
this Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Administrative Agent. Each Person that shall become a Lender or
a Participant pursuant to subsection 12.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms, certifications and
statements required pursuant to this subsection, provided that in the case of a
Participant the obligations of such Participant pursuant to this paragraph (b)
shall be determined as if such Participant were a Lender except that such
Participant shall furnish all such required forms, certifications and statements
to the Lender from which the related participation shall have been purchased.
(c) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the laws of New Zealand, or any treaty to which
New Zealand is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by the Borrower,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate, provided that such Lender is legally entitled to complete, execute and
deliver such documentation and in such Lender's reasonable judgment such
completion, execution or submission would not be materially disadvantageous to
such Lender.
4.12 Indemnity. The Borrower agrees and, with respect to Loans to Blue
Star Group, the Borrower and Blue Star Group agree to indemnify each Lender and
to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) failure of the Borrower or Blue Star Group,
as the case may be, to make a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower or Blue Star Group, as the case may be, has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) failure of the Borrower or Blue Star Group, as the case may be,
to make any prepayment or conversion of Eurodollar Loans after the Borrower or
Blue Star Group, as the case may be, has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a
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prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid, or converted, or not so borrowed, converted or
continued, for the period from the date of such prepayment or conversion or of
such failure to borrow, convert or continue to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or continue,
the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such Eurodollar Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this subsection
submitted to the Borrower or Blue Star Group, as the case may be, by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
4.13 Certain Rules Relating to the Payment of Additional Amounts. (a)
Upon the request, and at the expense, of the Borrower or Blue Star Group, as the
case may be, each Lender to which the Borrower or Blue Star Group, as the case
may be, is required to pay any additional amount pursuant to subsection 4.10 or
4.11, and any Participant in respect of whose participation such payment is
required, shall reasonably afford the Borrower or Blue Star Group, as the case
may be, the opportunity to contest, and reasonably
cooperate with the Borrower or Blue Star Group, as the case may be, in
contesting, the imposition of any Non-Excluded Tax giving rise to such payment;
provided that (i) such Lender shall not be required to afford the Borrower or
Blue Star Group, as the case may be, the opportunity to so contest unless the
Borrower or Blue Star Group, as the case may be, shall have confirmed in writing
to such Lender its obligation to pay such amounts pursuant to this Agreement and
(ii) the Borrower or Blue Star Group, as the case may be, shall reimburse such
Lender for its reasonable attorneys' and accountants' fees and disbursements
incurred in so cooperating with the Borrower or Blue Star Group, as the case may
be, in contesting the imposition of such Non-Excluded Tax; provided, however
that notwithstanding the foregoing no Lender shall be required to afford the
Borrower or Blue Star Group, as the case may be, the opportunity to contest, or
cooperate with the Borrower or Blue Star Group, as the case may be, in
contesting, the imposition of any Non-Excluded Taxes, if such Lender in its
discretion in good faith determines that to do so would have a material adverse
effect on it.
(b) If a Lender changes its applicable lending office (other than
pursuant to paragraph (c) below) and the effect of the change, as of the date of
the change, would be to cause the Borrower or Blue Star Group, as the case may
be, to become obligated to pay any additional amount under subsection 4.10 or
4.11, neither the Borrower nor Blue Star Group, as the case may be, shall be
obligated to pay such additional amount.
(c) If a condition or an event occurs which would, or would upon the
passage of time or giving of notice, result in the payment of any additional
amount to any Lender by the Borrower or Blue Star Group, as the case may be,
pursuant to subsection 4.10 or 4.11, such Lender shall promptly notify the
Borrower and the Administrative Agent and shall take such steps as may
reasonably be available to it and acceptable to the Borrower to mitigate the
effects of such condition or event (which shall include efforts to rebook the
Loans held by such Lender at
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another lending office, or through another branch or an affiliate, of such
Lender); provided that such Lender shall not be required to take any step that,
in its reasonable judgment, would be materially disadvantageous to its business
or operations or would require it to incur additional costs (unless the Borrower
agrees to reimburse such Lender for the reasonable incremental out-of-- pocket
costs thereof).
(d) If the Borrower or Blue Star Group, as the case may be, shall become
obligated to pay additional amounts pursuant to subsection 4.10 or 4.11 and any
affected Lender shall not have promptly taken steps necessary to avoid the need
for payments under subsection 4.10 or 4.11, the Borrower shall have the right,
for so long as such obligation remains, (x) with the assistance of the
Administrative Agent, to seek one or more substitute Lenders reasonably
satisfactory to the Administrative Agent and the Borrower to purchase the
affected Loan, in whole or in part, at an aggregate price no less than such
Loan's principal amount plus accrued interest, and assume the affected
obligations under this Agreement, or (y) upon at least four Business Days'
irrevocable notice to the Administrative Agent, to prepay the affected Loan, in
whole or in part, subject to subsection 4.12, without premium or penalty. In the
case of the substitution of a Lender, the Borrower, the Administrative Agent,
the affected Lender, and any substitute Lender shall execute and deliver an
appropriately completed Assignment and Acceptance pursuant to subsection 12.6(c)
to effect the assignment of rights to, and the assumption of obligations by, the
substitute Lender; provided that any fees required to be paid pursuant to
subsection 12.6(e) in connection with such assignment shall be paid by the
Borrower. In the case of a prepayment of an affected Loan, the amount specified
in the notice shall be due and payable on the date specified therein, together
with any accrued interest to such date on the amount prepaid. In the case of
each of the substitution of a Lender and of the prepayment of an affected Loan,
the Borrower or Blue Star Group, as the case may be, shall first pay the
affected Lender any additional amounts owing under subsections 4.10 and 4.11 (as
well as any commitment fees and other amounts then due and owing to such Lender)
prior to such substitution or prepayment.
(e) If the Administrative Agent or any Lender receives a refund in
respect of taxes for which the Borrower or Blue Star Group, as the case may be,
has made additional payments pursuant to subsection 4.10(a) or 4.11(a), the
Administrative Agent or such Lender, as the case may be, shall promptly pay such
refund (together with any interest with respect thereto received from the
relevant taxing authority) to the Borrower or Blue Star Group, as the case may
be, provided, however, that the Borrower or Blue Star Group, as the case may be,
agrees promptly to return such refund (together with any interest with respect
thereto due to the relevant taxing authority) (free of all Non-Excluded Taxes)
to the Administrative Agent or the applicable Lender, as the case may be, upon
receipt of a notice that such refund is required to be repaid to the relevant
taxing authority.
(f) For purposes of subsections 4.10 and 4.11, a change in treaty, law,
rule or regulation shall not include the ratification or entry into force of the
income tax treaty between Luxembourg and the United States.
(g) The obligations of a Lender or Participant under this subsection
4.13 shall survive the termination of this Agreement and the payment of the
Loans and all amounts payable hereunder.
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SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and each Lender to make the
Extensions of Credit requested to be made by it on the Effective Date and on
each Borrowing Date thereafter, the Borrower hereby represents and warrants, on
the Effective Date (both before and after giving effect to the Transactions
consummated on the Effective Date) and on every Borrowing Date thereafter, to
the Administrative Agent and each Lender that:
5.1 Financial Condition. (a) The audited consolidated balance sheets of
the Borrower and its consolidated Subsidiaries as of April 30, 1995, April 30,
1996 and April 26, 1997 and the audited consolidated statements of income and of
cash flows for the fiscal years ended on such dates have heretofore been
furnished to each Lender. Such financial statements (including the notes
thereto) (i) have been audited by Price Waterhouse, (ii) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
and (iii) (on the basis disclosed in the footnotes to such financial statements)
present fairly, in all material respects, the consolidated financial condition,
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods. The unaudited interim
consolidated balance sheets of the Borrower and its consolidated Subsidiaries as
at the end of, and the related unaudited interim consolidated statements of
income and of cash flows for, each of the three-month periods ending on July 26,
1997, October 25, 1997 and January 24, 1998 and each fiscal month ended after
January 24, 1998 and prior to the Effective Date have heretofore been furnished
to each Lender. During the period from April 26, 1997 to and including the
Effective Date, except for the Spin-Offs or as disclosed in Schedule 5.1 hereto,
there has been no sale, transfer or other disposition by the Borrower or its
Subsidiaries of any material part of the business or property of the Borrower
and its consolidated Subsidiaries, taken as a whole, and no purchase or other
acquisition by any of them of any business or property (including any Capital
Stock of any other Person) material in relation to the consolidated financial
condition of the Borrower and its consolidated Subsidiaries, taken as a whole,
in each case, which is not reflected in the foregoing financial statements or in
the notes thereto and has not otherwise been disclosed in writing to the Lenders
on or prior to the Effective Date.
(b) The pro forma balance sheet of the Borrower and its consolidated
Subsidiaries (the "Pro Forma Balance Sheet"), copies of which have heretofore
been furnished to each Lender, is the balance sheet of the Borrower and its
consolidated Subsidiaries as of January 24, 1998 (the "Pro Forma Date"),
adjusted to give effect (as if such events had occurred on such date) to (i) the
consummation on the Effective Date of the Transactions, (ii) the making of the
Loans to be made on the Effective Date in an aggregate principal amount of up to
$925,000,000 and (iii) the payment of estimated fees, expenses, financing costs
and estimated tax payments related to the transactions contemplated hereby and
thereby. The Pro Forma Balance Sheet was prepared in good faith by a Responsible
Officer of the Borrower on the basis of reasonable assumptions and estimates as
of the date thereof.
5.2 No Change; Solvent. Since January 24, 1998, (a) except as and to the
extent disclosed on Schedule 5.2(a), there has been no development or event
relating to or affecting any Loan Party which has had or would be reasonably
expected to have a Material Adverse Effect (after giving effect to the
Transactions and the transactions relating thereto, including the financing
thereof) and (b) except as permitted under this Agreement or (at any time prior
to the
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consummation of the Transactions on the Effective Date) the Transaction
Documents, and except for dividends or other distributions by the Borrower prior
to the execution and delivery of the Investment Agreement and except pursuant to
the Transactions, no dividends or other distributions have been declared, paid
or made upon the Capital Stock of the Borrower nor has any of the Capital Stock
of the Borrower been redeemed, retired, purchased or otherwise acquired for
value by the Borrower or any of its Subsidiaries. As of the Effective Date,
after giving effect to (i) the consummation of the Transactions, (ii) the making
of Loans to be made on the Effective Date in an aggregate principal amount not
to exceed $925,000,000 and (iii) the payment of estimated fees, expenses and
financing costs related to the transactions contemplated hereby and thereby, the
Borrower is Solvent.
5.3 Corporate Existence; Compliance with Law. Each of the Loan Parties
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, except to the extent that the failure to have such legal
right would not be reasonably expected to have a Material Adverse Effect, (c) is
duly qualified as a foreign corporation or limited liability company and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations. Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower and Blue Star Group, to obtain Extensions of Credit hereunder,
and each such Loan Party has taken all necessary corporate action to authorize
the execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the Extensions of Credit on
the terms and conditions of this Agreement, any Notes and the Applications. No
consent or authorization of, filing with, notice to or other similar act by or
in respect of, any Governmental Authority or any other Person is required to be
obtained or made by or on behalf of any Loan Party in connection with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which it is a party or, in the case of the Borrower or Blue Star
Group, with the Extensions of Credit hereunder, except for (i) consents,
authorizations, notices and filings described in Schedule 5.4, all of which have
been obtained or made, (ii) filings to perfect the Liens created by the Security
Documents, (iii) filings pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. Section 3727 et seq.) in respect of Accounts and contracts of
the Borrower and its Subsidiaries, the Obligor of which is the United States of
America or any department, agency or instrumentality thereof and (iv) consents,
authorizations, notices and filings which the failure to obtain or make would
not reasonably be expected to have a Material Adverse Effect. This Agreement has
been duly executed and delivered by the Borrower and Blue Star Group, and each
other Loan Document to which any Loan Party is a party, has been, or will be
duly executed and delivered on behalf of such Loan Party. This Agreement
constitutes a legal, valid and binding obligation of the Borrower and Blue Star
Group, and each other Loan Document to which any Loan Party is a party as
executed and delivered does constitute, or when executed and delivered, will
constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against such
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Loan Party in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law) and an implied covenant of good faith and fair dealing.
5.5 No Legal Bar. Except as previously disclosed in writing to the
Lenders on or prior to the Effective Date, the execution, delivery and
performance of the Loan Documents by the Loan Parties, the Extensions of Credit
hereunder and the use of the proceeds thereof (a) will not violate any
Requirement of Law or Contractual Obligation of any Loan Party in any respect
that would reasonably be expected to have a Material Adverse Effect and (b) will
not result in, or require, the creation or imposition of any Lien (other than
the Liens created by the Security Documents) on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.
5.6 No Material Litigation. Except as set forth on Schedule 5.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues, which (a) is so pending or
threatened on or prior to the Effective Date and relates to any of the Loan
Documents or any of the transactions contemplated hereby or thereby or (b) which
would be reasonably expected to have a Material Adverse Effect.
5.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which would be reasonably expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
5.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its material real property, and good title to, or a
valid leasehold interest in, all its other material property, and none of such
property interest is subject to any Lien, except for Liens permitted by
subsection 8.3.
5.9 Intellectual Property. Each of the Borrower and each of its
Subsidiaries owns, or has the legal right to use, all United States patents,
patent applications, trademarks, trademark applications, tradenames, service
marks, copyrights, technology, know-how and processes necessary for each of them
to conduct its business as currently conducted or as proposed to be conducted
immediately following the Effective Date (the "Intellectual Property") except
for those the failure to own or have such legal right to use would not be
reasonably expected to have a Material Adverse Effect. Except as provided on
Schedule 5.9, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any such claim, and, to the knowledge of the Borrower, the use
of such Intellectual Property by the Borrower and its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, would not be reasonably expected to have a Material
Adverse Effect.
5.10 No Burdensome Restrictions. Except as previously disclosed in
writing to the Lenders on or prior to the Effective Date, no Requirement of Law
or Contractual Obligation
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of the Borrower or any of its Subsidiaries would be reasonably expected to have
a Material Adverse Effect.
5.11 Taxes. To the knowledge of the Borrower: each of the Borrower and
its Subsidiaries has filed or caused to be filed all United States federal
income tax returns and all other material tax returns which are required to be
filed and has paid (a) all taxes shown to be due and payable on said returns and
(b) all taxes shown to be due and payable on any assessments of which it has
received notice made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested in good faith by appropriate proceedings diligently
conducted and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Subsidiaries, as the case may be);
and no tax Lien has been filed, and no material claim is being asserted, in each
case with respect to any such tax, fee or other charge.
5.12 Federal Regulations. No part of the proceeds of any Loans or any
Letter of Credit will be used for "buying" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U
except for the Stock Repurchase, which shall be made in compliance with
Regulation U, or for any purpose which violates the provisions of the
Regulations of the Board, including, without limitation, Regulation T,
Regulation U or Regulation X of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 or such other similar form referred
to in Regulation T, Regulation U or Regulation X of the Board, as the case may
be.
5.13 ERISA. During the five year period prior to each date as of which
this representation is made, or deemed made, with respect to any Plan (or, with
respect to (vi) or (viii) below, as of the date such representation is made or
deemed made), none of the following events or conditions, either individually or
in the aggregate, has resulted or is reasonably likely to result in a liability
to the Borrower or any of its Subsidiaries which would be reasonably expected to
have a Material Adverse Effect: (i) a Reportable Event; (ii) an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA); (iii) any material noncompliance with the applicable provisions
of ERISA or the Code; (iv) a termination of a Single Employer Plan (other than a
standard termination pursuant to Section 4041(b) of ERISA); (v) a Lien in favor
of the PBGC or a Plan; (vi) Underfunding with respect to any Single Employer
Plan; (vii) a complete or partial withdrawal from any Multiemployer Plan by the
Borrower or any Commonly Controlled Entity; (viii) any liability of the Borrower
or any Commonly Controlled Entity under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the annual valuation date most closely preceding the date on which
this representation is made or deemed made; (ix) the Reorganization or
Insolvency of any Multiemployer Plan; (x) the excess of the present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
aggregate liability of the Borrower or any of its Subsidiaries for
post-retirement benefits to be provided to their current and former employees
under Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA) over the assets under all such Plans; and (xi) an event or condition with
respect to which the Borrower or any
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Commonly Controlled Entity could incur any liability in respect of a Former
Plan. There have been no transactions that resulted or could result in any
liability to the Borrower or any Commonly Controlled Entity under Section 4069
of ERISA or Section 4212(c) of ERISA.
5.14 Collateral. Except with regard to (i) Liens on equipment
constituting fixtures, (ii) any reserved rights of the United States government
or any state government as required under law, (iii) Liens upon Patents, Patent
Licenses, Trademarks and Trademark Licenses to the extent that (a) such Liens
cannot be perfected by the filing of financing statements under the Uniform
Commercial Code or by the filing and acceptance thereof in the United States
Patent and Trademark Office or (b) such Patents, Patent Licenses, Trademarks and
Trademark Licenses are not, individually or in the aggregate, material to the
business of the Borrower and its Subsidiaries taken as a whole, (iv) Liens on
uncertificated securities, (v) Liens on Collateral the perfection of which
requires filings in or other actions under the laws of jurisdictions outside of
the United States of America, any State, territory or dependency thereof or the
District of Columbia (except to the extent that such filings or other actions
have been made or taken), (vi) Liens on contracts or Accounts on which the
United States of America or any state government or any department, agency, or
instrumentality thereof is the Obligor, (vii) Liens on proceeds of Accounts,
until transferred to or deposited in a Collateral Proceeds Account (as defined
in the Guarantee and Collateral Agreement), and (viii) the claims of creditors
of Persons receiving goods included as Collateral for "sale or return" within
the meaning of Section 2-326 of the Uniform Commercial Code of the applicable
jurisdiction, upon filing of the financing statements delivered to the
Administrative Agent by the Borrower and its Subsidiaries on the Effective Date
in the jurisdictions listed on Schedule 5.14 (which financing statements are in
proper form for filing in such jurisdictions) and the recording of the Mortgages
(and the recording of the Guarantee and Collateral Agreement, and the making of
filings in any other jurisdiction as may be necessary under any Requirement of
Law after the Effective Date) and the delivery to, and continuing possession by,
the Administrative Agent of all Instruments, Chattel Paper and Documents a
security interest in which is perfected by possession, the Liens created
pursuant to each Security Document, when executed and delivered, will constitute
valid Liens on and, to the extent provided therein, perfected security interests
in the collateral referred to in such Security Document (but as to the
Copyrights and the Copyright Licenses and accounts arising therefrom, only to
the extent the Uniform Commercial Code of the relevant jurisdiction, from time
to time in effect, is applicable) in favor of the Administrative Agent for the
ratable benefit of the Lenders, which Liens will be prior to all other Liens of
all other Persons, except for Liens permitted pursuant to the Loan Documents
(including, without limitation, those permitted to exist pursuant to subsection
8.3), and which Liens are enforceable as such as against all other Persons
(except, with respect to goods only, buyers in the ordinary course of business
to the extent provided in Section 9-307(1) of the Uniform Commercial Code as
from time to time in effect in the applicable jurisdiction), except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and an implied
covenant of good faith and fair dealing. Notwithstanding any other provision of
this Agreement, capitalized terms which are used in this subsection 5.14 and not
defined in this Agreement are so used as defined in the applicable Security
Document.
5.15 Investment Company Act; Other Regulations. Neither the Borrower nor
any of its Subsidiaries is an "investment company", or a company "controlled" by
an "investment
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company", within the meaning of the Investment Company Act. The Borrower is not
subject to regulation under any federal or state statute or regulation which
limits its ability to incur Indebtedness as contemplated hereby.
5.16 Subsidiaries. Schedule 5.16 sets forth all the Subsidiaries of the
Borrower at the Effective Date, the jurisdiction of their incorporation and the
direct or indirect percentage ownership interest of the Borrower therein.
5.17 Purpose of Loans. The proceeds of the Tranche A Term Loans and the
Tranche B Term Loans shall be used by the Borrower (i) to finance at or after
the Effective Date a portion of the Transactions (including the repurchase,
redemption or payment of the Convertible Notes due 2001 or the Convertible Notes
due 2003) and (ii) to pay certain transaction fees and expenses related to the
Transactions (such transaction fees and expenses not to exceed $75,000,000). The
proceeds of the Multi-Draw Term Loans shall be used by the Borrower to (i)
finance or refinance the cash purchase price of Permitted Acquisitions after the
Effective Date and pay transaction fees and expenses related to such Permitted
Acquisitions and (ii) finance the purchase, redemption or payment at maturity of
the Borrower's Convertible Notes due 2001 and its Convertible Notes due 2003.
The proceeds of the Revolving Credit Loans, the Swing Line Loans and the Letters
of Credit shall be used by the Borrower or Blue Star Group (i) for the purposes
described in the preceding two sentences and (ii) to finance the other working
capital and business requirements of the Borrower and its Subsidiaries.
5.18 Environmental Matters. Other than exceptions to any of the
following that would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect:
(a) To the knowledge of the Borrower, the facilities and properties
owned, leased or operated by the Borrower or any of its Subsidiaries (the
"Properties") and all operations at the Properties are in compliance with all
applicable Environmental Laws, and there is no violation of any applicable
Environmental Law with respect to the Properties or the business operated by
the Borrower or any of its Subsidiaries (the "Business"), and there are no
conditions relating to the Business or Properties that would be reasonably
likely to give rise to liability under any applicable Environmental Law.
(b) To the knowledge of the Borrower, the Properties do not contain, and
have not previously contained, any Materials of Environmental Concern at, on
or under the Properties in amounts or concentrations that constitute or
constituted a violation of, or would reasonably give rise to liability under,
applicable Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
applicable Environmental Laws with regard to any of the Properties or the
Business, nor does the Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened.
(d) To the knowledge of the Borrower, Materials of Environmental Concern
have not been transported or disposed of from the Properties, or generated,
treated, stored or
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disposed of at, on or under any of the Properties or any other location, in
violation of, or in a manner that would be reasonably likely to give rise to
liability of the Borrower or any of its Subsidiaries under, any applicable
Environmental Law, or materially interfere with the continued operations of
the Borrower or any of its Subsidiaries or materially impair the fair
saleable value of any of the Properties.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
applicable Environmental Law to which the Borrower or any of its Subsidiaries
is or will be named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any applicable
Environmental Law with respect to the Borrower or any of its Subsidiaries,
the Properties or the Business.
(f) There has been no release or, to the knowledge of the Borrower,
threat of release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations (including, without
limitation, disposal) of the Borrower or any of its Subsidiaries in
connection with the Properties or otherwise in connection with the Business,
in violation of or in amounts or in a manner that would be reasonably likely
to give rise to liability under applicable Environmental Laws.
(g) Neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or, to its knowledge, operation of law, any known or
suspected liabilities of any kind, fixed or contingent, as a result of any
violation or breach of applicable Environmental Law or with respect to any
contamination by any Materials of Environmental Concern.
5.19 No Material Misstatements. The written information, reports,
financial statements, exhibits and schedules furnished by or on behalf of the
Borrower to the Administrative Agent, the Other Representatives and the Lenders
in connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto, taken as a whole, did not contain as of the
Effective Date any material misstatement of fact and did not omit to state as of
the Effective Date any material fact necessary to make the statements therein
taken as a whole and in the light of the circumstances under which they were
made, not materially misleading in their presentation of the Transactions or of
the Borrower and its Subsidiaries. It is understood that no representation or
warranty is made concerning the forecasts, estimates, pro forma information,
projections and statements as to anticipated future performance or conditions,
and the assumptions on which they were based, contained in any such information,
reports, financial statements, certificates, exhibits or schedules, except that,
as of the date such forecasts, estimates, pro forma information, projections and
statements were generated, (i) such forecasts, estimates, pro forma information,
projections and statements were based on the good faith assumptions of the
management of the Borrower and (ii) such assumptions were believed by such
management to be reasonable. Such forecasts, estimates, pro forma information
and statements, and the assumptions on which they were based, may or may not
prove to be correct.
5.20 Delivery of the Transaction Documents. The Borrower has delivered
to the Administrative Agent, for itself and for each Lender, a complete
photocopy of each of the Transaction Documents (including all exhibits,
schedules and disclosure letters referred to
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therein or delivered pursuant thereto, if any) and all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof in any material respect.
5.21 Representations and Warranties Contained in the Transaction
Documents. Each of the Transaction Documents will have been duly executed and
delivered, by each of the Loan Parties which is a party thereto prior to the
Effective Date and, to the knowledge of the Borrower, all other parties thereto,
and is in full force and effect on the Effective Date. As of the Effective Date,
the representations and warranties of the Borrower in any of the Transaction
Documents (after giving effect to any amendments, supplements, waivers or other
modifications of any of the Transaction Documents prior to the Effective Date in
accordance with this Agreement) are true and correct in all material respects
except as otherwise disclosed to the Administrative Agent in writing prior to
the Effective Date and except to the extent such representations and warranties
relate to an earlier date in which case such representations and warranties
shall be true and correct in all material respects as of such earlier date.
5.22 Labor Matters. There are no strikes pending or, to the knowledge of
the Borrower, reasonably expected to be commenced against the Borrower or any of
its Subsidiaries which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect. The hours worked and payments made
to employees of the Borrower and each of its Subsidiaries have not been in
violation of any applicable laws, rules or regulations, except where such
violations would not reasonably be expected to have a Material Adverse Effect.
The consummation of the Transactions will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower or any of its Subsidiaries
(or any predecessor) is a party or by which the Borrower or any of its
Subsidiaries (or any predecessor) is bound except as would not reasonably be
expected to have a Material Adverse Effect.
5.23 Public Utility Holding Company Act. Neither the Borrower nor any of
its Subsidiaries is a "holding company" or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.24 Subordinated Debt. The Loans, L/C Obligations and all other
obligations hereunder and under the other Loan Documents constitute "Designated
Senior Indebtedness" for all purposes of the Convertible Notes Due 2001, the
Convertible Notes Due 2003 and the Senior Subordinated Notes.
5.25 Year 2000. Any reprogramming required to permit the proper
functioning (but only to the extent that such proper functioning would otherwise
be impaired by the occurrence of the year 2000), in and following the year 2000,
of the Borrower's and its Subsidiaries' internally developed business software
which is critical to the Borrower and its Subsidiaries taken as a whole will be
completed by October 31, 1999. Based on the Borrower's estimates as of the
Effective Date, the cost to the Borrower and its Subsidiaries of such
reprogramming, to the extent not reflected or reserved for on the consolidated
balance sheet of the Borrower and its Subsidiaries, would not reasonably be
expected to have a Material Adverse Effect.
5.26 Spin-Off Tax Liability. To the best knowledge of the Borrower as of
the
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Effective Date, the Borrower will not incur any material Federal income tax
liability as a result of the consummation of the Spin-Offs (whether or not any
such Federal income tax liability would be indemnified). As of the Effective
Date the Borrower is not aware of any plan by any of the Spin-Cos to consummate
any transaction that would cause Borrower to incur any such material Federal
income tax liability.
5.27 Blue Star Parties. (a) Pari Passu. The obligations of each Blue
Star Party under the Loan Documents to which it is a party, when executed and
delivered by such Blue Star Party, will rank at least pari passu with all other
unsecured Indebtedness of such Blue Star Party.
(b) No Immunities, etc. Each Blue Star Party is subject to civil and
commercial law with respect to its obligations under the Loan Documents to which
it is a party, and the execution, delivery and performance by such Blue Star
Party of the Loan Documents to which it is a party constitute and will
constitute private and commercial acts and not public or governmental acts.
Neither such Blue Star Party nor any of its property, whether or not held for
its own account, has any immunity (sovereign or other similar immunity) from any
suit or proceeding, from jurisdiction of any court or from set-off or any legal
process (whether service or notice, attachment prior to judgment, attachment in
aid of execution of judgment, execution of judgment or other similar immunity)
under laws of the jurisdiction in which such Blue Star Party is organized and
existing in respect of its obligations under the Loan Documents to which it is a
party. Such Blue Star Party has, pursuant to subsection 12.12, waived every
immunity (sovereign or otherwise) to which it or any of its properties would
otherwise be entitled from any legal action, suit or proceeding, from
jurisdiction of any court or from set-off or any legal process (whether service
or notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) under the laws of the jurisdiction
in which such Blue Star Party is organized and existing in respect of its
obligations under the Loan Documents to which it is a party. The waiver by such
Blue Star Party described in the immediately preceding sentence is the legal,
valid and binding obligation of such Blue Star Party.
(c) No Recordation Necessary. Each of the Loan Documents to which any
Blue Star Party is a party, is in proper legal form under the law of the
jurisdiction in which such Blue Star Party is organized and existing for the
enforcement hereof or thereof against such Blue Star Party under the law of such
jurisdiction, and to ensure the legality, validity, enforceability, priority or
admissibility in evidence of each of the Loan Documents to which any Blue Star
Party is a party. It is not necessary to ensure the legality, validity,
enforceability, priority or admissibility in evidence of any of the Loan
Documents or any other Loan Document be filed, registered or recorded with, or
executed or notarized before, any court or other authority in the jurisdiction
in which any Blue Star Party is organized and existing or that any registration
charge or stamp or similar tax be paid on or in respect of any of the Loan
Documents, except for any such filing, registration or recording, or execution
or notarization, as has been made or is not required to be made until such Loan
Document is sought to be enforced and for any charge or tax as has been timely
paid.
(d) Exchange Controls. The execution, delivery and performance by each
Blue Star Party of each Loan Document to which such Blue Star Party is a party,
is, under applicable foreign exchange control regulations of the jurisdiction in
which such Blue Star Party is organized and existing, not subject to any
notification or authorization except such as have been made or obtained or
cannot be made or obtained until a later date.
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SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extension of Credit. This Agreement,
including, without limitation, the agreement of each Lender to make the initial
Extension of Credit requested to be made by it, shall become effective on the
date on which the following conditions precedent shall have been satisfied or
waived:
(a) Loan Documents. The Administrative Agent shall have received the
following Loan Documents (each of which shall be satisfactory in form and
substance to the Administrative Agent), executed and delivered as required
below, with a copy for each applicable Lender: (i) this Agreement, executed
and delivered by a duly authorized officer of the Borrower and Blue Star
Group, (ii) the Guarantee and Collateral Agreement, executed and delivered by
a duly authorized officer of each of the Borrower and the Domestic
Subsidiaries of the Borrower listed on Schedule V, (iii) each of the
Mortgages with respect to the properties listed on Schedule 6.1(a), executed
and delivered by a duly authorized officer of the Loan Party thereto, (iv)
the Australian Pledge Agreement, executed and delivered by a duly authorized
officer of the Borrower and (v) any Notes requested by the Lenders in
accordance with subsections 2.2, 2.5, 2.7, 2.8 and 2.9, executed by a duly
authorized officer of the Borrower.
(b) Investment Agreement. The Equity Investment shall have been
consummated substantially in accordance with the terms and conditions of the
Investment Agreement for an aggregate purchase price not less than
approximately $270,000,000, and the Administrative Agent shall have received
from the Borrower a list, prepared in good faith in a commercially reasonable
manner, of the estimated transaction expenses incurred in connection with the
Transactions and the financing thereof, which estimate shall not exceed
$75,000,000 in the aggregate.
(c) Senior Subordinated Notes. The Administrative Agent shall have
received evidence, in form and substance reasonably satisfactory to it, that
the Borrower or its account shall have received gross cash proceeds of
approximately $400,000,000 from the issuance of Senior Subordinated Notes.
(d) Tender Offers and Spin-Offs. The Administrative Agent shall have
received evidence, in form and substance reasonably satisfactory to it, that
Borrower shall have spent not more than $1,000,000,000 (less an amount equal
to the aggregate exercise price of all options which are surrendered in
exchange for a cash payment) pursuant to the Stock Repurchase and shall have
completed the Spin-Offs. The Administrative Agent shall have received copies
of the Tender Offer materials with respect to the Stock Repurchase and the
Debt Tender Offer which materials shall be in form and substance reasonably
satisfactory to the Agents.
(e) Capital Structure. The capital structure of the Borrower and its
Subsidiaries shall be reasonably satisfactory to the Lenders, provided that
such condition shall be deemed satisfied by the receipt of the Administrative
Agent and each of the Lenders of a compliance certificate of a Responsible
Officer of the Borrower demonstrating that the
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Leverage Ratio (which shall be calculated for this purpose by subtracting
from Consolidated Total Funded Indebtedness an amount equal to the aggregate
amount of all cash and Cash Equivalents of the Borrower and its consolidated
Subsidiaries, to the extent such cash and Cash Equivalents are on deposit in
one or more accounts maintained with the Administrative Agent and are not
subject to any Lien in favor of a third party as of the Effective Date) of
the Borrower and its consolidated Subsidiaries for the four fiscal quarters
of the Borrower ended April 24, 1998, on a pro forma basis giving effect (as
if such events had occurred on such day) to (i) the consummation of the
Transactions as actually consummated on the Effective Date, (ii) the making
of the Loans to be made on the Effective Date and (iii) the payment of
estimated fees, expenses, financing costs and estimated tax payments related
to the transactions contemplated hereby and thereby, is not greater than
6.20 to 1.00.
(f) Financial Information. The Lenders shall have received copies of and
shall be reasonably satisfied, in form and substance, with (i) the audited
consolidated balance sheets and statements of income and of cash flows of the
Borrower and its consolidated Subsidiaries for the fiscal years ended and as
at April 30, 1995, April 30, 1996 and April 26, 1997, in each case
accompanied by a report of Price Waterhouse LLP, (ii) the unaudited
consolidated balance sheets and statements of income, retained income and
cash flows of the Borrower and its consolidated Subsidiaries as at the end of
and for each fiscal month and quarterly period ended after April 26, 1997 and
prior to the Effective Date for which such unaudited financial statements are
available and (iii) the Pro Forma Balance Sheet, together with a
reconciliation thereof to the balance sheet of the Borrower and its
consolidated Subsidiaries as of the Pro Forma Date.
(g) Projections. The Lenders shall have received a reasonably detailed
business plan of the Borrower and its Subsidiaries for fiscal year 1998 in a
form and level of detail reasonably satisfactory to the Lenders.
(h) Consents, Licenses and Approvals. The Administrative Agent shall
have received, with a copy for each Lender, a certificate of a Responsible
Officer of the Borrower stating that all consents, authorizations, notices
and filings referred to in Schedule 5.4 are in full force and effect or have
the status described therein, and the Administrative Agent shall have
received evidence thereof reasonably satisfactory to it.
(i) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person reasonably satisfactory to the
Administrative Agent and its counsel, of the Uniform Commercial Code,
judgment and tax lien filings which may have been filed with respect to
personal property of the Borrower and its Material Domestic Subsidiaries then
parties to the Security Documents in any of the jurisdictions set forth in
Schedule 5.14, and the results of such search shall not reveal any Liens
other than Liens permitted by subsection 8.3 or that are otherwise reasonably
satisfactory to the Administrative Agent and its counsel.
(j) Legal Opinions. The Administrative Agent shall have received, with a
copy for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Wilmer, Cutler & Pickering,
special
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counsel to the Borrower, substantially in the form of Exhibit G-1;
(ii) the executed legal opinion of Russell McVeagh
McKenzie Bartleet & Co., special New Zealand counsel to Borrower and the
other Loan Parties, substantially in the form of Exhibit G-2; and
(iii) the executed legal opinion of Minter Ellison, special
Australian counsel to the Borrower and the other Loan Parties,
substantially in the form of Exhibit G-3.
In addition, the Administrative Agent shall have received, with a copy for
each Lender, the legal opinions referred to in Sections 9.02(b) and 9.03(d)
of the Investment Agreement and each such legal opinion shall state that the
Administrative Agent and the Lenders are entitled to rely thereon as if such
legal opinion were addressed to the Administrative Agent and the Lenders.
(k) Tax Opinion. The Borrower shall have received an opinion, which may
be relied upon by the Agents and the Lenders, of Wilmer, Cutler & Pickering,
special counsel to the Borrower, that for U.S. federal income tax purposes,
the Spin-Offs will qualify as tax-free spin-offs under Section 355 of the
Code, and will not be taxable under Section 355(e) of the Code.
(l) Environmental Assessment. The Administrative Agent shall have
received the Environmental Reports described on Schedule 6.1(l).
(m) Actions to Perfect Liens. The Administrative Agent shall have
received evidence in form and substance reasonably satisfactory to it that
all filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on Form UCC-1 in
each jurisdiction set forth on Schedule 5.14, necessary or, in the reasonable
opinion of the Administrative Agent, desirable to perfect the Liens created
by the Security Documents shall have been completed or shall be ready to be
completed promptly following the Effective Date, and all agreements,
statements and other documents relating thereto shall be in form and
substance reasonably satisfactory to the Administrative Agent.
(n) Pledged Securities; Stock Powers and Endorsements. The
Administrative Agent shall have received the certificates and the promissory
notes, if any, representing the Pledged Securities under (and as defined in
the Guarantee and Collateral Agreement), together with an undated stock power
for each stock certificate executed in blank by a duly authorized officer of
the pledgor thereof and/or duly endorsed as required by the Guarantee and
Collateral Agreement.
(o) Title Insurance Policy. The Administrative Agent shall have received
in respect of each parcel of owned real property covered by a Mortgage a
mortgagee's title policy (or policies) or marked up unconditional (except
with respect to any matter which may be shown on a related survey) binder for
such insurance dated the date of the recording of such Mortgage. Each such
policy shall (i) be in an amount reasonably satisfactory to the
Administrative Agent but no more than the value of the particular
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property; (ii) insure that the Mortgage insured thereby creates a valid first
(or, in the case of the property so indicated on Schedule 6.1(a), a second)
Lien on such parcel free and clear of all defects and encumbrances, except
those permitted by subsection 8.3 and such as may be approved by the
Administrative Agent; (iii) name the Administrative Agent for the benefit of
the Lenders as the insured thereunder; (iv) be in the form of an ALTA Loan
Policy; (v) contain such endorsements and affirmative coverage as the
Administrative Agent may reasonably request and (vi) be issued by First
American Title Insurance Company. The Administrative Agent shall have
received evidence reasonably satisfactory to it that all premiums in respect
of each such policy, and all charges for mortgage recording tax, if any, have
been paid. The Administrative Agent shall have also received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in this subsection and a copy certified
by such parties as the Administrative Agent may deem reasonably appropriate,
of all other documents affecting the property covered by each Mortgage as
shall have been reasonably requested by the Administrative Agent.
(p) Fees. The Borrower shall have paid to the Administrative Agent the
fees to be received on the Effective Date referred to in subsection 4.5.
(q) Borrowing Certificate. The Administrative Agent shall have received,
with a copy for each Lender, a certificate of the Borrower, dated the
Effective Date, substantially in the form of Exhibit J, with appropriate
insertions and attachments, reasonably satisfactory in form and substance to
the Administrative Agent, executed by a Responsible Officer and the Secretary
or any Assistant Secretary of the Borrower.
(r) Corporate Proceedings of the Loan Parties. The Administrative Agent
shall have received, with a copy for each Lender, a copy of the resolutions,
in form and substance reasonably satisfactory to the Administrative Agent, of
the Board of Directors of each Loan Party authorizing, as applicable, (i) the
execution, delivery and performance of this Agreement, any Notes and the
other Loan Documents to which it is or will be a party, (ii) the Extensions
of Credit contemplated hereunder and (iii) the granting by it of the Liens to
be created pursuant to the Security Documents to which it will be a party,
certified by the Secretary or an Assistant Secretary of such Person as of the
Effective Date, which certificate shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall state that the resolutions
thereby certified have not been amended, modified (except as any later such
resolution may modify any earlier such resolution), revoked or rescinded and
are in full force and effect as of the Effective Date.
(s) Incumbency Certificates of the Loan Parties. The Administrative
Agent shall have received, with a copy for each Lender, a certificate of each
Loan Party, dated the Effective Date, as to the incumbency and signature of
the officers of such Person executing any Loan Document, reasonably
satisfactory in form and substance to the Administrative Agent, executed by a
Responsible Officer and the Secretary or any Assistant Secretary of such
Person.
(t) Corporate Documents. The Administrative Agent shall have received,
with a copy for each Lender, copies of the certificate of incorporation and
by-laws of each Loan Party, certified as of the Effective Date as complete
and correct copies thereof by the
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Secretary or an Assistant Secretary of such Loan Party.
(u) Insurance. The Administrative Agent shall have received evidence in
form and substance reasonably satisfactory to it that the requirements of
Section 5.2.2 of the Guarantee and Collateral Agreement and Section 5 of each
Mortgage shall have been satisfied, together with certificates of insurance
and other evidence of such insurance, if any, naming the Administrative Agent
as an additional insured and/or loss payee.
(v) No Material Change. Since the date of the most recent financial
statements provided to the Lenders prior to the date hereof, there shall not
have occurred or become known to any Loan Party any change, development or
event that would reasonably be expected to have a Material Adverse Effect.
(w) No Material Litigation. No litigation, investigation, injunction or
restraining order shall be pending, entered or threatened that would
reasonably be expected to have a Material Adverse Effect.
The making of the initial Extensions of Credit by the Lenders hereunder shall
conclusively be deemed to constitute an acknowledgement by the Administrative
Agent and each Lender that each of the conditions precedent set forth in this
subsection 6.1 shall have been satisfied in accordance with its respective terms
or shall have been irrevocably waived by such Person.
6.2 Conditions to Initial Blue Star Extensions of Credit. The agreement
of each Lender to make the initial Extension of Credit requested by Blue Star
Group to be made by such Lender (including if such Extension of Credit is the
initial Extension of Credit hereunder) is subject to the satisfaction or waiver
of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received the
following Loan Documents (each of which shall be satisfactory in form and
substance to the Administrative Agent), executed and delivered as required
below, with a copy for each applicable Lender: (i) each of the Blue Star
Guarantee and Security Documents, executed and delivered by a duly authorized
officer of the Borrower, Blue Star Group and the Subsidiaries of Blue Star
Group parties thereto, (ii) each of the Blue Star Mortgages, executed and
delivered by a duly authorized officer of the Loan Party thereto (iii) any
Notes requested by the Lenders in accordance with subsection 2.2 executed by
a duly authorized officer of Blue Star Group and (iv) the Blue Star
Representation Certificate, substantially in the form of Exhibit K, executed
and delivered by a duly authorized officer of Blue Star Group.
(b) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person reasonably satisfactory to the
Administrative Agent and its counsel, of the lien (including judgment and tax
lien) filings which may have been filed with respect to personal property of
the Blue Star Group and its Material Subsidiaries then parties to the Blue
Star Guarantee and Security Documents in any of the jurisdictions reasonably
requested by the Administrative Agent, and the results of such search shall
not reveal any Liens other than Liens permitted by subsection 8.3 or that are
otherwise reasonably satisfactory to the Administrative Agent and its
counsel.
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(c) Legal Opinions. The Administrative Agent shall have received, with a
copy for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Russell McVeagh
Bartleet & Co., special New Zealand counsel to Borrower and the other
Loan Parties, in form and substance satisfactory to the Administrative
Agent and its counsel; and
(ii) the executed legal opinion of Minter Ellison, special
Australian counsel to the Borrower and the other Loan Parties in form
and substance satisfactory to the Administrative Agent and its counsel.
(d) Actions to Perfect Liens. The Administrative Agent shall have
received evidence in form and substance reasonably satisfactory to it that
all filings, recordings, registrations and other actions, including, without
limitation, the filing or recording of duly executed lien statements or
instruments, necessary or, in the reasonable opinion of the Administrative
Agent, desirable to perfect the Liens created by the Blue Star Guarantee and
Security Documents shall have been completed or shall be ready to be
completed promptly following the first Borrowing Date for the Blue Star
Group, and all agreements, statements and other documents relating thereto
shall be in form and substance reasonably satisfactory to the Administrative
Agent.
(e) Corporate Proceedings of the Loan Parties. The Administrative Agent
shall have received, with a copy for each Lender, a copy of the resolutions,
in form and substance reasonably satisfactory to the Administrative Agent, of
the Board of Directors of each Loan Party which is party to any of the Blue
Star Guarantee and Security Documents authorizing, as applicable, (i) the
execution, delivery and performance of the Blue Star Guarantee and Security
Documents to which it is or will be a party, (ii) the Extensions of Credit
contemplated for the Blue Star Group hereunder and (iii) the granting by it
of the Liens to be created pursuant to the Blue Star Guarantee and Security
Documents to which it will be a party, certified by the Secretary or an
Assistant Secretary of such Person as of the first Borrowing Date for the
Blue Star Group, which certificate shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall state that the resolutions
thereby certified have not been amended, modified (except as any later such
resolution may modify any earlier such resolution), revoked or rescinded and
are in full force and effect as of the first Borrowing Date for the Blue Star
Group.
(f) Incumbency Certificates of the Loan Parties. The Administrative
Agent shall have received, with a copy for each Lender, a certificate of each
Loan Party which is party to any of the Blue Star Guarantee and Security
Documents, dated the date of the first Borrowing Date for the Blue Star
Group, as to the incumbency and signature of the officers of such Person
executing any Blue Star Guarantee and Security Document, reasonably
satisfactory in form and substance to the Administrative Agent, executed by a
Responsible Officer and the Secretary or any Assistant Secretary of such
Person.
(g) Corporate Documents. The Administrative Agent shall have received,
with a copy for each Lender, copies of the certificate of incorporation and
by-laws of each Loan Party which is party to any Blue Star Guarantee and
Security Document, certified as of the first Borrowing Date for the Blue Star
Group as complete and correct copies thereof
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by the Secretary or an Assistant Secretary of such Loan Party.
6.3 Conditions to Each Other Extension of Credit. The agreement of each
Lender to make any Extension of Credit requested to be made by it on any date
(including, without limitation, the initial Extension of Credit and each Swing
Line Loan) is subject to the satisfaction or waiver of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party pursuant to this Agreement or any other
Loan Document (or in any amendment, modification or supplement hereto or
thereto) to which it is a party, and each of the representations and
warranties contained in any certificate furnished at any time by or on behalf
of any Loan Party pursuant to this Agreement or any other Loan Document,
shall, except to the extent that they relate to a particular date, be true
and correct in all material respects on and as of such date as if made on and
as of such date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Extensions of Credit
requested to be made on such date.
(c) Letter of Credit Application. With respect to the issuance of any
Letter of Credit, the Issuing Lender shall have received an Application
completed to its satisfaction, and such other certificates, documents and
other papers and information as the Issuing Lender may reasonably request.
Each borrowing by and Letter of Credit issued on behalf of the Borrower or Blue
Star Group hereunder shall constitute a representation and warranty by the
Borrower and, if any such borrowing is by Blue Star Group, Blue Star Group as of
the date of such borrowing or such issuance that the conditions contained in
this subsection 6.3 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, from and after the Effective Date and
so long as the Revolving Credit Commitments and Multi-Draw Term Loan Commitments
remain in effect, and thereafter until payment in full of the Loans, all
Reimbursement Obligations and any other amount then due and owing to any Lender
or the Administrative Agent hereunder and under any Note and termination or
expiration of all Letters of Credit, the Borrower shall and (except in the case
of delivery of financial information, reports and notices) shall cause each of
its respective Subsidiaries to:
7.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event not later than 90 days after
the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries
as at the end of such year and the related audited consolidated statements of
income and of cash flows for such year (which may be the Borrower's annual
report, as filed with the SEC on Form 10-K), setting forth in each case in
comparative form the figures for and as of the end of the previous year,
reported
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on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Price Waterhouse LLP
or other independent certified public accountants of nationally recognized
standing reasonably satisfactory to the Administrative Agent; and
(b) as soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of
the Borrower, the unaudited consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows of the Borrower
and its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter (which may be the Borrower's
quarterly financial statements, as filed with the SEC on Form 10-Q), setting
forth in each case in comparative form the budgeted figures (as adjusted
consistent with past practice) for the relevant period and the figures for
the corresponding period of the previous fiscal year, certified by a
Responsible Officer of the Borrower as being fairly stated in all material
respects (subject to normal year-end audit and other adjustments);
all such financial statements delivered pursuant to subsection 7.1(a) or 7.1(b)
to be (and, in the case of financial statements delivered pursuant to subsection
7.1(b) shall be certified by a Responsible Officer of the Borrower as being)
complete and correct in all material respects in conformity with GAAP and to be
(and, in the case of financial statements delivered pursuant to subsection
7.1(b) shall be certified by a Responsible Officer of the Borrower as being)
prepared in reasonable detail in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods that began on or
after the Effective Date (except as approved by such accountants or officer, as
the case may be, and disclosed therein, and except, in the case of the financial
statements delivered pursuant to subsection 7.1(b), for the absence of certain
notes).
7.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements referred
to in subsection 7.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
audit necessary therefor no knowledge was obtained of any Default or Event of
Default insofar as the same relates to any financial accounting matters
covered by their audit, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred
to in subsections 7.1(a) and 7.1(b), a certificate signed by a Responsible
Officer of the Borrower, (i) stating that, to the best of each such
Responsible Officer's knowledge, each of the Borrower and each of its
Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement, any Notes and the other Loan Documents to which it is a party
to be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default, except,
in each case, as specified in such certificate, and (ii) setting forth the
calculations required to determine (A) compliance with all covenants set
forth in subsection 8.1 (in the case of a certificate furnished with the
financial statements referred to in subsections 7.1(a) and 7.1(b)) and (B)
compliance with the covenant set forth in subsection 8.8 (in the case of a
certificate furnished with the financial
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statements referred to in subsection 7.1(a));
(c) as soon as available, but in any event not later than 90 days after
the beginning of each fiscal year of the Borrower, a copy of the projections
of the operating budget and cash flow budget of the Borrower and its
Subsidiaries for such fiscal year as customarily prepared by the management
for its internal use, such projections to be accompanied by a certificate of
a Responsible Officer of the Borrower to the effect that such Responsible
Officer believes such projections to have been prepared on the basis of
reasonable assumptions;
(d) within five Business Days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its public
security holders, if any, and within five Business Days after the same are
filed, copies of all financial statements and periodic reports which the
Borrower may file with the Securities and Exchange Commission or any
successor or analogous Governmental Authority;
(e) within two Business Days after the same are filed, copies of all
registration statements and any amendments and exhibits thereto, which the
Borrower may file with the Securities and Exchange Commission or any
successor or analogous Governmental Authority, and such other documents or
instruments as may be reasonably requested by the Administrative Agent in
connection therewith; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
diligently conducted and reserves in conformity with GAAP with respect thereto
have been provided on the books of the Borrower or its Subsidiaries, as the case
may be.
7.4 Conduct of Business and Maintenance of Existence. Continue to engage
in business of the same general type as conducted by the Borrower and its
Subsidiaries on the Effective Date, taken as a whole, and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of the business of the Borrower and its Subsidiaries,
taken as a whole, except as otherwise expressly permitted pursuant to subsection
8.5, provided that the Borrower and its Subsidiaries shall not be required to
maintain any such rights, privileges or franchises, if the failure to do so
would not reasonably be expected to have a Material Adverse Effect; and comply
with all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in the business of the Borrower and its Subsidiaries, taken as a
whole, in good working order and condition, normal wear and tear excepted;
maintain with financially sound and reputable insurance companies insurance
on all property material to the business of the Borrower and its
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Subsidiaries, taken as a whole, in at least such amounts and against at
least such risks (but including in any event public liability, product liability
and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business; and furnish to the
Administrative Agent, upon written request, information in reasonable detail as
to the insurance carried, together with copies of certificates of insurance and
other evidence of such insurance, if any, naming the Administrative Agent as an
additional insured and/or loss payee.
7.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, complete and correct entries
in conformity with GAAP and all material Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit representatives of any Lender to visit and inspect any of its properties
and examine and, to the extent reasonable, make abstracts from any of its books
and records and to discuss the business, operations, properties and financial
and other condition of the Borrower and its Subsidiaries with officers of the
Borrower and its Subsidiaries and with its independent certified public
accountants, in each case at any reasonable time during normal business hours,
upon reasonable notice to the Chief Financial Officer or other Responsible
Officer of the Borrower, and as often as may reasonably be desired at reasonable
intervals, provided that any such visits and inspections shall be coordinated
through the Administrative Agent.
(b) If a Default or Event of Default shall have occurred and be
continuing, the Borrower shall reimburse the Administrative Agent for any
reasonable fees and expenses of third parties incurred in connection with any
appraisal of the Borrower's or any of its Subsidiaries' real property reasonably
requested in writing by the Required Lenders.
7.7 Notices. Promptly give notice to the Administrative Agent and each
Lender of:
(a) as soon as possible after a Responsible Officer of the Borrower
knows thereof, the occurrence of any Default or Event of Default;
(b) as soon as possible after a Responsible Officer of the Borrower
knows thereof, any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries, other than as
previously disclosed in writing to the Lenders, or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower
or any of its Subsidiaries and any Governmental Authority, which in either
case, if not cured or if adversely determined, as the case may be, would
reasonably be expected to have a Material Adverse Effect;
(c) as soon as possible after a Responsible Officer of the Borrower
knows thereof, any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in which the amount involved is $1,000,000 or more and which
is not covered by insurance or in which injunctive or similar relief is
sought that would reasonably be expected to have a Material Adverse Effect;
(d) the following events, as soon as possible and in any event within 30
days after a Responsible Officer of the Borrower knows thereof: (i) the
occurrence or expected
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occurrence of any Reportable Event with respect to any Single Employer Plan
(other than a Reportable Event described in Section 4043(c)(9) of ERISA), a
failure to make any required contribution to a Single Employer Plan or
Multiemployer Plan, the creation of any Lien on the property of the Borrower
or any of its Subsidiaries in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any Multiemployer
Plan if, as a result thereof, the Borrower or any of its Subsidiaries would
reasonably be expected to incur any material liability; (ii) the existence of
an Underfunding under a Single Employer Plan determined as of the most recent
annual valuation date of such Single Employer on the basis of the actuarial
assumptions used to determine the funding requirements of such Single
Employer Plan as of such date; (iii) the institution of proceedings or the
taking of any other formal action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Single
Employer Plan or Multiemployer Plan if, as a result thereof, the Borrower or
any of its Subsidiaries would reasonably be expected to incur any material
liability; or (iv) the occurrence or expected occurrence of any event or
condition under which the Borrower or any Commonly Controlled Entity has
incurred or could incur any liability in respect of a Former Plan;
(e) as soon as possible after a Responsible Officer of the Borrower
knows thereof, any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole;
(f) as soon as possible after a Responsible Officer of the Borrower
knows thereof and except as would not, individually or in the aggregate,
reasonably be expected to result in the payment of a Material Environmental
Amount, (i) any release or discharge by the Borrower or any of its
Subsidiaries of any Materials of Environmental Concern required to be
reported under applicable Environmental Laws to any Governmental Authority;
(ii) any condition, circumstance, occurrence or event that would result in
liability pursuant to applicable Environmental Laws or would result in the
imposition of any lien or other restriction on the title, ownership or
transferability of any Property; (iii) any proposed action to be taken by the
Borrower or any of its Subsidiaries that would reasonably be expected to
subject the Borrower or any of its Subsidiaries to any additional or
different requirements or liabilities, to the knowledge of the Borrower or
any of its Subsidiaries, under any applicable Environmental Law; (iv) any
Governmental Authority has notified the Borrower or any of its Subsidiaries
that any such Person is a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable law for the cleanup of Materials of Environmental Concern at any
location, whether or not owned, leased or operated by the Borrower or any of
its Subsidiaries; (v) any Governmental Authority has notified the Borrower or
any of its Subsidiaries that it will revoke any permit pursuant to any
Environmental Law held by the Borrower or any of its Subsidiaries, or deny or
refuse to renew any such permit sought by the Borrower or any of its
Subsidiaries; or (vi) any Governmental Authority has notified the Borrower or
any of its Subsidiaries that any property owned, leased, or operated by the
Borrower or any of its Subsidiaries is being listed on, or proposed for
listing on, the National Priorities List (NPL) or the Comprehensive
Environmental Response, Compensation and Liability Information System
(CERCLIS) maintained by the U.S. Environmental Protection Agency, or on any
similar list maintained by any
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Governmental Authority; and
(g) within three Business Days of the issuance thereof, notice of any
issuance of a letter of credit permitted by subsection 8.2(h).
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer of the Borrower (and, if applicable, the relevant Commonly
Controlled Entity or Subsidiary) setting forth details of the occurrence
referred to therein and stating what action the Borrower (or, if applicable, the
relevant Commonly Controlled Entity or Subsidiary) proposes to take with respect
thereto.
7.8 Environmental Laws. (a) Comply substantially with all Environmental
Laws applicable to it, and obtain, comply substantially with and maintain any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws; and (ii) take all reasonable efforts to ensure
that all tenants, subtenants, contractors, subcontractors and invitees comply
substantially with all Environmental Laws, and obtain, comply substantially with
and maintain any and all licenses, approvals, notifications, registrations or
permits required by Environmental Laws applicable to any of them insofar as any
failure to so comply, obtain or maintain reasonably would be expected to
adversely affect the Borrower or any of its Subsidiaries. For purposes of this
subsection 7.8(a), noncompliance shall be deemed not to constitute a breach of
this covenant provided that, upon learning of any actual or suspected
noncompliance, the Borrower shall in a timely fashion undertake or cause to be
undertaken reasonable efforts to achieve substantial compliance, and provided,
further that, in any case, such noncompliance, and any other noncompliance with
any Environmental Law, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
(b) Promptly upon the Administrative Agent's request if the Borrower
shall have failed to pay any principal of any Loan or any interest on any Loan
within five days after such interest becomes due in accordance with the terms
hereof so as to cause an Event of Default, permit an environmental consultant,
whom the Administrative Agent designates and which consultant is reasonably
acceptable to the Borrower, to perform an environmental assessment (including,
without limitation: reviewing documents; interviewing knowledgeable persons; and
sampling and analyzing soil, air, surface rate, ground water, and/or other
media) in or about any Property subject to a Mortgage. Such environmental
assessment shall be in form, scope and substance reasonably satisfactory to the
Administrative Agent. The Borrower or its Subsidiaries shall cooperate fully in
the conduct of such environmental assessment, and shall pay the costs of such
environmental assessment promptly upon written demand by the Administrative
Agent. Pursuant to this subsection 7.8(b) the Administrative Agent shall have
the right, but shall not have any duty, to request and/or obtain such
environmental assessment.
7.9 After-Acquired Real Property and Fixtures. (a) With respect to any
owned real property with a fair market value (as determined in good faith by the
Borrower) of $1,500,000 or more or related fixtures in which the Borrower or any
of its Domestic Subsidiaries acquires ownership rights at any time after the
Effective Date, promptly, or (i) with respect to either of the properties listed
on Schedule 7.9(a)(i) , on the date six months after the date hereof if such
property has not been sold by such date or (ii) with respect to the property
listed on Schedule 7.9(a)(ii), within 60 days after the Effective Date, grant to
the Administrative Agent, for the ratable benefit of the Lenders, a Lien of
record on all such owned real property and
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fixtures, upon terms reasonably satisfactory in form and substance to the
Administrative Agent and in accordance with any applicable requirements of any
Governmental Authority (including, without limitation, any required appraisals
of such property under FIRREA); provided, that, at the request of the Borrower,
the Administrative Agent may, but is under no obligation to, waive the
requirement that the Borrower grant a Lien of record on such owned real property
and fixtures; and provided further that nothing in this subsection 7.9 shall
defer or impair the attachment or perfection of any security interest in any
Collateral covered by any of the Security Documents which would attach or be
perfected pursuant to the terms thereof without action by the Borrower, any
Subsidiary or any other Person. In connection with any such grant to the
Administrative Agent, for the benefit of the Lenders, of a first priority Lien
of record on any such real property in accordance with this subsection, the
Borrower or such Subsidiary shall deliver or cause to be delivered to the
Administrative Agent any surveys, title insurance policies, environmental
reports and other documents in connection with such grant of such Lien obtained
by it in connection with the acquisition of such ownership rights in such real
property or as the Administrative Agent shall reasonably request (in light of
the value of such real property and the cost and availability of such surveys,
title insurance policies, environmental reports and other documents and whether
the delivery of such surveys, title insurance policies, environmental reports
and other documents would be customary in connection with such grant of such
Lien in similar circumstances).
(b) At its own expense, execute, acknowledge and deliver, or cause the
execution, acknowledgement and delivery of, and thereafter register, file or
record in an appropriate governmental office, any document or instrument
reasonably deemed by the Administrative Agent to be necessary or desirable for
the creation and perfection of the foregoing Liens or any other Liens created
pursuant to the Security Documents.
(c) At its own expense, request, and use reasonable efforts to obtain,
(i) a consent, substantially in the form of Exhibit F or such other form as may
be reasonably satisfactory to the Administrative Agent, from the landlord of
each of the existing facilities in which Inventory of any Loan Party is located,
as of the Effective Date, in which such landlord acknowledges the Administrative
Agent's security interest in the Inventory pledged by each Loan Party to the
Administrative Agent for the benefit of the Lenders, copies of which consent, if
obtained, shall be delivered to the Administrative Agent by the Effective Date
and (ii) prior to entering into a lease of a facility in which Inventory will be
located on or after the Effective Date, a consent, substantially in the form of
Exhibit F or such other form as may be reasonably satisfactory to the
Administrative Agent, from each landlord of any such facility, in which such
landlord acknowledges the Administrative Agent's first priority security
interest in the Inventory pledged by each Loan Party to the Administrative Agent
for the benefit of the Lenders.
7.10 Acquired Subsidiaries; Further Security and Guarantees. (a) In the
event that the Borrower or any of its Subsidiaries acquires any Material
Subsidiary from any third party as permitted by the other provisions of this
Agreement or creates any new Material Subsidiary, (i) if such Material
Subsidiary is a Material Domestic Subsidiary, such new Material Domestic
Subsidiary shall, to the extent permitted by law, execute and deliver to the
Administrative Agent (A) the Guarantee and Collateral Agreement, (B) mortgages
in respect of real property with a fair market value (as determined in good
faith by the Borrower) of $1,500,000 or more provided, that, at the request of
the Borrower, the Administrative Agent may waive the requirement that the
Borrower execute and deliver a mortgage with respect to such real property and
(C) other
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security documents and take any necessary steps to perfect the security interest
to be created thereby and (ii) the relevant parent corporation (if such parent
corporation is the Borrower or a Domestic Subsidiary) shall execute and deliver
to the Administrative Agent a stock pledge agreement (or, if the parent
corporation is a party to the Guarantee and Collateral Agreement, pledge the
Capital Stock of such Material Subsidiary owned by such parent corporation
pursuant to such agreement) and shall take any necessary steps to perfect the
security interest to be created thereby (which security interest shall not apply
to more than 65% of such parent corporation's ownership interest in any Foreign
Subsidiary or any Foreign Subsidiary Holdco).
(b) In the event that the Borrower or any of its Subsidiaries creates
any new Subsidiary which is a Receivables Subsidiary, the relevant parent
corporation of such Receivables Subsidiary shall execute and deliver a stock
pledge agreement and deliver or cause to be delivered to the Administrative
Agent the stock certificates representing all of the outstanding capital stock
of such new Receivables Subsidiary, together with undated stock powers for each
such certificate executed in blank by a duly authorized officer of such parent
corporation.
(c) Within 30 days after the due date for delivery of financial
statements pursuant to subsection 7.1(a) or (b), (i) the Borrower shall, to the
extent permitted by law, cause any Subsidiary that qualifies as a Material
Domestic Subsidiary (based on its total assets as of the end of the most
recently completed fiscal quarter of the Borrower), but which is not a party to
the Guarantee and Collateral Agreement to execute and deliver to the
Administrative Agent, the Guarantee and Collateral Agreement and mortgages in
respect of real property with a fair market value (as determined in good faith
by the Borrower) of $1,500,000 or more and other security documents and take any
necessary steps to perfect the security interest to be created thereby and (ii)
the relevant parent corporation of any Subsidiary that qualifies as a Material
Subsidiary (based on its total assets as of the end of the most recently
completed fiscal quarter of the Borrower) (if such parent corporation is the
Borrower or a Domestic Subsidiary) shall execute and deliver to the
Administrative Agent a stock pledge agreement (or, if the parent corporation is
a party to the Guarantee and Collateral Agreement, pledge the Capital Stock of
such Material Subsidiary owned by such parent corporation pursuant to such
agreement) and shall take any necessary steps to perfect the security interest
to be created thereby (which security interest shall not apply to more than 65%
of such parent corporation's ownership interest in any Foreign Subsidiary or any
Foreign Subsidiary Holdco).
7.11 Interest Rate Protection Agreement. The Borrower shall have
incurred on a fixed rate basis, or shall enter into, no later than 180 days
after the Effective Date, an Interest Rate Protection Agreement with respect to,
an amount at least equal to 50% of the aggregate principal amount of the Term
Loans and Senior Subordinated Notes, and any Interest Rate Protection Agreement
entered into by the Borrower shall be in form and substance, and for a term,
reasonably satisfactory to the Administrative Agent.
7.12 Surveys. Within 60 days after the Effective Date, the Borrower
shall provide each of the Administrative Agent and the Title Insurance Company
with maps or plats of an as-built survey of the sites of the owned real property
covered by the Mortgages certified to the Administrative Agent and the Title
Insurance Company in a manner reasonably satisfactory to them, dated a date
reasonably satisfactory to the
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Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor reasonably satisfactory to the
Administrative Agent and the Title Insurance Company, which maps or plats and
the surveys on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys the
following: (i) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites necessary to use the sites; (iv) all
roadways, paths, driveways, easements, encroachments and overhanging projections
and similar encumbrances affecting the sites, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on a filed
map, a legend relating the survey to said map; and, the Borrower shall enter
into and cause to be recorded such amendments to the Mortgages, and deliver to
the Administrative Agent suitable accompanying endorsements of any related title
insurance policies, as may be reasonably requested by the Administrative Agent
to address new information contained in such surveys..
SECTION 8. NEGATIVE COVENANTS APPLICABLE TO ALL COMMITMENTS AND LOANS
OTHER THAN THE TRANCHE B TERM LOAN COMMITMENTS AND TRANCHE B
TERM LOANS
The Borrower hereby agrees that, from and after the Effective Date and
so long as the Revolving Credit Commitments or Multi-Draw Term Loan Commitments
remain in effect, and thereafter until payment in full of the Loans (other than
Tranche B Term Loans), all Reimbursement Obligations and any other amount then
due and owing to any Lender (other than a Tranche B Term Loan Lender) or the
Administrative Agent hereunder and under any Note (other than a Tranche B Term
Loan Note) and termination or expiration of all Letters of Credit, the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
8.1 Financial Condition Covenants.
(a) Maintenance of Consolidated Interest Coverage Ratio. Permit, at the
last day of any fiscal quarter ending during any test period set forth below,
the Consolidated Interest Coverage Ratio for the period of four consecutive
fiscal quarters ending on such date (or, if less than four full fiscal
quarters shall have begun after and elapsed since the Effective Date, then
for all such fiscal quarters beginning after the Effective Date that shall
have elapsed since the Effective Date), to be less than the ratio set forth
opposite such test period below:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
Effective Date - last day of
the third quarter ending in January 1999 1.50 to 1.00
First day of the fourth quarter beginning
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
in January/February 1999 - last day of the third
quarter ending in 2000 1.75 to 1.00
First day of the fourth quarter beginning
in January/February 2000 - last day of the third
quarter ending in January 2001 2.00 to 1.00
First day of the fourth quarter beginning
in January/February 2001 - last day of the third
quarter ending in January 2002 2.25 to 1.00
First day of the fourth quarter beginning
in January/February 2002 - last day of the third
quarter ending in January 2005 2.50 to 1.00
Thereafter 2.75 to 1.00
</TABLE>
(b) Maintenance of Leverage Ratio. Permit, at the last day of any fiscal
quarter ending during any test period set forth below, the Leverage Ratio for
the period of four fiscal quarters ending on such date, to be greater than
the ratio set forth opposite such test period below:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
First day of second quarter beginning in
July/August 1998 - last day of the second quarter
ending in October 1998 6.95 to 1.00
First day of the third quarter beginning in
October/November 1998 - last day of the
second quarter ending in January 1999 6.85 to 1.00
First day of the fourth quarter beginning in
January/February 1999 - last day of the
second quarter ending in January 2000 6.65 to 1.00
First day of the fourth quarter beginning in
January/February 2000 - last day of the
second quarter ending in January 2001 5.90 to 1.00
First day of the fourth quarter beginning in
January/February 2001 - last day of the
second quarter ending in January 2002 5.00 to 1.00
First day of the fourth quarter beginning in
January/February 2002 - last day of the
second quarter ending in January 2003 4.50 to 1.00
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Thereafter 4.00 to 1.00
</TABLE>
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness (including any Indebtedness of any of its Subsidiaries),
except:
(a) (i) Indebtedness of the Borrower under this Agreement and under any
other Loan Documents and (ii) Indebtedness of the Borrower and Blue Star
Group under the Blue Star Credit Facility.
(b) Indebtedness of the Borrower to any of its Wholly Owned Subsidiaries
and of any Subsidiary of the Borrower to the Borrower or any other Wholly
Owned Subsidiary of the Borrower;
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred to
finance or refinance the acquisition of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) otherwise permitted
pursuant to this Agreement, and any other Financing Leases, in an aggregate
principal amount not exceeding in the aggregate as to the Borrower and its
Subsidiaries $50,000,000 at any time outstanding, provided that such
Indebtedness is incurred substantially simultaneously with such acquisition
or within six months after such acquisition or in connection with a
refinancing thereof;
(d) Indebtedness of the Borrower under Interest Rate Protection
Agreements relating to Indebtedness of the Borrower under this Agreement and
Indebtedness of the Borrower and its Subsidiaries under Permitted Hedging
Arrangements;
(e) other Indebtedness outstanding on the Effective Date and listed on
Schedule 8.2(e) and any refinancings, refundings, renewals or extensions
thereof, provided that the amount of such Indebtedness is not increased at
the time of such refinancing, refunding, renewal or extension except by an
amount equal to the premium or other amounts paid, and fees and expenses
incurred, in connection with such refinancing and by an amount equal to the
unutilized commitments thereunder;
(f) to the extent that any Guarantee Obligation permitted under
subsection 8.4 constitutes Indebtedness, such Indebtedness;
(g) Indebtedness of the Borrower and any of its Subsidiaries assumed in
connection with any Permitted Acquisition, provided that such Indebtedness
shall not exceed $25,000,000 in aggregate principal amount at any one time
outstanding and any refinancing, refunding, renewal or extension of any such
Indebtedness; provided that the amount of such Indebtedness is not increased
at the time of such refinancing, refunding, renewal or extension, except by
an amount equal to the premium or other amounts paid, and fees and expenses
incurred, in connection with such refinancing, refunding, renewal or
extension.
(h) Indebtedness of the Borrower or any of its Subsidiaries pursuant to
any Permitted Receivables Securitization, provided that upon the
effectiveness of any such Permitted Receivables Securitization, the Term
Loans shall be prepaid and the Revolving
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Credit Commitments shall be automatically and permanently reduced in
accordance with subsections 4.4(e) and 4.4(j);
(i) Indebtedness in respect of letters of credit (excluding Letters of
Credit) issued by a Lender or an affiliate of a Lender for the account of the
Borrower and its Subsidiaries, provided that (i) the aggregate amount of any
such Indebtedness shall not exceed the Letter of Credit commitment of the
Issuing Lender pursuant to subsection 3.1 and (ii) upon the effectiveness of
any such letter of credit and for so long as it remains outstanding, the
Letter of Credit commitment of the Issuing Lender pursuant to subsection 3.1
shall be reduced by an amount equal to the aggregate amount of such
Indebtedness;
(j) Indebtedness of the Borrower or any of its Subsidiaries in respect
of Sale and Leaseback Transactions permitted under subsection 8.12;
(k) Indebtedness of the Borrower or any of its Subsidiaries incurred to
finance insurance premiums in the ordinary course of business;
(l) Indebtedness arising from the honoring of a check, draft or similar
instrument against insufficient funds, provided that such Indebtedness is
extinguished within five Business Days of its incurrence;
(m) Indebtedness of the Borrower on account of the Senior Subordinated
Notes;
(n) Indebtedness of Foreign Subsidiaries of the Borrower (in addition to
Indebtedness of Foreign Subsidiaries of the Borrower permitted by subsection
8.2(e)) not exceeding, as to all such Foreign Subsidiaries, $25,000,000 in
aggregate principal amount at any one time outstanding; and
(o) additional Indebtedness of the Borrower or any Subsidiary of the
Borrower, together with Guarantee Obligations permitted by subsection 8.4(o),
not exceeding $50,000,000 as to the Borrower and its Subsidiaries in
aggregate principal amount at any one time outstanding.
8.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes, assessments and similar charges not yet delinquent
or the nonpayment of which in the aggregate would not reasonably be expected
to have a Material Adverse Effect, or which are being contested in good faith
by appropriate proceedings diligently conducted and adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in
good faith by appropriate proceedings diligently conducted;
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(c) Liens of landlords or of mortgagees of landlords arising by
operation of law or pursuant to the terms of real property leases, provided
that the rental payments secured thereby are not yet due and payable;
(d) pledges, deposits or other Liens in connection with workers'
compensation, unemployment insurance, other social security benefits or other
insurance related obligations (including, without limitation, pledges or
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements);
(e) Liens arising by reason of any judgment, decree or order of any
court or other Governmental Authority, if appropriate legal proceedings which
may have been duly initiated for the review of such judgment, decree or
order, are being diligently prosecuted and shall not have been finally
terminated or the period within which such proceedings may be initiated shall
not have expired;
(f) Liens to secure the performance of bids, trade contracts (other than
for borrowed money), obligations for utilities, leases, statutory
obligations, surety and appeal bonds, performance bonds, judgment and like
bonds, replevin and similar bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on the
use of property, other similar encumbrances incurred in the ordinary course
of business and minor irregularities of title, which do not materially
interfere with the ordinary conduct of the business of the Borrower and its
Subsidiaries taken as a whole;
(h) Liens securing or consisting of Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 8.2(c) incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall be
created substantially simultaneously with such acquisition and (ii) such
Liens securing such Indebtedness do not at any time encumber any property
other than the property financed by such Indebtedness;
(i) Liens securing any Indebtedness permitted by subsection 8.2(n) or
other Indebtedness of Foreign Subsidiaries permitted by subsection 8.2;
provided that such Liens attach only to the assets of the Foreign Subsidiary
or Subsidiaries liable with respect to such Indebtedness;
(j) Liens securing Indebtedness permitted by subsection 8.2(g), provided
that (i) such Liens existed at the time of the Permitted Acquisition relating
to such Indebtedness and were not created in anticipation thereof and (ii)
any such Lien is not spread to cover any additional property or assets after
the time of such Permitted Acquisition;
(k) Liens existing on assets or properties at the time of the
acquisition thereof by the Borrower or a Subsidiary which do not materially
interfere with the use of the property subject thereto or extend to or cover
any assets of the Borrower or such Subsidiary other than the assets or
property being acquired;
(l) Liens in existence on the Effective Date and listed in Schedule
8.3(l) and
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continuations of such Liens to secure Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 8.2(e), provided that no such Lien is
spread to cover any additional property after the Effective Date and that the
amount of Indebtedness secured thereby is not increased except as permitted
by subsection 8.2(e);
(m) Liens on Intellectual Property and foreign patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, technology, know-how and processes to the extent such Liens arise
from the granting of licenses to use such Intellectual Property and foreign
patents, patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, technology, know-how and processes to any
Person in the ordinary course of business of the Borrower and its
Subsidiaries;
(n) Liens securing Guarantee Obligations permitted under subsection
8.4(f) not exceeding (as to the Borrower and all its Subsidiaries) $5,000,000
in aggregate amount at any time outstanding;
(o) Liens created pursuant to the Security Documents or otherwise
securing Indebtedness permitted by subsection 8.2(a);
(p) Liens created pursuant to and in accordance with any Permitted
Receivables Securitization;
(q) Liens on property subject to Sale and Leaseback Transactions
permitted under subsection 8.12 and general intangibles related thereto;
(r) Liens securing obligations of Blue Star Group under the Blue Star
Credit Facility; and
(s) additional Liens not otherwise permitted by the preceding clauses of
this subsection 8.3 which secure obligations not to exceed $10,000,000 in the
aggregate at any time outstanding.
8.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer
to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the Effective Date and listed
in Schedule 8.4(a), and any refinancings, refundings, extensions or renewals
thereof, provided that the amount of such Guarantee Obligation shall not be
increased at the time of such refinancing, refunding, extension or renewal
except to the extent that the amount of Indebtedness in respect of such
Guarantee Obligations is permitted to be increased by subsection 8.2(e);
(b) Guarantee Obligations for performance, appeal, judgment, replevin
and similar bonds, or suretyship arrangements, all in the ordinary course of
business;
(c) Guarantee Obligations in respect of indemnification and contribution
agreements expressly permitted by subsection 8.11(iii) or similar agreements
by the
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Borrower or any of its Subsidiaries;
(d) Reimbursement Obligations in respect of the Letters of Credit and
reimbursement obligations owing to the issuer of any letter of credit
permitted by subsection 8.2(i);
(e) Guarantee Obligations in respect of third-party loans and advances
to directors, officers or employees of the Borrower or any Subsidiary and, in
the case of loans or advances to finance the purchase of common stock of the
Borrower, to the immediate family members or relatives thereof, or trusts or
partnerships for the benefit of any of the foregoing, or any of their heirs,
executors, or legal representatives, (i) for travel and entertainment
expenses incurred in the ordinary course of business, (ii) for relocation
expenses incurred in the ordinary course of business or (iii) for any other
purpose and, in the case of this clause (iii), in an aggregate principal
amount (as to the Borrower and all its Subsidiaries), together with the
aggregate amount of all Investments permitted under subsection 8.9(e)(iii),
of up to $5,000,000 outstanding at any time, plus the net cash proceeds
received by the Borrower since the Effective Date from the issuance or sale
of capital stock of the Borrower (including any options, warrants or other
rights in respect thereof) to any such Person;
(f) obligations to insurers required in connection with worker's
compensation and other insurance coverage incurred in the ordinary course of
business;
(g) obligations of the Borrower under any Interest Rate Protection
Agreements relating to Indebtedness of the Borrower under this Agreement and
obligations of the Borrower and its Subsidiaries under Permitted Hedging
Arrangements;
(h) guarantees made in the ordinary course of its business by the
Borrower or any of its Subsidiaries of obligations of the Borrower or any of
its Subsidiaries, which obligations are otherwise permitted under this
Agreement;
(i) Guarantee Obligations in connection with sales or other dispositions
permitted under subsection 8.6, including indemnification obligations with
respect to leases, and guarantees of collectability in respect of accounts
receivables or notes receivable for up to face value;
(j) accommodation guarantees for the benefit of trade creditors of the
Borrower or any of its Subsidiaries in the ordinary course of business of
obligations of the Borrower or any of its Subsidiaries, which obligations are
otherwise permitted by this Agreement;
(k) Guarantee Obligations of the Borrower and its Subsidiaries in
respect of recourse events in connection with any Permitted Receivables
Securitization;
(l) Guarantee Obligations (including any Letters of Credit issued
hereunder in respect of the purchase of goods or services by any joint
venture or similar arrangement) in respect of Indebtedness of a Person in
connection with a joint venture or similar arrangement in respect of which no
other co-investor or other Person has a greater legal or beneficial ownership
interest than the Borrower or any of its Subsidiaries and as to all
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of such Persons does not at any time exceed $25,000,000 in aggregate
principal amount, provided that such amount shall be reduced by the aggregate
amount of then existing Investments permitted by subsection 8.9(l);
(m) Guarantee Obligations in connection with the Transactions;
(n) Guarantee Obligations incurred pursuant to the Guarantees or
otherwise in respect of Indebtedness permitted by subsection 8.2(a);
(o) Guarantee Obligations not otherwise permitted by the preceding
clauses of this subsection 8.4, together with Indebtedness permitted by
subsection 8.2(o), not exceeding $50,000,000 in aggregate principal amount at
any one time outstanding; and
(p) Guarantee Obligations under the Subordinated Subsidiary Guarantees
in respect of the Senior Subordinated Notes.
8.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more Wholly Owned
Subsidiaries of the Borrower (provided that the Wholly Owned Subsidiary or
Subsidiaries of the Borrower shall be the continuing or surviving corporation
and provided further that no Domestic Subsidiary may be merged or
consolidated with or into a Foreign Subsidiary unless the continuing or
surviving entity is a Domestic Subsidiary);
(b) any Subsidiary of the Borrower may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or to any other Subsidiary which is a Wholly Owned
Subsidiary of the Borrower that is a Guarantor; and
(c) any Foreign Subsidiary of the Borrower may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to any other Foreign Subsidiary that is a Wholly Owned Subsidiary
of the Borrower;
(d) as expressly permitted by subsection 8.6 and 8.10 (so long as, if
the Borrower or, if there are any Loans outstanding to Blue Star Group, Blue
Star Group is party to any merger, consolidation or amalgamation, the
Borrower or, in the case of a merger, consolidation or amalgamation involving
Blue Star Group, a Wholly Owned Subsidiary of the Borrower shall be the
surviving corporation).
8.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares
of such Subsidiary's Capital Stock, to any Person other
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than the Borrower or any Wholly Owned Subsidiary of the Borrower, except:
(a) the sale or other Disposition of obsolete or worn out property,
whether now owned or hereafter acquired, in the ordinary course of business;
(b) the sale or other Disposition of any property (including Inventory)
in the ordinary course of business;
(c) the sale or discount without recourse of accounts receivable or
notes receivable arising in the ordinary course of business, or the
conversion or exchange of accounts receivable into or for notes receivable,
in connection with the compromise or collection thereof, provided that, in
the case of any Foreign Subsidiary of the Borrower, any such sale or discount
may be with recourse if such sale or discount is consistent with customary
practice in such Foreign Subsidiary's country of business and the aggregate
amount of any such recourse shall (to the extent such recourse is required by
GAAP to be included as Indebtedness on the consolidated balance sheet of the
Borrower and its consolidated subsidiaries) be included in the determination
of such Foreign Subsidiary's Indebtedness for purposes of subsection 8.2(h);
(d) as permitted by subsections 8.5(b) and 8.5(c) and pursuant to Sale
and Leaseback Transactions permitted by subsection 8.12;
(e) the sale, transfer or discount of Receivables pursuant to any
Permitted Receivables Securitization; provided that upon the effectiveness of
any such Permitted Receivables Securitization, the Term Loans shall be
prepaid and the Revolving Credit Commitments shall be automatically and
permanently reduced to the extent required by subsections 4.4(e) and 4.4(j);
(f) Dispositions of any assets or property by the Borrower or any
Subsidiary of the Borrower to the Borrower or any Wholly Owned Subsidiary of
the Borrower, provided that the Wholly Owned Subsidiary has executed each of
the guarantees and security documents required pursuant to subsection 6.1(a).
(g) any sales or other Dispositions by the Borrower or any of its
Subsidiaries of any property the Net Cash Proceeds of which do not exceed
$20,000,000 in the aggregate per annum and the non-cash portion of which does
not exceed 25% of the consideration therefor, provided that in the case of
any Asset Sale an amount equal to 100% of the Net Cash Proceeds of such sale
less the Reinvested Amount with respect thereto is applied in accordance with
subsection 4.4(c);
(h) any sale or other Disposition of any property resulting from the
consolidation of the Borrower's distribution operations into
centrally-located regional warehouses known as district fulfillment centers;
(i) the abandonment or other Disposition of patents, trademarks or other
intellectual property that are, in the reasonable judgment of the Borrower,
no longer economically practicable to maintain or useful in the conduct of
the business of the Borrower and its Subsidiaries taken as a whole;
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(j) the disposition of any Subsidiary that is not a Material
Subsidiary;
(k) the Transactions and the other transactions expressly contemplated
by the Transaction Documents, including, without limitation, the Spin-Offs;
and
(l) the contribution or other transfer of any Blue Star Intercompany
Notes to a BSIN Subsidiary.
8.7 Limitation on Restricted Payments/Dividends. Declare or pay any
dividend (other than dividends payable solely in common stock of the Borrower or
options, warrants or other rights to purchase common stock of the Borrower) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution (other than distributions payable
solely in common stock of the Borrower or options, warrants or other rights to
purchase common stock of the Borrower) in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Borrower or any
Subsidiary (any of the foregoing, a "Restricted Payment"), except:
(a) the Transactions and the other transactions expressly contemplated
by the Transaction Documents, including, without limitation, the Spin-Offs
and the Stock Repurchase;
(b) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, payments by the Borrower to repurchase
or otherwise acquire Capital Stock of the Borrower (including any options,
warrants or other rights in respect thereof) from officers, directors or
employees, and former officers, directors or employees, of the Borrower or
any of its Subsidiaries, or family members or relatives thereof, or trusts or
partnerships for the benefit of any of the foregoing, or any of their heirs,
executors, successors and legal representatives (all of the foregoing "Option
Purchases"), in an aggregate amount not to exceed the aggregate amount of
option proceeds received on or prior to the Effective Date pursuant to the
Transactions minus the aggregate principal amount of the Borrower's
Convertible Notes due 2001 outstanding or paid, prepaid or redeemed for
consideration other than common stock of the Borrower; provided that the
Leverage Ratio of the Borrower for its four fiscal quarters ended on the date
of the financial statements most recently furnished to the Lenders pursuant
to subsection 7.1, as adjusted to give effect to any Indebtedness incurred
since such date to finance Option Purchases, shall not exceed 6.00 to 1.00;
(c) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, any purchase or other acquisition of
Capital Stock of the Borrower that is used or is to be used within ten
Business Days as consideration in any Permitted Acquisition, including,
without limitation, the reacquisition of any such Capital Stock from escrow
or as part of a purchase price adjustment in connection with any Permitted
Acquisition, provided that the Borrower shall not hold more than $10,000,000
aggregate fair market value of its Capital Stock at any one time for such
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purposes; and
(d) Restricted Payments in an aggregate not to exceed 6% of the
aggregate gross proceeds received by the Borrower in or from public offerings
of common stock of the Borrower after the Effective Date.
8.8 Limitation on Capital Expenditures. Make or commit to make any
Capital Expenditures (excluding any expenses incurred in connection with normal
replacement and maintenance programs properly charged to current operations, any
Reinvested Amounts and any asset acquired in connection with any Permitted
Acquisition, but including any asset acquired under a Financing Lease); provided
that the Borrower and its consolidated Subsidiaries may make Capital
Expenditures in an amount not to exceed, for any fiscal year of the Borrower set
forth below, an amount equal to the Borrower's Consolidated EBITDA for such
fiscal year multiplied by the percentage set forth opposite such fiscal year
below:
<TABLE>
<CAPTION>
Fiscal Year Percentage
----------- ----------
<S> <C>
1999 22.5%
2000 22.5%
2001 18.5%
2002 18.5%
2003 16.0%
2004 16.0%
2005 16.0%
2006 16.0%
</TABLE>
provided that (x) 100% of the unused amount of any Capital Expenditures
permitted to be made during each of the first three fiscal years during the term
of this Agreement and not made during such fiscal year may be carried over and
expended during the next succeeding fiscal year (and any amount so carried over
to be deemed the first amount applied and expended for Capital Expenditures
during such next succeeding fiscal year) and (y) 50% of the unused amount of any
Capital Expenditures permitted to be made during each subsequent fiscal year and
not made during such fiscal year may be carried over and expended during the
next succeeding fiscal year (and any amount so carried over shall be deemed the
first amount applied and expended for Capital Expenditures during such next
succeeding fiscal year).
8.9 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in (each an "Investment"), any
Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Investments existing on the Effective Date and described in Schedule
8.9(c), setting forth the respective amounts of such Investments as of a
recent date;
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(d) Investments in notes receivable in connection with transactions
permitted by subsection 8.6(c);
(e) loans and advances to officers, directors or employees of the
Borrower or any of its Subsidiaries and, in the case of loans and advances to
finance the acquisition of common stock of the Borrower, to immediate family
members or relatives thereof, or trusts or partnerships for the benefit of
any of the foregoing, or any of their heirs, executors, or legal
representatives, (i) in the ordinary course of business for travel and
entertainment or relocation expenses, (ii) existing on the Effective Date and
described in Schedule 8.9(c), (iii) made after the Effective Date for other
purposes, not to exceed (as to the Borrower and all its Subsidiaries),
together with the amount of all Guarantee Obligations permitted pursuant to
subsection 8.4(e)(iii), $5,000,000 in the aggregate outstanding at any time,
plus the net cash proceeds received by the Borrower since the Effective Date
from the issuance or sale of capital stock of the Borrower (including any
options, warrants or other rights in respect thereof) to any such Person and
(iv) relating to indemnification or reimbursement of any officers, directors
or employees in respect of liabilities relating to their serving in any such
capacity or as otherwise specified in Section 8.11;
(f) Investments by the Borrower in its Wholly Owned Subsidiaries (other
than any Receivables Subsidiary) and by such Subsidiaries in the Borrower and
in Wholly Owned Subsidiaries of the Borrower (other than any Receivables
Subsidiary);
(g) acquisitions expressly permitted by subsection 8.10;
(h) Investments of the Borrower under Interest Rate Protection
Agreements relating to Indebtedness of the Borrower under this Agreement and
Investments by the Borrower and its Subsidiaries under Permitted Hedging
Arrangements;
(i) any Investment by the Borrower and its Subsidiaries which, in the
judgment of the Borrower, is reasonably necessary in connection with, and
pursuant to, any Permitted Receivables Securitization;
(j) Investments in the nature of pledges or deposits with respect to
leases or utilities provided to third parties in the ordinary course of
business or otherwise described in subsection 8.3(c), (d) or (f);
(k) Investments representing non-cash consideration received by the
Borrower or any of its Subsidiaries in connection with any Asset Sale,
provided that in the case of any Asset Sale permitted under subsection
8.6(g), such non-cash consideration constitutes not more than 20% of the
aggregate consideration received in connection with such Asset Sale and any
such non-cash consideration received by the Borrower or any of its Material
Subsidiaries (other than Foreign Subsidiaries) is pledged to the
Administrative Agent for the benefit of the Lenders pursuant to the Security
Documents;
(l) Investments by the Borrower or any of its Subsidiaries in a Person
in connection with a joint venture or similar arrangement in respect of which
no other co-investor or other Person has a greater legal or beneficial
ownership interest than the
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Borrower or such Subsidiary in an aggregate amount (after giving effect to
any repayments or other realized returns on prior Investments made under this
subsection 8.9(k)) not to exceed an amount equal to $25,000,000 at any one
time outstanding, provided that such amount shall be reduced by the aggregate
amount of the outstanding Guarantee Obligations permitted by subsection
8.4(l);
(m) Investments representing evidences of Indebtedness, securities or
other property received from another Person by the Borrower or any of its
Subsidiaries in connection with any bankruptcy proceeding or other
reorganization of such other Person or as a result of foreclosure, perfection
or enforcement of any Lien or exchange for evidences of Indebtedness,
securities or other property of such other Person held by the Borrower or any
of its Subsidiaries, provided that any such securities or other property
received by the Borrower or any of its Material Subsidiaries (other than
Foreign Subsidiaries) is pledged to the Administrative Agent for the benefit
of the Lenders pursuant to the Security Documents, and provided, further,
that in the event that the aggregate expected value of such securities or
other property received with respect to a Person is less than $500,000, the
Borrower or such Subsidiary may, rather than pledge such securities and other
property to the Administrative Agent, dispose of such securities and other
property within 180 days of the receipt thereof so long as the Net Cash
Proceeds of such Disposition are utilized to prepay the Loans pursuant to
subsection 4.4(c), and any such securities and other property not so disposed
of by such 180th day shall be pledged to the Administrative Agent for the
benefit of the Lenders pursuant to the Security Documents; and
(n) Investments not otherwise permitted by the preceding clauses of this
subsection 8.9 in an aggregate amount (after giving effect to any repayments
or other realized returns on prior Investments made under this subsection
8.9(n)) not to exceed $15,000,000 at any one time outstanding.
8.10 Limitations on Certain Acquisitions. Acquire by purchase, merger,
consolidation or otherwise all the business or assets of, or stock or other
evidences of beneficial ownership of, any Person or substantially all of the
assets and business of any Person or of any product line or unit of business of
any Person, except that the Borrower and its Subsidiaries shall be allowed to
make any such acquisition that is "non-hostile" so long as (a) such acquisition
is expressly permitted by subsection 8.5 or (b) (i) the target of such
acquisition is a Permitted Acquisition Target and (ii) after giving effect
thereto, no Default or Event of Default shall occur as a result of such
acquisition and, in the exercise of its best judgment, the Borrower shall
believe that the Borrower and its Subsidiaries will have adequate financial
liquidity to engage in their business in the ordinary course for the reasonably
foreseeable future (the making of any such acquisition and related borrowing, if
clause (iii) below does not apply, being deemed a representation and warranty by
the Borrower with respect to the matters set forth in clauses (i) and (ii)
above), and (iii) the Borrower provides a compliance certificate in form and
substance reasonably satisfactory to Administrative Agent issued by a
Responsible Officer of the Borrower and delivered three Business Days prior to
the consummation of such acquisition to the effect of clauses (i) and (ii) above
(excluding the parenthetical clause therein) and showing computations of
compliance with the financial covenants on a pro forma basis for the four most
recently ended fiscal quarters for which financial statements are available, if:
(x) such acquisition involves a cash purchase price of more than $25,000,000; or
(y) the cash purchase price of such acquisition,
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together with the aggregate cash purchase price of all other such acquisitions
during the then current fiscal quarter of the Borrower exceeds $50,000,000,
provided, however, that in making such computation any acquisition involving (1)
a cash purchase price of more than $25,000,000 or (2) a cash purchase price of
less than $1,000,000 (unless the aggregate cash purchase price of all
acquisitions in the same fiscal quarter of less than $1,000,000 exceeds
$10,000,000) shall be excluded; once a certificate has been provided for a
fiscal quarter pursuant to clause (iii)(y), the Borrower shall not be required
to deliver an additional certificate unless the aggregate purchase price of
additional acquisitions of the type referred to in clause (iii)(y) completed in
such quarter shall be equal to or greater than $50,000,000; and provided,
further, that the Borrower and its Subsidiaries shall be allowed to make
additional acquisitions in which the target of such acquisition is not a
Permitted Acquisition Target by reason of the fact that it does not have
positive Consolidated EBITDA for its most recent fiscal year, calculated as
provided above, so long as (A) the Borrower delivers a compliance certificate in
form and substance reasonably satisfactory to the Administrative Agent signed by
a Responsible Officer of the Borrower and delivered at least three Business Days
prior to the consummation of such acquisition showing that such target is
reasonably expected to have positive Consolidated EBITDA for the following
fiscal year calculated on a projected basis after giving effect to the
acquisition thereof by the Borrower or any of its Subsidiaries and after taking
into account any synergies such Responsible Officer reasonably believes will
result from such acquisition, and (B) the purchase price of such acquisition,
together with the sum of the purchase prices of each other acquisition during
the then current fiscal year of the Borrower pursuant to this proviso, does not
exceed $10,000,000.
8.11 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate of the
Borrower unless such transaction is (a) otherwise permitted under this
Agreement, and (b) upon terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate; provided that
nothing contained in this subsection 8.11 shall be deemed to prohibit:
(i) the Borrower or any of its Subsidiaries from entering into
or performing any consulting, management or employment agreements or other
compensation arrangements with a director, officer or employee of the
Borrower or any of its Subsidiaries, provided that the annual aggregate base
cash compensation with respect to any such director, in his or her capacity
as such is not in excess of $100,000 for each such director;
(ii) the payment of transaction expenses in connection with
this Agreement, the Transactions and the other transactions related hereto
and thereto;
(iii) the Borrower or any of its Subsidiaries from entering
into, making payments or satisfying obligations pursuant to and otherwise
performing agreements in favor of CDR-PC Acquisition, CD&R, CD&R Fund V, the
Affiliates thereof and each person who becomes a director, officer, agent or
employee of the Borrower, the Borrower or any of their respective
Subsidiaries, pursuant to the CDR Agreements or in respect of liabilities (A)
arising under the Securities Act, the Exchange Act and any other applicable
securities laws or otherwise, in connection with any offering of securities
by the Borrower or any of its Subsidiaries, (B) incurred to third parties for
any action or failure
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to act of the Borrower or any of its Subsidiaries, predecessors or
successors, (C) arising out of the performance by CD&R of management
consulting or financial advisory services provided to the Borrower or any of
its Subsidiaries, (D) arising out of the fact that any indemnitee was or is a
director, officer, agent or employee of the Borrower or any of its
Subsidiaries, or is or was serving at the request of any such corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or enterprise or (E) to the fullest extent permitted by
Delaware or other applicable state law, out of any breach or alleged breach
by such indemnitee of his or her fiduciary duty as a director or officer of
the Borrower or any of its Subsidiaries;
(iv) the Borrower or any of its Subsidiaries from performing
any agreements or commitments with or to any Affiliate existing on the
Effective Date and described on Schedule 8.11(iv);
(v) any transaction with any Receivables Subsidiary;
(vi) the Transactions and the other transactions expressly
contemplated by the Transaction Documents, including, without limitation, the
Spin-Offs and the Stock Repurchase; or
(vii) any transaction permitted under subsection 8.2(b), 8.4(c),
8.4(e), 8.4(h), 8.5, 8.6(f), 8.6(j), 8.7, 8.9(e), or 8.9(f), or any
transaction with a Wholly Owned Subsidiary of the Borrower.
For purposes of this subsection 8.11, (A) any transaction with any Affiliate
shall be deemed to have satisfied the standard set forth in subparagraph (b) of
the first sentence hereof if (i) such transaction is approved by a majority of
the Disinterested Directors of the Board of Directors of the Borrower or the
applicable Subsidiary, or (ii) in the event that at the time of any such
transaction, there are no Disinterested Directors serving on the Board of
Directors of the Borrower or such Subsidiary, such transaction shall be approved
by a nationally recognized expert with expertise in appraising the terms and
conditions of the type of transaction for which approval is required, and (B)
"Disinterested Director" shall mean, with respect to any Person and transaction,
a member of the Board of Directors of such Person who does not have any material
direct or indirect financial interest in or with respect to such transaction
other than by virtue of such member's ownership of capital stock of the Person.
8.12 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary (any of such
arrangements, a "Sale and Leaseback Transaction"), other than in connection with
any Disposition permitted under subsection 8.6, unless (a) in the case of any
Financing Lease pursuant to such arrangement, the incurrence of such Financing
Lease is permitted under subsection 8.2 or (b) in the case of any other lease
pursuant to such arrangements, the (i) lease payments thereunder will be treated
as an operating expense for purposes of determining Consolidated EBITDA and (ii)
the aggregate Net Cash Proceeds from all Sale and Leaseback Transactions
permitted by this clause (b) shall not during the term of this Agreement exceed
$50,000,000 plus the aggregate amount of such Net Cash Proceeds applied to
prepay the Loans pursuant to
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subsection 4.4(c).
8.13 Limitations on Dispositions of Collateral. Convey, sell, transfer,
lease, or otherwise dispose of any of the Collateral, or attempt, offer or
contract to do so, except for (a) mergers, consolidations, sales, leases,
transfers or other Dispositions expressly permitted under subsection 8.5 and (b)
sales or other Dispositions expressly permitted under subsection 8.6, including
sales of Inventory in the ordinary course of business; and the Administrative
Agent shall, and the Lenders hereby authorize the Administrative Agent to,
execute such releases of Liens and take such other actions as the Borrower may
reasonably request in connection with the foregoing.
8.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Borrower or any of its Subsidiaries to end on a day other than the last Business
Day of April.
8.15 Limitation on Negative Pledge Clauses. Enter into with any Person
any agreement, other than (a) this Agreement and the other Loan Documents and
(b) any industrial revenue or development bonds, purchase money mortgages,
acquisition agreements or Financing Leases or agreements in connection with any
Permitted Receivables Securitization permitted by this Agreement (in which
cases, any prohibition or limitation shall only be effective against the assets
financed or acquired thereby) or operating leases of real property entered into
in the ordinary course of business, which prohibits or limits the ability of the
Borrower or any of its Subsidiaries (other than Foreign Subsidiaries) to create,
incur, assume or suffer to exist any Lien in favor of the Lenders with respect
to the obligations secured by the Security Documents upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
8.16 Limitation on Lines of Business; Creation of Subsidiaries. Enter
into any business, either directly or through any Subsidiary, except for those
businesses of the same general type as those in which the Borrower and its
Subsidiaries are engaged on the date of this Agreement or which are related
thereto.
8.17 Limitation on Optional Payments and Modifications of Debt
Instruments and other Material Agreements. (a) Make any optional payment,
prepayment, repurchase or redemption of the Senior Subordinated Notes or make
any payments on account of or for a sinking or other analogous fund for the
repurchase, redemption, defeasance or other acquisition thereof (other than
scheduled payments of principal and interest and payments of, in each case, fees
and expenses required by the Senior Subordinated Notes or the Senior
Subordinated Note Indenture, only to the extent permitted under the
subordination provisions, if any, applicable thereto), (b) make any amendment,
supplement, modification or waiver of any of the terms of the Senior
Subordinated Notes or the Senior Subordinated Note Indenture (i) which amends or
modifies the subordination provisions contained in the Senior Subordinated Notes
and the Senior Subordinated Note Indenture; (ii) which shortens the fixed
maturity or increases the principal amount of, or increases the rate or shortens
the time of payment of interest on, or increases the amount or shortens the time
of payment of any principal or premium payable whether at maturity, at a date
fixed for prepayment or by acceleration or otherwise of the Indebtedness
evidenced by the Senior Subordinated Notes or increases the amount of, or
accelerates the time of payment of, any fees or other amounts payable in
connection therewith; (iii) which relates to any material affirmative or
negative covenants or any events of default or remedies thereunder and the
effect of which is to subject the Borrower, or any of its Subsidiaries, to any
more onerous
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or more restrictive provisions; or (iv) which otherwise adversely affects the
interests of the Lenders as senior creditors with respect to the Senior
Subordinated Notes or the interests of the Lenders hereunder in any material
respect or (c) in the event of the occurrence of a Change of Control, repurchase
the Senior Subordinated Notes, unless the Borrower shall have (i) made payment
in full of the Loans, all Reimbursement Obligations and any other amounts then
due and owing to any Lender or the Administrative Agent hereunder and under any
Note and cash collateralized the L/C Obligations on terms reasonably
satisfactory to the Administrative Agent or (ii) made an offer to pay the Loans,
all Reimbursement Obligations and any amounts then due and owing to each Lender
and the Administrative Agent hereunder and under any Note and to cash
collateralize the L/C Obligations in respect of each Lender and shall have made
payment in full thereof to each such Lender or the Administrative Agent which
has accepted such offer and cash collateralized the L/C Obligations in respect
of each such Lender which has accepted such offer.
8.18 Limitation on Optional Payments and Modifications of Tranche B
Terms. (a) Make any optional payment, prepayment or purchase of the Tranche B
Term Loans (other than scheduled payments or mandatory prepayments of principal
and interest or as part of an optional prepayment of the Term Loans pursuant to
the provisions of the Agreement) or (b) consent to any amendment of this
Agreement or enter into any other agreement that would have the effect of
changing (to earlier dates) any dates upon which payments of principal or
interest are due on the Tranche B Term Loans.
SECTION 9. COVENANTS APPLICABLE TO TRANCHE B TERM LOAN COMMITMENTS
AND TRANCHE B TERM LOANS
The Borrower hereby agrees that, until payment in full of all Tranche B
Loans, and any other amount then due and owing on account of the Tranche B Loans
to any Tranche B Lender or the Administrative Agent hereunder or under any Note:
(a) The covenants (the "Covenants") (together with the definitions of
such terms as may be used therein) as set forth in Schedule 9(a) are hereby
deemed to be incorporated herein by reference.
(b) The Borrower shall, and shall cause its Restricted Subsidiaries (as
defined in Schedule 9(a) to, observe and perform the Covenants, as such
Covenants may be amended, supplemented or otherwise modified from time to
time with the consent of the Required Tranche B Term Loan Lenders.
SECTION 10. EVENTS OF DEFAULT
10.1 Certain Bankruptcy Events. If any of the following events shall
occur and be continuing:
(a) Any Loan Party shall commence any case, proceeding or other action
(i) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for
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relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (ii) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or any Loan Party shall make a general assignment for the
benefit of its creditors; or
(b) There shall be commenced against any Loan Party any case, proceeding
or other action of a nature referred to in clause (i) above which (i) results
in the entry of an order for relief or any such adjudication or appointment
or (ii) remains undismissed, undischarged, unstayed or unbonded for a period
of 60 days; or
(c) There shall be commenced against any Loan Party any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which shall
not have been vacated, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
(d) Any Loan Party shall take any corporate action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (a), (b), or (c) above; or
(e) Any Loan Party shall be generally unable to, or shall admit in
writing its general inability to, pay its debts as they become due;
then, and in any such event:
(A) if such event is an Event of Default specified in clause (a) or (b)
of this subsection 10.1 with respect to the Borrower, automatically the
Revolving Credit Commitments and Multi-Draw Term Loan Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries
of the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable; and
(B) if such event is any other Event of Default specified in this
subsection 10.1, any or all of the following actions may be taken: (i) with
the consent of the Required Basic Lenders, the Administrative Agent may, or
upon the request of the Required Basic Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Revolving Credit Commitments
and/or the Tranche A Term Loan Commitments and/or the Multi-Draw Term Loan
Commitments to be terminated forthwith, whereupon the Revolving Credit
Commitments and/or the Tranche A Term Loan Commitments and/or the Multi-Draw
Term Loan Commitments (as the case may be) shall immediately terminate; (ii)
with the consent of the Required Basic Lenders, the Administrative Agent may,
or upon the request of the Required Basic Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Swing Line Loans and/or the
Revolving Credit Loans and/or the Tranche A Loans and/or the Multi-Draw Term
Loans hereunder (with accrued interest
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thereon) and all other amounts owing on account thereof under this Agreement
(including, without limitation, all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable; (iii) with the
consent of the Required Tranche B Term Loan Lenders, the Administrative Agent
may, or upon the request of the Required Tranche B Term Loan Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Tranche B
Commitments to be terminated forthwith, whereupon the Tranche B Commitments
shall immediately terminate; and (iv) with the consent of the Required
Tranche B Term Loan Lenders, the Administrative Agent may, or upon the
request of the Required Tranche B Term Loan Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Tranche B Loans (with accrued
interest thereon) and all other amounts owing on account thereof under this
Agreement to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
10.2 Other Events of Default Applicable to the Tranche A Commitments,
Revolving Credit Commitments, Multi-Draw Term Loan Commitments and Amounts Owing
Thereunder. If any of the following events shall occur and be continuing:
(a) The Borrower or Blue Star Group, as the case may be, shall fail to
pay any principal of any Revolving Credit Loan, Tranche A Term Loan or
Multi-Draw Term Loan or any Reimbursement Obligation when due in accordance
with the terms hereof; or the Borrower or Blue Star Group shall fail to pay
any interest on any Revolving Credit Loan, Tranche A Term Loan or Multi-Draw
Term Loan, or any other amount payable hereunder, within five days after any
such interest or other amount becomes due in accordance with the terms
hereof; or
(b) Any representation or warranty made or deemed made by any Loan Party
herein or in any other Loan Document (or in any amendment, modification or
supplement hereto or thereto) or which is contained in any certificate
furnished at any time by or on behalf of any Loan Party pursuant to this
Agreement or any such other Loan Document shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) Any Loan Party shall default in the observance or performance of any
agreement contained in (i) subsection 7.7(a), subsection 7.11, 7.12, Section
8 or Section 9 of this Agreement or (ii) Section 5 of the Guarantee and
Collateral Agreement, and, in the case of a default in the observance or
performance of its obligations under subsection 7.7(a) hereof, such default
shall have continued unremedied for a period of two days after a Responsible
Officer of the Borrower shall have discovered or should have discovered such
default; or
(d) Any Loan Party shall default in the observance or performance of any
other agreement contained in this Agreement or any other Loan Document (other
than as provided in paragraphs (a) through (c) of this subsection 10.2), and
such default shall continue unremedied for a period ending on the earlier of
(i) the date 32 days after a Responsible Officer of the Borrower shall have
discovered or should have discovered such default and (ii) the date 15 days
after written notice has been given to the Borrower by the Administrative
Agent or the Required Lenders; or
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(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness (other than the
Revolving Credit Loans, Tranche A Term Loans or Multi-Draw Term Loans and the
Reimbursement Obligations) in excess of $10,000,000 or in the payment of any
Guarantee Obligation in excess of $10,000,000, beyond the period of grace
(not to exceed 30 days), if any, provided in the instrument or agreement
under which such Indebtedness or Guarantee Obligation was created; or (ii)
default in the observance or performance of any other agreement or condition
relating to any Indebtedness or Guarantee Obligation referred to in clause
(i) above 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 beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause, with the giving of notice,
lapse of time or both if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable (an
"Acceleration"), and such time shall have lapsed and, if any notice (a
"Default Notice") shall be required to commence a grace period or declare the
occurrence of an event of default before notice of Acceleration may be
delivered, such Default Notice shall have been given; or
(f) (i) Any of the Security Documents shall cease for any reason to be
in full force and effect (other than pursuant to the terms hereof or
thereof), or any Loan Party which is a party to any of the Security Documents
shall so assert in writing, or (ii) the Lien created by any of the Security
Documents shall cease to be perfected and enforceable in accordance with its
terms or of the same effect as to perfection and priority purported to be
created thereby with respect to any significant portion of the Collateral
(other than in connection with any termination of such Lien in respect of any
Collateral as permitted hereby or by any Security Document), and such failure
of such Lien to be perfected and enforceable with such priority shall have
continued unremedied for a period of 20 days; or
(g) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(net of any insurance or indemnity payments actually received in respect
thereof prior to or within 60 days from the entry thereof, or to be received
in respect thereof, in the event any appeal thereof shall be unsuccessful) of
$15,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, satisfied, stayed or bonded pending appeal within 60
days from the entry thereof; or
(h) Any Guarantee shall cease for any reason to be in full force and
effect (other than pursuant to the terms hereof or thereof) or any Guarantor
shall so assert in writing; or
(i) The Senior Subordinated Notes, for any reason, shall not be or shall
cease to be validly subordinated as provided therein and in the Senior
Subordinated Note Indenture to the monetary obligations of the Borrower under
this Agreement, any Notes and the other Loan Documents; or
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(j) A Change of Control shall have occurred; or
(k) Any event entitling the Persons financing Receivables pursuant to a
Permitted Receivables Securitization to stop financing such Receivables shall
have occurred and be continuing and such Person shall have stopped financing
such Receivables prior to the time such financing is scheduled to end; or
(l) Any Loan Document (other than this Agreement, any of the Security
Documents or any Guarantee) shall cease for any reason to be in full force
and effect (other than pursuant to the terms hereof or thereof) or any Loan
Party shall so assert in writing; or
(m) The Borrower shall (i) consent to liability in respect of an
adjustment in its federal income tax liability as a result of the Spin-Offs
of an amount which, to the extent it has not been paid, would cause the
Borrower not to be in compliance on a pro forma basis with subsection 8.1(b)
as of the end of the period for which the most recent financial statements
have been furnished to the Lenders under subsection 7.1, computed by treating
the amount of liability, reduced by the indemnification payments (if any)
with respect thereto reasonably expected to be received by the Borrower from
the Spin-Cos, as Indebtedness; or (ii) receive a statutory notice of
deficiency (or similar notice) from the Internal Revenue Service stating a
federal income tax deficiency as a result of the Spin-Offs and shall not,
within 60 days thereafter, commence appropriate proceedings challenging such
adjustment and provide to the Administrative Agent an opinion of Wilmer,
Cutler & Pickering or other nationally recognized tax counsel to the effect,
with customary qualifications, that the Borrower is more likely than not
substantially to prevail in such proceedings or appeals therefrom, if the
federal income tax deficiency as a result of the Spin-Offs stated in such
notice of deficiency would cause the Borrower not to be in compliance on a
pro forma basis with subsection 8.1(b) as of the end of the period for which
the most recent financial statements have been furnished to the Lenders under
subsection 7.1, computed by treating the amount of such deficiency, reduced
by the indemnification payments (if any) with respect thereto reasonably
expected to be received by the Borrower from the Spin-Cos, as Indebtedness.
For purposes of determining whether the Borrower's payment of an adjustment
in its federal income tax liability as a result of the Spin-Offs would cause
the Borrower not to be in compliance on a pro forma basis with subsection
8.1(b) as of the end of the period for which the most recent financial
statements have been furnished to the Lenders under subsection 7.1, the
amount of the Borrower's payment shall be reduced by (x) indemnification
payments (if any) with respect thereto reasonably expected to be received by
the Borrower from the Spin-Cos, and (y) claims for refund of such tax
payments filed by the Borrower, as to which the Borrower has provided to the
Administrative Agent an opinion of Wilmer, Cutler & Pickering or other
nationally recognized tax counsel to the effect, with customary
qualifications, that the Borrower is more likely than not substantially to
prevail in such claim for refund, including related court proceedings or
appeals therefrom.
then, and in any such event, either or both of the following actions may be
taken: (i) with the consent of the Required Basic Lenders, the Administrative
Agent may, or upon the request of the Required Basic Lenders, the Administrative
Agent shall, by notice to the Borrower, declare the
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Revolving Credit Commitments and/or the Tranche A Term Loan Commitments and/or
the Multi-Draw Term Loan Commitments to be terminated forthwith, whereupon the
Revolving Credit Commitments and/or the Tranche A Term Loan Commitments and/or
the Multi-Draw Term Loan Commitments shall immediately terminate; and (ii) with
the consent of the Required Basic Lenders, the Administrative Agent may, or upon
the request of the Required Basic Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans (other than the Tranche B Term Loans)
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) and any Notes (other than any
Tranche B Term Loan Notes) to be due and payable forthwith, whereupon the same
shall immediately become due and payable.
10.3 Certain Events of Default Applicable to Tranche B Term Loan
Commitments and Amounts Owing Thereunder. If any of the following events shall
occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Tranche B Term
Loan when due in accordance with the terms hereof; or the Borrower shall fail
to pay any interest on any Tranche B Term Loan, or any other amount payable
on account thereof hereunder, within five days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made on or prior to
the Effective Date by any Loan Party herein or in any other Loan Document or
which is contained in any certificate furnished on or prior to the Effective
Date by or on behalf of any Loan Party pursuant to this Agreement or any such
other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) Prior to the termination of the Revolving Credit Commitments and the
Multi-Draw Term Loan Commitments and the payment in full of the Loans and any
other amounts then due and owing hereunder or under any Note the Borrower
shall default in the observance or performance of any agreement contained in
subsection 8.1 and such default shall continue unremedied for a period of 20
Business Days after the Borrower has or should have notified the
Administrative Agent in writing pursuant to subsection 7.7(a); or
(d) The Borrower shall default in the observance or performance of any
agreement contained in Section 7, and such default shall continue unremedied
for a period ending on the earlier of (i) the date 32 days after a
Responsible Officer of the Borrower shall have discovered or should have
discovered such default and (ii) the date 15 days after written notice has
been given to the Borrower by the Administrative Agent or the Required
Lenders; or
(e) The Borrower or any other Loan Party shall default in the observance
of performance of any agreement contained in Section 9 (and any grace period
provided in the Senior Subordinated Note Indenture with respect to the
relevant Covenant referred to in Section 9 shall have expired, with any such
grace period which commences upon
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notice from the Noteholders or the trustee thereunder to commence upon notice
from a comparable percentage of the Tranche B Term Loan Lenders or the
Agents) or subsection 8.17; or
(f) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness (other than the
Tranche B Term Loans) in excess of $10,000,000 or in the payment of any
Guarantee Obligation (other than in respect of the Tranche B Term Loans) in
excess of $10,000,000, beyond the period of grace (not to exceed 30 days), if
any, provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any Indebtedness
or Guarantee Obligation referred to in clause (i) above 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 beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice or lapse of
time if required, an Acceleration, and such time shall have lapsed and, a
Default Notice shall be required to commence a grace period or declare the
occurrence of an event of default before notice of Acceleration may be
delivered, such Default Notice shall have been given; provided, however, that
no Default or Event of Default shall exist under this paragraph unless in the
case of clause (ii) above only, (x) such default or other event or condition
shall have continued for a period of 60 days and (y) the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or administrative agent on behalf of such holder or
holders or beneficiary or beneficiaries) shall not have caused such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(g) (i) Any of the Security Documents shall cease for any reason to be
in full force and effect (other than pursuant to the terms hereof or
thereof), or any Loan Party which is a party to any of the Security Documents
shall so assert in writing, or (ii) the Lien created by any of the Security
Documents shall cease to be perfected and enforceable in accordance with its
terms or of the same effect as to perfection and priority purported to be
created thereby with respect to any significant portion of the Collateral
(other than in connection with any termination of such Lien in respect of any
Collateral as permitted hereby or by any Security Document), and such failure
of such Lien to be perfected and enforceable with such priority shall have
continued unremedied for a period of 20 days; or
(h) Any Guarantee shall cease for any reason to be in full force and
effect (other than pursuant to the terms hereof or thereof) or any Guarantor
shall so assert in writing; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(net of any insurance or indemnity payments actually received in respect
thereof prior to or within 60 days from the entry thereof, or to be received
in respect thereof, in the event any appeal thereof shall be unsuccessful) of
$15,000,000 or more and all such judgments or decrees shall not have
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been vacated, discharged, stayed, satisfied or bonded pending appeal within
60 days from the entry thereof; or
(j) A Change of Control shall have occurred;
then, and in any such event, either or both of the following actions may be
taken: (i) with the consent of the Required Tranche B Term Loan Lenders, the
Administrative Agent may, or upon the request of the Required Tranche B Term
Loan Lenders, the Administrative Agent shall, by notice to the Borrower, declare
the Tranche B Term Loan Commitments to be terminated forthwith, whereupon the
Tranche B Term Loan Commitments shall immediately terminate; and (ii) with the
consent of the Required Tranche B Term Loan Lenders, the Administrative Agent
may, or upon the request of the Required Tranche B Term Loan Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Tranche B
Term Loans to be due and payable forthwith, whereupon the same shall immediately
become due and payable.
10.4 Certain Provisions Applicable to Letters of Credit. With respect to
all Letters of Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to subsection 10.1 or
subsection 10.2, the Borrower shall at such time deposit in a cash collateral
account opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Administrative Agent, for the benefit of the Issuing Lender and
the L/C Participants, a security interest in such cash collateral to secure all
obligations of the Borrower in respect of such Letters of Credit under this
Agreement and the other Loan Documents. The Borrower shall execute and deliver
to the Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, such further documents and instruments as the Administrative Agent
may request to evidence the creation and perfection of such security interest in
such cash collateral account. Amounts held in such cash collateral account shall
be applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under any Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under any Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower.
10.5 Certain Waivers. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
SECTION 11. THE ADMINISTRATIVE AGENT
11.1 Appointment. (a) Each Lender hereby irrevocably designates and
appoints Chase as the Administrative Agent of such Lender under this Agreement
and the other Loan Documents, and each such Lender irrevocably authorizes Chase,
as the Administrative Agent for such Lender, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
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Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent and the Other Representatives shall not have any duties or
responsibilities, except, in the case of the Administrative Agent and the Other
Representatives, those expressly set forth herein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent or the Other
Representatives.
(b) Each Lender hereby irrevocably designates and appoints Bankers Trust
Company, as the Syndication Agent, and Merrill Lynch Capital Corporation, as
Documentation Agent, under this Agreement and the other Loan Documents.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
neither the Syndication Agent nor the Documentation Agent shall have any duties
or responsibilities hereunder, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Syndication Agent or the Documentation Agent,
provided, however, that each of the Syndication Agent and the Documentation
Agent may have duties and responsibilities in its capacity as Blue Star L/C
Issuing Lender or as a Lender.
11.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact or counsel selected by it with reasonable care.
11.3 Exculpatory Provisions. None of the Administrative Agent or any
Other Representative nor any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by such Person under or in connection with this
Agreement or any other Loan Document (except for the gross negligence or willful
misconduct of such Person or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates) or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made by the
Borrower or any other Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any Notes or any other Loan Document or for any
failure of the Borrower or any other Loan Party to perform its obligations
hereunder or thereunder. Neither the Administrative Agent nor any Other
Representative shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Borrower or any other Loan Party. Each
Lender agrees that, except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent hereunder or
given to the Administrative Agent for the account of or with copies for the
Lenders, the Administrative Agent and the Other Representatives shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower or any other Loan
Party which may come into the possession of the Administrative Agent and the
Other
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Representatives or any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates.
11.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified as between itself and the Lenders
in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Basic Lenders, the Required Tranche B Term Loan Lenders or the Required
Lenders as required by Section 12.1 or it shall first be indemnified to its
satisfaction by the Basic Lenders, the Tranche B Term Loan Lenders or the
Required Lenders as it deems appropriate against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action (other than any liability or expense resulting from its own
gross negligence or wilful misconduct). The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and any Notes and the other Loan Documents in accordance with a
request of the Basic Lenders, the Tranche B Term Loan Lenders or the Required
Lenders as required by Section 12.1, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
11.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action reasonably promptly with respect to, or permitted as a result of, any
Default or Event of Default, or any Acceleration of any amounts due hereunder as
shall be directed by the Required Basic Lenders, the Required Tranche B Term
Loan Lenders or the Required Lenders (depending upon whether such Default, Event
of Default or Acceleration relates to Basic Lenders, the Tranche B Term Loan
Lenders or both); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default, Event of Default or Acceleration as it shall deem advisable in
the best interests of the relevant Lenders. To the extent that, as a result of
the exercise by it of any remedies with respect to any Collateral, the
Administrative Agent shall receive or realize any amounts, it shall distribute
such amounts ratably among the Lenders by reference to the aggregate amounts
accrued and unpaid that are outstanding under the Agreement and the other Loan
Documents and owing to the respective Lenders (after deducting and applying any
amounts then owing to the Administrative Agent or on account of expenses of the
Administrative Agent previously paid by any Lender), and if the portion to be so
distributed to any Lenders shall exceed the sum then due and payable to such
Lenders, such excess shall be held by the Administrative Agent in a collateral
account for such
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Lenders.
11.6 Acknowledgements and Representations by Lenders. Each Lender
expressly acknowledges that none of the Administrative Agent or the Other
Representatives nor any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent or any Other Representative
hereafter taken, including any review of the affairs of the Borrower or any
other Loan Party, shall be deemed to constitute any representation or warranty
by the Administrative Agent or such Other Representative to any Lender. Each
Lender represents to the Administrative Agent, the Other Representatives and
each of the Loan Parties that, independently and without reliance upon the
Administrative Agent, the Other Representatives or any other Lender, and based
on such documents and information as it has deemed appropriate, it has made and
will make its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the Borrower and
the other Loan Parties, it has made its own decision to make its Loans hereunder
and enter into this Agreement and it will make its own decisions in taking or
not taking action under this Agreement and the other Loan Documents. Each Lender
represents to each other party hereto that it is a bank, savings and loan
association or other similar savings institution, insurance company, investment
fund or company or other financial institution which makes or acquires
commercial loans in the ordinary course of its business, that it is
participating hereunder as a Lender for its account and for such commercial
purposes, and that it has the knowledge and experience to be and is capable of
evaluating the merits and risks of being a Lender hereunder. Each Lender
acknowledges and agrees to comply with the provisions of subsection 12.6
applicable to the Lenders. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or given to the Administrative Agent for the account of or with copies
for the Lenders, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower or any other Loan
Party which may come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.
11.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent and the Other Representatives (provided that the Term Loan Lenders shall
have no obligation to indemnify the Issuing Lender) in their capacities as such
(to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower or any of the other Loan Parties to do so), ratably
according to their respective Total Credit Percentages in effect on the date on
which indemnification is sought under this subsection (or, if indemnification is
sought after the date upon which the Revolving Credit Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their Total Credit Percentages immediately prior to such date), from and
against any and all liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent or any Other Representative in any way
relating to or arising out of this Agreement, any of the other Loan Documents or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent or any Other Representative under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the Administrative Agent's or any Other Representative's gross
negligence or willful misconduct. The obligations to indemnify the Issuing
Lender shall be ratable among the Revolving Credit Lenders in accordance with
their respective Revolving Credit Commitments (or, if the Revolving Credit
Commitments have been terminated, the outstanding principal amount of their
respective Revolving Credit Loans and L/C Obligations and their respective
participating interests in the outstanding Letters of Credit). The agreements in
this subsection shall survive the payment of the Loans and all other amounts
payable hereunder.
11.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent, the Other Representatives and their affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower or
any other Loan Party as though the Administrative Agent and the Other
Representatives were not the Administrative Agent and the Other Representatives
hereunder and under the other Loan Documents. With respect to Loans made or
renewed by them and any Note issued to them and with respect to any Letter of
Credit issued or participated in by them, the Administrative Agent and the Other
Representatives shall have the same rights and powers under this Agreement and
the other Loan Documents as any Lender and may exercise the same as though they
were not the Administrative Agent or an Other Representative, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
11.9 Successor Administrative Agent. The Administrative Agent, the
Documentation Agent or the Syndication Agent may resign as such upon 10 days'
notice to the Lenders. If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Loan Documents, then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be approved by the Borrower (such approval
not to be unreasonably withheld), whereupon such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
11.10 Swing Line Lender. The provisions of this Section 11 shall apply
to the Swing Line Lender in its capacity as such to the same extent that such
provisions apply to the Administrative Agent.
11.11 Release of Liens in Connection with Permitted Receivables
Securitization. In connection with a Permitted Receivables Securitization, the
Borrower may deliver to the Administrative Agent a written request for release
identifying the relevant Receivables and the terms of such Permitted Receivables
Securitization in reasonable detail together with a certification by the
Borrower stating that such transaction is in compliance with this Agreement. The
Administrative Agent shall execute and deliver to the Borrower (at the sole cost
and expense of the Borrower) all releases and other documents (including,
without limitation, Uniform Commercial Code termination statements) necessary or
reasonably desirable for the release of
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the Liens created by the Guarantee and Collateral Agreement on such Receivables
as the Borrower may reasonably request, provided that the Loans have been
prepaid and/or the Revolving Credit Commitments shall have been reduced in
accordance with subsection 4.4. Each of the Lenders hereby authorizes the
Administrative Agent to deliver such releases or other documents.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. (a) Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (x) enter into with the Borrower
and the other Loan Parties, as the case may be, written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights or obligations of the Lenders or of the Borrower and
the other Loan Parties, as the case may be, hereunder or thereunder or (y) at
the Borrower's or another Loan Party's request, on such terms and conditions as
the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, waive any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:
(i) reduce the amount or extend the scheduled date of maturity
of any Loan or any Reimbursement Obligation or of any scheduled installment
thereof, or reduce the stated rate of any interest or fee payable hereunder
or extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender's Revolving Credit Commitment or
Multi-Draw Term Loan Commitment, in each case, without the written consent of
each Lender directly affected thereby,
(ii) amend, modify or waive any provision of subsection 12.5 or
this subsection 12.1 or reduce the percentage specified in the definition of
Required Lenders or of Required Release Lenders, or consent to the assignment
or transfer by any Loan Party of any of its rights and obligations under this
Agreement and the other Loan Documents (other than pursuant to subsection
8.5), in each case, without the written consent of all the Lenders,
(iii) release any Guarantee or, in the aggregate, a material
portion of the Collateral without the written consent of the Required Release
Lenders, except as expressly permitted hereby or by any Guarantee or Security
Document (as such documents are in effect on the date hereof or, if later,
the date of execution and delivery thereof in accordance with the terms
hereof),
(iv) amend, modify or waive any provision of (x) subsection 2.6
(to the extent such subsection 2.6 relates to the Tranche A Term Loans) or
2.7 without the written consent of Tranche A Term Loan Lenders, the Tranche A
Term Loan Percentages of which aggregate more than 50%, (y) subsection 2.6
(to the extent such subsection 2.6 relates to the Tranche B Term Loans) or
2.8 without the written consent of the Required
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Tranche B Term Loan Lenders or (z) subsection 2.6 (to the extent that
subsection 2.6 relates to the Multi-Draw Term Loans) or 2.9 or 2.11 without
the consent of Multi-Draw Term Loan Lenders the Multi-Draw Term Loan
Percentages of which aggregate more than 50%,
(v) amend, modify or waive any provision of subsection 2.1,
2.2, 2.3, 2.4, 2.5 or Section 3 without the written consent of the Revolving
Credit Lenders, the Revolving Credit Commitment Percentages of which
aggregate more than 50%,
(vi) amend, modify or waive any provision of Section 11 without
the written consent of the then Administrative Agent and of any Other
Representative affected thereby,
(vii) amend, modify or waive any prepayment required by
subsection 4.4(c), 4.4(d) or 4.4(e) without the written consent of Tranche A
Term Loan Lenders, Tranche B Term Loan Lenders and Multi-Draw Term Loan
Lenders having in the aggregate more than 50% of the sum of the outstanding
Term Loans and Available Multi-Draw Term Loan Commitments,
(viii) amend, modify or waive the order of application of
prepayments specified in subsection 4.4(e) or 4.4(g) without the written
consent of (w) Revolving Credit Lenders the Revolving Credit Commitment
Percentages of which aggregate more than 50%, (x) Tranche A Term Loan Lenders
the Tranche A Term Loan Percentages of which aggregate more than 50%, (y) the
Required Tranche B Term Loan Lenders and (z) Multi-Draw Term Loan Lenders the
Multi-Draw Term Loan Percentages of which aggregate more than 50%,
(ix) amend, modify or waive any provision of the Swing Line
Note (if any) or subsection 2.5 without the written consent of the Swing Line
Lender and each other Lender, if any, which holds or is required to purchase
a participation in the Swing Line Loan pursuant to subsection 2.5(d),
(x) amend, modify or waive the provisions of Section 3, any
Letter of Credit or any L/C Obligation without the written consent of each
relevant Issuing Lender and Revolving Credit Lenders the Revolving Credit
Commitment Percentages of which aggregate more than 50%.
(xi) (A) amend, modify or waive any provision of subsection 6.2
or Section 5 (after the Effective Date only) 7 or 8 (other than subsection
8.17) or subsection 10.2 or any definitions to the extent used therein or,
(B) waive any Default or Event of Default under subsection 10.2 or any
consequences of such Default or Event of Default, in each case, without the
written consent of the Required Basic Lenders (it being agreed that the
consent of the Required Lenders shall not be required for any such amendment,
modification or waiver);
(xii) (A) amend, modify or waive any provision of Section 9 (or
any of the covenants incorporated therein by reference) or subsection 10.3 or
any definitions to the extent used therein or (B) waive any Default or Event
of Default under subsection 10.3 or
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any consequences of such Default or Event of Default, in each case, without
the written consent of the Required Tranche B Term Loan Lenders (it being
agreed that the consent of the Required Lenders shall not be required for any
such amendment, modification or waiver);
(xiii) reduce the percentage specified in the definition of
Required Tranche B Term Loan Lenders without the written consent of all of
the Tranche B Term Loan Lenders; or reduce the percentage specified in
Required Basic Lenders without the written consent of all of the Basic
Lenders; or
(xiv) amend, modify or waive any provision of any Security
Document that provides for the ratable sharing by the Lenders of the proceeds
of any realization on the Collateral to provide for a non-ratable sharing
thereof, without the written consent of the Required Release Lenders.
Any waiver and any amendment, supplement or modification pursuant to this
subsection 12.1 shall apply to each of the Lenders and shall be binding upon the
Borrower, the other Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Borrower, the other
Loan Parties, the Lenders and the Administrative Agent shall be restored to
their former position and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, or, in the case of delivery by a nationally recognized overnight
courier, when received, addressed as follows in the case of the Borrower, Blue
Star Group and the Administrative Agent, and as set forth in Schedule I in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Loans:
The Borrower and U.S. Office Products Company
and the Blue 1025 Thomas Jefferson Street, N.W.
Star Group: Suite 600 East
Washington D.C. 20007
Attention: Donald H. Platt and Mark Director
Telecopy: (202) 339-6733
Blue Star Group Limited
Coopers & Lybrand Building
23-29 Albert Street
P.O. Box 1335
Shortland Street
Auckland, New Zealand
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Attention: Maurice Kidd, CFO
Telecopy: (011) (64) (9) 358-8282
with a copy to: Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George Stamas/Russell J. Bruemmer
Telecopy: (202) 663-6363
with a copy to: c/o Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Brian D. Finn
Telecopy: (212) 407-5252
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
The Administrative The Chase Manhattan Bank
Agent, Swing Line 270 Park Avenue
Lender and Issuing New York, New York 10017
Lender Attention: Clifford Rooke
Telecopy: (212) 972-0009
Telephone: (212) 270-5808
with a copy to: The Chase Manhattan Bank
c/o The Loan & Agency Services Group
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Janet Belden
Telecopy: (212) 552-5658
Telephone: (212) 552-7277
with a copy to: The Chase Manhattan Bank, Delaware
c/o Corporate Banking Dept.
1201 Market Street, 8th Floor
Wilmington, Delaware 19801
Attention: Michael Handago
Telecopy: (302) 428-3390
Telephone: (302) 428-3311
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.3, 2.10, 3.2, 4.2, 4.4 or 4.8 shall not
be effective until received.
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12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent, any Lender or any Loan
Party, any right, remedy, power or privilege hereunder or under the other Loan
Documents 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 not exclusive of any rights, remedies, powers and privileges
provided by law.
12.4 Survival of Representations and Warranties. All representations and
warranties made hereunder and in the other Loan Documents (or in any amendment,
modification or supplement hereto or thereto) and in any certificate delivered
pursuant hereto or such other Loan Documents shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent and the Other Representatives for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, execution and delivery of, and any amendment, supplement, waiver or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions (including the syndication of the Revolving
Credit Commitments and Term Loans, the Administrative Agent's due diligence
investigation and any collateral audit) contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of one firm
of counsel and of local counsel to the Administrative Agent and the Other
Representatives, (b) to pay or reimburse each Lender, each Other Representative
and the Administrative Agent for all its respective reasonable costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the reasonable fees and disbursements
of one firm of counsel and of local counsel to the Administrative Agent, the
Other Representatives and the several Lenders, and any reasonable Environmental
Costs arising out of or in any way relating to any Loan Party or any property in
which any Loan Party has had any interest at any time, (c) to pay, and indemnify
and hold harmless each Lender, the Administrative Agent and the Other
Representatives from and against, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, and indemnify and hold harmless each Lender, the
Administrative Agent and the Other Representatives (and their respective
directors, officers, employees, agents, successors and assigns) from and
against, any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (whether or not caused by any such Person's own negligence
(other than gross negligence) and including, without limitation, the reasonable
fees and disbursements of counsel) with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents (regardless of whether the Administrative
Agent, any such Other Representative or any Lender is a party to the litigation
or other proceeding giving rise thereto) and any of the
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transactions contemplated hereby or thereby, including, without limitation, any
of the foregoing relating to the violation of, noncompliance with, or liability
under, any Environmental Laws or any orders, requirements or demands of
Governmental Authorities related thereto applicable to the operations of the
Borrower, any of its Subsidiaries or any of the Properties (all the foregoing in
this clause (d), collectively, the "Indemnified Liabilities"), provided that the
Borrower shall not have any obligation hereunder to the Administrative Agent,
any such Other Representative or any Lender with respect to Environmental Costs
or Indemnified Liabilities arising from (i) the gross negligence or willful
misconduct of the Administrative Agent, any Other Representative or any such
Lender (or any of their respective directors, officers, employees, agents,
successors and assigns) or (ii) legal proceedings commenced against the
Administrative Agent, any Other Representative or any such Lender by any
securityholder or creditor thereof arising out of and based upon rights afforded
any such securityholder or creditor solely in its capacity as such.
Notwithstanding the foregoing, except as provided in clauses (b) and (c) above,
the Borrower shall have no obligation under this subsection 12.5 to the
Administrative Agent, any Other Representative or any Lender with respect to any
tax, levy, impost, duty, charge, fee, deduction or withholding imposed, levied,
collected, withheld or assessed by any Governmental Authority. The agreements in
this subsection shall survive repayment of the Loans and all other amounts
payable hereunder.
12.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, Blue
Star Group, the Lenders, the Administrative Agent, the Other Representatives,
all future holders of the Loans and their respective successors and assigns,
except that the Borrower or Blue Star Group, as the case may be, may not, other
than in accordance with subsection 8.5, assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Revolving Credit Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents; provided that (unless the Borrower and the Administrative Agent
otherwise consent in writing) no such participating interests shall be in an
aggregate principal amount of less than (i) in the case of Tranche A Term Loans,
Multi-Draw Term Loans, Multi-Draw Term Loan Commitments and Revolving Credit
Commitments, $5,000,000 in the aggregate (or, if less, the full amount of such
selling Lender's Revolving Credit Loans, Multi-Draw Term Loans, Multi-Draw Term
Loan Commitments, Tranche A Term Loans and Revolving Credit Commitments) or (ii)
in the case of Tranche B Term Loans, $5,000,000 (or, if less, the full amount of
such selling Lender's Tranche B Term Loans). Such sale of participating
interests need not be ratable as among the Tranche A Term Loans, the Multi-Draw
Term Loans, the Multi-Draw Term Loan Commitments, the Revolving Credit
Commitments and the Tranche B Term Loans of such Lender. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan (and
any Note evidencing such Loan) for all purposes under this Agreement and the
other Loan Documents and the Borrower, Blue Star Group, and the Administrative
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the other
Loan Documents, and such Lender shall be solely responsible for any
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withholding taxes or any filing or reporting requirements relating to such
Participant. Any agreement pursuant to which any Lender shall sell any such
participating interest shall provide that such Lender shall retain the sole
right and responsibility to exercise such Lender's rights and enforce the
Borrower's and Blue Star Group's obligations hereunder, including the right to
consent to any amendment, supplement, modification or waiver of any provision of
this Agreement or any of the other Loan Documents, provided that such
participation agreement may provide that such Lender will not agree to any
amendment, supplement, modification or waiver described in clause (i) or (ii) of
the proviso to the second sentence of subsection 12.1 without the consent of the
Participant. The Borrower and Blue Star Group agree that each Lender shall be
entitled to the benefits of subsections 4.9, 4.10, 4.11, 4.12, 12.1 and 12.5
without regard to whether it has granted any participating interests, and that
all amounts payable to a Lender under subsections 4.9, 4.10, 4.11, 4.12 and 12.5
shall be determined as if such Lender had not granted any such participating
interests.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any affiliate thereof or to any Approved Fund or, with the prior
written consent of the Administrative Agent and the Borrower or Blue Star Group,
as the case may be, (which in each case shall not be unreasonably withheld), to
an additional bank, savings and loan association or other similar savings
institution, insurance company, investment fund or company or other financial
institution (an "Assignee") all or any part of its rights and obligations under
this Agreement and any Notes, including, without limitation, its Revolving
Credit Commitments and Loans, pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit H, (an "Assignment and Acceptance")
executed by such Assignee such assigning Lender (and, in the case of an Assignee
that is not then a Lender or an affiliate thereof, or an Approved Fund, by the
Borrower and the Administrative Agent) and delivered to the Administrative Agent
for its acceptance and recording in the Register; provided that (i) (unless the
Administrative Agent and the Borrower or Blue Star Group, as the case may be,
otherwise consent in writing (such consent not to be unreasonably withheld)) no
such transfer to an Assignee (other than a Lender or any affiliate thereof or
any Approved Fund) shall be in an aggregate principal amount less than (x) in
the case of Tranche A Term Loans, Multi-Draw Term Loans, Multi-Draw Term Loan
Commitments and Revolving Credit Commitments, $5,000,000 in the aggregate (or,
if less, the full amount of such assigning Lender's Tranche A Term Loans,
Multi-Draw Term Loans, Multi-Draw Term Loan Commitments, Revolving Credit Loans
and Revolving Credit Commitments) or (y) in the case of Tranche B Term Loans,
$5,000,000 (or, if less, the full amount of such assigning Lender's Tranche B
Term Loans) and (ii) if any Lender assigns all or any part of its rights and
obligations under this Agreement to one of its affiliates in connection with or
in contemplation of the sale or other disposition of its interest in such
affiliate, the Borrower's prior written consent shall be required for such
assignment. Any such assignment shall be ratable as between the Tranche A Term
Loans, the Multi-Draw Term Loans, the Multi-Draw Term Loan Commitments and the
Revolving Credit Commitments of such Lender unless the Administrative Agent and
the Borrower otherwise consent in writing, but need not be ratable as between
the Tranche A Term Loans, the Multi-Draw Term Loans, the Multi-Draw Term Loan
Commitments and the Revolving Credit Commitments of such Lender, on the one
hand, and the Tranche B Term Loans of such Lender, on the other hand. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Revolving Credit Commitment, Multi-Draw Term Loan Commitment, Tranche A
Term Loan, Tranche B Term
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Loan and Multi-Draw Term Loan as set forth therein, and (y) the assigning Lender
thereunder shall be released from its obligations under this Agreement to the
extent that such obligations shall have been expressly assumed by the Assignee
pursuant to such Assignment and Acceptance (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such assigning Lender shall cease
to be a party hereto but shall nevertheless continue to be entitled to the
benefits of subsections 4.10, 4.11, 4.12 and 12.5). Notwithstanding the
foregoing, no Assignee, which as of the date of any assignment to it pursuant to
this subsection 12.6(c) would be entitled to receive any greater payment under
subsection 4.10 or 4.11 than the assigning Lender would have been entitled to
receive as of such date under such subsections with respect to the rights
assigned, shall be entitled to receive such payments unless the Borrower has
consented in writing to the assignment after disclosure of such fact.
(d) The Administrative Agent, on behalf of the Borrower shall maintain
at its address referred to in subsection 12.2 a copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Lenders and the Revolving Credit Commitment
of, and the principal amount of the Loans owing to, and the Notes evidencing
such Loans owed by, each Lender from time to time. Notwithstanding anything in
this Agreement to the contrary, the Borrower, Blue Star Group, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loan, the Notes and the Revolving
Credit Commitments recorded therein for all purposes of this Agreement and the
other Loan Documents. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Notwithstanding anything in this Agreement to the contrary, no
assignment under subsection 12.6(c) of any rights or obligations under or in
respect of the Loans or the Notes evidencing such Loans shall be effective
unless and until the Administrative Agent shall have recorded the assignment
pursuant to subsection 12.6(d). Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case of an Assignee
that is not then a Lender or an affiliate thereof, by the Administrative Agent
and the Borrower), together with payment to the Administrative Agent of a
registration and processing fee of $3,500 (which fee need not be paid in the
case of any assignment to an affiliate or Approved Fund of the assigning
Lender), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give prompt notice of such
acceptance and recordation to the Lenders and the Borrower. On or prior to such
effective date, the assigning Lender shall surrender any outstanding Notes held
by it all or a portion of which are being assigned, and the Borrower or Blue
Star Group, as the case may be, at its own expense, shall, upon the request to
the Administrative Agent by the assigning Lender or the Assignee, as applicable,
execute and deliver to the Administrative Agent (in exchange for the outstanding
Notes of the assigning Lender) a new Revolving Credit Note, Tranche A Term Note,
Tranche B Term Note, Multi-Draw Term Note and/or Swing Line Note, as the case
may be (such new Note to be a new QFL Note in the case of an assignment of a QFL
Note), to the order of such Assignee in an amount equal to (i) in the case of a
Revolving Credit Note, the lesser of (A) the amount of such Assignee's Revolving
Credit Commitment and (B) the aggregate principal amount of all Revolving Credit
Loans made by such Assignee, (ii) in the case of a Tranche A Term Note, the
amount of such Assignee's Tranche A Term Loan, (iii) in the case of a Tranche B
Term Note, the amount of such
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Assignee's Tranche B Term Loan, (iv) in the case of a Swing Line Note, the
lesser of (A) the Swing Line Commitment and (B) the aggregate principal amount
of all Swing Line Loans made by such Assignee and (v) in the case of a
Multi-Draw Term Loan Note, the lesser of (A) such Assignee's Multi-Draw Term
Loan Commitment and (B) the aggregate principal amount of all Multi-Draw Term
Loans made by such Assignee, in each case with respect to the relevant Loan,
Swing Line Commitment, Revolving Credit Commitment or Multi-Draw Term Loan
Commitment after giving effect to such Assignment and Acceptance and, if the
assigning Lender has retained a Swing Line Commitment, Revolving Credit
Commitment or Multi-Draw Term Loan Commitment or Term Loan hereunder, a new
Revolving Credit Note, Tranche A Term Note, Tranche B Term Note, Multi-Draw Term
Loan Note and/or Swing Line Note, as the case may be, to the order of the
assigning Lender in an amount equal to (i) in the case of a Revolving Credit
Note, the lesser of (A) the amount of such Lender's Revolving Credit Commitment
and (B) the aggregate principal amount of all Revolving Credit Loans made by
such Lender, (ii) in the case of a Tranche A Term Note, the amount of such
Lender's Tranche A Term Loan, (iii) in the case of a Tranche B Term Note, the
amount of such Lender's Tranche B Term Loan, (iv) in the case of a Swing Line
Note, the lesser of (A) the Swing Line Commitment and (B) the aggregate
principal amount of all Swing Line Loans made by such Lender and (v) in the case
of a Multi-Draw Term Loan Note, the lesser of (A) such Lender's Multi-Draw Term
Loan Commitment and (B) the aggregate principal amount of all Multi-Draw Term
Loans made by such Lender, in each case with respect to the relevant Loan, Swing
Line Commitment or Revolving Credit Commitment after giving effect to such
Assignment and Acceptance. Any such new Notes shall be dated the Effective Date
and shall otherwise be in the form of the Note replaced thereby. Any Notes
surrendered by the assigning Lender shall be returned by the Administrative
Agent to the Borrower marked "cancelled".
(f) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a "Transferee") and any prospective Transferee, subject to
the provisions of subsection 12.15, any and all information in such Lender's
possession concerning the Borrower and its Affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement. No assignment or
participation made or purported to be made to any Transferee shall be effective
without the prior written consent of the Borrower if it would require the
Borrower to make any filing with any Governmental Authority or qualify any Loan
or Note under the laws of any jurisdiction, and the Borrower shall be entitled
to request and receive such information and assurances as it may reasonably
request from any Lender or any Transferee to determine whether any such filing
or qualification is required or whether any assignment or participation is
otherwise in accordance with applicable law.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection 12.6 concerning assignments relate only
to absolute assignments and that such provisions do not prohibit assignments
creating security interests, including any pledge or assignment by a Lender of
any Loan or Note to any Federal Reserve Bank in accordance with applicable law,
provided that any foreclosure or similar action shall be subject to the
provisions of this subsection concerning assignments and shall be void and of no
force or effect unless effected in compliance with such provisions.
12.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted Lender")
shall at any
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time receive any payment of all or part of its Revolving Credit Loans, Term
Loans or the Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 10.1, or otherwise (except pursuant to subsection 4.4, 4.13(d) or
12.6)), in a greater proportion than any such payment to or collateral received
by any other Lender, if any, in respect of such other Lender's Revolving Credit
Loans, Term Loans or the Reimbursement Obligations, as the case may be, owing to
it, or interest thereon, such Benefitted Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Revolving Credit Loans, Term Loans or the Reimbursement Obligations, as
the case may be, owing to it, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon the occurrence of an Event of Default under Section 10.1 to
set-off and appropriate and apply against any amount then due and payable under
Section 10.1 any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
12.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be delivered to the Borrower, and the
Administrative Agent.
12.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 Integration. This Agreement and the other Loan Documents represent
the entire agreement of the Borrower, the other Loan Parties, the Administrative
Agent and the Lenders with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Borrower, the
other Loan Parties, the Administrative Agent or any Lender relative to the
subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND
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THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
12.12 Submission To Jurisdiction; Waivers. (a) Each party hereto hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State
of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action
or proceeding was brought in an inconvenient forum and agrees not to plead or
claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower,
Blue Star Group, the applicable Lender or the Administrative Agent, as the
case may be, at the address specified in subsection 12.2 or at such other
address of which the Administrative Agent, any such Lender, the Borrower and
Blue Star Group shall have been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to
sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any punitive damages.
(b) Blue Star Group hereby agrees to irrevocably and unconditionally
appoint the Borrower as its agent for service of process (in such capacity, the
"New York Process Agent"), to receive on behalf of Blue Star Group and its
property service of copies of the summons and complaint and any other process
which may be served in any action or proceeding in any such New York State or
Federal court described in paragraph (a) of this subsection and agrees promptly
to appoint a successor New York Process Agent in The City of New York (which
successor New York Process Agent shall accept such appointment in a writing
reasonably satisfactory to the Administrative Agent) prior to the termination
for any reason of the appointment of the initial New York Process Agent. In any
such action or proceeding in such New York State or Federal court, such service
may be made on Blue Star Group by delivering a copy of such process to Blue Star
Group in care of the New York Process Agent at the New York Process Agent's
address and by depositing a copy of such process in the mails by certified or
registered air mail, addressed to Blue Star Group at its address specified in
subsection 12.2 (such
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service to be effective upon such receipt by the New York Process Agent and the
depositing of such process in the mails as aforesaid). Blue Star Group hereby
irrevocably and unconditionally authorizes and directs the New York Process
Agent to accept such service on its behalf. As an alternate method of service,
Blue Star Group irrevocably and unconditionally consents to the service of any
and all process in any such action or proceeding in such New York State or
Federal court by mailing of copies of such process to Blue Star Group by
certified or registered air mail at its address specified in subsection 12.2.
Blue Star Group agrees that, to the fullest extent permitted by applicable law,
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(c) To the extent that Blue Star Group has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceeding,
from jurisdiction of any court or from set-off or any legal process (whether
service or notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) with respect to itself or any
of its property, Blue Star Group hereby irrevocably waives and agrees not to
plead or claim such immunity in respect of its obligations under the Loan
Documents.
12.13 Acknowledgements. The Borrower and Blue Star Group hereby
acknowledge that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Other Representative or
Lender has any fiduciary relationship with or duty to the Borrower or Blue
Star Group arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Administrative Agent
and Lenders, on the one hand, and the Borrower, or Blue Star Group, as the
case may be, on the other hand, in connection herewith or therewith is solely
that of creditor and debtor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby and
thereby among the Lenders or among the Borrower, Blue Star Group and the
Lenders.
12.14 WAIVER OF JURY TRIAL. THE BORROWER, BLUE STAR GROUP, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.15 Judgment Currency. (a) The obligations of each Loan Party
hereunder and under the other Loan Documents to make payments in a specified
currency (the "Obligation Currency") shall not be discharged or satisfied by any
tender or recovery pursuant to any judgment expressed in or converted into any
currency other than the Obligation Currency, except to the extent that such
tender or recovery results in the effective receipt by the Administrative Agent
or a Lender of the full amount of the Obligation Currency expressed to be
payable to the
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Administrative Agent or such Lender under this Agreement or the other Loan
Documents. If, for the purpose of obtaining or enforcing judgment against any
Loan Party in any court or in any jurisdiction, it becomes necessary to convert
into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the "Judgment Currency") an amount due
in the Obligation Currency, the conversion shall be made, at the rate of
exchange (as quoted by the Administrative Agent or if the Administrative Agent
does not quote a rate of exchange on such currency, by a known dealer in such
currency designated by the Administrative Agent) determined, in each case, as of
the Business Day immediately preceding the date on which the judgment is given
(such Business Day being hereinafter referred to as the "Judgment Currency
Conversion Date").
(b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, each relevant Loan Party agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) For purposes of determining any rate of exchange or currency
equivalent for this Section, such amounts shall include any premium and costs
payable in connection with the purchase of the Obligation Currency.
12.16 Confidentiality. Each of the Administrative Agent and each Lender
(including their successors and assigns) on behalf of itself and each of its
Affiliates, directors, officers, employees, agents, advisors and representatives
agrees to keep confidential any written or oral information (a) provided to it
by or on behalf of the Borrower, Blue Star Group or any of their Subsidiaries
pursuant to or in connection with this Agreement or (b) obtained by such Lender
based on a review of the books and records of the Borrower, Blue Star Group or
any of their Subsidiaries; provided that nothing herein shall prevent any Lender
from disclosing any such information (i) to the Administrative Agent or any
other Lender, (ii) to any Transferee or prospective Transferee which agrees to
comply with the provisions of this subsection, (iii) to its Affiliates, Approved
Funds, its Subsidiaries and the employees, directors, agents, attorneys,
accountants and other professional advisors of it, its Affiliates, Approved
Funds, and its Subsidiaries, provided that such Lender shall inform each such
Person of the agreement under this subsection 12.16 and shall take reasonable
actions to cause compliance by any such Person referred to in this clause (iii)
with this Agreement (including, to cause any such Person to acknowledge its
agreement to be bound by the provisions of this subsection 12.16), (iv) upon the
request or demand of any Governmental Authority having jurisdiction over such
Lender or to the extent required in response to any order of any court or other
Governmental Authority or as shall otherwise be required pursuant to any
Requirement of Law, provided that such Lender shall, unless prohibited by any
Requirement of Law, notify the Borrower of any disclosure pursuant to this
clause (iv) as far in advance as is reasonably practicable under such
circumstances except that such Lender may make required disclosures to federal
or state banking or other examiners and regulators without notifying the
Borrower, (v) which has been publicly disclosed other than in breach of this
Agreement, (vi) in connection with the exercise of any remedy hereunder, (vii)
in connection with periodic regulatory examinations, (viii) in connection with
any litigation to
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which such Lender may be a party, subject to the proviso in clause (iv), (ix) to
any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty (A) has
been approved in writing by the Borrower and (B) agrees in a writing enforceable
by the Borrower to be bound by the provisions of this subsection 12.16) and (x)
if, prior to such information having been so provided or obtained, such
information was already in the Administrative Agent's or a Lender's possession
on a nonconfidential basis without a duty of confidentiality to the Borrower or
Blue Star Group being violated.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
U.S. OFFICE PRODUCTS COMPANY
By:______________________________________
Title:
BLUE STAR GROUP LIMITED
By:______________________________________
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent, Swing Line
Lender, Issuing Lender and Lender
By:______________________________________
Title:
BANKERS TRUST COMPANY, as Syndication Agent
and Lender
By:______________________________________
Title:
MERRILL LYNCH CAPITAL CORPORATION, as
Documentation Agent and
Lender
By:______________________________________
Title:
<PAGE>
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION
By:______________________________________
Title:
Address for Notices:
335 Madison Avenue
New York, NY 10017
Attention: Daniel Rencricca
Telecopy: (212) 503-7502
Telephone: (212) 503-7690
<PAGE>
BANKBOSTON, N.A.
By:______________________________________
Title:
Address for Notices:
Diversified Finance
MS 01-08-02
100 Federal Street
Boston, MA 02110
Attn: Kenneth Struglia
Telecopy: 617-434-4929
Telephone: 617-434-9621
<PAGE>
THE BANK OF NEW YORK
By:______________________________________
Title:
Address for Notices:
One Wall Street
New York, NY 10286
Attn: Ronald R. Reedy
Telecopy: (212) 635-6434
Telephone: (212) 635-6724
<PAGE>
BHF - BANK AKTIENGESELLSCHAFT
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
590 Madison Avenue
New York, NY 10022
Attn: Thomas J. Scifo
Telecopy: (212) 756-5536
Telephone: (212) 756-5912
<PAGE>
BARCLAYS BANK PLC
By:______________________________________
Title:
Address for Notices:
222 Broadway, 11th Floor
New York, NY 10038
Attention: John Giannone
Telecopy: (212) 412-7511
Telephone: (212) 412-3276
<PAGE>
CITICORP USA, INC.
By:______________________________________
Title:
Address for Notices:
399 Park Avenue, 5th Floor
New York, NY 10043
Attention: Carla Devillers
Telecopy: (212) 793-1810
Telephone: (212) 559-8646
<PAGE>
NATIONSBANK, N.A.
By:______________________________________
Title:
Address for Notices:
6610 Rockledge Drive, 6th Fl
Rockville, MD 20817-1876
Michael Heredia
Telecopy: 310-571-0719
Telephone: 310-571-0724
<PAGE>
CHIAO TUNG BANK CO., LTD., NEW YORK AGENCY
By:______________________________________
Title:
Address for Notices:
One World Financial Center, 30th Floor
200 Liberty Street
New York, NY 10281
Attention: Carbin Lin
Telecopy: (212) 285-2922
Telephone: (212) 285-2666
<PAGE>
CITY NATIONAL BANK
By:______________________________________
Title:
Address for Notices:
400 North Roxbury Drive, 3rd Floor
Beverly Hills, CA 90210
Attention: George Hayrapetian
Telecopy: (310) 888-6152
Telephone: (310) 888-6114
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
520 Madison Avenue
8th Floor
New York, NY 10022
Attention: Michael Fought
Telecopy: (212) 418-2228
Telephone: (212) 418-2254
<PAGE>
ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
280 Park Avenue, 32nd Floor
New York, NY 10017
Attention: Anca Trifan
Telecopy: (212) 984-5627
Telephone: (212) 984-5631
<PAGE>
FIRST UNION NATIONAL BANK
By:______________________________________
Title:
Address for Notices:
F.C. 1-8-10-69
1339 Chestnut Street
Philadelphia, PA 19101
Attn: Joan Anderson
Telecopy: 215-786-4259
Telephone: 215-786-2160
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION
By:______________________________________
Title:
Address for Notices:
GE Capital - Commercial Finance
201 High Ridge Road
Stamford, CT 06927-5100
Attn: Roger M. Burns
Telecopy: 203-316-7978
Telephone: 203-316-7926
<PAGE>
HELLER FINANCIAL, INC.
By:______________________________________
Title:
Address for Notices:
500 West Monroe St.
Chicago, IL 60661
Attn: Patrick Hayes
Telecopy: 312-441-7357
Telephone: 312-441-7357
<PAGE>
HIBERNIA NATIONAL BANK
By:______________________________________
Title:
Address for Notices:
313 Carondelet Street
New Orleans, LA 70130
Attn: Cheryl H. Dererea
Telecopy: 504-533-2060
Telephone: 504-533-2119
<PAGE>
IMPERIAL BANK, A CALIFORNIA BANKING CORPORATION
By:______________________________________
Title:
Address for Notices:
9920 South La Cienega Boulevard, Dept. 2405
Inglewood, CA 90301
Charles Wilmot
Telecopy: 310-417-5997
Telephone: 310-417-5415
<PAGE>
NATIONAL BANK OF CANADA, A CANADIAN CHARTERED BANK
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
401 East Pratt St, Suite 631
Baltimore, MD 21202
Attn: Richard Brown
Telecopy: 410-727-4314
Telephone: 410-837-8359
<PAGE>
NATIONAL CITY BANK
By:______________________________________
Title:
Address for Notices:
Telecopy:
Telephone:
<PAGE>
THE SAKURA BANK LIMITED
By:______________________________________
Title:
Address for Notices:
277 Park Avenue, 45th Fl
New York, NY 10172
Attn: Yoshikazu Nagura
Telecopy: 212-888-7651
Telephone: 212-756-6804
<PAGE>
SOUTHERN PACIFIC BANK
By:______________________________________
Title:
Address for Notices:
12300 Wilshire Blvd.
Los Angeles, CA 90025
Attn: Cheryl Wasilewski
Telecopy: 310-207-4067
Telephone: 310-442-3351
<PAGE>
THE SUMITOMO BANK, LIMITED
By:______________________________________
Title:
Address for Notices:
277 Park Avenue, 6th Floor
New York, NY 10017
Attn: Greg Aptman
Telecopy: 212-224-4834
Telephone: 212-224-4131
<PAGE>
THE MITSUBISHI TRUST & BANKING CORPORATION
By:______________________________________
Title:
Address for Notices:
520 Madison Avenue
New York, NY 10022
Attn: Paul Arzouian
Telecopy: 212-644-6825
Telephone: 212-891-8425
<PAGE>
CYPRESSTREE INVESTMENT MANAGEMENT COMPANY,
As: Attorney-in-Fact and on behalf of
First Allmerica Financial
Life Insurance Company as Portfolio
Manager
By:______________________________________
Title:
Address for Notices:
125 High Street, 14th Floor
Boston, MA 02110
Attn: Timothy Barnes
Telecopy: 617-946-5697
Telephone:617-946-0600
<PAGE>
ALLSTATE INSURANCE COMPANY
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
3075 Sanders Road
Northbrook, IL 60062-7127
Attn: Kirstin Eichmann
Telecopy: 847-402-3092
Telephone: 847-402-9327
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
3075 Sanders Road
Northbrook, IL 60062-7127
Attn: Kirstin Eichmann
Telecopy: 847-402-3092
Telephone: 847-402-9327
<PAGE>
BALANCED HIGH-YIELD FUND I LTD.
by: BHF-BANK AKTIENGESELLSCHAFT, acting
through its New York
Branch , as attorney-in-fact
By:______________________________________
Title:
By:______________________________________
Title:
Address for Notices:
c/o BHF-Bank
590 Madison Ave, 30th Fl
New York, NY
Attn: Linda Pace
Telecopy: 212-756-5536
Telephone: 212-756-5915
<PAGE>
CYPRESS TREE INVESTMENT FUND, LLC
By:______________________________________
Title:
Address for Notices:
Telecopy:
Telephone:
<PAGE>
DEEPROCK & COMPANY
by: Eaton Vance Management, as Investment Advisor
By:______________________________________
Title:
Address for Notices:
c/o Boston Management and Research
24 Federal Street, 6th Floor
Boston, MA 02110
Attn: Gretchen Bergstresser
Telecopy: 617-695-9594
Telephone: 617-654-8404
<PAGE>
FIRST COMMERCIAL BANK, NEW YORK
By:______________________________________
Title:
Address for Notices:
2 World Trade Center, Suite 7868
New York, NY 10048
Attn: Helen Tong
Telecopy: 212-432-7250
Telephone: 212-432-6590
<PAGE>
KZH-ING-2 CORPORATION
By:______________________________________
Title:
Address for Notices:
c/o The Chase Manhattan Bank
450 West 33rd St, 15th Fl
New York, NY 10001
Attn: Virginia Conway
Telecopy: 212-946-7776
Telephone: 212-946-7575
<PAGE>
KZH - SOLEIL-2 CORPORATION
By:______________________________________
Title:
Address for Notices:
c/o The Chase Manhattan Bank
450 West 33rd St, 15th Fl
New York, NY 10001
Attn: Virginia Conway
Telecopy: 212-946-7776
Telephone: 212-946-7575
<PAGE>
NATIONAL WESTMINSTER BANK PLC
by: NatWest Capital Markets, Limited, its agent
by: Greenwich Capital Markets , Inc., its agent
By:______________________________________
Title:
Address for Notices:
c/o American Money Management Corp.
One East Fourth St, 3rd Fl
Cincinnati, OH 45202
Attn: David Taylor
Telecopy: 513-579-2910
Telephone: 513-579-2194
<PAGE>
PARIBAS CAPITAL FUNDING LLC
By:______________________________________
Title:
Address for Notices:
787 Seventh Avenue, 32nd Fl
New York, NY 10019
Attn: Michael Weinberg
Telecopy: 212-841-2144
Telephone: 212-841-2544
<PAGE>
PRIME INCOME TRUST
By:______________________________________
Title:
Address for Notices:
c/o Dean Witter InterCapital, Inc.
Two World Trade Center, 72nd Fl
New York, NY 10048
Attn: Sheila Finnerty
Telecopy: 212-392-5345
Telephone: 212-392-5686
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:______________________________________
Title:
Address for Notices:
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attn: Sean Kelley
Telecopy: 630-684-6740
Telephone: 630-684-6262
and
State Street Bank & Trust
Corporate Trust Department
P.O. Box 778
Boston, MA 02102
Attn: Sean Emerson
Telecopy: 617-664-5366
Telephone: 617-664-5481
<PAGE>
VAN KAMPEN AMERICAN CAPITAL SENIOR
FLOATING RATE FUND
By:______________________________________
Title:
Address for Notices:
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attn: Sean Kelley
Telecopy: 630-684-6740
Telephone: 630-684-6262
and
State Street Bank & Trust
Corporate Trust Department
P.O. Box 778
Boston, MA 02102
Attn: Sean Emerson
Telecopy: 617-664-5366
Telephone: 617-664-5481
<PAGE>
KZH-IV CORPORATION
By:______________________________________
Title:
Address for Notices:
450 W.33rd Street
15th Floor
New York, New York 10001-2697
Attn: Virginia R. Conway
Telecopy: 212-946-7776
Telephone: 212-946-7575
<PAGE>
KZH-CYPRESSTREE-1 CORPORATION
By:______________________________________
Title:
Address for Notices:
450 W.33rd Street
15th Floor
New York, New York 10001-2697
Attn: Virginia R. Conway
Telecopy: 212-946-7776
Telephone: 212-946-7575
<PAGE>
KZH CRESCENT-2 CORPORATION
By:______________________________________
Title:
Address for Notices:
450 W.33rd Street
15th Floor
New York, New York 10001-2697
Attn: Virginia R. Conway
Telecopy: 212-946-7776
Telephone: 212-946-7575
<PAGE>
KZH-ING-2 CORPORATION
By:______________________________________
Title:
Address for Notices:
450 W.33rd Street
15th Floor
New York, New York 10001-2697
Attn: Virginia R. Conway
Telecopy: 212-946-7776
Telephone: 212-946-7575
<PAGE>
Schedule I
Commitments and Addresses
<PAGE>
Schedule II
Applicable Margin and Commitment Fee Step-Downs
Step-Downs for Revolving Credit Loans, Tranche A Term Loans, Multi-Draw Term
Loans and Commitment Fees
<TABLE>
<CAPTION>
Leverage Eurodollar Loans ABR Loans
Ratio Applicable Margin Applicable Margin Commitment Fee
--------- ------------------ ------------------ ----------------
<S> <C> <C> <C>
greater than 5.00 to 1 2.25% 1.25% 0.500%
greater than 4.50 to 1 2.00% 1.00% 0.500%
greater than 4.00 to 1 1.75% 0.75% 0.375%
greater than 3.50 to 1 1.50% 0.50% 0.375%
-----
greater than 3.00 to 1 1.25% 0.25% 0.300%
less than or equal to 3.00 to 1.00% 0.00% 0.300%
1
</TABLE>
Step-Downs for Tranche B Term Loans
<TABLE>
<CAPTION>
Eurodollar Loans
Leverage Applicable ABR Loans Applicable
Ratio Margin Margin
--------- ------------------- ----------------------
<S> <C> <C>
greater than 5.00 to 1 2.50% 1.50%
greater than 4.50 to 1 2.25% 1.25%
greater than 4.00 to 1 2.00% 1.00%
greater than 3.50 to 1 2.00% 1.00%
greater than 3.00 to 1 2.00% 1.00%
less than or equal to 3.00 to 1 2.00% 1.00%
</TABLE>
<PAGE>
Schedule III
to Credit Agreement
Indicative Terms of Permitted Receivables Securitizations
Transaction Summary: The Borrower may establish, directly or indirectly, one
or more special purpose, bankruptcy remote subsidiaries
(collectively, the "Receivables Company") that will
purchase, on a revolving basis, all or a designated
portion of the trade account receivables, together with
any designated assets related to such receivables such
as agreements, security arrangements, guarantees and
other related assets (collectively, the "Receivables"),
generated by the Borrower and its subsidiaries. The
purchases of the Receivables by the Receivables Company
will be financed in part by the creation of a
receivables facility, with or without external credit
enhancement, in which ownership interests in, or notes,
commercial paper, certificates or other debt instruments
secured by or representing beneficial interests in the
Receivables (such ownership interests, notes, commercial
paper, certificates or instruments, the "Receivables
Securities") will be sold in one or more registered
public offerings, private placements, or other available
capital markets transactions by the Receivables Company
or an unaffiliated special purpose entity. If the
financing is provided through an unaffiliated special
purpose entity, the Borrower may or may not elect to
create a Receivables Company to implement the
transaction.
Interest Rate on
Receivables Securities: Under the terms of the definitive documentation for the
creation and issuance of the Receivables Securities (the
"Receivables Facility Documents"), the Receivables
Securities will bear interest or have an equivalent
yield thereon at a rate that at the time of issuance the
Borrower reasonably expects to be less than the interest
rate provided for on the Revolving Credit Loans
(including, in the case of a fixed rate offering of
Receivables Securities, the interest rate swap
equivalent in respect thereof on the date of issuance
thereof).
Limited Recourse: The transfer of Receivables by the Borrower to the
Receivables Company will be made with limited recourse.
The Borrower may be liable under the Receivables
Facility
<PAGE>
Documents for customary recourse events, and in any
event may be liable for (a) the breach of certain
representations and warranties (consistent with similar
financing transactions of this type) set forth therein,
(b) the aggregate amount of any dilution with respect to
any transferred Receivables, (c) its other agreements
and obligations (consistent with similar financing
transactions of this type) under the Receivables
Facility Documents, (d) any obligations incurred in
respect of any underwriting or placement agency
agreements entered into in connection with the offering
of the Receivables Securities, (e) its servicing
obligations and (f) customary indemnification and
repurchase provisions.
Default/Termination/
Amortization Events
Under the Receivables
Facility Documents: The Receivables Facility Documents may contain customary
defaults/termination/amortization events, and in any
event may contain the following
defaults/termination/amortization events: failure to
pass certain performance tests, including maintenance of
a minimum amount of eligible receivables outstanding or
generated during a specified period, a maximum dilution
ratio, delinquency ratio, default ratio, and maximum
days sales outstanding ratio; nonpayment of amounts when
due; violation of covenants; failure of any
representation or warranty to be true in all material
respects; cross-acceleration to Borrower's credit
facilities; bankruptcy events with respect to all
parties to the transaction; change in control; material
judgments; tax and ERISA matters; and actual or asserted
(by the Borrower, the Receivables Company or any of
their affiliates) invalidity of any Receivables Facility
Documents or security or beneficial interests
thereunder; and such other events as are required by any
rating agency rating the Receivables Securities.
<PAGE>
Schedule IV
Equity Investors
CDR-PC Acquisition, L.L.C.
<PAGE>
Schedule V
Subsidiary Guarantors
<PAGE>
Schedule VI
Blue Star Subsidiary Guarantors
<PAGE>
SCHEDULE I
LENDERS; COMMITMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Multi-Draw Tranche A Tranche B
Revolving Credit Term Loan Term Loan Term Loan
Lender Commitment Commitment Commitment Commitment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Chase Manhattan Bank $16,545,454.55 $15,636,389.64 $ 6,818,181.82 $347,000,000.00
Bankers Trust Company $15,909,090.91 $12,727,272.73 $ 6,363,636.36 $31,000,000.00
Merrill Lynch Capital Corporation $15,000,000.00 $12,000,000.00 $ 6,000,000.00 $11,000,000.00
Barclays Bank PLC $13,636,363.64 $10,909,080.91 $ 5,454,545.45 $10,000,000.00
Bank of America National Trust and Savings Association $13,636,363.64 $10,909,080.91 $ 5,454,545.45 $10,000,000.00
Citicorp USA, Inc. $13,636,363.64 $10,909,080.91 $ 5,454,545.45 $10,000,000.00
BHF - Bank Aktiengesellschaft $13,636,363.64 $10,909,080.91 $ 5,454,545.45 $10,000,000.00
NationsBank, N.A. $13,636,363.64 $10,909,080.91 $ 5,454,545.45
The Bank of New York $11,363,636.36 $ 9,090,909.09 $ 4,545,454.55
General Electric Capital Corporation $11,363,636.36 $ 9,090,909.09 $ 4,545,454.55 $10,000,000.00
National Bank of Canada, A Canadian Chartered Bank $11,363,636.36 $ 9,090,909.09 $ 4,545,454.55
Southern Pacific Bank $11,363,636.36 $ 9,090,909.09 $ 4,545,454.55
Credit Agricole Indosuez $ 9,090,909.09 $ 7,272,727.27 $ 3,636,363.64
First Union National Bank $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
The Mitsubishi Trust & Banking Corporation $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
City National Bank $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
Chiao Tung Bank Co., Ltd., New York Agency $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
Heller Financial, Inc. $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
Erste Bank Der Oesterreichischen Sparkassen $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
Hibernia National Bank $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
The Sakura Bank Limited $ 6,818,181.82 $ 5,454,545.45 $ 2,727,272.73
First Commerical Bank, New York $ 8,000,000.00 $ 4,000,000.00 $ 3,000,000.00
National City Bank $ 4,545,454.55 $ 3,636,363.64 $ 1,818,181.82
The Sumitomo Bank Limited $ 4,545,454.55 $ 3,636,363.64 $ 1,818,181.82 $ 5,000,000.00
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Multi-Draw Tranche A Tranche B
Revolving Credit Term Loan Term Loan Term Loan
Lender Commitment Commitment Commitment Commitment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BankBoston, N.A. $ 4,545,454.55 $ 3,636,363.64 $ 1,818,181.82 $ 5,000,000.00
Imperial Bank, a California Banking Corporation $ 3,636,363.64 $ 2,909,090.91 $ 1,454,545.45
KZH - IV Corporation $65,000,000.00
Van Kampen American Capital Prime Rate Income Trust $45,000,000.00
Prime Income Trust $20,000,000.00
KZH - Soleil - 2 Corporation $15,000,000.00
National Westminster Bank PLC $15,000,000.00
KZH - ING - 2 Corporation $10,000,000.00
Paribas Capital Funding LLC $10,000,000.00
Van Kampen American Capital Senior Floating Rate $10,000,000.00
Fund
Allstate Insurance Company $6,666,666.67
KZH - CypressTree - 1 Corporation $8,000,000.00
Balanced High-Yield Fund I Ltd. $5,000,000.00
KZH - Crescent 2 Corporation $5,000,000.00
First Allmerica Financial Life Insurance $5,000,000.00
Allstate Life Insurance Company $3,333,333.33
Cypress Tree Investment Fund, LLC $2,000,000.00
Deeprock & Company $1,000,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL $250,000,000.00 $200,000,000.00 $100,000,000.00 $675,000,000.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Schedule 9(a)
-------------
I. COVENANTS APPLICABLE TO TRANCHE B TERM LOAN COMMITMENTS AND
TRANCHE B TERM LOANS
As used in this Schedule, the terms defined in part II of this Schedule
shall have the meanings set forth therein.
I.1. Limitation on Indebtedness. (a) The Borrower will not, and will
not permit any Restricted Subsidiary to, Incur any Indebtedness; provided,
however, that the Borrower or any Note Guarantor may Incur Indebtedness if on
the date of the Incurrence of such Indebtedness, after giving effect to the
Incurrence thereof, the Consolidated Coverage Ratio would be greater than
1.75:1.00 if such Indebtedness is Incurred prior to June 15, 2001 or 2.00:1.00
if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Borrower and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness Incurred pursuant to the Credit Agreement
(including but not limited to Indebtedness in respect of letters of
credit or bankers' acceptances issued or created hereunder) and
Indebtedness of any Foreign Subsidiary Incurred other than under the
Credit Agreement, and (without limiting the foregoing), in each case,
any Refinancing Indebtedness in respect thereof, in a maximum principal
amount at any time outstanding not exceeding in the aggregate the
amount equal to (A) $1,350.0 million, plus (B) the amount, if any, by
which the Borrowing Base exceeds $400.0 million, plus (C) in the case
of any refinancing of the Credit Agreement or any portion thereof, the
aggregate amount of fees, underwriting discounts, premiums and other
costs and expenses incurred in connection with such refinancing;
(ii) Indebtedness (A) of any Restricted Subsidiary to the
Borrower or (B) of the Borrower or any Restricted Subsidiary to any
Restricted Subsidiary; provided that any subsequent issuance or
transfer of any Capital Stock of such Restricted Subsidiary to which
such Indebtedness is owed, or other event, that results in such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
other subsequent transfer of such Indebtedness (except to the Borrower
or a Restricted Subsidiary) will be deemed, in each case, an Incurrence
of such Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Notes (other than any
Additional Notes), any Indebtedness (other than the Indebtedness
described in clauses (i) or (ii) above) outstanding on the Issue Date
and any Refinancing Indebtedness Incurred in respect of any
Indebtedness described in this clause (iii) or paragraph (a) above;
(iv) Purchase Money Obligations and Capitalized Lease
Obligations, and any Refinancing Indebtedness with respect thereto, in
an aggregate principal amount at any time outstanding not exceeding an
amount equal to 3.5% of Consolidated Total Assets at any time
outstanding;
<PAGE>
(v) Indebtedness of any Foreign Subsidiary Incurred for
working capital purposes;
(vi) (A) Guarantees by the Borrower or any Restricted
Subsidiary of Indebtedness or any other obligation or liability of the
Borrower or any Restricted Subsidiary (other than any Indebtedness
incurred by the Borrower or such Restricted Subsidiary, as the case may
be, in violation of this Section I.1), or (B) without limiting Section
I.6 of this Schedule, Indebtedness of the Borrower or any Restricted
Subsidiary arising by reason of any Lien granted by or applicable to
such Person securing Indebtedness of the Borrower or any Restricted
Subsidiary (other than any Indebtedness Incurred by the Borrower or
such Restricted Subsidiary, as the case may be, in violation of the
covenant described under this Section I.1);
(vii) Indebtedness of the Borrower or any Restricted
Subsidiary (A) arising from the honoring of a check, draft or similar
instrument of such Person drawn against insufficient funds, provided
that such Indebtedness is extinguished within five Business Days of its
incurrence, or (B) consisting of guarantees, indemnities, obligations
in respect of earn-outs or other purchase price adjustments, or similar
obligations, Incurred in connection with the acquisition or disposition
of any business, assets or Person (including pursuant to the Strategic
Restructuring);
(viii) Indebtedness of the Borrower or any Restricted
Subsidiary in respect of (A) letters of credit, bankers' acceptances or
other similar instruments or obligations issued, or relating to
liabilities or obligations incurred, in the ordinary course of business
(including those issued to governmental entities in connection with
self-insurance under applicable workers' compensation statutes), or (B)
completion guarantees, surety, judgment, appeal or performance bonds,
or other similar bonds, instruments or obligations, provided, or
relating to liabilities or obligations incurred, in the ordinary course
of business, or (C) Hedging Obligations entered into for bona fide
hedging purposes in the ordinary course of business, or (D) Management
Guarantees or (E) the financing of insurance premiums in the ordinary
course of business;
(ix) Indebtedness of a Receivables Subsidiary secured by a
Lien on all or part of the assets disposed of in, or otherwise incurred
in connection with, a Financing Disposition;
(x) Indebtedness of any Person that is assumed by the
Borrower or any Restricted Subsidiary in connection with its
acquisition of assets from such Person or any Affiliate thereof or is
issued and outstanding on or prior to the date on which such Person was
acquired by the Borrower or any Restricted Subsidiary or merged or
consolidated with or into any Restricted Subsidiary (other than
Indebtedness Incurred to finance, or otherwise in connection with, such
acquisition), provided that on the date of such acquisition, merger or
consolidation, after giving effect thereto, (x) with respect to any
such Indebtedness of the Borrower, any Foreign Subsidiary or any Note
Guarantor, (A) the Borrower could Incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) above or (B) the Consolidated
Coverage Ratio is greater than it was on such date immediately prior to
giving effect to such acquisition and (y) with respect to any such
2
<PAGE>
Indebtedness of any Domestic Subsidiary that is not a Note Guarantor,
the Borrower could Incur at least $1.00 of additional Indebtedness
pursuant to paragraph (a) above; and any Refinancing Indebtedness with
respect to any such Indebtedness;
(xi) Indebtedness of any Restricted Subsidiary in an
aggregate principal amount at any time outstanding for all such
Indebtedness not exceeding (A) an amount equal to 5% of Consolidated
Total Assets, provided that either on the date of Incurrence of such
Indebtedness after giving effect thereto, the Borrower could Incur at
least $1.00 of additional Indebtedness pursuant to paragraph (a) above,
or such Indebtedness is Refinancing Indebtedness in respect of any such
Indebtedness initially so Incurred, or (B) otherwise, an amount equal
to 2.5% of Consolidated Total Assets;
(xii) Indebtedness of the Borrower or any Restricted
Subsidiary in an amount at any time outstanding not exceeding twice the
amount of Excluded Contributions made after the Issue Date, provided
that the proceeds of such Indebtedness and the related amount of such
Excluded Contributions are used to finance the acquisition of assets
from any Person in a Related Business or the merger or consolidation of
such a Person into or with the Borrower or any Restricted Subsidiary
(including but not limited to payment of any related fees and
expenses), or to refinance any such acquisition, merger or
consolidation with such Indebtedness being Incurred for such
refinancing within nine months of the closing of such acquisition,
merger or consolidation; and any Refinancing Indebtedness with respect
to any such Indebtedness; and
(xiii) Indebtedness of the Borrower or any Restricted
Subsidiary in an aggregate principal amount at any time outstanding not
exceeding an amount equal to 5% of Consolidated Total Assets.
(c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant, (i) any other obligation of the obligor on such
Indebtedness (or of any other Person who could have Incurred such Indebtedness
under this Section I.1) arising under any Guarantee, Lien or letter of credit,
bankers' acceptance or other similar instrument or obligation supporting such
Indebtedness shall be disregarded to the extent that such Guarantee, Lien or
letter of credit, bankers' acceptance or other similar instrument or obligation
secures the principal amount of such Indebtedness; (ii) in the event that
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in paragraph (b) above, the Borrower, in its sole discretion, shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses; and (iii) the amount of
Indebtedness issued at a price that is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined in
accordance with GAAP.
(d) For purposes of determining compliance with any Dollar-denominated
restriction on the Incurrence of Indebtedness denominated in a foreign currency,
the Dollar-equivalent principal amount of such Indebtedness Incurred pursuant
thereto shall be calculated based on the relevant currency exchange rate in
effect on the date that such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness,
provided that (x) the Dollar-equivalent principal amount of any such
Indebtedness outstanding on the Issue Date shall be calculated based on the
relevant currency exchange rate in effect on the
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Issue Date, (y) if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable Dollar-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
Dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced and (z) the
Dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency and Incurred pursuant to the Credit Agreement shall be calculated based
on the relevant currency exchange rate in effect on, at the Borrower's option,
(i) the Issue Date, (ii) any date on which any of the respective commitments
under the Credit Agreement shall be reallocated between or among facilities or
subfacilities thereunder, or on which such rate is otherwise calculated for any
purpose thereunder, or (iii) the date of such Incurrence. The principal amount
of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
I.2. Limitation on Restricted Payments. (a) The Borrower shall not, and
shall not permit any Restricted Subsidiary, directly or indirectly to (i)
declare or pay any dividend or make any distribution on or in respect of its
Capital Stock (including any such payment in connection with any merger or
consolidation to which the Borrower is a party) except (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and (y) dividends or distributions payable to the Borrower or any
Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making
such dividend or distribution, to other holders of its Capital Stock on no more
than a pro rata basis, measured by value), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Borrower held by Persons
other than the Borrower or a Restricted Subsidiary, (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than a purchase, redemption, defeasance or other
acquisition or retirement for value in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of such acquisition or retirement) or (iv) make any Investment
(other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition or
retirement or Investment being herein referred to as a "Restricted Payment"), if
at the time the Borrower or such Restricted Subsidiary makes such Restricted
Payment and after giving effect thereto:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Borrower could not incur at least an additional $1.00
of Indebtedness pursuant to paragraph (a) of the covenant described
under Section I.1 of this Schedule; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in
cash, to be as determined in good faith by the Board of Directors,
whose determination shall be conclusive) declared or made subsequent to
the Issue Date and then outstanding would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from April 25,
1998 to the end of the most
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recent fiscal quarter ending prior to the date of such
Restricted Payment for which consolidated financial statements
of the Borrower are available (or, in case such Consolidated
Net Income shall be a negative number, 100% of such negative
number);
(B) the aggregate Net Cash Proceeds, and fair value
(as determined in good faith by the Board of Directors) of
property or assets, received (x) by the Borrower as capital
contributions to the Borrower after the Issue Date or from the
issuance or sale (other than to a Restricted Subsidiary) of
its Capital Stock (other than Disqualified Stock) after the
Issue Date (other than Excluded Contributions) or (y) by the
Borrower or any Restricted Subsidiary from the issuance and
sale by the Borrower or any Restricted Subsidiary after the
Issue Date of Indebtedness that shall have been converted into
or exchanged for Capital Stock of the Borrower (other than
Disqualified Stock), plus the amount of cash, property or
assets (determined as provided above) received by the Borrower
or any Restricted Subsidiary upon such conversion or exchange;
(C) the aggregate amount equal to the net reduction
in Investments in Unrestricted Subsidiaries resulting from (i)
dividends, distributions, interest payments, return of
capital, repayments of Investments or other transfers of
assets to the Borrower or any Restricted Subsidiary from any
Unrestricted Subsidiary, or (ii) the redesignation of any
Unrestricted Subsidiary as a Restricted Subsidiary (valued in
each case as provided in the definition of "Investment"), not
to exceed in the case of any such Unrestricted Subsidiary the
aggregate amount of Investments (other than Permitted
Investments) made by the Borrower or any Restricted Subsidiary
in such Unrestricted Subsidiary after the Issue Date;
(D) in the case of any disposition or repayment of
any Investment constituting a Restricted Payment (without
duplication of any amount deducted in calculating the amount
of Investments at any time outstanding included in the amount
of Restricted Payments), an amount in the aggregate equal to
the lesser of the return of capital, repayment or other
proceeds with respect to all such Investments and the initial
amount of all such Investments; and
(E) the aggregate exercise price of all options
attributable to shares of Capital Stock purchased in the
Equity Tender Offer.
(b) The provisions of the foregoing paragraph (a) will not prohibit any
of the following (each, a "Permitted Payment"):
(i) any purchase, redemption, repurchase, defeasance or
other acquisition or retirement of Capital Stock of the Borrower or
Subordinated Obligations made by exchange (including any such exchange
pursuant to the exercise of a conversion right or privilege in
connection with which cash is paid in lieu of the issuance of
fractional shares) for, or out of the proceeds of the substantially
concurrent issuance or sale of, Capital Stock of the Borrower (other
than Disqualified Stock and other than Capital Stock issued or sold to
a Subsidiary) or a substantially concurrent capital contribution to the
Borrower; provided, that the Net Cash Proceeds from such issuance,
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sale or capital contribution shall be excluded in subsequent
calculations under clause (3)(B) of the preceding paragraph (a) and
shall not constitute an Excluded Contribution;
(ii) any purchase, redemption, repurchase, defeasance or
other acquisition or retirement of Subordinated Obligations (x) made by
exchange for, or out of the proceeds of the substantially concurrent
issuance or sale of, Indebtedness of the Borrower or Refinancing
Indebtedness Incurred in compliance with Section I.1 of this Schedule,
(y) from Net Available Cash to the extent permitted by Section I.4 of
this Schedule or (z) to the extent required by the agreement governing
such Subordinated Obligations, following the occurrence of a Change of
Control (or other similar event described therein as a "change of
control"), but only if the Borrower shall have paid or prepaid the
Tranche B Term Loans (except to the extent prepayment has been declined
by any Tranche B Term Loan Lender) or obtained a waiver of or a
suitable amendment to subsection 10.3(j) of the Credit Agreement;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with the preceding paragraph (a);
(iv) Investments in an aggregate amount outstanding at any
time not to exceed the amount of Excluded Contributions (excluding the
amount of Excluded Contributions used to Incur Indebtedness pursuant to
clause (xii) of paragraph (b) of Section I.1 of this Schedule);
(v) payments by the Borrower to repurchase or otherwise
acquire Capital Stock (including any options, warrants or other rights
in respect thereof) from Management Investors (including loans,
advances, dividends or distributions by the Borrower to a Parent to
permit such Parent to make any such repurchase or other acquisition),
such payments, loans, advances, dividends or distributions not to
exceed an amount (net of repayments of any such loans or advances)
equal to (1) $25.0 million, plus (2) $3.0 million multiplied by the
number of calendar years that have commenced since the Issue Date (not
to exceed $9.0 million in the aggregate), plus (3) the Net Cash
Proceeds received by the Borrower since the Issue Date from, or as a
capital contribution from, the issuance or sale to Management Investors
of Capital Stock (including any options, warrants or other rights in
respect thereof), to the extent such Net Cash Proceeds are not included
in any calculation under clause (3)(B)(x) of the preceding paragraph
(a) and do not constitute an Excluded Contribution;
(vi) the payment by the Borrower of (or loans, advances,
dividends or distributions by the Borrower to a Parent to pay)
dividends on the common stock or equity of the Borrower (or such
Parent) following a public offering of such common stock or equity, in
an amount not to exceed in any fiscal year 6% of the aggregate gross
proceeds received by the Borrower in or from such public offering;
(vii) Restricted Payments (including loans or advances) in
an aggregate amount outstanding at any time not to exceed $20.0 million
(net of repayments of any such loans or advances);
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(viii) payments by the Borrower or any Restricted Subsidiary
to satisfy obligations under the CDR Agreements; and Permitted Parent
Payments;
(ix) payments by the Borrower, or loans, advances,
dividends or distributions by the Borrower to a Parent to make
payments, to holders of Capital Stock of the Borrower or such Parent in
lieu of issuance of fractional shares of such Capital Stock, not to
exceed $100,000 in the aggregate outstanding at any time;
(x) dividends or other distributions of Capital Stock,
Indebtedness or other securities of Unrestricted Subsidiaries;
(xi) the Transactions; and
(xii) any purchase, redemption, retirement or other
acquisition of Capital Stock (x) that is used as consideration in
making any Investment that involves an acquisition of a Person,
business or assets and that is permitted as a Restricted Payment
Transaction or (y) deemed to occur upon the exercise of options if such
Capital Stock represents a portion of the exercise price thereof;
provided, that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
amount of any such Permitted Payment shall be included in subsequent
calculations of the amount of Restricted Payments, (B) in the case of clause
(v), at the time of any calculation of the amount of Restricted Payments, the
net amount of Permitted Payments that have then actually been made under clause
(v) that is in excess of 50% of the total amount of Permitted Payments then
permitted under clause (v) shall be included in such calculation of the amount
of Restricted Payments, (C) in all cases other than pursuant to clauses (A) and
(B) immediately above, the net amount of any such Permitted Payment shall be
excluded in subsequent calculations of the amount of Restricted Payments and (D)
solely with respect to clause (vii), no Default or Event of Default shall have
occurred or be continuing at the time of such Permitted Payment after giving
effect thereto.
I.3. Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Borrower will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the Borrower, (ii)
make any loans or advances to the Borrower or (iii) transfer any of its property
or assets to the Borrower, except any encumbrance or restriction:
(1) pursuant to an agreement or instrument in effect at or
entered into on the Issue Date (including, without limitation, the
Credit Agreement), the Indenture or the Notes;
(2) pursuant to any agreement or instrument of a Person, or
relating to Indebtedness or Capital Stock of a Person, which Person is
acquired by or merged or consolidated with or into the Borrower or any
Restricted Subsidiary, or which agreement or instrument is assumed by
the Borrower or any Restricted Subsidiary in connection with an
acquisition of assets from such Person, as in effect at the time of
such acquisition, merger or consolidation (except to the extent that
such Indebtedness was incurred to finance, or otherwise in connection
with, such acquisition, merger or consolidation),
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provided that for purposes of this clause (2), if another Person is the
Successor Company, any Subsidiary thereof or agreement or instrument of
such Person or any such Subsidiary shall be deemed acquired or assumed,
as the case may be, by the Borrower or a Restricted Subsidiary, as the
case may be, when such Person becomes the Successor Company;
(3) pursuant to an agreement or instrument (a "Refinancing
Agreement") effecting a refinancing of Indebtedness Incurred pursuant
to, or that otherwise extends, renews, refunds, refinances or replaces,
an agreement or instrument referred to in clause (1) or (2) of this
covenant or this clause (3) (an "Initial Agreement") or contained in
any amendment, supplement or other modification to an Initial Agreement
(an "Amendment"); provided, however, that the encumbrances and
restrictions contained in any such Refinancing Agreement or Amendment
are not materially less favorable to the Holders of the Notes taken as
a whole than encumbrances and restrictions contained in the Initial
Agreement or Initial Agreements to which such Refinancing Agreement or
Amendment relates (as determined in good faith by the Borrower);
(4) (A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, or the assignment or transfer of
any lease, license or other contract, (B) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Borrower or any Restricted Subsidiary not
otherwise prohibited by the Indenture, (C) contained in mortgages,
pledges or other security agreements securing Indebtedness of a
Restricted Subsidiary to the extent restricting the transfer of the
property or assets subject thereto, (D) pursuant to customary
provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreements of the Borrower or any
Restricted Subsidiary, (E) pursuant to Purchase Money Obligations that
impose encumbrances or restrictions on the property or assets so
acquired, (F) on cash or other deposits or net worth imposed by
customers under agreements entered into in the ordinary course of
business, (G) pursuant to customary provisions contained in agreements
and instruments entered into in the ordinary course of business
(including but not limited to leases and joint ventures and other
similar agreements entered into in the ordinary course of business), or
(H) that arises or is agreed to in the ordinary course of business and
does not detract from the value of property or assets of the Borrower
or any Restricted Subsidiary in any manner material to the Borrower or
such Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary (or any of its
property or assets) imposed pursuant to an agreement entered into for
the direct or indirect sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary (or the
property or assets that are subject to such restriction) pending the
closing of such sale or disposition;
(6) required by any applicable law, rule, regulation or order
or by any regulatory authority having jurisdiction over the Borrower or
any Restricted Subsidiary or any of their business; or
(7) pursuant to an agreement or instrument (A) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue Date
pursuant to the provisions of
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Section I.1 of this Schedule if the Borrower determines that such
encumbrance or restriction will not cause the Borrower not to have the
funds necessary to pay the principal of or interest on the Notes, (B)
relating to any sale of receivables by a Foreign Subsidiary or (C)
relating to Indebtedness of or a Financing Disposition to or by any
Receivables Entity.
I.4 Limitation on Sales of Assets and Subsidiary Stock. (a) The
Borrower will not, and will not permit any Restricted Subsidiary to, make any
Asset Disposition unless
(i) the Borrower or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person
assuming responsibility for, any liabilities, contingent or otherwise)
at the time of such Asset Disposition at least equal to the fair market
value of the shares and assets subject to such Asset Disposition, as
such fair market value may be determined (and shall be determined, to
the extent such Asset Disposition involves aggregate consideration in
excess of $10.0 million) in good faith by the Board of Directors, whose
determination shall be conclusive (including as to the value of all
noncash consideration),
(ii) in the case of any Asset Disposition having a fair
market value of $10.0 million or more, at least 75% of the
consideration therefor (excluding, in the case of an Asset Disposition
of assets, any consideration by way of relief from, or by any other
Person assuming responsibility for, any liabilities, contingent or
otherwise, that are not Indebtedness) received by the Borrower or such
Restricted Subsidiary is in the form of cash, and provided that this
clause (ii) shall not apply to any Asset Disposition involving assets
that accounted for less than two percent of Consolidated EBITDA during
the period of the most recent four consecutive fiscal quarters ending
prior to the date of such Asset Disposition for which consolidated
financial statements of the Borrower are available, and
(iii) an amount equal to 100% of the Net Cash Proceeds from
such Asset Disposition minus any Reinvested Amount is applied by the
Borrower (or any Restricted Subsidiary, as the case may be) as follows:
(A) first, to make any prepayment of the Loans and
cash collateralization of the L/C Obligations required under
subsection 4.4(c) of the Credit Agreement; and
(B) second, to the extent of the balance of such Net
Cash Proceeds after application in accordance with clause (A)
above, to fund (to the extent consistent with any other
applicable provision of the Credit Agreement) any general
corporate purpose (including but not limited to the
repurchase, repayment or other acquisition or retirement of
any Subordinated Obligations).
I.5 Limitation on Transactions with Affiliates. (a) The Borrower will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
enter into or conduct any transaction or series of related transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Borrower (an "Affiliate
Transaction") unless (i) the terms of such Affiliate Transaction are not
materially less favorable to the Borrower
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or such Restricted Subsidiary, as the case may be, than those that could be
obtained at the time in a transaction with a Person who is not such an Affiliate
and (i) if such Affiliate Transaction involves aggregate consideration in excess
of $10.0 million, the terms of such Affiliate Transaction have been approved by
a majority of the Disinterested Directors. For purposes of this paragraph, any
Affiliate Transaction shall be deemed to have satisfied the requirements set
forth in this paragraph if (x) such Affiliate Transaction is approved by a
majority of the Disinterested Directors, or (y) in the event there are no
Disinterested Directors, a fairness opinion is provided by a nationally
recognized appraisal or investment banking firm with respect to such Affiliate
Transaction.
(b) The provisions of the preceding paragraph (a) will not apply to:
(i) any Restricted Payment Transaction,
(ii) (1) the entering into, maintaining or performance of
any employment contract, collective bargaining agreement, benefit plan,
program or arrangement, related trust agreement or any other similar
arrangement for or with any employee, officer or director heretofore or
hereafter entered into in the ordinary course of business, including
vacation, health, insurance, deferred compensation, severance,
retirement, savings or other similar plans, programs or arrangements,
(2) the payment of compensation, performance of indemnification or
contribution obligations, or any issuance, grant or award of stock,
options, other equity-related interests or other securities, to
employees, officers or directors in the ordinary course of business,
(3) the payment of fees to directors of the Borrower or any of its
Subsidiaries, (4) any transaction with an officer or director in the
ordinary course of business not involving more than $250,000 in any one
case, or (5) Management Advances and payments in respect thereof,
(iii) any transaction with the Borrower, any Restricted
Subsidiary, or any Receivables Entity,
(iv) any transaction arising out of agreements or
instruments in existence on the Issue Date, and any payments made
pursuant thereto,
(v) execution, delivery and performance of the CDR
Agreements, including (1) payment to CDR or any Affiliate of CDR of a
fee of $15.0 million plus out-of-pocket expenses in connection with the
Transactions, and (2) payment to CDR or any Affiliate of CDR of fees of
up to $1.0 million in any fiscal year plus all out-of-pocket expenses
incurred by CDR or any such Affiliate in connection with its
performance of management consulting, monitoring, financial advisory or
other services with respect to the Borrower and its Restricted
Subsidiaries,
(vi) the Transactions, all transactions in connection
therewith (including but not limited to the financing thereof), and all
fees or expenses paid or payable in connection with the Transactions,
(vii) any transaction in the ordinary course of business
on terms not materially less favorable to the Borrower or the relevant
Restricted Subsidiary than those that could be obtained at the time in
a transaction with a Person who is not an Affiliate of
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the Borrower, and
(viii) any transaction in the ordinary course of business,
or approved by a majority of the Board of Directors, between the
Borrower or any Restricted Subsidiary and any Affiliate of the Borrower
controlled by the Borrower that is a joint venture or similar entity.
I.6 Limitation on Liens. The Borrower shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, (i) create or permit to
exist any Lien (other than Permitted Liens) on any of its property or assets
(including Capital Stock of any other Person), whether owned on the Issue Date
or thereafter acquired, securing any Indebtedness of the Borrower or any Note
Guarantor (other than Indebtedness under the Credit Agreement) or (ii) create or
permit to exist any Lien (the "Initial Lien") securing the Revolving Credit
Loans, the L/C Obligations (except to the extent of cash collateralization
therefor as contemplated by the Credit Agreement), the Tranche A Term Loans or
the Multi-Draw Terms Loans, or guarantees by any Subsidiary Guarantors thereof
or any Refinancing Indebtedness which refinances all or substantially all of
such Revolving Credit Loans, L/C Obligations, Tranche A Term Loans, Multi-Draw
Term Loans or guarantees by any Subsidiary Guarantors of any such Refinancing
Indebtedness, unless contemporaneously therewith effective provision is made to
secure the Tranche B Term Loans or the guarantees thereof, equally and ratably
for so long as such Initial Lien is in effect. Any such Lien thereby created in
favor of the Tranche B Term Loans or guarantees thereof will be automatically
and unconditionally released and discharged upon (i) the release and discharge
of the Initial Lien to which it relates, or (ii) any sale, exchange or transfer
to any Person (other than a Subsidiary or the Borrower) of the property or
assets secured by such Initial Lien, or of all of the Capital Stock held by the
Borrower or any Restricted Subsidiary in, or all or substantially all the assets
of, any Restricted Subsidiary creating such Lien.
II. DEFINITIONS
Unless otherwise defined in this Schedule, capitalized terms
used in this Schedule (including in other capitalized terms in this Schedule or
in other such capitalized terms) have the respective meanings specified in the
Senior Subordinated Note Indenture (as defined in the Credit Agreement):
"Borrower" has the meaning specified in the Credit Agreement.
"Board of Directors" means the board of directors or other
governing body of the Borrower or, if the Borrower is owned or managed by a
single entity, the board of directors or other governing body of such entity,
or, in either case, any committee thereof duly authorized to act on behalf of
such board or governing body (or, for purposes of clause (i) of paragraph (a) of
Section I.4 of this Schedule, a committee of Officers of the Borrower designated
by such board or governing body).
"Consolidated Total Assets" means, as of any date of
determination, the total assets shown on the consolidated balance sheet of the
Borrower and its Restricted Subsidiaries as of the most recent date for which
such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP (and, in the case of any determination relating to any
Incurrence of Indebtedness or any Investment, on a pro forma basis including any
property or assets being
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acquired in connection therewith), provided that for purposes of paragraph (b)
of Section I.1 of this Schedule and the definition of "Permitted Investment",
Consolidated Total Assets shall not be less than $2,006 million.
"Credit Agreement" means the Credit Agreement to which this
Schedule is attached and is a part, as amended, modified, or supplemented from
time to time.
"Excluded Contribution" means Net Cash Proceeds, or the fair
value, as determined in good faith by the Board of Directors, of property or
assets, received by the Borrower as capital contributions to the Borrower after
the Issue Date or from the issuance or sale (other than to a Restricted
Subsidiary) of Capital Stock (other than Disqualified Stock) of the Borrower ,
in each case to the extent designated as an Excluded Contribution pursuant to an
Officer's Certificate of the Borrower and not previously included in the
calculation set forth in Section I.2 of this Schedule for purposes of
determining whether a Restricted Payment may be made.
"Issue Date" means the Effective Date, as defined in the
Credit Agreement.
"L/C Obligations" has the meaning specified in the Credit
Agreement.
"Loans" has the meaning specified in the Credit Agreement.
"Note Guarantor" means a Subsidiary Guarantor.
"Reinvested Amount" has the meaning specified in the Credit
Agreement.
"Subsidiary Guarantee" means, as to any Subsidiary Guarantor,
its Guarantee of the Loans.
"Subsidiary Guarantor" has the meaning specified in the Credit
Agreement.
"Subordinated Obligations" means any Indebtedness of the
Borrower (whether outstanding on the date of the Credit Agreement or thereafter
Incurred) that is expressly subordinated in right of payment to the Tranche B
Term Loans pursuant to a written agreement.
"Tranche B Term Loan" has the meaning specified in the Credit
Agreement.
"Tranche B Term Loan Lender" has the meaning specified in the
Credit Agreement.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Borrower that at the time of determination is an Unrestricted Subsidiary, as
designated by the Board of Directors in the manner provided below, and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Borrower (including any newly acquired or newly formed
Subsidiary of the Borrower ) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Borrower or any other
Restricted Subsidiary of the Borrower that is not a Subsidiary of the Subsidiary
to be so designated; provided, that either (A) the Subsidiary to be so
12
<PAGE>
designated has total consolidated assets of $1,000 or less or (B) if such
Subsidiary has consolidated assets greater than $1,000, then such designation
would be permitted in Section I.2 of this Schedule. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
that immediately after giving effect to such designation either (x) the Borrower
could incur at least $1.00 of additional Indebtedness under paragraph (a) of
Section I.1 of this Schedule or (y) the Consolidated Coverage Ratio would be
greater than it was immediately prior to giving effect to such designation. Any
such designation by the Board of Directors shall be evidenced to the Agent by
promptly filing with the Agent a copy of the resolution of the Borrower's Board
of Directors giving effect to such designation and an Officer's Certificate
certifying that such designation complied with the foregoing provisions.
13
<PAGE>
EXHIBIT A-1
-----------
FORM OF REVOLVING CREDIT NOTE
THIS REVOLVING CREDIT NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS REVOLVING CREDIT NOTE AND THE
OBLIGATIONS EVIDENCED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$_____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, [U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation] [BLUE STAR GROUP LIMITED, a New Zealand
corporation] (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________ (the "Lender") and its successors and assigns, at the
office of The Chase Manhattan Bank, located at 270 Park Avenue, New York, New
York 10017, in lawful money of the United States of America and in immediately
available funds, the principal amount of the lesser of (a)
_________________________ DOLLARS ($_____________) and (b) the aggregate unpaid
principal amount of the Revolving Credit Loans made by the Lender to the
undersigned pursuant to subsection 2.1 of the Credit Agreement referred to
below, which sum shall be payable on the Termination Date.
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this Revolving Credit Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Revolving Credit Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Revolving Credit Loan.
This Revolving Credit Note is one of the Revolving Credit
Notes referred to in, and is subject in all respects to, the Credit Agreement,
dated as of June __, 1998 (as amended, supplemented, waived or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
several banks and other financial institutions from time to time parties thereto
2
<PAGE>
(including the Lender), The Chase Manhattan Bank, as collateral and
administrative agent for such banks and financial institutions, Bankers Trust
Company, as syndication agent for such banks and financial institutions and
Merrill Lynch Capital Corporation, as documentation agent for such banks and
financial institutions, and is entitled to the benefits thereof, is secured and
guaranteed as provided therein and in the Loan Documents and is subject to
optional and mandatory prepayment in whole or in part as provided therein.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Revolving Credit Note in respect thereof. Each holder hereof,
by its acceptance of this Revolving Credit Note, agrees to the terms of, and to
be bound by and to observe the provisions applicable to the Lenders contained
in, the Credit Agreement. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings unless otherwise defined herein or
unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Revolving Credit Note shall become, or may be declared to be, immediately
due and payable, all as provided therein.
All parties now and hereafter liable with respect to this
Revolving Credit Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this
Revolving Credit Note.
2
<PAGE>
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT
OF LAWS THEREOF.
[U.S. OFFICE PRODUCTS COMPANY
By: ]
Title:
[BLUE STAR GROUP LIMITED
By: ]
Title:
3
<PAGE>
Schedule A to
Revolving Credit Note
---------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period and Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to Eurodollar Rate with of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans Respect Thereto Repaid ABR Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------
- ---------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- ---------------------------------------------------
<S> <C>
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
<PAGE>
Schedule B to
Revolving Credit Note
---------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR
Amount of ABR Loans Converted to ABR Amount of Principal of Loans Converted to
Date Loans Loans ABR Loans Repaid Eurodollar Loans
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
- -------------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- -------------------------------------------------------------
<S> <C>
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-2
-----------
FORM OF SWING LINE NOTE
$____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of THE CHASE MANHATTAN BANK (the "Swing Line
Lender") and its successors and assigns, at the office of The Chase Manhattan
Bank, 270 Park Avenue, New York, New York 10017, in lawful money of the United
States of America and in immediately available funds, the principal amount of
the lesser of (a) __________________________ DOLLARS ($____________) and (b) the
aggregate unpaid principal amount of all Swing Line Loans made by the Swing Line
Lender to the undersigned pursuant to subsection 2.5 of the Credit Agreement
referred to below, which sum shall be payable on the Termination Date.
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until paid in full (both before and after judgment).
The holder of this Swing Line Note is authorized to endorse on
the schedule annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date and amount of
each Swing Line Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof. Each such endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed. The failure to make any such endorsement shall not affect the
obligations of the Borrower in respect of such Swing Line Loan.
This Swing Line Note is the Swing Line Note referred to in,
and is subject in all respects to, the Credit Agreement, dated as of June __,
1998 (as amended, supplemented, waived or otherwise modified from time to time,
the "Credit Agreement"), among the Borrower, the several banks and other
financial institutions from time to time parties thereto (including the Swing
Line Lender), The Chase Manhattan Bank, as collateral and administrative agent
for such banks and financial institutions, Bankers Trust Company, as syndication
agent for such banks and financial institutions and Merrill Lynch Capital
Corporation, as documentation agent for such banks and financial institutions,
and is entitled to the benefits thereof, is secured and guaranteed as provided
therein and in the Loan Documents and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Reference is hereby made to
the Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Swing Line Note
in respect thereof. The holder hereof, by its acceptance of this Swing Line
Note, agrees to the terms of, and to be bound by and to observe the provisions
applicable to the Lenders contained in, the Credit Agreement. Terms used herein
which are defined in the Credit Agreement
<PAGE>
shall have such defined meanings unless otherwise defined herein or unless the
context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts remaining unpaid on this
Swing Line Note shall become, or may be declared to be, immediately due and
payable all as provided therein.
All parties now and hereafter liable with respect to this
Swing Line Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this Swing
Line Note.
2
<PAGE>
THIS SWING LINE NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT
OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY
By:
Title:
3
<PAGE>
Schedule A to
Swing Line Note
---------------
LOANS AND REPAYMENTS OF SWING LINE LOANS
----------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Amount of Principal of Swing Unpaid Principal Balance of
Date Amount of Swing Line Loans Line Loans Repaid Swing Line Loans Notation Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-3
-----------
FORM OF TRANCHE A TERM NOTE
THIS TERM NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT
REFERRED TO BELOW. TRANSFERS OF THIS TERM NOTE AND THE OBLIGATIONS EVIDENCED
HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) ___________________________ DOLLARS ($____________) and (b) the aggregate
unpaid principal amount of the Tranche A Term Loan made by the Lender to the
undersigned pursuant to subsection 2.6 of the Credit Agreement referred to
below, which sum shall be payable in accordance with subsection 2.7(b) of the
Credit Agreement in 27 consecutive quarterly installments, commencing December
31, 1998, each such installment to be in an amount equal to the Lender's Tranche
A Term Loan Percentage of the amount set forth next to the applicable
installment date in such subsection 2.7(b) (or, if less, the aggregate amount of
Tranche A Term Loans then outstanding).
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this Tranche A Term Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Tranche A Term Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Tranche A Term Loan.
This Tranche A Term Note is one of the Tranche A Term Notes
referred to in, and is subject in all respects to, the Credit Agreement, dated
as of June __, 1998 (as amended, supplemented, waived or otherwise modified from
time to time, the "Credit Agreement"), among the Borrower, the several banks and
other financial institutions from time to time parties thereto
<PAGE>
(including the Lender), The Chase Manhattan Bank, as collateral and
administrative agent for such banks and financial institutions, Bankers Trust
Company, as syndication agent for such banks and financial institutions and
Merrill Lynch Capital Corporation, as documentation agent for such banks and
financial institutions, and is entitled to the benefits thereof, is secured and
guaranteed as provided therein and in the Loan Documents and is subject to
optional and mandatory prepayment in whole or in part as provided therein.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Tranche A Term Note in respect thereof. Each holder hereof,
by its acceptance of this Tranche A Term Note, agrees to the terms of, and to be
bound by and observe the provisions applicable to the Lenders contained in, the
Credit Agreement. Terms used herein which are defined in the Credit Agreement
shall have such defined meanings unless otherwise defined herein or unless the
context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Tranche A Term Note shall become, or may be declared to be, immediately due
and payable, all as provided therein.
All parties now and hereafter liable with respect to this
Tranche A Term Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this
Tranche A Term Note.
2
<PAGE>
THIS TRANCHE A TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY
By:
Title:
3
<PAGE>
Schedule A to
Tranche A Term Note
-------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
-------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to and Eurodollar Rate of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans with Respect Thereto Repaid ABR Loans
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------
- --------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- --------------------------------------------------
<S> <C>
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
</TABLE>
<PAGE>
Schedule B to
Tranche A Term Note
-------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR
Amount of ABR Loans Converted to ABR Amount of Principal of Loans Converted to
Date Loans Loans ABR Loans Repaid Eurodollar Loans
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
- ------------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-4
-----------
FORM OF TRANCHE B TERM NOTE
THIS TERM NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT
REFERRED TO BELOW. TRANSFERS OF THIS TERM NOTE AND THE OBLIGATIONS EVIDENCED
HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$_____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) ___________________________ DOLLARS ($_____________) and (b) the
aggregate unpaid principal amount of the Tranche B Term Loan made by the Lender
to the undersigned pursuant to subsection 2.6 of the Credit Agreement referred
to below, which sum shall be payable in accordance with subsection 2.8(b) of the
Credit Agreement in 31 consecutive quarterly installments, commencing December
31, 1998, each such installment to be in an amount equal to the Lender's Tranche
B Term Loan Percentage of the amount set forth next to the applicable
installment date in such subsection 2.8(b) (or, if less, the aggregate amount of
Tranche B Term Loans then outstanding).
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this Tranche B Term Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Tranche B Term Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Tranche B Term Loan.
This Tranche B Term Note is one of the Tranche B Term Notes
referred to in, (and is subject in all respects to,) the Credit Agreement, dated
as of June __, 1998 (as amended, supplemented, waived or otherwise modified from
time to time, the "Credit Agreement"), among the Borrower, the several banks and
other financial institutions from time to time parties thereto
<PAGE>
(including the Lender), The Chase Manhattan Bank, as collateral and
administrative agent for such banks and financial institutions, Bankers Trust
Company, as syndication agent for such banks and financial institutions and
Merrill Lynch Capital Corporation, as documentation agent for such banks and
financial institutions, and is entitled to the benefits thereof, is secured and
guaranteed as provided therein and in the Loan Documents and is subject to
optional and mandatory prepayment in whole or in part as provided therein.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Tranche B Term Note in respect thereof. Each holder hereof,
by its acceptance of this Tranche B Term Note, agrees to the terms of, and to be
bound by and to observe the provisions applicable to the Lenders contained in,
the Credit Agreement. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings unless otherwise defined herein or
unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Tranche B Term Note shall become, or may be declared to be, immediately due
and payable, all as provided therein.
All parties now and hereafter liable with respect to this
Tranche B Term Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this
Tranche B Term Note.
2
<PAGE>
THIS TRANCHE B TERM NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT
OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY
By:
Title:
3
<PAGE>
Schedule A to
Tranche B Term Note
-------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period and Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to Eurodollar Rate with of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans Respect Thereto Repaid ABR Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------
- -------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- -------------------------------------------------
<S> <C>
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
</TABLE>
<PAGE>
Schedule B to
Tranche B Term Note
-------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR Loans
Amount of ABR Loans Converted to ABR Amount of Principal of Converted to Eurodollar
Date Loans Loans ABR Loans Repaid Loans
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
- ------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ------------------------------------------------------
<S> <C>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-5
-----------
FORM OF MULTI-DRAW TERM NOTE
THIS TERM NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT
REFERRED TO BELOW. TRANSFERS OF THIS TERM NOTE AND THE OBLIGATIONS EVIDENCED
HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) ___________________________ DOLLARS ($____________) and (b) the aggregate
unpaid principal amount of the Multi-Draw Term Loan made by the Lender to the
undersigned pursuant to subsection 2.6 of the Credit Agreement referred to
below, which sum shall be payable in accordance with subsection 2.9(b) of the
Credit Agreement in 16 consecutive quarterly installments, commencing September
30, 2001, each such installment to be in an amount equal to the Lender's
Multi-Draw A Term Loan Percentage of the amount set forth next to the applicable
installment date in such subsection 2.9(b) (or, if less, the aggregate amount of
Multi-Draw Term Loans then outstanding).
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this Multi-Draw Term Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Multi-Draw Term Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Multi-Draw Term Loan.
This Multi-Draw Term Note is one of the Multi-Draw Term Notes
referred to in, and is subject in all respects to, the Credit Agreement, dated
as of June __, 1998 (as amended, supplemented, waived or otherwise modified from
time to time, the "Credit Agreement"), among the Borrower, the several banks and
other financial institutions from time to time parties thereto
<PAGE>
(including the Lender), The Chase Manhattan Bank, as collateral and
administrative agent for such banks and financial institutions, Bankers Trust
Company, as syndication agent for such banks and financial institutions and
Merrill Lynch Capital Corporation, as documentation agent for such banks and
financial institutions, and is entitled to the benefits thereof, is secured and
guaranteed as provided therein and in the Loan Documents and is subject to
optional and mandatory prepayment in whole or in part as provided therein.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Multi-Draw Term Note in respect thereof. Each holder hereof,
by its acceptance of this Multi-Draw Term Note, agrees to the terms of, and to
be bound by and observe the provisions applicable to the Lenders contained in,
the Credit Agreement. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings unless otherwise defined herein or
unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Multi-Draw Term Note shall become, or may be declared to be, immediately
due and payable, all as provided therein.
All parties now and hereafter liable with respect to this
Multi-Draw Term Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this
Multi-Draw Term Note.
2
<PAGE>
THIS MULTI-DRAW TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY
By:
Title:
3
<PAGE>
Schedule A to
Multi-Draw Term Note
--------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to and Eurodollar Rate of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans with Respect Thereto Repaid ABR Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------
- ---------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- ---------------------------------------------------
<S> <C>
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
<PAGE>
Schedule B to
Multi-Draw Term Note
--------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR
Amount of ABR Loans Converted to ABR Amount of Principal of Loans Converted to
Date Loans Loans ABR Loans Repaid Eurodollar Loans
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
- ---------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ---------------------------------------------------------
<S> <C>
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-6
-----------
FORM OF QFL REVOLVING CREDIT NOTE
THIS QFL REVOLVING CREDIT NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS QFL REVOLVING CREDIT NOTE AND THE
OBLIGATIONS EVIDENCED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$_____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) __________________________ DOLLARS ($_____________) and (b) the aggregate
unpaid principal amount of the Revolving Credit Loans made by the Lender to the
undersigned pursuant to subsection 2.1 of the Credit Agreement referred to
below, which sum shall be payable on the Termination Date.
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this QFL Revolving Credit Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Revolving Credit Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Revolving Credit Loan.
This QFL Revolving Credit Note is one of the QFL Revolving
Credit Notes referred to in, and is subject in all respects to, the Credit
Agreement, dated as of June __, 1998 (as amended, supplemented, waived or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the several banks and other financial institutions from time to time
parties thereto (including the Lender), The Chase Manhattan Bank, as collateral
and
<PAGE>
administrative agent for such banks and financial institutions, Bankers Trust
Company, as syndication agent for such banks and financial institutions and
Merrill Lynch Capital Corporation, as documentation agent for such banks and
financial institutions, and is entitled to the benefits thereof, is secured and
guaranteed as provided therein and in the Loan Documents and is subject to
optional and mandatory prepayment in whole or in part as provided therein.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this QFL Revolving Credit Note in respect thereof. Each holder
hereof, by its acceptance of this QFL Revolving Credit Note, agrees to the terms
of, and to be bound by and to observe the provisions applicable to the Lenders
contained in, the Credit Agreement. Terms used herein which are defined in the
Credit Agreement shall have such defined meanings unless otherwise defined
herein or unless the context otherwise requires.
As provided in subsection 12.6(c) of the Credit Agreement,
this QFL Revolving Credit Note and the obligations evidenced hereby may be
assigned in whole or in part only by registration of such assignment of this QFL
Revolving Credit Note and the obligations evidenced hereby on the Register
described in subsection 12.6(d) of the Credit Agreement. Any assignment of all
or part of such obligations and this QFL Revolving Credit Note evidencing the
same shall be registered on the Register only upon surrender for registration of
assignment of this QFL Revolving Credit Note evidencing such obligations, duly
endorsed by (or accompanied by a written instrument of assignment duly executed
by) the holder of this QFL Revolving Credit Note, and thereupon one or more new
QFL Revolving Credit Notes in the same aggregate principal amount shall be
issued to the designated Assignee or Assignees and this QFL Revolving Credit
Note shall be returned to the Borrower marked "cancelled". No assignment of this
QFL Revolving Credit Note and the obligations evidenced hereby shall be
effective unless such assignment shall have been recorded in the Register as
provided herein and in subsection 12.6(e) of the Credit Agreement. This QFL
Revolving Credit Note may not be exchanged for promissory notes that are not QFL
Revolving Credit Notes.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this QFL Revolving Credit Note shall become, or may be declared to be,
immediately due and payable, all as provided therein.
All parties now and hereafter liable with respect to this QFL
Revolving Credit Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this QFL
Revolving Credit Note.
2
<PAGE>
THIS QFL REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY
By:
Title:
3
<PAGE>
Schedule A to QFL
Revolving Credit Note
---------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to and Eurodollar Rate of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans with Respect Thereto Repaid ABR Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------
- ---------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- ---------------------------------------------------
<S> <C>
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
<PAGE>
Schedule B to QFL
Revolving Credit Note
---------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR
Amount of ABR Loans Converted to ABR Amount of Principal of Loans Converted to
Date Loans Loans ABR Loans Repaid Eurodollar Loans
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
- ---------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ---------------------------------------------------------
<S> <C>
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-7
-----------
FORM OF QFL TRANCHE A TERM NOTE
THIS QFL TRANCHE A TERM NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS QFL TRANCHE A TERM NOTE AND THE
OBLIGATIONS EVIDENCED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) __________________________ DOLLARS ($____________) and (b) the aggregate
unpaid principal amount of the Tranche A Term Loan made by the Lender to the
undersigned pursuant to subsection 2.6 of the Credit Agreement referred to
below, which sum shall be payable in accordance with subsection 2.7(b) of the
Credit Agreement in 27 consecutive quarterly installments, commencing December
31, 1998, each such installment to be in an amount equal to the Lender's Tranche
A Term Loan Percentage of the amount set forth next to the applicable
installment date in such subsection 2.7(b) (or, if less, the aggregate amount of
Tranche A Term Loans then outstanding).
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this QFL Tranche A Term Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Tranche A Term Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Tranche A Term Loan.
This QFL Tranche A Term Note is one of the QFL Tranche A Term
Notes referred to in, and is subject in all respects to, the Credit Agreement,
dated as of June __, 1998
<PAGE>
(as amended, supplemented, waived or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the several banks and other financial
institutions from time to time parties thereto (including the Lender), The Chase
Manhattan Bank, as [collateral and] administrative agent for such banks and
financial institutions, Bankers Trust Company, as syndication agent for such
banks and financial institutions and Merrill Lynch Capital Corporation, as
documentation agent for such banks and financial institutions, and is entitled
to the benefits thereof, is secured and guaranteed as provided therein and in
the Loan Documents and is subject to optional and mandatory prepayment in whole
or in part as provided therein. Reference is hereby made to the Loan Documents
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security and the guarantees, the
terms and conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this QFL Tranche A Term Note in respect
thereof. Each holder hereof, by its acceptance of this QFL Tranche A Term Note,
agrees to the terms of, and to be bound by and to observe the provisions
applicable to the Lenders contained in, the Credit Agreement. Terms used herein
which are defined in the Credit Agreement shall have such defined meanings
unless otherwise defined herein or unless the context otherwise requires.
As provided in subsection 12.6(e) of the Credit Agreement,
this QFL Tranche A Term Note and the obligations evidenced hereby may be
assigned in whole or in part only by registration of such assignment of this QFL
Tranche A Term Note and the obligations evidenced hereby on the Register
described in subsection 12.6(d) of the Credit Agreement. Any assignment of all
or part of such obligations and this QFL Tranche A Term Note evidencing the same
shall be registered on the Register only upon surrender for registration of
assignment of this QFL Tranche A Term Note evidencing such obligations, duly
endorsed by (or accompanied by a written instrument of assignment duly executed
by) the holder of this QFL Tranche A Term Note, and thereupon one or more new
QFL Tranche A Term Notes in the same aggregate principal amount shall be issued
to the designated Assignee or Assignees and this QFL Tranche A Term Note shall
be returned to the Borrower marked "cancelled". No assignment of this QFL
Tranche A Term Note and the obligations evidenced hereby shall be effective
unless such assignment shall have been recorded in the Register as provided
herein and in subsection 12.6(e) of the Credit Agreement. This QFL Tranche A
Term Note may not be exchanged for promissory notes that are not QFL Tranche A
Term Notes.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this QFL Tranche A Term Note shall become, or may be declared to be, immediately
due and payable, all as provided therein.
All parties now and hereafter liable with respect to this QFL
Tranche A Term Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this QFL
Tranche A Term Note.
THIS QFL TRANCHE A TERM NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY.
2
<PAGE>
By:
Title:
3
<PAGE>
Schedule A to QFL
Tranche A Term Note
-------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to and Eurodollar Rate of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans with Respect Thereto Repaid ABR Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------
- ---------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- ---------------------------------------------------
<S> <C>
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
<PAGE>
Schedule B to QFL
Tranche A Term Note
-------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR
Amount of ABR Loans Converted to ABR Amount of Principal of Loans Converted to
Date Loans Loans ABR Loans Repaid Eurodollar Loans
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
- ---------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ---------------------------------------------------------
<S> <C>
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-8
-----------
FORM OF QFL TRANCHE B TERM NOTE
THIS QFL TRANCHE B TERM NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS QFL TRANCHE B TERM NOTE AND THE
OBLIGATIONS EVIDENCED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$_____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) __________________________ DOLLARS ($_____________) and (b) the aggregate
unpaid principal amount of the Tranche B Term Loans made by the Lender to the
undersigned pursuant to subsection 2.6 of the Credit Agreement referred to
below, which sum shall be payable in accordance with subsection 2.8(b) of the
Credit Agreement in 31 consecutive quarterly installments, commencing December
31, 1998, each such installment to be in an amount equal to the Lender's Tranche
B Term Loan Percentage of the amount set forth next to the applicable
installment date in such subsection 2.8(b) (or, if less, the aggregate amount of
Tranche B Term Loans then outstanding).
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this QFL Tranche B Term Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Tranche B Term Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Tranche B Term Loan.
This QFL Tranche B Term Note is one of the QFL Tranche B Term
Notes referred to in the Credit Agreement, dated as of June __, 1998 (as
amended, supplemented, waived or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower,
<PAGE>
the several banks and other financial institutions from time to time parties
thereto (including the Lender), The Chase Manhattan Bank, as collateral and
administrative agent for such banks and financial institutions, Bankers Trust
Company, as syndication agent for such banks and financial institutions and
Merrill Lynch Capital Corporation, as documentation agent for such banks and
financial institutions, and is entitled to the benefits thereof, is secured and
guaranteed as provided therein and in the Loan Documents and is subject to
optional and mandatory prepayment in whole or in part as provided therein.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this QFL Tranche B Term Note in respect thereof. Each holder
hereof, by its acceptance of this QFL Tranche B Term Note, agrees to the terms
of, and to be bound by and to observe the provisions applicable to the Lenders
contained in, the Credit Agreement. Terms used herein which are defined in the
Credit Agreement shall have such defined meanings unless otherwise defined
herein or unless the context otherwise requires.
As provided in subsection 12.6(e) of the Credit Agreement,
this QFL Tranche B Term Note and the obligations evidenced hereby may be
assigned in whole or in part only by registration of such assignment of this QFL
Tranche B Term Note and the obligations evidenced hereby on the Register
described in subsection 12.6(d) of the Credit Agreement. Any assignment of all
or part of such obligations and this QFL Tranche B Term Note evidencing the same
shall be registered on the Register only upon surrender for registration of
assignment of this QFL Tranche B Term Note evidencing such obligations, duly
endorsed by (or accompanied by a written instrument of assignment duly executed
by) the holder of this QFL Tranche B Term Note, and thereupon one or more new
QFL Tranche B Term Notes in the same aggregate principal amount shall be issued
to the designated Assignee or Assignees and this QFL Tranche B Term Note shall
be returned to the Borrower marked "cancelled". No assignment of this QFL
Tranche B Term Note and the obligations evidenced hereby shall be effective
unless such assignment shall have been recorded in the Register as provided
herein and in subsection 12.6(e) of the Credit Agreement. This QFL Tranche B
Term Note may not be exchanged for promissory notes that are not QFL Tranche B
Term Notes.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this QFL Tranche B Term Note shall become, or may be declared to be, immediately
due and payable, all as provided therein.
All parties now and hereafter liable with respect to this QFL
Tranche B Term Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this QFL
Tranche B Term Note.
2
<PAGE>
THIS QFL TRANCHE B TERM NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY
By:
Title:
3
<PAGE>
Schedule A to QFL
Tranche B Term Note
-------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to and Eurodollar Rate of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans with Respect Thereto Repaid ABR Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------
- ---------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- ---------------------------------------------------
<S> <C>
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
<PAGE>
Schedule B to QFL
Tranche B Term Note
-------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of ABR
Amount of ABR Loans Converted to ABR Amount of Principal of Loans Converted to
Date Loans Loans ABR Loans Repaid Eurodollar Loans
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
- ---------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ---------------------------------------------------------
<S> <C>
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A-9
-----------
FORM OF QFL MULTI-DRAW TERM NOTE
THIS QFL MULTI-DRAW TERM NOTE AND THE OBLIGATIONS EVIDENCED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS QFL MULTI-DRAW TERM NOTE AND THE
OBLIGATIONS EVIDENCED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
June __, 1998
FOR VALUE RECEIVED, the undersigned, U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Borrower"), hereby unconditionally
promises to pay to the order of _____________ (the "Lender") and its successors
and assigns, at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) __________________________ DOLLARS ($____________) and (b) the aggregate
unpaid principal amount of the Multi-Draw Term Loan made by the Lender to the
undersigned pursuant to subsection 2.6 of the Credit Agreement referred to
below, which sum shall be payable in accordance with subsection 2.9(b) of the
Credit Agreement in 16 consecutive quarterly installments, commencing December
31, 2001, each such installment to be in an amount equal to the Lender's
Multi-Draw Term Loan Percentage of the amount set forth next to the applicable
installment date in such subsection 2.9(b) (or, if less, the aggregate amount of
Multi-Draw Term Loans then outstanding).
The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time at the
applicable rates per annum and on the dates set forth in subsection 4.1 of the
Credit Agreement until such principal amount is paid in full (both before and
after judgment).
The holder of this QFL Multi-Draw Term Note is authorized to
endorse on the schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof the
date, Type and amount of each Multi-Draw Term Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of principal
thereof, each continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure to
make any such endorsement shall not affect the obligations of the Borrower in
respect of such Multi-Draw Term Loan.
This QFL Multi-Draw Term Note is one of the QFL Multi-Draw
Term Notes referred to in, and is subject in all respects to, the Credit
Agreement, dated as of June __, 1998
<PAGE>
(as amended, supplemented, waived or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the several banks and other financial
institutions from time to time parties thereto (including the Lender), The Chase
Manhattan Bank, as collateral and administrative agent for such banks and
financial institutions, Bankers Trust Company, as syndication agent for such
banks and financial institutions and Merrill Lynch Capital Corporation, as
documentation agent for such banks and financial institutions, and is entitled
to the benefits thereof, is secured and guaranteed as provided therein and in
the Loan Documents and is subject to optional and mandatory prepayment in whole
or in part as provided therein. Reference is hereby made to the Loan Documents
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security and the guarantees, the
terms and conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this QFL Multi-Draw Term Note in respect
thereof. Each holder hereof, by its acceptance of this QFL Multi-Draw Term Note,
agrees to the terms of, and to be bound by and to observe the provisions
applicable to the Lenders contained in, the Credit Agreement. Terms used herein
which are defined in the Credit Agreement shall have such defined meanings
unless otherwise defined herein or unless the context otherwise requires.
As provided in subsection 12.6(e) of the Credit Agreement,
this QFL Multi-Draw Term Note and the obligations evidenced hereby may be
assigned in whole or in part only by registration of such assignment of this QFL
Multi-Draw Term Note and the obligations evidenced hereby on the Register
described in subsection 12.6(d) of the Credit Agreement. Any assignment of all
or part of such obligations and this QFL Multi-Draw Term Note evidencing the
same shall be registered on the Register only upon surrender for registration of
assignment of this QFL Multi-Draw Term Note evidencing such obligations, duly
endorsed by (or accompanied by a written instrument of assignment duly executed
by) the holder of this QFL Multi-Draw Term Note, and thereupon one or more new
QFL Multi-Draw Term Notes in the same aggregate principal amount shall be issued
to the designated Assignee or Assignees and this QFL Multi-Draw Term Note shall
be returned to the Borrower marked "cancelled". No assignment of this QFL
Multi-Draw Term Note and the obligations evidenced hereby shall be effective
unless such assignment shall have been recorded in the Register as provided
herein and in subsection 12.6(e) of the Credit Agreement. This QFL Multi-Draw
Term Note may not be exchanged for promissory notes that are not QFL Multi-Draw
Term Notes.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this QFL Multi-Draw Term Note shall become, or may be declared to be,
immediately due and payable, all as provided therein.
All parties now and hereafter liable with respect to this QFL
Multi-Draw Term Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive, to the maximum extent permitted by applicable law,
presentment, demand, protest and all other notices of any kind under this QFL
Multi-Draw Term Note.
THIS QFL MULTI-DRAW TERM NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
U.S. OFFICE PRODUCTS COMPANY.
2
<PAGE>
By:
Title:
3
<PAGE>
Schedule A to QFL
Multi-Draw Term Note
--------------------
LOANS, CONTINUATIONS, CONVERSIONS AND
REPAYMENTS OF EURODOLLAR LOANS
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Amount of ABR Interest Period Amount of Principal Amount of Eurodollar
Amount of Eurodollar Loans Converted to and Eurodollar Rate of Eurodollar Loans Loans Converted to
Date Loans Eurodollar Loans with Respect Thereto Repaid ABR Loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ---------------------------------------------------
- ---------------------------------------------------
Unpaid Principal
Balance of Eurodollar
Loans Notation Made by
- ---------------------------------------------------
<S> <C>
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
<PAGE>
Schedule B to QFL
Multi-Draw Term Note
--------------------
LOANS, CONVERSIONS AND
REPAYMENTS OF ABR LOANS
-----------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Amount of Eurodollar Amount of Principal of Amount of ABR
Amount of ABR Loans Converted to ABR ABR Loans Repaid Loans Converted to
Date Loans Loans Eurodollar Loans
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
- ---------------------------------------------------------
Unpaid Principal Balance
of ABR Loans Notation Made by
- ---------------------------------------------------------
<S> <C>
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C TO
CREDIT AGREEMENT
----------------
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
Reference is made to the Loans held by the undersigned,
___________________ (the "Non-U.S. Lender"), pursuant to the Credit
Agreement, dated as of June 9, 1998 (as amended, supplemented, waived or
otherwise modified from time to time, the "Credit Agreement"), among U.S.
Office Products Company, a Delaware corporation, (the "Borrower"), the
several banks and other financial institutions from time to time parties to
the Credit Agreement (the "Lenders"), The Chase Manhattan Bank, a New York
banking corporation, as collateral agent and administrative agent for the
Lenders, Bankers Trust Company, a New York banking corporation, as
syndication agent for the Lenders and Merrill Lynch Capital Corporation, a
Delaware corporation, as documentation agent for the Lenders. Unless
otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement. The
Non-U.S. Lender is providing this certificate pursuant to subsection
4.11(b)(Y) of the Credit Agreement. The Non-U.S. Lender hereby certifies that:
(1) The Non-U.S. Lender is the sole record and beneficial
owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s))
registered in its name and in respect of which it is providing this
certificate;
(2) The Non-U.S. Lender is not a "bank" (as such term is used
in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended (the "Code")), is not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has not been treated
as a bank for purposes of any tax, securities law or other filing or
submission made to any Governmental Authority, any application made to
a rating agency or any qualification for any exemption from any tax,
securities law or other legal requirements;
(3) The Non-U.S. Lender is not a 10-percent shareholder
of the Borrower within the meaning of Section 881(c)(3)(B) of the
Code; and
(4) The Non-U.S. Lender is not a controlled foreign
corporation receiving interest from a related person within the
meaning of Section 881(c)(3)(C) of the Code.
The Non-U.S. Lender has furnished you with a certficate of its
non-U.S person status on Internal Revenue Service Form W-8. By executing this
certificate, the Non-U.S. Lender agrees that if the information provided on this
certificate changes, the Non-U.S. Lender shall so inform the Borrower and the
Administrative Agent in writing within thirty days of such change.
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate.
[NAME OF NON-U.S. LENDER]
By:
--------------------------------
[Address]
Date:
---------------------
2
<PAGE>
EXHIBIT D TO
CREDIT AGREEMENT
----------------
FORM OF
PREPAYMENT OPTION NOTICE
Attention of
---------------
Telecopy No.
---------------
[Date]
Ladies and Gentlemen:
The undersigned, The Chase Manhattan Bank, as administrative
agent (in such capacity, the "Administrative Agent") for the Lenders referred to
below, refers to the Credit Agreement, dated as of June __, 1998 (as amended,
supplemented, waived or otherwise modified from time to time, the "Credit
Agreement"), among U.S. Office Products Company, the banks and other financial
institutions from time to time parties thereto (the "Lenders"), the
Administrative Agent, Bankers Trust Company as syndication agent (in such
capacity, the "Syndication Agent") for the Lenders and Merrill Lynch Capital
Corporation, as documentation agent for the Lenders. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Administrative Agent hereby gives notice of
an offer of prepayment made by the Borrower pursuant to Section 4.4(h) of the
Credit Agreement of the Tranche B Prepayment Amount. Amounts applied to prepay
the Tranche B Term Loans shall be applied pro rata to the Tranche B Term Loan
held by you. The portion of the prepayment amount to be allocated to the Tranche
B Term Loan held by you and the date on which such prepayment will be made to
you (should you elect to receive such prepayment) are set forth below:
(A) Total Tranche B Term Loan Prepayment Amount
------------
(B) Portion of Tranche B Prepayment Amount to be
received by you ------------
(C) Prepayment Date (10 Business Days after the
date of this Prepayment Option Notice)
------------
IF YOU DO NOT WISH TO RECEIVE ALL OF THE TRANCHE B PREPAYMENT
AMOUNT TO BE ALLOCATED TO YOU ON THE PREPAYMENT DATE INDICATED IN PARAGRAPH (C)
ABOVE, please sign this notice in the space provided below and indicate the
percentage of the Tranche B Prepayment Amount otherwise payable which you do not
wish to receive. Please return this notice as so completed via
<PAGE>
telecopy to the attention of ___________________ at ____________________, no
later than [10:00] a.m., New York City time, on the Prepayment Date, at telecopy
________________. IF YOU DO NOT RETURN THIS NOTICE, YOU WILL RECEIVE 100% OF THE
TRANCHE B PREPAYMENT ALLOCATED TO YOU ON THE PREPAYMENT DATE.
THE CHASE MANHATTAN BANK
as Administrative Agent
By:
------------------------
Name:
Title:
[LENDER]
By:
------------------------
Name:
Title:
Percentage of Tranche B
Prepayment Amount
Declined: %
----------
2
<PAGE>
EXHIBIT E TO
CREDIT AGREEMENT
FORM OF
MORTGAGE
from
[SUBSIDIARY GUARANTOR], Mortgagor
to
THE CHASE MANHATTAN BANK, as Administrative Agent, Mortgagee
DATED AS OF JUNE __, 1998
After recording, please return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: Amy Jedlicka, Esq.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Background......................................................... 1
Granting Clauses................................................... 3
Terms and Conditions............................................... 6
1. Warranty of Title..................................... 6
2. Payment of Obligations................................ 6
3. Requirements.......................................... 6
4. Payment of Taxes and Other Impositions................ 7
5. Insurance............................................. 8
6. Restrictions on Liens and Encumbrances................ 13
7. Due on Sale and Other Transfer Restrictions........... 13
8. Maintenance; No Alteration; Inspection; Utilities..... 13
9. Condemnation/Eminent Domain........................... 13
10. Restoration.......................................... 14
11. Leases............................................... 14
12. Further Assurances................................... 16
13. Mortgagee's Right to Perform......................... 16
14. Events of Default.................................... 16
15. Remedies............................................. 17
16. Right of Mortgagee to Credit Sale.................... 18
17. Appointment of Receiver.............................. 18
18. Extension, Release, etc.............................. 18
19. Security Agreement under Uniform Commercial Code..... 19
20. Assignment of Rents.................................. 20
21. Additional Rights.................................... 21
22. Changes in Method of Taxation........................ 21
23. Notices.............................................. 21
24. No Oral Modification................................. 21
25. Partial Invalidity................................... 21
26. Mortgagor's Waiver of Rights......................... 22
27. Remedies Not Exclusive............................... 22
28. Multiple Security.................................... 22
29. Successors and Assigns............................... 23
30. No Waivers, etc.................................. 24
31. Governing Law, etc................................... 24
32. Waiver of Trial by Jury.............................. 24
33. Certain Definitions.................................. 24
34. Release of Mortgage.................................. 25
35. Conflict with Credit Agreement....................... 25
Schedule A......................................................... 28
</TABLE>
-i-
<PAGE>
MORTGAGE
THIS MORTGAGE, dated as of June 9, 1998 is made by [SUBSIDIARY
GUARANTOR], a _________ corporation whose address is ______________________
("Mortgagor"), to THE CHASE MANHATTAN BANK, a New York banking corporation whose
address is 270 Park Avenue, New York, New York 10017 as Administrative Agent (in
such capacity, together with its successors and assigns, "Mortgagee") for itself
and the several banks and financial institutions (collectively, the "Lenders")
(together with any banking affiliate of any Lender entering into an Interest
Rate Protection Agreement) from time to time parties to the Credit Agreement
dated as of the date hereof under such agreement or any successor agreements (as
the same may be amended, waived, supplemented or otherwise modified from time to
time and together with any such agreement, the "Credit Agreement") among
Mortgagor, the Lenders and Mortgagee. References to this "Mortgage" shall mean
this instrument and any and all renewals, modifications, amendments,
supplements, extensions, consolidations, substitutions, spreaders and
replacements of this instrument. Unless otherwise defined herein, capitalized
terms herein shall have the meanings ascribed to them in the Credit Agreement.
Background
A. U.S. Office Products Company, a Delaware corporation (the
"Borrower") has entered into that certain Credit Agreement dated as of the date
hereof (as the same may be amended, supplemented, restated or otherwise modified
from time to time, the "Credit Agreement") with Blue Star Group, Limited, a New
Zealand corporation, the several banks and other financial institutions or
entities from time to time parties thereto (the "Lenders"), Banker Trust
Company, as Syndication Agent, Merrill Lynch Capital Corporation, as
Documentation Agent and Mortgagee. Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Credit Agreement.
References in this Mortgage to the "Default Rate" shall mean the interest rate
applicable to ABR Loans that are Tranche B Term Loans as provided for in
subsection 4.1(c) of the Credit Agreement plus 2%.
B. Mortgagor is the fee owner of the parcel(s) of real
property together with the improvements located thereon (the "Improvements")
described on Schedule A attached hereto (the "Real Estate").
C. Pursuant to the terms of the Credit Agreement, (1) the
Lenders have agreed (a) to make certain Revolving Credit Loans to Borrower in an
aggregate principal amount at any one time outstanding not to exceed
$250,000,000.00 and (b) to make certain Term Loans to Borrower in an aggregate
principal amount not to exceed $775,000,000.00, (2) the Multi-Draw Term Loan
Lenders have agreed to make certain Multi-Draw Term Loans to Borrower in an
aggregate principal amount at any one time outstanding not to exceed
$200,000,000.00, (3) the Swing Line Lender has agreed to make certain Swing Line
Loans to Borrower in an aggregate
<PAGE>
2
principal amount at any one time outstanding not to exceed $15,000,000.00, and
(4) the Issuing Lender has agreed to issue, and the other Lenders which are L/C
Participants have agreed to acquire participating interests in, Letters of
Credit for the account of Borrower; the sum of (i) the aggregate then undrawn
and unexpired amount of the then outstanding Letters of Credit and (ii) the
aggregate amount of drawings under the Letters of Credit which have not been
reimbursed pursuant to subsection 3.5(a) of the Credit Agreement shall not
exceed $50,000,000.00. The maximum aggregate principal amount of the Loans and
the L/C Obligations outstanding at any one time shall not exceed
$1,225,000,000.00.
D. It is a condition precedent to the effectiveness of the
Credit Agreement and the obligations of the Lenders to make their respective
extensions of credit to the Borrower thereunder inter alia, that (1) Mortgagor
guaranty the obligations of Borrower under the Credit Agreement and the other
Loan Documents in respect of the Loans and the Reimbursement Obligations by
executing and delivering that certain Guarantee and Collateral Agreement dated
as of even date herewith in favor of Mortgagee (as the same may be amended,
supplemented or otherwise modified from time to time, the "Guarantee and
Collateral Agreement") and (2) Mortgagor secure its obligations under the
Guarantee and Collateral Agreement by executing and delivering this Mortgage.
Mortgagor, a subsidiary of the Company, will receive substantial direct and
indirect benefit from the extensions of credit made to the Borrower pursuant to
the Credit Agreement.
NOW THEREFORE, in consideration of the premises and for the
sum of Ten Dollars ($10.00), the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby agrees as follows:
<PAGE>
3
Granting Clauses
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure
the following (collectively, the "Obligations"):
A. the due and punctual payment and performance by
Mortgagor of any and all of its obligations and liabilities,
whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with the Guarantee and
Collateral Agreement;
B. the payment of all other obligations and
liabilities of Mortgagor, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of or in
connection with the Guarantee and Collateral Agreement, this
Mortgage, any other document securing payment of the
Obligations (the "Security Documents") and any amendments,
supplements, extensions, renewals, restatements, replacements
or modifications of any of the foregoing (the Credit
Agreement, the Letters of Credit, the Interest Rate Protection
Agreements, the Guarantee and Collateral Agreement, this
Mortgage and the other Security Documents and all other
documents and instruments from time to time evidencing,
securing or guaranteeing the payment and performance of the
Obligations, as any of the same may be amended, supplemented,
extended, renewed, restated, replaced or modified from time to
time, are collectively referred to as the "Loan Documents"),
in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees, charges
and disbursements of counsel to Mortgagee or to the Lenders
that are required to be paid by Mortgagor pursuant to the
terms of the Credit Agreement, this Mortgage or any other Loan
Document); and
C. the performance of all covenants, agreements,
obligations and liabilities of Mortgagor under or pursuant to
the provisions of the Loan Documents; and
D. IT IS AGREED THAT THIS MORTGAGE SHALL STAND AS
SECURITY FOR ALL SUCH FUTURE AND ADDITIONAL INDEBTEDNESS
WHETHER IT BE INCURRED FOR ANY BUSINESS PURPOSE THAT WAS
RELATED OR WHOLLY UNRELATED TO THE PURPOSE OF THE LOANS, OR
WHETHER IT WAS INCURRED FOR SOME PERSONAL OR NONBUSINESS
PURPOSE, OR FOR ANY OTHER PURPOSE RELATED OR UNRELATED, OR
SIMILAR OR DISSIMILAR, TO THE PURPOSE OF THE LOANS;
MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND
HEREBY MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS AND SETS
OVER TO MORTGAGEE:
<PAGE>
4
(A) the Real Estate;
(B) all the estate, right, title, claim or demand whatsoever
of Mortgagor, in possession or expectancy, in and to the Real Estate or
any part thereof;
(C) all right, title and interest of Mortgagor in, to and
under all easements, rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water and
riparian rights, development rights, air rights, mineral rights and all
estates, rights, titles, interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging, relating or appertaining to
the Real Estate, and any reversions, remainders, rents, issues, profits
and revenue thereof and all land lying in the bed of any street, road
or avenue, in front of or adjoining the Real Estate to the center line
thereof;
(D) all right, title and interest of Mortgagor in and to all
of the fixtures, chattels, business machines, machinery, apparatus,
equipment, furnishings, fittings and articles of personal property of
every kind and nature whatsoever, and all appurtenances and additions
thereto and substitutions or replacements thereof (together with, in
each case, attachments, components, parts and accessories), currently
owned or subsequently acquired by Mortgagor and now or subsequently
attached to, or contained in or used or usable in any way in connection
with any operation or letting of the Real Estate, including but without
limiting the generality of the foregoing, all screens, awnings, shades,
blinds, curtains, draperies, artwork, carpets, rugs, storm doors and
windows, furniture and furnishings, heating, electrical, and mechanical
equipment, lighting, switchboards, plumbing, ventilating, air
conditioning and air- cooling apparatus, refrigerating, and
incinerating equipment, escalators, elevators, loading and unloading
equipment and systems, stoves, ranges, laundry equipment, cleaning
systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae),
televisions, computers, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings
and fixtures of every kind and description (all of the foregoing in
this paragraph (D) being referred to as the "Equipment");
(E) all right, title and interest of Mortgagor in and to all
substitutes and replacements of, and all additions and improvements to,
the Real Estate and the Equipment, subsequently acquired by or released
to Mortgagor or constructed, assembled or placed by Mortgagor on the
Real Estate, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all
building materials whether stored at the Real Estate or offsite, and,
in each such case, without any further mortgage, conveyance, assignment
or other act by Mortgagor;
(F) all right, title and interest of Mortgagor in, to and
under all leases, subleases, underlettings, concession agreements,
management agreements, licenses and other agreements relating to the
use or occupancy of the Real Estate or the Equipment or any part
thereof, now existing or subsequently entered into by Mortgagor and
whether written or oral and all guarantees of any of the foregoing
(collectively, as any of the foregoing may be amended, restated,
extended, renewed or modified from time to time, the
<PAGE>
5
"Leases"), and all rights of Mortgagor in respect of cash and
securities deposited thereunder and the right to receive and collect
the revenues, income, rents, issues and profits thereof, together with
all other rents, royalties, issues, profits, revenue, income and other
benefits arising from the use and enjoyment of the Mortgaged Property
(as defined below) (collectively, the "Rents");
(G) all books and records relating to or used in connection
with the operation of the Real Estate or the Equipment or any part
thereof;
(H) all unearned premiums under insurance policies now or
subsequently obtained by Mortgagor relating to the Real Estate or
Equipment and Mortgagor's interest in and to all proceeds of any such
insurance policies (including title insurance policies) including the
right to collect and receive such proceeds, subject to the provisions
relating to insurance generally set forth below; and all awards and
other compensation, including the interest payable thereon and the
right to collect and receive the same, made to the present or any
subsequent owner of the Real Estate or Equipment for the taking by
eminent domain, condemnation or otherwise, of all or any part of the
Real Estate or any easement or other right therein, subject to the
provisions relating to condemnation awards generally set forth below;
(I) all right, title and interest of Mortgagor, to the extent
assignable, in and to (i) all contracts from time to time executed by
Mortgagor or any manager or agent on its behalf relating to the
ownership, construction, maintenance, repair, operation, occupancy,
sale or financing of the Real Estate or Equipment or any part thereof
and all agreements relating to the purchase or lease of any portion of
the Real Estate or any property which is adjacent or peripheral to the
Real Estate, together with the right to exercise such options
(collectively, the "Contracts"), (ii) all consents, licenses, building
permits, certificates of occupancy and other governmental approvals
relating to construction, completion, occupancy, use or operation of
the Real Estate or any part thereof (collectively, the "Permits") and
(iii) all drawings, plans, specifications and similar or related items
relating to the Real Estate (collectively, the "Plans");
(J) any and all monies now or subsequently on deposit for the
payment of real estate taxes or special assessments against the Real
Estate or for the payment of premiums on insurance policies covering
the foregoing property or otherwise on deposit with or held by
Mortgagee as provided in this Mortgage;
(K) all accounts and revenues arising from the operation of
the Improvements; and
(L) all proceeds, both cash and noncash, of the foregoing;
but excluding any liens of the type referred to in Section
8.3(o) of the Credit Agreement (all of the foregoing property and rights and
interests now owned or held or subsequently acquired by Mortgagor and described
in the foregoing clauses (A) through (E) are collectively referred to as the
"Premises", and those described in the foregoing clauses (A) through (L) are
collectively referred to as the "Mortgaged Property").
<PAGE>
6
Mortgagee shall have a lien upon and security interest in the
plant, property and equipment and all replacements thereof and accessions
thereto, including replacement parts and equipment, located in and on the
Mortgaged Property owned by Mortgagor and which are now and hereafter shall
become fixtures, to the extent that the foregoing are deemed to be real property
under the laws of the State in which the Premises are located. This instrument
shall constitute a fixture financing statement and filing under the Uniform
Commercial Code (the "Code").
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto Mortgagee, its successors and assigns for the
uses and purposes set forth, until the Obligations are fully paid and performed.
Terms and Conditions
Mortgagor further represents, warrants, covenants and agrees
with Mortgagee as follows:
1. Warranty of Title. Mortgagor warrants that Mortgagor has
good title to the Real Estate in fee simple and good title to the rest of the
Mortgaged Property, subject only to the matters that are set forth in Schedule B
of the title insurance policy or policies being issued to Mortgagee to insure
the lien of this Mortgage and Liens permitted by Section 8.3 of the Credit
Agreement (the "Permitted Exceptions") and Mortgagor shall warrant, defend and
preserve such title and the lien of the Mortgage thereon against all claims of
all persons and entities. Mortgagor further warrants that it has the right to
mortgage the Mortgaged Property.
2. Payment of Obligations. Mortgagor shall pay and perform all
the Obligations at the times and places and in the manner specified in the
Guarantee and Collateral Agreement and in this Mortgage.
3. Requirements.
(a) Mortgagor shall promptly comply with, or cause to be
complied with, and conform to all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules, regulations and requirements, and
irrespective of the nature of the work to be done, of each of the United States
of America, any State and any municipality, local government or other political
subdivision thereof and any agency, department, bureau, board, commission or
other instrumentality of any of them, now existing or subsequently created
(collectively, "Governmental Authority") which has jurisdiction over the
Mortgaged Property and all covenants, restrictions and conditions now or later
of record which may be applicable to any of the Mortgaged Property, or to the
use, manner of use, occupancy, possession, operation, maintenance, alteration,
repair or reconstruction of any of the Mortgaged Property, except to the extent
that failure to comply therewith, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. All present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements of every Governmental Authority applicable to Mortgagor or to any
of the Mortgaged Property and all covenants, restrictions, and conditions which
now or later may be applicable to any of the Mortgaged Property are collectively
referred to as the "Legal Requirements".
<PAGE>
7
(b) From and after the date of this Mortgage, Mortgagor shall
not by act or omission permit, other than Permitted Exceptions, any building or
other improvement on any premises not subject to the lien of this Mortgage to
rely on the Premises or any part thereof or any interest therein to fulfill any
Legal Requirement, and Mortgagor hereby assigns to Mortgagee any and all rights
to give consent for all or any portion of the Premises or any interest therein
to be so used. Mortgagor shall not by act or omission impair the integrity of
any of the Real Estate as a single zoning lot separate and apart from all other
premises. Mortgagor represents that each parcel of the Real Estate constitutes a
legally subdivided lot, in compliance with all subdivision laws and similar
Legal Requirements, except to the extent that failure to comply therewith, in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Any act or omission by Mortgagor which would result in a violation of
any of the provisions of this subsection shall be void.
4. Payment of Taxes and Other Impositions. (a) Mortgagor,
prior to delinquency, shall pay and discharge all taxes of every kind and nature
(including, without limitation, all real and personal property, income,
franchise, withholding, transfer, gains, profits and gross receipts taxes), all
charges for any easement or agreement maintained for the benefit of any of the
Mortgaged Property, all general and special assessments, levies, permits,
inspection and license fees, all water and sewer rents and charges and all other
public charges even if unforeseen or extraordinary, imposed upon or assessed
against or which may become a lien on any of the Mortgaged Property, or arising
in respect of the occupancy, use or possession thereof, together with any
penalties or interest on any of the foregoing (all of the foregoing are
collectively referred to as the "Impositions"). Mortgagor shall within 30 days
after the request of Mortgagee deliver to Mortgagee (i) original or copies of
receipted bills and cancelled checks evidencing payment of such Imposition if it
is a real estate tax or other public charge and (ii) evidence reasonably
acceptable to Mortgagee showing the payment of any other such Imposition. If by
law any Imposition, at Mortgagor's option, may be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Mortgagor may elect to pay such Imposition in such installments and shall be
responsible for the payment of such installments with interest, if any.
(b) Nothing herein shall affect any right or remedy of
Mortgagee under this Mortgage or otherwise, without notice or demand to
Mortgagor, to pay any Imposition after the date such Imposition shall have
become delinquent, and to add to the Obligations the amount so paid, together
with interest from the time of payment at the Default Rate. Any sums paid by
Mortgagee in discharge of any Impositions shall be (i) a lien on the Premises
secured hereby prior to any right or title to, interest in, or claim upon the
Premises subordinate to the lien of this Mortgage, and (ii) payable on demand by
Mortgagor to Mortgagee together with interest at the Default Rate as set forth
above.
(c) Mortgagor shall not claim, demand or be entitled to
receive any credit or credits toward the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed against the Mortgaged Property
or any part thereof, and shall not claim any deduction from the taxable value of
the Mortgaged Property by reason of this Mortgage.
(d) Mortgagor shall have the right before any delinquency
occurs to contest or object in good faith to the amount or validity of any
Imposition by appropriate legal proceedings,
<PAGE>
8
but such right shall not be deemed or construed in any way as relieving,
modifying, or extending Mortgagor's covenant to pay any such Imposition at the
time and in the manner provided in this Section unless (i) Mortgagor has given
prior written notice to Mortgagee of Mortgagor's intent so to contest or object
to an Imposition, (ii) Mortgagor shall demonstrate to Mortgagee's satisfaction
that the legal proceedings shall operate conclusively to prevent the sale of the
Mortgaged Property, or any part thereof, to satisfy such Imposition prior to
final determination of such proceedings and (iii) Mortgagor shall have set aside
on its books adequate reserves as required by GAAP.
(e) Upon written notice to Mortgagor, Mortgagee during the
continuance of an Event of Default (as defined below) shall be entitled to
require Mortgagor to pay monthly in advance to Mortgagee the equivalent of
1/12th of the estimated annual Impositions. Mortgagee may commingle such funds
with its own funds and Mortgagor shall not be entitled to interest thereon.
5. Insurance. (a) Mortgagor shall maintain or cause to be
maintained on all of the Premises
(i) property insurance against loss or damage by fire,
lightning, windstorm, tornado, water damage, flood, earthquake and by
such other further risks and hazards as now are or subsequently may be
covered by an "all risk" policy or a fire policy covering "special"
causes of loss (provided, however, that the maintenance of insurance
against earthquake and flood risks shall be subject to availability of
such insurance coverage on commercially reasonable terms). The policy
shall include building ordinance law endorsements and the policy limits
shall be automatically reinstated after each loss (other than with
respect to flood and earthquake coverage which shall be reinstated on a
commercially reasonable basis);
(ii) commercial general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language or similar language of such endorsement), covering all claims
for personal injury, bodily injury or death, or property damage,
subject to standard policy terms, conditions and exclusions, occurring
on, in or about the Premises in an amount not less than $10,000,000
combined single limit with respect to personal injury, bodily injury or
death, or property damage, relating to any one occurrence plus such
excess limits as Mortgagee shall reasonably request from time to time;
(iii) when and to the extent reasonably required by
Mortgagee, insurance against loss or damage by any other risk commonly
insured against by persons occupying or using like properties in the
locality or localities in which the Real Estate is situated;
(iv) during the course of any construction or repair of
Improvements, commercial general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language or similar language of such endorsement), (including coverage
for elevators and escalators, if any). The policy shall include
coverage for independent contractors and completed operations. The
completed operations coverage shall stay in effect for two years after
construction of any
<PAGE>
9
Improvements has been completed. The policy shall provide coverage on
an occurrence basis against claims for personal injury, bodily injury,
death and property damage resulting from Mortgagor's negligence or
other behavior for which Mortgagor may be adjudged tortiously liable,
subject to standard policy terms, conditions and exclusions, occurring
on, in or about the Premises and the adjoining streets, sidewalks and
passageways, such insurance to afford immediate minimum protection to
a limit of not less than that reasonably required by Mortgagee with
respect to personal injury, bodily injury or death to any one or more
persons or damage to property;
(v) during the course of any construction or repair of the
Improvements, workers' compensation insurance (including employer's
liability insurance) for all employees of Mortgagor engaged on or with
respect to the Premises in such amounts as are reasonably satisfactory
to Mortgagee, but in no event less than the limits established by law;
(vi) during the course of any construction, addition,
alteration or repair of the Improvements, builder's risk completed
value property insurance form against "all risks of physical loss,"
including collapse, water damage, flood and earthquake and transit
coverage, during construction or repairs of the Improvements in
reporting form, covering the total replacement value of work performed
and equipment, supplies and materials furnished (with an appropriate
limit for soft costs in the case of construction); provided, however,
that the maintenance of insurance against earthquake and flood risks
shall be subject to availability of such insurance coverage on
commercially reasonable terms;
(vii) boiler and machinery property insurance covering
pressure vessels, air tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator equipment and escalator
equipment, provided the Improvements contain equipment of such nature,
in such amounts as are reasonably satisfactory to Mortgagee but not
less than the lesser of $1,000,000 or 10% of the value of the
Improvements;
(viii) if any portion of the Premises are located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, flood insurance in an
amount reasonably satisfactory to Mortgagee, but in no event less than
the maximum limit of coverage available under the National Flood
Insurance Act of 1968, as amended; and
(ix) such other insurance in such amounts as Mortgagee may
reasonably request from time to time.
Each insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent available)
shall (i) provide that it shall not be cancelled, non-renewed or materially
amended without 30-days' prior written notice to Mortgagee, and (ii) with
respect to all property insurance, provide for deductibles not to exceed
$250,000, other than with respect to windstorm and earthquake perils for which
deductibles shall not exceed $500,000, contain a "Replacement Cost Endorsement"
without any deduction made for depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement reasonably satisfactory to Mortgagee),
with loss payable solely to Mortgagee (modified, if necessary, to provide that
proceeds in the amount of replacement cost may be retained by
<PAGE>
10
Mortgagee without the obligation to rebuild) as its interest may appear, without
contribution, under a "standard" or "New York" mortgagee clause reasonably
acceptable to Mortgagee and be written by insurance companies having an A.M.
Best Company, Inc. rating of A- or higher and a financial size category of not
less than VII, or otherwise as reasonably approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an additional insured and contain a
waiver of subrogation against Mortgagee; all such policies shall indemnify and
hold Mortgagee harmless from all liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and passageways, subject to
standard policy terms, conditions and exclusions. The amounts of each insurance
policy and the form of each such policy shall at all times be reasonably
satisfactory to Mortgagee. Each policy shall expressly provide that any proceeds
which are payable to Mortgagee shall be paid by check payable to the order of
Mortgagee only and requiring the endorsement of Mortgagee only. If any required
insurance shall expire, be withdrawn, become void by breach of any condition
thereof by Mortgagor or by any lessee of any part of the Mortgaged Property or
become void or unsafe by reason of the failure or impairment of the capital of
any insurer, or if for any other reason whatsoever such insurance shall become
unsatisfactory to Mortgagee, Mortgagor shall immediately obtain new or
additional insurance reasonably satisfactory to Mortgagee. Mortgagor shall not
take out any separate or additional insurance which is contributing in the event
of loss unless it is properly endorsed and otherwise reasonably satisfactory to
Mortgagee in all respects.
(b) Mortgagor shall deliver to Mortgagee an original of each
insurance policy required to be maintained, or a certificate of such insurance
reasonably acceptable to Mortgagee, together with a copy of the declaration page
for each such policy. Mortgagor shall (i) pay as they become due all premiums
for such insurance, (ii) not later than 7 days prior to the expiration of each
policy to be furnished pursuant to the provisions of this Section, deliver a
renewed policy or policies or certificates of insurance reasonably acceptable to
Mortgagee, or duplicate original or originals thereof. Within 60 days of the
inception of each insurance policy or renewal, Mortgagor shall deliver to
Mortgagee evidence reasonably satisfactory to Mortgagee of payment therefor.
Upon the reasonable request of Mortgagee, Mortgagor shall cause its insurance
underwriter or broker to certify to Mortgagee in writing that all the
requirements of this Mortgage governing insurance have been satisfied.
(c) If Mortgagor is in default of its obligations to insure or
deliver any such prepaid policy or policies or certificates of insurance
reasonably acceptable to Mortgagee, then Mortgagee, at its option and without
notice, may effect such insurance from year to year, and pay the premium or
premiums therefor, and Mortgagor shall pay to Mortgagee on demand such premium
or premiums so paid by Mortgagee with interest from the time of payment at the
Default Rate and the same shall be deemed to be secured by this Mortgage and
shall be collectible in the same manner as the Obligations secured by this
Mortgage.
(d) Mortgagor shall increase the amount of property insurance
required to equal 100% replacement cost pursuant to the provisions of this
Section at the time of each renewal of each policy (but not later than 12 months
from the date of this Mortgage and each successive 12 month period to occur
thereafter) by using the Marshall & Swift Building Cost Index to determine
whether there shall have been an increase in the replacement value since the
most recent adjustment and, if there shall have been such an increase, the
amount of insurance required shall be adjusted accordingly.
<PAGE>
11
(e) Mortgagor promptly shall in all material respects comply
with and conform to (i) all provisions of each such insurance policy, and (ii)
all requirements of the insurers applicable to Mortgagor or to any of the
Mortgaged Property or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Mortgaged Property.
Mortgagor shall not use or permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel any insurance policy or void
coverage required to be maintained by this Mortgage.
(f) If the Mortgaged Property, or any part thereof, shall be
destroyed or damaged by fire or any other casualty, whether insured or
uninsured, or in the event any claim is made against Mortgagor for any personal
injury, bodily injury or property damage incurred on or about the Premises,
Mortgagor shall promptly give notice thereof to Mortgagee. If the Mortgaged
Property is damaged by fire or other casualty and the cost to repair such damage
is less than the lesser of (i) 30% of the replacement cost of the Improvements
at the affected Real Estate site and (ii) $1,000,000, then provided that no
Event of Default shall have occurred and be continuing, Mortgagor shall have the
right to adjust such loss, and the insurance proceeds relating to such loss may
be paid over to Mortgagor; provided that Mortgagor shall, promptly after any
such damage, repair in all material respects all such damage regardless of
whether any insurance proceeds have been received or whether such proceeds, if
received, are sufficient to pay for the costs of repair. If the Mortgaged
Property is damaged by fire or other casualty, and the cost to repair such
damage exceeds the above limit, or if an Event of Default shall have occurred
and be continuing, then Mortgagor authorizes and empowers Mortgagee, at
Mortgagee's option and in Mortgagee's reasonable discretion, as attorney-in-fact
for Mortgagor, to make proof of loss, to adjust and compromise any claim under
any insurance policy, to appear in and prosecute any action arising from any
policy, to collect and receive insurance proceeds and to deduct therefrom
Mortgagee's expenses incurred in the collection process. Each insurance company
concerned is hereby authorized and directed to make payment for such loss
directly to Mortgagee. Mortgagee shall have the right to require Mortgagor to
repair or restore the Mortgaged Property in all material respects, and Mortgagor
hereby designates Mortgagee as its attorney-in-fact for the purpose of making
any election required or permitted under any insurance policy relating to repair
or restoration. The insurance proceeds or any part thereof received by Mortgagee
may be applied by Mortgagee toward reimbursement of all reasonable costs and
expenses of Mortgagee in collecting such proceeds, and the balance shall be
advanced to Mortgagor to be used for the restoration or repair of the Mortgaged
Property, provided, however, if an Event of Default has occurred and is
continuing, the balance may be applied, at Mortgagee's option in its sole and
absolute discretion, to the principal (to the installments in inverse order of
maturity, if payable in installments) and interest due or to become due on the
Loans, to fulfill any other Obligation of Mortgagor, to the restoration or
repair of the property damaged, or released to Mortgagor. In the event Mortgagee
elects to release such proceeds to Mortgagor, Mortgagor shall be obligated to
use such proceeds to restore or repair the Mortgaged Property. Application by
Mortgagee of any insurance proceeds toward the last maturing installments of
principal and interest due or to become due on the Loans shall not excuse
Mortgagor from making any regularly scheduled payments due thereunder, nor shall
such application extend or reduce the amount of such payments.
(g) In the event of foreclosure of this Mortgage or other
transfer of title to the Mortgaged Property in extinguishment of the
Obligations, all right, title and interest of Mortgagor in and to any insurance
policies then in force shall pass to the purchaser or grantee
<PAGE>
12
and Mortgagor hereby appoints Mortgagee its attorney-in-fact, in Mortgagor's
name, to assign and transfer all such policies and proceeds to such purchaser or
grantee.
(h) Upon written notice to Mortgagor, Mortgagee, during the
continuance of an Event of Default, shall be entitled to require Mortgagor to
pay monthly in advance to Mortgagee the equivalent of 1/12th of the estimated
annual premiums due on such insurance. Mortgagee may commingle such funds with
its own funds and Mortgagor shall not be entitled to interest thereon.
(i) Mortgagor may maintain insurance required under this
Mortgage by means of one or more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such policy shall specify, or
Mortgagor shall furnish to Mortgagee a written statement from the insurer so
specifying, the maximum amount of the total insurance afforded by such blanket
policy that is allocated to the Premises and the other Mortgaged Property and
any sublimits in such blanket policy applicable to the Premises and the other
Mortgaged Property, (B) each such blanket policy shall include an endorsement
providing that, in the event of a loss resulting from an insured peril,
insurance proceeds shall be allocated to the Mortgaged Property in an amount
equal to the coverages required to be maintained by Mortgagor as provided above
and (C) the protection afforded under any such blanket policy shall be no less
than that which would have been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens and Encumbrances. Except for the lien
of this Mortgage and the Permitted Exceptions and except as otherwise permitted
pursuant to the terms of the Credit Agreement, Mortgagor shall not further
mortgage, nor otherwise encumber the Mortgaged Property nor create or suffer to
exist any lien, charge or encumbrance on the Mortgaged Property, or any part
thereof, whether superior or subordinate to the lien of this Mortgage and
whether recourse or non-recourse.
7. Due on Sale and Other Transfer Restrictions. Except as may
be permitted pursuant to Sections 8.5 and 8.6 of the Credit Agreement, Mortgagor
shall not sell, transfer, convey or assign all or any portion of, or any
interest in, the Mortgaged Property.
8. Maintenance; No Alteration; Inspection; Utilities. (a)
Mortgagor shall maintain or cause to be maintained all the Improvements in good
condition and repair and shall not commit or suffer any waste of the
Improvements. Mortgagor shall repair, restore, replace or rebuild promptly any
part of the Premises which may be damaged or destroyed by any casualty
whatsoever to a condition substantially equivalent to its condition prior to the
damage or destruction. Except as permitted by the Credit Agreement, the
Improvements shall not be demolished or materially altered, nor any material
additions built, without the prior written consent of Mortgagee, provided that
Mortgagor may make alterations or additions without the consent of Mortgagee
that do not materially reduce the value of the Mortgaged Property.
(b) Mortgagee and any persons authorized by Mortgagee shall,
upon reasonable notice and at any reasonable time, have the right to enter and
inspect the Premises and the right to inspect all work done, labor performed and
materials furnished in and about the Improvements and the right to inspect and
make copies, to the extent reasonable, of all books, contracts and records of
Mortgagor relating to the Mortgaged Property.
<PAGE>
13
(c) Mortgagor shall pay or cause to be paid prior to
delinquency, all utility charges which are incurred for gas, electricity, water
or sewer services furnished to the Premises and all other assessments or charges
of a similar nature, whether public or private, affecting the Premises or any
portion thereof, whether or not such assessments or charges are liens thereon.
9. Condemnation/Eminent Domain. Promptly upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Mortgaged Property, or any portion thereof, Mortgagor will notify Mortgagee of
the pendency of such proceedings. Mortgagor authorizes Mortgagee, at Mortgagee's
option and in Mortgagee's reasonable discretion, as attorney-in-fact for
Mortgagor, to commence, appear in and prosecute, in Mortgagee's or Mortgagor's
name, any action or proceeding relating to any condemnation of the Mortgaged
Property, or any portion thereof, and to settle or compromise any claim in
connection with such condemnation upon the occurrence and during the continuance
of an Event of Default. If Mortgagee elects not to participate in such
condemnation proceeding, then Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult with Mortgagee, its attorneys
and experts and cooperate with them in any defense of any such proceedings. All
awards and proceeds of condemnation shall be assigned to Mortgagee to be applied
in the same manner as insurance proceeds, as provided above, and Mortgagor
agrees to execute any such assignments of all such awards as Mortgagee may
request.
10. Restoration. If Mortgagee elects or is required hereunder
to release funds to Mortgagor for restoration of any of the Mortgaged Property,
then such restoration shall be performed only in accordance with the following
conditions:
(i) prior to the commencement of any restoration, the
plans and specifications for such restoration, and the budgeted costs,
shall be submitted to and reasonably approved by Mortgagee;
(ii) prior to making any advance of restoration funds,
Mortgagee shall be reasonably satisfied that the remaining restoration
funds are sufficient to complete the restoration and to pay all related
expenses, including interest on the Obligations and real estate taxes
on the Premises, during restoration;
(iii) at the time of any disbursement of the restoration
funds, (A) no Default shall then exist, (B) no mechanics' or
materialmen's liens shall have been filed and remain undischarged,
except those discharged by the disbursement of the requested
restoration funds and (C) a reasonably satisfactory bring-down or
continuation of title insurance on the Premises shall be delivered to
Mortgagee;
(iv) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of reasonably satisfactory evidence of the
stage of completion and of performance of the work in a good and
workmanlike manner and in accordance with the contracts, plans and
specifications reasonably acceptable to Mortgagee;
(v) with respect to each advance of restoration funds,
Mortgagee may retain 10% of the amount of such advance as a holdback
until the restoration is fully
<PAGE>
14
completed;
(vi) the restoration funds shall bear no interest and may
be commingled with Mortgagee's other funds;
(vii) Mortgagee may impose such other conditions as are
customarily imposed by construction lenders; and
(viii) any restoration funds remaining shall be retained by
Mortgagee and shall be applied by Mortgagee to the Obligations in the
order specified in subsection 4.4(g) of the Credit Agreement or to
other expenses related to the Mortgaged Property, as herein permitted.
11. Leases. (a) Mortgagor shall not (i) execute an assignment
or pledge of any Lease relating to all or any portion of the Mortgaged Property
other than in favor of Mortgagee, or (ii) without the prior written consent of
Mortgagee, which consent shall not be unreasonably withheld or delayed, execute
or permit to exist any Lease of any of the Mortgaged Property, except for
Permitted Encumbrances and except as permitted by subsection 8.6 of the Credit
Agreement.
(b) As to any Lease consented to by Mortgagee, Mortgagor
shall:
(i) promptly perform in all material respects all of the
provisions of the Lease on the part of the lessor thereunder to be
performed;
(ii) promptly enforce all of the material provisions of the
Lease on the part of the lessee thereunder to be performed;
(iii) appear in and defend any action or proceeding arising
under or in any manner connected with the Lease or the obligations of
Mortgagor as lessor or of the lessee thereunder;
(iv) exercise, within 5 days after a reasonable request by
Mortgagee, any right to request from the lessee a certificate with
respect to the status thereof;
(v) promptly deliver to Mortgagee copies of any notices of
default which Mortgagor may at any time forward to or receive from the
lessee;
(vi) promptly deliver to Mortgagee a fully executed
counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon Mortgagee's
reasonable request, an assignment of the Mortgagor's interest under
such Lease.
(c) Mortgagor shall deliver to Mortgagee, within 10 days after
a reasonable request by Mortgagee, a written statement, certified by Mortgagor
as being true, correct and complete, containing the names of all lessees and
other occupants of the Mortgaged Property, the terms of all Leases and the
spaces occupied and rentals payable thereunder, and a list of all
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15
Leases which are then in default, including the nature and magnitude of the
default; such statement shall be accompanied by credit information with respect
to the lessees and such other information as Mortgagee may reasonably request.
(d) All Leases entered into by Mortgagor after the date
hereof, if any, and all rights of any lessees thereunder shall be subject and
subordinate in all respects to the lien and provisions of this Mortgage unless
Mortgagee shall otherwise elect in writing.
(e) As to any Lease now in existence or subsequently consented
to by Mortgagee, Mortgagor shall not supplement, alter, revise, modify or amend
such Lease or permit any such action to be taken nor shall Mortgagor accept the
payment of rent more than thirty (30) days in advance of its due date.
(f) In the event of the enforcement by Mortgagee of any remedy
under this Mortgage, the lessee under each Lease shall, if requested by
Mortgagee or any other person succeeding to the interest of Mortgagee as a
result of such enforcement, attorn to Mortgagee or to such person and shall
recognize Mortgagee or such successor in interest as lessor under the Lease
without change in the provisions thereof; provided however, that Mortgagee or
such successor in interest shall not be: (i) bound by any payment of an
installment of rent or additional rent which may have been made more than 30
days before the due date of such installment; (ii) bound by any amendment or
modification to the Lease made without the consent of Mortgagee or such
successor in interest; (iii) liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv) responsible for any monies
owing by Mortgagor to the credit of such lessee or subject to any credits,
offsets, claims, counterclaims, demands or defenses which the lessee may have
against Mortgagor (or its predecessors in interest); (v) bound by any covenant
to undertake or complete any construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to such lessee other than any
security deposit actually delivered to Mortgagee or such successor in interest.
Each lessee or other occupant, upon request by Mortgagee or such successor in
interest, shall execute and deliver an instrument or instruments confirming such
attornment. In addition, Mortgagor agrees that each Lease entered into after the
date of this Mortgage shall include language to the effect of subsections
(d)-(f) of this Section; provided that the provisions of such subsections shall
be self-operative and any failure of any Lease to include such language shall
not impair the binding effect of such provisions on any lessee under such Lease.
12. Further Assurances. To further assure Mortgagee's rights
under this Mortgage, Mortgagor agrees upon demand of Mortgagee to do any act or
execute any additional documents (including, but not limited to, security
agreements on any personalty included or to be included in the Mortgaged
Property and a separate assignment of each Lease in recordable form) as may be
reasonably required by Mortgagee to confirm the lien of this Mortgage and all
other rights or benefits conferred on Mortgagee.
13. Mortgagee's Right to Perform. If Mortgagor fails to
perform any of the covenants or agreements of Mortgagor, Mortgagee, without
waiving or releasing Mortgagor from any obligation or default under this
Mortgage, may, at any time (but shall be under no obligation to) pay or perform
the same, and the amount or cost thereof, with interest at the Default Rate,
shall immediately be due from Mortgagor to Mortgagee and the same shall be
secured by this Mortgage and shall be a lien on the Mortgaged Property prior to
any right, title to, interest in or
<PAGE>
16
claim upon the Mortgaged Property attaching subsequent to the lien of this
Mortgage. No payment or advance of money by Mortgagee under this Section shall
be deemed or construed to cure Mortgagor's default or waive any right or remedy
of Mortgagee.
14. Events of Default. The occurrence of an Event of Default
under the Credit Agreement shall constitute an Event of Default hereunder.
15. Remedies.
(a) Upon the occurrence of any Event of Default, in addition
to any other rights and remedies Mortgagee may have pursuant to the Loan
Documents, or as provided by law, and without limitation, the Obligations and
all other amounts payable with respect to the this Mortgage and the other
applicable Loan Documents shall become due and payable as provided in the Credit
Agreement. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
In addition, upon the occurrence of any Event of Default, Mortgagee may
immediately take such action, without notice or demand, as it deems advisable to
protect and enforce its rights against Mortgagor and in and to the Mortgaged
Property, including, but not limited to, the following actions, each of which
may be pursued concurrently or otherwise, at such time and in such manner as
Mortgagee may determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of Mortgagee:
(i) Mortgagee may, to the extent permitted by applicable
law, (A) institute and maintain an action of mortgage foreclosure
against all or any part of the Mortgaged Property, (B) institute and
maintain an action on the Guarantee and Collateral Agreement or any
other Loan Document, (C) sell all or part of the Mortgaged Property
(Mortgagor expressly granting to Mortgagee the power of sale), or (D)
take such other action at law or in equity for the enforcement of this
Mortgage or any of the Loan Documents as the law may allow. Mortgagee
may proceed in any such action to final judgment and execution thereon
for all sums due hereunder, together with interest thereon as provided
in the Credit Agreement and all reasonable costs of suit, including,
without limitation, reasonable attorneys' fees and disbursements.
Interest at the Default Rate shall be due on any judgment obtained by
Mortgagee from the date of judgment until actual payment is made of the
full amount of the judgment.
(ii) Mortgagee may personally, or by its agents, attorneys
and employees and without regard to the adequacy or inadequacy of the
Mortgaged Property or any other collateral as security for the
Obligations enter into and upon the Mortgaged Property and each and
every part thereof and exclude Mortgagor and its agents and employees
therefrom without liability for trespass, damage or otherwise
(Mortgagor hereby agreeing to surrender possession of the Mortgaged
Property to Mortgagee upon demand at any such time) and use, operate,
manage, maintain and control the Mortgaged Property and every part
thereof. Following such entry and taking of possession, Mortgagee shall
be entitled, without limitation, (x) to lease all or any part or parts
of the Mortgaged Property for such periods of time and upon such
conditions as Mortgagee may, in its discretion, deem proper, (y) to
enforce, cancel or modify any Lease and (z) generally to execute, do
and perform any other act, deed, matter or thing concerning the
Mortgaged Property as Mortgagee shall deem appropriate as fully as
Mortgagor might do.
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17
(b) The holder of this Mortgage, in any action to foreclose
it, shall be entitled to the appointment of a receiver. In case of a foreclosure
sale, the Real Estate may be sold, at Mortgagee's election, in one parcel or in
more than one parcel and Mortgagee is specifically empowered (without being
required to do so, and in its sole and absolute discretion) to cause successive
sales of portions of the Mortgaged Property to be held.
(c) In the event of any breach of any of the covenants,
agreements, terms or conditions contained in this Mortgage, and notwithstanding
to the contrary any exculpatory or non-recourse language which may be contained
herein, subject to the giving of any notice and the expiration of any cure
period as provided for in Section 10.2(d) of the Credit Agreement, Mortgagee
shall be entitled to enjoin such breach and obtain specific performance of any
covenant, agreement, term or condition and Mortgagee shall have the right to
invoke any equitable right or remedy as though other remedies were not provided
for in this Mortgage.
16. Right of Mortgagee to Credit Sale. Upon the occurrence of
any sale made under this Mortgage, whether made under the power of sale or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof. In lieu of paying cash therefor, Mortgagee may make settlement for the
purchase price by crediting upon the Obligations or other sums secured by this
Mortgage the net sales price after deducting therefrom the expenses of sale and
the cost of the action and any other sums which Mortgagee is authorized to
deduct under this Mortgage. In such event, this Mortgage and any and all
documents evidencing expenditures secured hereby may be presented to the person
or persons conducting the sale in order that the amount so used or applied may
be credited upon the Obligations as having been paid.
17. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, Mortgagee as a matter of right and without notice to
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged Property or any other collateral as
security for the Obligations or the interest of Mortgagor therein, shall have
the right to apply to any court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged Property, and Mortgagor hereby
irrevocably consents to such appointment and waives notice of any application
therefor (except as may be required by law). Any such receiver or receivers
shall have all the usual powers and duties of receivers in like or similar cases
and all the powers and duties of Mortgagee in case of entry as provided in this
Mortgage, including, without limitation and to the extent permitted by law, the
right to enter into leases of all or any part of the Mortgaged Property, and
shall continue as such and exercise all such powers until the date of
confirmation of sale of the Mortgaged Property unless such receivership is
sooner terminated.
18. Extension, Release, etc. (a) Without affecting the lien or
charge of this Mortgage upon any portion of the Mortgaged Property not then or
theretofore released as security for the full amount of the Obligations,
Mortgagee may, from time to time and without notice, agree to (i) release any
person liable for the indebtedness guaranteed under the Guarantee and Collateral
Agreement, (ii) extend the maturity or alter any of the terms of the
indebtedness guaranteed under the Guarantee and Collateral Agreement or any
other guaranty thereof, (iii) grant other indulgences, (iv) release or reconvey,
or cause to be released or reconveyed at any
<PAGE>
18
time at Mortgagee's option any parcel, portion or all of the Mortgaged Property,
(v) take or release any other or additional security for any obligation herein
mentioned, or (vi) make compositions or other arrangements with debtors in
relation thereto. If at any time this Mortgage shall secure less than all of the
principal amount of the Obligations, it is expressly agreed that any repayments
of the principal amount of the Obligations shall not reduce the amount of the
lien of this Mortgage until the lien amount shall equal the principal amount of
the Obligations outstanding.
(b) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect the lien of this Mortgage or any liens,
rights, powers or remedies of Mortgagee hereunder, and such liens, rights,
powers and remedies shall continue unimpaired.
(c) If Mortgagee shall have the right to foreclose this
Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the lien of
this Mortgage subject to the rights of any tenants of the Mortgaged Property.
The failure to make any such tenants parties defendant to any such foreclosure
proceeding and to foreclose their rights will not be asserted by Mortgagor as a
defense to any proceeding instituted by Mortgagee to collect the Obligations or
to foreclose the lien of this Mortgage.
(d) Unless expressly provided otherwise, in the event that
ownership of this Mortgage and title to the Mortgaged Property or any estate
therein shall become vested in the same person or entity, this Mortgage shall
not merge in such title but shall continue as a valid lien on the Mortgaged
Property for the amount secured hereby.
19. Security Agreement under Uniform Commercial Code. (a) It
is the intention of the parties hereto that this Mortgage shall constitute a
Security Agreement within the meaning of the Code of the State in which the
Mortgaged Property is located. If an Event of Default shall occur under this
Mortgage, then in addition to having any other right or remedy available at law
or in equity, Mortgagee shall have the option of either (i) proceeding under the
Code and exercising such rights and remedies as may be provided to a secured
party by the Code with respect to all or any portion of the Mortgaged Property
which is personal property (including, without limitation, taking possession of
and selling such property) or (ii) treating such property as real property and
proceeding with respect to both the real and personal property constituting the
Mortgaged Property in accordance with Mortgagee's rights, powers and remedies
with respect to the real property (in which event the default provisions of the
Code shall not apply). If Mortgagee shall elect to proceed under the Code, then
five days' notice of sale of the personal property shall be deemed reasonable
notice and the reasonable expenses of retaking, holding, preparing for sale,
selling and the like incurred by Mortgagee shall include, but not be limited to,
reasonable attorneys' fees and legal expenses. At Mortgagee's request during the
continuance of an Event of Default, Mortgagor shall assemble the personal
property and make it available to Mortgagee at a place designated by Mortgagee
which is reasonably convenient to both parties.
(b) Mortgagor and Mortgagee agree, to the extent permitted by
law, that: (i) all of the goods described within the definition of the word
"Equipment" are or are to become fixtures on the Real Estate; (ii) this Mortgage
upon recording or registration in the real estate records of the proper office
shall constitute a financing statement filed as a "fixture filing" within the
meaning of Sections 9-313 and 9-402 of the Code; (iii) Mortgagor is the record
owner of the
<PAGE>
19
Real Estate; and (iv) the addresses of Mortgagor and Mortgagee are as set forth
on the first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee from time to time,
shall execute, acknowledge and deliver to Mortgagee one or more separate
security agreements, in form reasonably satisfactory to Mortgagee, covering all
or any part of the Mortgaged Property and will further execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, any financing
statement, affidavit, continuation statement or certificate or other document as
Mortgagee may request in order to perfect, preserve, maintain, continue or
extend the security interest under and the priority of this Mortgage and such
security instrument. Mortgagor further agrees to pay to Mortgagee on demand all
reasonable costs and expenses incurred by Mortgagee in connection with the
preparation, execution, recording, filing and re-filing of any such document and
all reasonable costs and expenses of any record searches for financing
statements Mortgagee shall reasonably require. If Mortgagor shall fail to
furnish any financing or continuation statement within 10 days after request by
Mortgagee, then pursuant to the provisions of the Code, Mortgagor hereby
authorizes Mortgagee, without the signature of Mortgagor, to execute and file
any such financing and continuation statements. The filing of any financing or
continuation statements in the records relating to personal property or chattels
shall not be construed as in any way impairing the right of Mortgagee to proceed
against any personal property encumbered by this Mortgage as real property, as
set forth above.
20. Assignment of Rents. Mortgagor hereby assigns to Mortgagee
the Rents as further security for the payment and performance of the
Obligations, and Mortgagor grants to Mortgagee the right to enter the Mortgaged
Property for the purpose of collecting the same and to let the Mortgaged
Property or any part thereof, and to apply the Rents on account of the
Obligations. The foregoing assignment and grant is present and absolute and
shall continue in effect until the Obligations are paid and performed in full,
but Mortgagee hereby waives the right to enter the Mortgaged Property for the
purpose of collecting the Rents, letting the Mortgaged Property or any part
thereof or applying the Rents and Mortgagor shall be entitled to collect,
receive, use and retain the Rents until the occurrence of an Event of Default
under this Mortgage; such right of Mortgagor to collect, receive, use and retain
the Rents may be revoked by Mortgagee upon the occurrence of any Event of
Default under this Mortgage by giving not less than five days' written notice of
such revocation to Mortgagor; in the event such notice is given, Mortgagor shall
pay over to Mortgagee, or to any receiver appointed to collect the Rents, any
lease security deposits, and shall pay monthly in advance to Mortgagee, or to
any such receiver, the fair and reasonable rental value as determined by
Mortgagee for the use and occupancy of the Mortgaged Property or of such part
thereof as may be in the possession of Mortgagor or any affiliate of Mortgagor,
and upon default in any such payment Mortgagor and any such affiliate will
vacate and surrender the possession of the Mortgaged Property to Mortgagee or to
such receiver, and in default thereof may be evicted by summary proceedings or
otherwise. Mortgagor shall not accept prepayments of installments of Rent to
become due for a period of more than one month in advance (except for security
deposits and estimated payments of percentage rent, if any).
21. Additional Rights. The holder of any subordinate lien on
the Mortgaged Property shall have no right to terminate any Lease whether or not
such Lease is subordinate to this Mortgage nor shall any holder of any
subordinate lien join any tenant under any Lease in any action to foreclose the
lien or modify, interfere with, disturb or terminate the rights of any tenant
<PAGE>
20
under any Lease. By recordation of this Mortgage all subordinate lienholders are
subject to and notified of this provision, and any action taken by any such
lienholder contrary to this provision shall be null and void. Upon the
occurrence of any Event of Default, Mortgagee may, in its sole discretion and
without regard to the adequacy of its security under this Mortgage, apply all or
any part of any amounts on deposit with Mortgagee under this Mortgage against
all or any part of the Obligations. Any such application shall not be construed
to cure or waive any Default or Event of Default or invalidate any act taken by
Mortgagee on account of such Default or Event of Default.
22. Changes in Method of Taxation. In the event of the passage
after the date hereof of any law of any Governmental Authority deducting from
the value of the Premises for the purposes of taxation any lien thereon, or
changing in any way the laws for the taxation of mortgages or debts secured
thereby for federal, state or local purposes, or the manner of collection of any
such taxes, and imposing a tax, either directly or indirectly, on mortgages or
debts secured thereby, the holder of this Mortgage shall have the right to
declare the Obligations due on a date to be specified by not less than 30 days'
written notice to be given to Mortgagor unless within such 30-day period
Mortgagor shall assume as an Obligation hereunder the payment of any tax so
imposed until full payment and performance of the Obligations and such
assumption shall be permitted by law.
23. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been sufficiently given or
served when served in the manner set forth in Section 12.2 of the Credit
Agreement.
24. No Oral Modification. This Mortgage may not be changed or
terminated orally. Any agreement made by Mortgagor and Mortgagee after the date
of this Mortgage relating to this Mortgage shall be superior to the rights of
the holder of any intervening or subordinate lien or encumbrance.
25. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, but each shall be
construed as if such invalid, illegal or unenforceable provision had never been
included. Notwithstanding to the contrary anything contained in this Mortgage or
in any provisions of the Obligations or Loan Documents, the obligations of
Mortgagor and of any other obligor under the Obligations or Loan Documents shall
be subject to the limitation that Mortgagee shall not charge, take or receive,
nor shall Mortgagor or any other obligor be obligated to pay to Mortgagee, any
amounts constituting interest in excess of the maximum rate permitted by law to
be charged by Mortgagee.
26. Mortgagor's Waiver of Rights. To the fullest extent
permitted by law, Mortgagor waives the benefit of all laws now existing or that
may subsequently be enacted providing for (i) any appraisement before sale of
any portion of the Mortgaged Property, (ii) any extension of the time for the
enforcement of the collection of the Obligations or the creation or extension of
a period of redemption from any sale made in collecting such debt and (iii)
exemption of the Mortgaged Property from attachment, levy or sale under
execution or exemption from civil process. To the full extent Mortgagor may do
so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead,
claim or take the benefit or advantage of any
<PAGE>
21
law now or hereafter in force providing for any appraisement, valuation, stay,
exemption, extension or redemption, or requiring foreclosure of this Mortgage
before exercising any other remedy granted hereunder and Mortgagor, for
Mortgagor and its successors and assigns, and for any and all persons ever
claiming any interest in the Mortgaged Property, to the extent permitted by law,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of election to mature or declare due the whole of the
secured indebtedness and marshalling in the event of foreclosure of the liens
hereby created.
27. Remedies Not Exclusive. Mortgagee shall be entitled to
enforce payment and performance of the Obligations and to exercise all rights
and powers under this Mortgage or under any of the other Loan Documents or other
agreement or any laws now or hereafter in force, notwithstanding some or all of
the Obligations may now or hereafter be otherwise secured, whether by mortgage,
security agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Mortgage nor its enforcement, shall prejudice or in any
manner affect Mortgagee's right to realize upon or enforce any other security
now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be
entitled to enforce this Mortgage and any other security now or hereafter held
by Mortgagee in such order and manner as Mortgagee may determine in its absolute
discretion. No remedy herein conferred upon or reserved to Mortgagee is intended
to be exclusive of any other remedy herein or by law provided or permitted, but
each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Mortgagee or to which it
may otherwise be entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Mortgagee. In no event
shall Mortgagee, in the exercise of the remedies provided in this Mortgage
(including, without limitation, in connection with the assignment of Rents to
Mortgagee, or the appointment of a receiver and the entry of such receiver on to
all or any part of the Mortgaged Property), be deemed a "mortgagee in
possession," and Mortgagee shall not in any way be made liable for any act,
either of commission or omission, in connection with the exercise of such
remedies.
28. Multiple Security. If (a) the Premises shall consist of
one or more parcels, whether or not contiguous and whether or not located in the
same county, or (b) in addition to this Mortgage, Mortgagee shall now or
hereafter hold one or more additional mortgages, liens, deeds of trust or other
security (directly or indirectly) for the Obligations upon other property in the
State in which the Premises are located (whether or not such property is owned
by Mortgagor or by others) or (c) both the circumstances described in clauses
(a) and (b) shall be true, then to the fullest extent permitted by law,
Mortgagee may, at its election, commence or consolidate in a single foreclosure
action all foreclosure proceedings against all such collateral securing the
Obligations (including the Mortgaged Property), which action may be brought or
consolidated in the courts of any county in which any of such collateral is
located. Mortgagor acknowledges that the right to maintain a consolidated
foreclosure action is a specific inducement to Mortgagee to enter into the
Credit Agreement and to extend the indebtedness guaranteed by the Guarantee and
Collateral Agreement, and Mortgagor expressly and irrevocably waives any
objections to the commencement or consolidation of the foreclosure proceedings
in a single action and any objections to the laying of venue or based on the
grounds of forum non conveniens which it may now or hereafter have. Mortgagor
further agrees that if Mortgagee shall be prosecuting one or more foreclosure or
other proceedings against a portion of the Mortgaged Property or against any
collateral other than the Mortgaged Property, which collateral directly or
indirectly secures the
<PAGE>
22
Obligations, or if Mortgagee shall have obtained a judgment of foreclosure and
sale or similar judgment against such collateral, then, whether or not such
proceedings are being maintained or judgments were obtained in or outside the
State in which the Premises are located, Mortgagee may commence or continue
foreclosure proceedings and exercise its other remedies granted in this Mortgage
against all or any part of the Mortgaged Property and Mortgagor waives any
objections to the commencement or continuation of a foreclosure of this Mortgage
or exercise of any other remedies hereunder based on such other proceedings or
judgments, and waives any right to seek to dismiss, stay, remove, transfer or
consolidate either any action under this Mortgage or such other proceedings on
such basis. Neither the commencement nor continuation of proceedings to
foreclose this Mortgage nor the exercise of any other rights hereunder nor the
recovery of any judgment by Mortgagee in any such proceedings shall prejudice,
limit or preclude Mortgagee's right to commence or continue one or more
foreclosure or other proceedings or obtain a judgment against any other
collateral (either in or outside the State in which the Premises are located)
which directly or indirectly secures the Obligations, and Mortgagor expressly
waives any objections to the commencement of, continuation of, or entry of a
judgment in such other proceedings or exercise of any remedies in such
proceedings based upon any action or judgment connected to this Mortgage, and
Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or
consolidate either such other proceedings or any action under this Mortgage on
such basis. It is expressly understood and agreed that to the fullest extent
permitted by law, Mortgagee may, at its election, cause the sale of all
collateral which is the subject of a single foreclosure action at either a
single sale or at multiple sales conducted simultaneously and take such other
measures as are appropriate in order to effect the agreement of the parties to
dispose of and administer all collateral securing the Obligations (directly or
indirectly) in the most economical and least time-consuming manner.
29. Successors and Assigns. All covenants of Mortgagor
contained in this Mortgage are imposed solely and exclusively for the benefit of
Mortgagee and its successors and assigns, and no other person or entity shall
have standing to require compliance with such covenants or be deemed, under any
circumstances, to be a beneficiary of such covenants, any or all of which may be
freely waived in whole or in part by Mortgagee at any time if in its sole
discretion it deems such waiver advisable. All such covenants of Mortgagor shall
run with the land and bind Mortgagor, the successors and assigns of Mortgagor
(and each of them) and all subsequent owners, encumbrancers and tenants of the
Mortgaged Property, and shall inure to the benefit of Mortgagee, its successors
and assigns. The word "Mortgagor" shall be construed as if it read "Mortgagors"
whenever the sense of this Mortgage so requires and if there shall be more than
one Mortgagor, the obligations of the Mortgagors shall be joint and several.
30. No Waivers, etc. Any failure by Mortgagee to insist upon
the strict performance by Mortgagor of any of the terms and provisions of this
Mortgage shall not be deemed to be a waiver of any of the terms and provisions
hereof, and Mortgagee, notwithstanding any such failure, shall have the right
thereafter to insist upon the strict performance by Mortgagor of any and all of
the terms and provisions of this Mortgage to be performed by Mortgagor.
Mortgagee may release, regardless of consideration and without the necessity for
any notice to or consent by the holder of any subordinate lien on the Mortgaged
Property, any part of the security held for the obligations secured by this
Mortgage without, as to the remainder of the security, in anywise impairing or
affecting the lien of this Mortgage or the priority of such lien over any
subordinate lien.
<PAGE>
23
31. Governing Law, etc. This Mortgage shall be governed by and
construed in accordance with the laws of the State in which the Premises are
located, except that Mortgagor expressly acknowledges that by its terms the
Credit Agreement shall be governed and construed in accordance with the laws of
the State of New York, without regard to principles of conflict of law, and for
purposes of consistency, Mortgagor agrees that in any in personam proceeding
related to this Mortgage the rights of the parties to this Mortgage shall also
be governed by and construed in accordance with the laws of the State of New
York governing contracts made and to be performed in that State, without regard
to principles of conflict of law.
32. Waiver of Trial by Jury. Mortgagor and Mortgagee each
hereby irrevocably and unconditionally waive trial by jury in any action, claim,
suit or proceeding relating to this Mortgage and for any counterclaim brought
therein.
33. Certain Definitions. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Mortgage shall be used interchangeably in singular or plural form and
the word "Mortgagor" shall mean "each Mortgagor or any subsequent owner or
owners of the Mortgaged Property or any part thereof or interest therein," the
word "Mortgagee" shall mean "Mortgagee or any successor Administrative Agent,"
the words "Guarantee and Collateral Agreement" shall mean "the Guarantee and
Collateral Agreement, the Credit Agreement or any other evidence of indebtedness
secured by this Mortgage," the word "person" shall include any individual,
corporation, partnership, limited liability company, trust, unincorporated
association, government, governmental authority, or other entity, and the words
"Mortgaged Property" shall include any portion of the Mortgaged Property or
interest therein. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa. The
captions in this Mortgage are for convenience or reference only and in no way
limit or amplify the provisions hereof.
34. Release of Mortgage. Upon payment in full of all the
Loans, all Reimbursement Obligations and all other Obligations, the termination
or expiration of all Letters of Credit, the termination of all Commitments (as
defined in the Guarantee and Collateral Agreement) and the compliance with the
Obligations then required to be complied with, Mortgagee shall release the lien
of this Mortgage.
35. Conflict with Credit Agreement. In the event of any
conflict or inconsistency between the terms and provisions of this Mortgage and
the terms and provisions of the Credit Agreement, the terms and provisions of
the Credit Agreement shall govern, other than with respect to the Governing Law
provision set forth in Section 31 hereof.
<PAGE>
24
This Mortgage has been duly executed by Mortgagor on June __,
1998 and is intended to be effective as of June 9, 1998.
[SUBSIDIARY GUARANTOR],
a ___________ corporation
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the day of _____________ ___, 1998, before me personally
came , to me known, who, being by me duly sworn, did depose and say that [s]he
resides at ___________________________________________; that [s]he is a[n] [ ]
President of [SUBSIDIARY GUARANTOR], the corporation described in and which
executed the foregoing instrument; and that [s]he signed [his][her] name thereto
by authority of the board of directors of said corporation.
WITNESS my hand and seal as such Notary Public on this ____
day of __________, 1998.
-------------------------
Notary Public
[Notarial Stamp]
My Commission Expires:
- ----------------------
<PAGE>
Schedule A
Description of the Premises
[Attach Legal Description of all parcels]
<PAGE>
EXHIBIT F
TO CREDIT AGREEMENT
-------------------
FORM OF LANDLORD CONSENT
[TENANT]
[ADDRESS]
as of June __, 1998
VIA OVERNIGHT SERVICE
- ---------------------
[LANDLORD NAME]
[LANDLORD ADDRESS]
[ADDRESS[ES] OF LEASED PREMISES]
--------------------------------
Dear Landlord:
The undersigned is the tenant of the above-described property
(the "Property").
U.S. Office Products Company, the parent of the undersigned
("USOP"), has arranged for financing from a group of banks led by The Chase
Manhattan Bank, as Administrative Agent, having an address at 270 Park Avenue,
New York, New York 10017. These banks have agreed to make loans to USOP, which
are to be guaranteed by the undersigned and secured by, among other things, a
lien on any furniture, goods, documents, fixtures, equipment, leasehold
improvements and inventory that is now or in the future may be located at the
Property (collectively, the "Personal Property"), which loans may be modified,
refinanced, extended or restructured, from time to time. The Administrative
Agent has asked that we notify you and request that you agree to the terms of
this letter by returning it to us in the enclosed postage-paid envelope.
By signing this letter you agree that any lien of any kind and
any and all rights, including levy, execution, sale and distraint for unpaid
rents, that you may have or obtain on the Personal Property shall be junior to
the Administrative Agent's lien, and that prior to taking any action to enforce
any lien, you will give the Administrative Agent at least ten (10) business
days' prior notice of your intent to take action. If we should default to the
banks, you agree that in all circumstances the Administrative Agent may have
access to the Property for the purpose of removing or selling the Personal
Property, provided that the Administrative Agent agrees to pay you for the
reasonable cost of repair of any physical damage to the Property caused by the
Administrative Agent in connection with any removal or sale. This letter
agreement is not
<PAGE>
intended to nor shall create any rights in favor of you with respect to the
Personal Property not already existing at law or under lease documents demising
the Property.
Because these loans are important for the future of USOP and
our company and because the bank group and the Administrative Agent will be
relying on this letter, we would greatly appreciate it if you would sign the
enclosed copy of this letter and return it to me by [June 1], 1998, in the
enclosed envelope. If you have any questions, please feel free to contact USOP
at (___) ___-____.
Thank you in advance for your cooperation.
Sincerely,
By:
------------------------
Name:
Title:
Acknowledged and agreed as of
the date first above written:
[LANDLORD NAME]
By:
-------------------------
Name:
Title:
2
<PAGE>
ACKNOWLEDGEMENT AND CONSENT (1)
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of June __, 1998 (the "Agreement"), made by
the Granting Parties (as defined therein) named therein for the benefit of The
Chase Manhattan Bank, as Administrative Agent. The undersigned agrees in
favor of the Administrative Agent for the ratable benefit of the Secured
Parties (as defined therein) as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.3.1 of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(a) and 6.7 of the Agreement.
[NAME OF ISSUER]
By
-------------------------------
Title
----------------------------
Address for Notices:
---------------------------------
---------------------------------
Fax:-----------------------------
- --------------------
(1)This consent is necessary only with respect to any Issuer of Pledged Stock
which is not also a Grantor.
<PAGE>
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of _________ __, 199_, made by
______________________________, a ______________ corporation (the "Additional
Granting Party"), in favor of THE CHASE MANHATTAN BANK, as administrative
agent (in such capacities, the "Administrative Agent") for the banks and other
financial institutions (the "Lenders") from time to time parties to the Credit
Agreement referred to below and the other Secured Parties (as defined below).
All capitalized terms not defined herein shall have the meaning ascribed to
them in the Guarantee and Collateral Agreement referred to below, or if not
defined therein, in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, U.S. OFFICE PRODUCTS COMPANY, a Delaware corporation (the
"Borrower"), BLUE STAR GROUP, LIMITED, a New Zealand corporation ("Blue Star
Group"), the Lenders, the Administrative Agent, BANKERS TRUST COMPANY, as
syndication agent (in such capacity, the "Syndication Agent") and MERRILL
LYNCH CAPITAL CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent") are parties to a Credit Agreement, dated as of June 9,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
the other Granting Parties named therein are parties to the Guarantee and
Collateral Agreement, dated as of June 10, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee and Collateral
Agreement") in favor of the Administrative Agent, for the ratable benefit of
the Secured Parties (as defined in the Guarantee and Collateral Agreement);
WHEREAS, the Additional Granting Party is a member of an affiliated
group of companies that includes the Borrower and the other Granting Parties
to the Guarantee and Collateral Agreement; the proceeds of the extensions of
credit under the Credit Agreement will be used in part to enable the Borrower
to make valuable transfers to one or more of the other Granting Parties
(including the Additional Granting Party) in connection with the operation of
their respective businesses; and the Borrower and the other Granting Parties
(including the Additional Granting Party) are engaged in related businesses,
and each such Granting Party (including the Additional Granting Party) will
derive substantial direct and indirect benefit from the making of the
extensions of credit under the Credit Agreement;
WHEREAS, the Credit Agreement requires the Additional Granting Party
to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Granting Party has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
<PAGE>
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
this Assumption Agreement, the Additional Granting Party, as provided in
Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Granting Party thereunder with
the same force and effect as if originally named therein as a Guarantor [,
Grantor and Pledgor] [and Grantor] [and Pledgor](2) and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor [, Grantor and Pledgor] [and Grantor] [and
Pledgor](3) thereunder. The information set forth in Annex 1-A hereto is
hereby added to the information set forth in Schedules ____________ to the
Guarantee and Collateral Agreement, and such Schedules are hereby amended and
modified to include such information. The Additional Granting Party hereby
represents and warrants that each of the representations and warranties of
such Additional Grantor, in its capacities as a Guarantor [, Grantor and
Pledgor] [and Grantor] [and Pledgor],(4) contained in Section 4 of the
Guarantee and Collateral Agreement is true and correct in all material
respects on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
2. Governing Law. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above
written.
[ADDITIONAL GRANTING PARTY]
(2) Indicate the capacities in which the Additional Granting Party is
becoming a Granting Party.
(3) Indicate the capacities in which the Additional Granting Party is
becoming a Granting Party.
(4) Indicate the capacities in which the Additional Granting Party is
becoming a Granting Party.
<PAGE>
By:
-------------------------------
Name:
Title:
<PAGE>
Annex 1-A to
Assumption Agreement
<PAGE>
EXHIBIT G-3
TO CREDIT AGREEMENT
FORM OF OPINION OF LOCAL
COUNSEL TO THE LOAN PARTIES
June __, 1998
The Chase Manhattan Bank,
as Administrative Agent
270 Park Avenue
New York, New York 10017
And each of the Lenders parties to the Credit
Agreement referred to below
We have acted as special counsel in the State of
(the "State") to U.S. Office Products Company, a Delaware corporation
("Borrower"), and , a
corporation (together with the Borrowers, the "Loan Parties") in connection with
(a) the Credit Agreement, dated as of June __, 1998 (the "Credit Agreement"),
among Borrower, the several banks and other financial institutions from time to
time parties thereto (the "Lenders"), the Bankers Trust Company, a New York
banking corporation, as syndication agent, Merrill Lynch Capital Corporation, as
documentation agent for the Lenders and The Chase Manhattan Bank, a New York
banking corporation, as collateral and administrative agent for the Lenders (in
such capacities, the "Administrative Agent") and (b) the Guarantee and
Collateral Agreement (the "Guarantee") delivered pursuant to the Credit
Agreement.
The opinions expressed below are furnished to you pursuant to the
Credit Agreement. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings ascribed to them in the Credit
Agreement.
In arriving at the opinions expressed below,
(a) we have examined and relied on the originals, or copies certified
or otherwise identified to our satisfaction, of each of (1) the Credit
Agreement, (2) the Guarantee and (3) the mortgage listed on Schedule 1 (the
"State Mortgage" and, together with the Credit Agreement and the Guarantee, the
"Loan Documents");
(b) we have examined unfiled copies of financing statements
(collectively, the "Financing Statements") naming Borrower as Debtor and the
Administrative Agent as Secured Party and describing the Collateral (as defined
in the Guarantee and the State Mortgage) as to which security interests may be
perfected by filing under the Uniform Commercial Code of the State (the "Filing
Collateral"), which we understand will be filed in the filing offices listed on
Schedule 2 (the "Filing Offices"); and
<PAGE>
The Chase Manhattan Bank,
as Administrative Agent -2- June __, 1998
(c) we have examined such corporate documents and records of the Loan
Parties and such other instruments and certificates of public officials,
officers and representatives of the Loan Parties and other Persons, and we have
made such investigations of law, in each case as we have deemed appropriate as a
basis for such opinions.
In rendering the opinions expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (a) the authenticity
of all documents submitted to us as originals, (b) the genuineness of all
signatures on all documents that we examined and (c) the conformity to authentic
originals of documents submitted to us as certified, conformed or photostatic
copies.
Based upon and subject to the foregoing, we are of the opinion that:
1. The execution and delivery by each of the Loan Parties of the Loan
Documents to which it is a party, the borrowing by the Borrower in accordance
with the terms of the Loan Documents, the performance by the Loan Parties of
their respective obligations under the Loan Documents and the creation and
perfection of any security interest upon or with respect to any of the
properties of the Loan Parties provided for therein (a) do not and will not
violate any Requirement of Law of the State and (b) except for the filings
described on Schedule 2 to perfect the security interests created by the
Guarantee with respect to the Filing Collateral and the recordings described on
Schedule 1 attached hereto to perfect the liens created by the State Mortgage do
not and will not require any consent or authorization of, approval by, notice
to, filing with or other act by or in respect of, any Governmental Authority of
the State.
2. (a) The provisions of the Guarantee create in favor of the
Administrative Agent for the benefit of the Lenders a legal, valid and
enforceable security interest in the Collateral.
(b) The Administrative Agent upon filing of the Financing Statements in
the Filing Offices will have a perfected security interest for the benefit of
the Lenders in the Filing Collateral.
3. The State Mortgage:
(a) constitutes a legal, valid and binding obligation of Borrower
enforceable against Borrower in accordance with its terms;
(b) is in proper form for recording;
(c) complies as to form with all existing Requirements of Law;
(d) creates in favor of the Mortgagee (as defined in such State
Mortgage) for the benefit of the Lenders a legal, valid and binding lien on the
real property and fixtures described in such State Mortgage, enforceable as such
against Borrower and, when recorded in the applicable office listed on Schedule
1, all other Persons; and
<PAGE>
The Chase Manhattan Bank,
as Administrative Agent -3- June __, 1998
(e) when recorded in the applicable office listed on Schedule 1, will
constitute a perfected lien on the real property and fixtures described in such
State Mortgage.
The facts that (a) the State Mortgage secures the guaranty of
obligations arising under a revolving line of credit and (b) the Revolving
Credit Loans may from time to time be repaid in full or in part and reborrowed
in accordance with the terms of the Credit Agreement will not result in a
subordination of the liens of the State Mortgage to any other lien on the real
property and fixtures described in such State Mortgage or otherwise impair the
priority of the liens of such State Mortgage.
4. The courts of the State will enforce those provisions in the Loan
Documents which provide that the validity, construction and enforceability of
such documents will be governed by the laws of the State of New York, except
that the Courts of the State may apply the internal law of the State to
determine the perfection and effect of perfection of the liens created under
such documents and the application of remedies in enforcing such liens with
respect to property located in the State.
5. To our knowledge, there is no action, suit or proceeding before or
by any court, arbitrator or governmental agency, body or official, now pending,
to which any Loan Party is a party or to which the business, assets or property
of any Loan Party is subject and no such action, suit or proceeding is
threatened to which any Loan Party or the business, assets or property of any
Loan Party would be subject that, in either case, would be reasonably expected
to have a Material Adverse Effect or questions the validity of the Loan
Documents.
Our opinions set forth in paragraphs 2 and 3 above are subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
We are members of the bar of the State and we express no opinion as to
the laws of any jurisdiction other than the laws of the State and the Federal
laws of the United States of America.
This opinion has been rendered solely for your benefit and for the
benefit of your Transferees pursuant to the Credit Agreement in connection with
the Credit Agreement and the transactions contemplated thereby and may not be
used, circulated, quoted, relied upon or otherwise referred to for any other
purpose without our prior written consent; provided, however, that this opinion
may be delivered to your regulators, accountants, attorneys and other
professional advisers and may be used in connection with any legal or regulatory
proceeding relating to the subject matter of this opinion.
Very truly yours,
<PAGE>
EXHIBIT I TO
CREDIT AGREEMENT
FORM OF SWING LINE LOAN PARTICIPATION CERTIFICATE
-----------,
[Name of Lender]
- ------------------
- ------------------
Ladies and Gentlemen:
Pursuant to subsection 2.5(d) of the Credit Agreement dated as
of June __, 1998 (as amended, supplemented, waived or otherwise modified from
time to time) among U.S. Office Products Company, a Delaware corporation, the
several banks and other financial institutions from time to time parties thereto
(the "Lenders"), The Chase Manhattan Bank, as collateral agent and
administrative agent for the Lenders, Bankers Trust Company, as syndication
agent for the Lenders and Merrill Lynch Capital Corporation, as documentation
agent for the Lenders, the undersigned hereby acknowledges receipt from you on
the date hereof of DOLLARS ($ ) as payment for
a participating interest in the following Swing Line Loan:
Date of Swing Line Loan:
---------------
Principal Amount of Swing Line Loan:
------------
Very truly yours,
THE CHASE MANHATTAN BANK
By:
---------------
Title:
<PAGE>
EXHIBIT J TO
CREDIT AGREEMENT
FORM OF BORROWING CERTIFICATE
U.S. OFFICE PRODUCTS COMPANY
Pursuant to subsection 6.1(r) of the Credit Agreement, dated
as of June __, 1998 (the "Credit Agreement"; terms defined therein being used
herein as therein defined), among U.S. Office Products Company, a Delaware
corporation (the "Borrower"), the several banks and other financial institutions
from time to time parties thereto (the "Lenders"), and The Chase Manhattan Bank,
as administrative agent for the Lenders, Bankers Trust Company, as syndication
agent for the Lenders and Merrill Lynch Capital Corporation, as documentation
agent for the Lenders, the Borrower hereby certifies that:
1. The representations and warranties of the Borrower set
forth in the Credit Agreement and each of the other Loan Documents to
which the Borrower is a party or which are contained in any certificate
furnished by or on behalf of the Borrower pursuant to or in connection
with the Credit Agreement or any of the other Loan Documents are true
and correct on and as of the date hereof with the same effect as if
made on the date hereof except for representations and warranties
expressly stated to relate to a specific earlier date, in which case
such representations and warranties are true and correct as of such
earlier date; and
2. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to the Loans to
be made on the date hereof and/or the issuance of any Letters of Credit
to be issued on the date hereof.
IN WITNESS WHEREOF, the has caused this certificate to be duly
executed and delivered on its behalf as of the date set forth below.
U.S. OFFICE PRODUCTS COMPANY
By:
----------------
Title:
Date: , 1998
----------
<PAGE>
EXHIBIT K
TO CREDIT AGREEMENT
FORM OF REPRESENTATION CERTIFICATE
Reference is made to the Credit Agreement, dated as of June 9,
1998 (as amended, waived, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among U.S. Office Products Company, a Delaware
corporation ("USOP" or the "Borrower"), Blue Star Group, Limited, a New Zealand
corporation ("Blue Star Group"), the banks and other financial institutions from
time to time parties thereto (the "Lenders"), The Chase Manhattan Bank, as
administrative agent (in such capacity, the "Administrative Agent"), Bankers
Trust Company, as syndication agent (in such capacity, the "Syndication Agent"),
and Merrill Lynch Capital Corporation, as documentation agent (in such capacity,
the "Documentation Agent"). Unless otherwise defined herein, capitalized terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
To induce the Administrative Agent and each Lender to make the
Extensions of Credit requested to be made by it on each Borrowing Date, Blue
Star Group hereby represents and warrants, on the date hereof and on every
Borrowing Date hereafter, to the Administrative Agent and each Lender that:
(a) Corporate Existence; Compliance with Law. Blue Star Group
(i) is duly incorporated and validly existing under the laws of the jurisdiction
of its incorporation, (ii) has the corporate power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, except to
the extent that the failure to have such legal right would not be reasonably
expected to have a Material Adverse Effect, (iii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not be reasonably expected to have
a Material Adverse Effect, and (iv) is in compliance with all Requirements of
Law, except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
(b) Corporate Power; Authorization; Enforceable Obligations.
Blue Star Group has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and to
obtain Extensions of Credit under the Credit Agreement, and it has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Loan Documents to which it is a party and to authorize the Extensions of
Credit on the terms and conditions of the Credit Agreement, any Notes and the
Applications. No consent or authorization of, filing with, notice to or other
similar act by or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of Blue Star Group in
connection with the execution, delivery, performance, validity or enforceability
of the Loan Documents to which it is a party or with the Extensions of Credit
hereunder, except for (i) consents, authorizations, notices and filings
described in Schedule 1, all of which have been obtained or made prior to the
date hereof, (ii) filings to perfect the Liens created by the Security
Documents, (iii) filings pursuant to the Assignment of Claims Act of
<PAGE>
2
1940, as amended (31 U.S.C. Section 3727 et seq.) in respect of Accounts and
contracts of it and its Subsidiaries, the Obligor of which is the United States
of America or any department, agency or instrumentality thereof and (iv)
consents, authorizations, notices and filings which the failure to obtain or
make would not reasonably be expected to have a Material Adverse Effect. Each
Loan Document to which Blue Star Group is a party has been or will be duly
executed and delivered on behalf of it. Each Loan Document to which Blue Star
Group is a party as executed and delivered does constitute, or when executed and
delivered, will constitute, a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No Legal Bar. The execution, delivery and performance of
the Loan Documents by Blue Star Group, the Extensions of Credit under the Credit
Agreement and the use of the proceeds thereof (a) will not violate any
Requirement of Law or Contractual Obligation of it in any respect that would
reasonably be expected to have a Material Adverse Effect and (b) will not result
in, or require, the creation or imposition of any Lien (other than the Liens
created by the Security Documents) on any of its properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.
(d) No Default. Neither Blue Star Group nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would be reasonably expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
(e) Ownership of Property; Liens. Each of Blue Star Group and
its Subsidiaries has good record and marketable title in fee simple to, or a
valid leasehold interest in, all its material real property, and good title to,
or a valid leasehold interest in, all its other material property, and none of
such property interest is subject to any Lien, except for Liens permitted by
subsection 8.3 of the Credit Agreement.
(f) Pari Passu. The obligations of each Blue Star Party under
the Loan Documents to which it is a party, when executed and delivered by it,
will rank at least pari passu with all other of its unsecured Indebtedness.
(g) No Immunities, etc. Each Blue Star Party is subject to
civil and commercial law with respect to its obligations under the Loan
Documents to which it is a party, and the execution, delivery and performance by
it of the Loan Documents to which it is a party constitute and will constitute
private and commercial acts and not public or governmental acts. No Blue Star
Party nor any of its property, whether or not held for its own account, has any
immunity (sovereign or other similar immunity) from any suit or proceeding, from
jurisdiction of any court or from set-off or any legal process (whether service
or notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or other similar immunity) under laws of the
jurisdiction in which it is organized and existing in respect of its obligations
under the Loan Documents to which it is a party. Each Blue Star Party has,
pursuant to subsection 12.3 of the Credit Agreement, waived every immunity
(sovereign or otherwise) to which it or any of its properties would otherwise be
entitled from any legal action, suit or
<PAGE>
3
proceeding, from jurisdiction of any court or from set-off or any legal
process (whether service or notice, attachment prior to judgment, attachment in
aid of execution of judgment, execution of judgment or otherwise) under the laws
of the jurisdiction in which it is organized and existing in respect of its
obligations under the Loan Documents to which it is a party. The waiver by each
Blue Star Party described in the immediately preceding sentence is the legal,
valid and binding obligation of it.
(h) No Recordation Necessary. Each of the Loan Documents to
which each Blue Star Party is a party is in proper legal form under the law of
the jurisdiction in which it is organized and existing for the enforcement
hereof or thereof against it under the law of such jurisdiction, and to ensure
the legality, validity, enforceability, priority or admissibility in evidence of
each of the Loan Documents to which it is a party. It is not necessary to ensure
the legality, validity, enforceability, priority or admissibility in evidence of
any of the Loan Documents or any other Loan Document be filed, registered or
recorded with, or executed or notarized before, any court or other authority in
the jurisdiction in which it is organized and existing or that any registration
charge or stamp or similar tax be paid on or in respect of any of the Loan
Documents, except for any such filings, registration or recording, or execution
or notarization, as has been made (including with respect to any such filing,
registrations and recordings made to perfect any liens created pursuant to the
Security Documents) or is not required to be made until such Loan Document is
sought to be enforced and for any charge or tax as has been timely paid.
(i) Exchange Controls. The execution, delivery and performance
by each Blue Star Party of each Loan Document is, under applicable foreign
exchange control regulations of the jurisdiction in which it is organized and
existing, not subject to any notification or authorization except such as have
been made or obtained or cannot be made or obtained until a later date.
<PAGE>
4
IN WITNESS WHEREOF, the undersigned has caused this
Representation Certificate to be duly executed and delivered by its proper and
duly authorized officer as of the day and year first above written.
BLUE STAR GROUP LIMITED
------------------
By:
Title:
<PAGE>
EXHIBIT L
U.S. OFFICE PRODUCTS COMPANY
THE CHASE MANHATTAN BANK
EQUITABLE MORTGAGE OF SECURITIES
<PAGE>
EXECUTION COPY
U.S. OFFICE PRODUCTS COMPANY
THE CHASE MANHATTAN BANK
EQUITABLE MORTGAGE OF SECURITIES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. INTERPRETATION................................................................................ 1
1.1 Definitions.......................................................................... 1
1.2 Other expressions.................................................................... 4
2. MORTGAGE...................................................................................... 4
2.1 Creating the Mortgage................................................................ 4
2.2 Continuing security and discharging the Mortgage..................................... 4
2.3 Priority............................................................................. 5
2.4 Limitation on amount secured......................................................... 5
3. PAYMENT OBLIGATIONS........................................................................... 5
3.1 Borrower Obligations................................................................. 5
3.2 Interest............................................................................. 5
3.3 Costs and expenses................................................................... 5
4. MORTGAGOR'S OTHER OBLIGATIONS................................................................. 5
4.1 General Negative obligations......................................................... 5
4.2 Obligations concerning Securities.................................................... 6
4.3 Obligations concerning voting rights and dividends................................... 6
5. BETTER SECURITY AND RIGHTS FOR FINANCIER...................................................... 7
6. DEFAULT....................................................................................... 7
7. FINANCIER'S POWERS............................................................................ 7
7.1 Generally............................................................................ 7
7.2 To take possession of Mortgaged Property............................................. 8
7.3 To deal with the Mortgaged Property and Mortgagor's business......................... 8
7.4 To discharge or acquire prior Security Interest...................................... 10
7.5 Exercise of rights under clause 7.4.................................................. 10
7.6 To sell and give options............................................................. 10
7.7 To appoint Receivers................................................................. 11
7.8 To appoint more than one Receiver.................................................... 11
7.9 To pay the Receiver.................................................................. 11
7.10 Notice or lapse of time required before rights exercised............................. 11
7.11 To give up possession and terminate receivership..................................... 12
7.12 Persons dealing not bound to enquire................................................. 12
8. RECEIVER'S POWERS............................................................................. 12
8.1 General.............................................................................. 12
8.2 Receiver is agent of Mortgagor....................................................... 13
8.3 Accountability of Receiver........................................................... 13
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
9.1 Appointment and powers............................................................... 13
9.2 Attorney may delegate powers......................................................... 14
9.3 Purpose.............................................................................. 14
10. NOTICES FROM THE ADMINISTRATIVE AGENT......................................................... 15
11. PRESERVING RIGHTS, POWERS AND REMEDIES........................................................ 15
11.1 Preservation......................................................................... 15
11.2 Moratorium legislation............................................................... 15
11.3 Voidable payments.................................................................... 15
11.4 Effect of release.................................................................... 16
12. MISCELLANEOUS................................................................................. 16
12.1 No obligations to exercise rights or give consent, consent must be in
writing.............................................................................. 16
12.2 No marshalling....................................................................... 16
12.3 Surplus proceeds..................................................................... 16
12.4 Applying receipts.................................................................... 17
12.5 The Administrative Agent may assign rights........................................... 17
12.6 Dealing with third parties........................................................... 17
12.7 Certificates......................................................................... 17
12.8 If due date not a business day....................................................... 17
12.9 Severability......................................................................... 17
12.10 Governing law and jurisdiction....................................................... 18
12.11 The Administrative Agent need not execute............................................ 18
</TABLE>
ii
<PAGE>
EQUITABLE MORTGAGE OF SECURITIES
DEED dated June 10, 1998
BETWEEN U.S OFFICE PRODUCTS COMPANY, a Delaware corporation
of 1025 Thomas Jefferson Street, NW, Suite 600E,
Washington DC 20007, United States of America
("Mortgagor")
AND THE CHASE MANHATTAN BANK, a New York banking
corporation of 270 Park Avenue, New York, New York
10017 as administrative agent for certain banks and
financial institutions party to a credit agreement
dated as of June 9, 1998
("Administrative Agent")
1. INTERPRETATION
1.1 Definitions
In this document:
'Attorney' means an attorney-in-fact appointed under a Relevant
Agreement
'Borrower Obligations' means the 'Borrower Obligations' as defined in
the Collateral Agreement.
'Collateral Agreement' means the document entitled 'Guarantee and
Collateral Agreement, dated as of June 10 1998, by the Mortgagor in
favour of the Administrative Agent (on behalf of the Lenders), as the
same may be amended, waived, supplemented or otherwise modified from
time to time.
'Collateral Security' means a Guarantee, Security Interest or
negotiable instrument held or given, whether before of after this
document is executed, as security for or otherwise in connection with
the Borrower Obligations and includes, but is not limited to, the
Collateral Agreement.
'Credit Agreement' means the Credit Agreement dated as of June 9, 1998
between the Mortgagor, Blue Star Group Limited, a New Zealand
corporation, the Administrative Agent, certain banks and other
financial institutions from time to time party thereto (as 'Lenders'),
Bankers Trust Company (as 'Syndication Agent') and Merrill Lynch
Capital Corporation (as 'Documentation Agent'), as the same may be
amended, waived, supplemented or otherwise modified from time to time.
'Debtor' means a person any of whose present or future, actual or
contingent indebtedness or liabilities to the Administrative Agent or
the Lenders is supported or
<PAGE>
secured by a present or future Guarantee or Security Interest given or
entered into by the Mortgagor.
'Event of Default' means an 'Event of Default' as defined in the Credit
Agreement.
'External Administrator' means an administrator, receiver, receiver and
manager, trustee, provisional liquidator, liquidator, inspector or any
other person (however described) holding or appointed to an analogous
office or acting or purporting to act in an analogous capacity.
'Guarantee' means a guarantee, indemnity, letter of credit, letter of
comfort or any other obligation (whatever it is called and whatever its
nature) by which a person is responsible for another person's
obligation or debt.
'Issuer' means Blue Star Group Pty Limited ACN 074 868 901.
'Lenders' has the meaning so defined in the Collateral Agreement.
'Mortgage' means the mortgage over the Mortgaged Property created under
this document.
'Mortgaged Property' means all present and future:
(a) Securities; and
(b) Securities resulting from the conversion, consolidation,
re-classification, redemption, reconstruction, amalgamation or
subdivision of the Securities; and
(c) money, distributions, dividends or return of capital from time
to time payable to the Mortgagor or its nominee as the holder
of, or otherwise in connection with, the Securities; and
(d) proceeds from the sale, redemption or disposal of the
Securities; and
(e) the benefit of any document relating to any of the things
specified in this definition (including any share
certificate); and
(f) all other rights, benefits and advantages of any nature now or
in the future attaching to or arising in connection with any
of the Securities,
whether held by the Mortgagor beneficially or in trust or subject to
any other third party right or interest, provided that the Securities
do not include shares in the issued capital of the Issuer in excess of
65% of any series of the outstanding capital stock of the Issuer.
'New Rights' means the Securities, rights, money, distributions,
dividends and proceeds referred to in paragraphs (b) to (f) of the
definition of Mortgaged Property.
'Permitted Security Interest' means a Security Interest which the
Administrative Agent
2
<PAGE>
has consented to (including, without limitation, the Permitted Liens
(as defined in the Credit Agreement)). It does not include a Security
Interest which the Administrative Agent has consented to on one or more
conditions if those conditions are not complied with.
'Public Authority' means a government or minister or any government, a
semi- government or judicial department or entity and includes, but is
not limited to, Australian Stock Exchange Limited, the Reserve Bank of
Australia and the governing body of any stock exchange on which any
Securities forming part of the Mortgaged Property are listed.
'Receiver' means a receiver or receiver and manager appointed under
this document. When two or more persons are appointed, the expression
'Receiver' refers to each of those persons severally as well as to two
or more of them jointly.
'Records' means all the information which relates in any way to a
specified person's business or any transaction entered into by the
person, whether the information is recorded electronically,
magnetically or otherwise.
'Related Party' means:
(a) a person providing Collateral Security; and
(b) a Debtor.
'Relevant Agreement' means:
(a) this document; and
(b) a Collateral Security; and
(c) the Credit Agreement.
'Securities' means 88,015,337 ordinary fully paid A$1 par value shares
in the capital of the Issuer (being the shares the subject at the date
of this document of certificate no. 2 issued by the Issuer on 5 June
1998).
'Security Interest' means a mortgage, pledge, lien, charge,
preferential right, trust arrangement, agreement or other arrangement
given or created as security.
'Tax' includes a tax, levy, duty or charge (and associated penalty or
interest) imposed or withheld by a Public Authority.
'Winding Up' includes:
(a) dissolution, liquidation, provisional liquidation and
bankruptcy; and
(b) a procedure which is equivalent or analogous in any
jurisdiction.
3
<PAGE>
1.2 Other expressions
In this document, unless the contrary intention appears:
(a) the singular includes the plural and vice versa;
(b) if this document binds two or more persons, it binds them
severally and jointly;
(c) a reference to a party to this document includes that party's
successors and permitted assigns;
(d) a reference to a document or agreement includes that document
or agreement as novated, altered or replaced;
(e) a reference to any thing includes the whole or any part of
that thing and a reference to a group of things or persons
includes each thing or person in that group;
(f) 'A$' refers to Australian currency;
(g) words implying natural persons include partnerships, bodies
corporate, associations and Public Authorities.
2. MORTGAGE
2.1 Creating the Mortgage
The Mortgagor mortgages the Mortgaged Property in favour of the
Administrative Agent, for the ratable benefit of the Lenders, as
security for (subject to clause 2.4) the payment of the Borrower
Obligations.
2.2 Continuing security and discharging the Mortgage
The Mortgage is a continuing security. It remains in effect until the
Administrative Agent gives a final discharge to the Mortgagor. The
Mortgagor is only entitled to a final discharge if all of the Borrower
Obligations have been paid or as provided in the Relevant Agreements
(including, without limitation, upon the sale or other disposition of
the Securities).
2.3 Priority
This Mortgage is a first ranking mortgage of the Mortgaged Property and
takes priority over all Security Interests.
2.4 Limitation on amount secured
4
<PAGE>
Despite anything contained in this document, unless the Administrative
Agent and the Mortgagor specifically agree in writing that this clause
does not apply, the maximum principal amount recoverable by the
Administrative Agent or the Lenders under this document will be limited
to A$15,000 or any other amount agreed to by the Administrative Agent
and the Mortgagor.
3. PAYMENT OBLIGATIONS
3.1 Borrower Obligations
The Mortgagor must pay the Borrower Obligations at the times and in the
way specified in the Relevant Agreements.
3.2 Interest
The Mortgagor must pay interest on the Borrower Obligations to or as
directed by the Administrative Agent, at the rates specified in the
Relevant Agreements.
3.3 Costs and expenses
The Mortgagor indemnifies the Administrative Agent and the Lenders
against, and must pay on demand to the Administrative Agent, all stamp,
excise, sales and other similar taxes with respect to any of the
Mortgaged Property and all reasonable costs and expenses (including,
but not limited to, reasonable legal costs and disbursements) which the
Administrative Agent, a Lender or a Receiver or Attorney pays, or is
liable to pay, in connection with protecting, enforcing or exercising a
right, power or remedy of the Administrative Agent or a Lender or a
Receiver or Attorney under this document.
4. MORTGAGOR'S OTHER OBLIGATIONS
4.1 General Negative obligations
Except as otherwise provided in the Relevant Agreements, the Mortgagor
must not, without the consent of the Administrative Agent:
(a) deal with or dispose of the Mortgaged Property; or
(b) permit a Security Interest (other than a Permitted Security
Interest) to affect the Mortgaged Property; or
(c) do or allow anything to be done which may prejudice the
Administrative Agent's or the Lender's security or rights
under a Relevant Agreement.
4.2 Obligations concerning Securities
The Mortgagor must:
5
<PAGE>
(a) immediately deposit with the Administrative Agent all
certificates, documents of title or other documents that from
time to time relate to or evidence the Securities; and
(b) on demand by the Administrative Agent, deposit with it
transfers executed in blank by the Mortgagor. The transfers
must be in a form, and executed in a manner, acceptable to the
Administrative Agent in its reasonable discretion; and
(c) punctually pay all calls, installments and other moneys which
may at any time be payable on any of the Securities or which,
if unpaid, may result in the creation of a Security Interest
over any of the Securities; and
(d) promptly notify the Administrative Agent in writing when the
Mortgagor becomes entitled to any New Rights.
4.3 Obligations concerning voting rights and dividends
The Mortgagor:
(a) may until an Event of Default occurs exercise voting rights
conferred on it as the holder of any Securities, but it must
not in doing so permit or cause anything to occur that would
or would be likely to be an Event of Default. However, if an
Event of Default occurs and the Administrative Agent gives
notice to the Mortgagor as provided in Section 63 of the
Collateral Agreement, the Mortgagor may no longer exercise any
of those voting rights, except with the prior written consent
of the Administrative Agent; and
(b) may, until an Event of Default occurs and the Administrative
Agent gives notice to the Mortgagor as provided in Section 63
of the Collateral Agreement:
(i) acquire any of the Securities referred to in
paragraphs (b) of the definition of Mortgaged
Property, provided that the pledge of such acquired
Securities to the Administrative Agent would not
result in the Mortgagor's pledging in excess of 65%
of any series of the outstanding capital stock of the
Issuer;
(ii) receive and use in the ordinary course of its
business cash dividends and other distributions
payable in relation to the Securities; and
However, if an Event of Default occurs and the Administrative
Agent gives notice to the Mortgagor as provided in Section 63
of the Collateral Agreement, while that Event of Default
remains unremedied:
(iii) the Mortgagor may not do any of the things specified
in paragraphs (i) or (ii) and during that period only
the Administrative Agent may do those things; and
6
<PAGE>
(iv) the Mortgagor must (at its cost) do all things
necessary to enable the Administrative Agent to do
the things specified in paragraphs (i) and (ii).
5. BETTER SECURITY AND RIGHTS FOR FINANCIER
5.1 The Mortgagor must, at the Mortgagor's cost, do whatever the
Administrative Agent reasonably requires to enable the Administrative
Agent to better exercise or perfect its or the Lender's rights over the
Mortgaged Property.
5.2 This includes, but is not limited to, executing a legal mortgage over
any of the Mortgaged Property (or doing the things the Administrative
Agent requires so that this Mortgage takes effect as a legal mortgage)
or any other Security Interest over the Mortgaged Property reasonably
required by the Administrative Agent.
6. DEFAULT
After an Event of Default occurs and shall be continuing, the
Administrative Agent may declare the Borrower Obligations payable as
provided in the Credit Agreement. If so, the Borrower Obligations
become immediately payable, unless the Administrative Agent specifies
otherwise.
7. FINANCIER'S POWERS
7.1 Generally
(a) Subject to the terms of the Relevant Agreements, while an
Event of Default remains unremedied, the Administrative Agent
may do the things which a mortgage and an absolute owner could
do to the Mortgaged Property and exercise the rights, powers
and remedies of a mortgagee and an absolute owner of the
Mortgaged Property. These include, but are not limited to, the
things and powers described in clause 7.
(b) The Administrative Agent need not make a demand or give notice
to anyone before doing these things or exercising these
powers, except if notice is required as described in clause
7.10.
7.2 To take possession of Mortgaged Property
Subject to the terms of the Relevant Agreements, while an Event of
Default remains unremedied, the Administrative Agent may:
(a) take possession of the Mortgaged Property; and
(b) receive the rents and profits of the Mortgaged Property.
7.3 To deal with the Mortgaged Property and Mortgagor's business
7
<PAGE>
Subject to the terms of the Relevant Agreements, while an Event of
Default remains unremedied, the Administrative Agent may:
(a) (contractual rights)
(i) perform the Mortgagor's obligations under; and
(ii) enforce or exercise or not exercise the Mortgagor's
rights and powers under; and
(iii) agree to vary or rescind,
an instrument, arrangement or right forming part of the
Mortgaged Property (regardless of whether it is entered into
on behalf of the Mortgagor by an Attorney, Receiver or the
Administrative Agent); and
(b) (compromise) settle, compromise or submit to arbitration a
dispute in connection with the Mortgaged Property; and
(c) (perform Mortgagor's obligations) do everything it may to
comply with the obligations of the Mortgagor under a Relevant
Agreement; and
(d) (remedy breach) do everything it may to make good a breach or
default inherent in an Event of Default, to its own
satisfaction; and
(e) (deposit money in suspense or other accounts) invest, deposit
or hold the Mortgaged Property in any way that, and for as
long as, the Administrative Agent thinks fit and vary,
transpose or reinvest the Mortgaged Property; and
(f) (pay calls) pay any calls and other money payable in
connection with the Mortgaged Property; and
(g) (recover, protect Mortgaged Property) do everything the
Administrative Agent thinks necessary to recover or protect
the Mortgaged Property or the rights of the Administrative
Agent under this document; and
(h) (legal proceedings) commence, prosecute, defend and settle
proceedings which the Administrative Agent considers expedient
in connection with this document or the Mortgaged Property in
or before a Public Authority in the name of the Mortgagor or
otherwise; and
(i) (vote Securities) exercise rights and powers and do everything
expedient in connection with Securities which form part of the
Mortgaged Property. The Mortgagor appoints the Administrative
Agent and any officer of the Administrative Agent nominated by
the Administrative Agent for this purpose, severally and
jointly, to be the authorised representative and proxy of the
Mortgagor to do the things described in this paragraph; and
8
<PAGE>
(j) (transfers) complete and procure the registration of any
transfers or other documents that may have been lodged with
the Administrative Agent in relation to the Mortgaged
Property; and
(k) (acquire) acquire by purchase, subscription or otherwise any
Securities; and
(l) (exchange) exchange the Mortgaged Property for any other
property or rights (with or without giving or receiving any
other consideration for the exchange); and
(m) (transfer obligations) assign to any person the obligations of
the Mortgagor which arise under a Relevant Agreement or
otherwise; and
(n) (execute documents) enter into agreements and execute
documents itself or on behalf of the Mortgagor for any purpose
in connection with a Relevant Agreement; and
(o) (delegate) delegate to any person for any time that the
Administrative Agent thinks fit any of the powers of the
Administrative Agent under this clause, including this right
of delegation; and
(p) (incidental power) do anything the Administrative Agent thinks
expedient in its interests and incidental to any of the powers
under this clause, without limiting those powers; and
(q) (spend money) spend money in connection with the powers in
this clause. That money then forms part of the Borrower
Obligations.
7.4 To discharge or acquire prior Security Interest
While an Event of Default remains unremedied, the Administrative Agent
may:
(a) purchase the debt secured by a prior Security Interest; or
(b) pay the amount required to discharge or satisfy that debt
(including, but not limited to, a debt secured by a Permitted
Security Interest); or
(c) take a transfer or assignment of that Security Interest and
any Guarantee, document or right ancillary or collateral to
it, at the Mortgagor's cost.
7.5 Exercise of rights under clause 7.4
If the Administrative Agent exercises its rights under clause 7.4:
(a) the Mortgagor is indebted to the Administrative Agent for the
same amount paid by the Administrative Agent. This does not
limit any other debt acquired by the Administrative Agent; and
9
<PAGE>
(b) that debt is immediately payable to the Administrative Agent
and forms part of the Borrower Obligations and interest
accrues on the unpaid amount of that debt under clause 3.2;
and
(c) the Administrative Agent need not enquire whether the money
claimed to be owing is actually owing in connection with the
prior Security Interest, or an ancillary or collateral
document; and
(d) the person with the benefit of the prior Security Interest
need not enquire whether there is any money owing under a
Relevant Agreement; and
(e) the Mortgagor directs any person with the benefit of a prior
Security Interest to give the Administrative Agent any
information it requires in connection with the prior Security
Interest. This includes, but is not limited to, the state of
accounts for that Security Interest.
7.6 To sell and give options
Subject to the terms of the Relevant Agreements, while an Event of
Default remains unremedied, the Administrative Agent may:
(a) (options) give an option to purchase the Mortgaged Property on
the term it thinks fit; and
(b) (sell together with other property) sell the Mortgaged
Property with any other property in any manner that the
Administrative Agent thinks expedient; and
(c) (hive off assets or obligations) promote the formation of any
company so that the company may purchase or acquire the
Mortgaged Property or assume obligations of the Mortgagor or
both; and
(d) (effect hive-off) sell or assign the Mortgaged Property or
assume the Mortgagor's obligations.
7.7 To appoint Receivers
While an Event of Default remains unremedied, the Administrative Agent
may:
(a) appoint one or more persons to be a Receiver or Receivers of
the Mortgaged Property, with one or more of the powers and
rights described in clauses 7.1 and 7.2; and
(b) remove that Receiver or those Receivers; and
(c) if a Receiver is removed, retires or dies, appoint another or
others in his or her
10
<PAGE>
place; and
(d) in the case of removal or retirement of a Receiver, reappoint
that person.
7.8 To appoint more than one Receiver
If the Administrative Agent appoints two or more persons to be the
Receiver, the Administrative Agent may appoint them to act jointly,
severally or jointly and severally. If it is not specified in the
instrument of appointment, the Receivers are appointed to act
severally.
7.9 To pay the Receiver
The Administrative Agent may fix the remuneration of a Receiver at an
amount agreed between the Administrative Agent and the Receiver.
7.10 Notice or lapse of time required before rights exercised
(a) If notice or lapse of time is required under any statute
before the Administrative Agent can exercise its power of sale
of any other rights available to it under this document or by
law, then that notice or lapse of time is dispensed with.
(b) Paragraph (a) only applies if the relevant statute allows
notice or lapse of time to be dispensed with.
(c) If the relevant statute does not allow notice or lapse of time
to be dispensed with, but allows it to be shortened, then for
the purposes of this document, the period of notice or lapse
of time is one day.
7.11 To give up possession and terminate receivership
The Administrative Agent may:
(a) give up possession of the whole or any part of the Mortgaged
Property; or
(b) terminate a receivership,
or both.
7.12 Persons dealing not bound to enquire
A person dealing with the Administrative Agent or a Receiver or
Attorney:
(a) need not enquire whether there has been a default by the
Mortgagor under a Relevant Agreement or whether the
Administrative Agent, Receiver or Attorney has acted properly;
or
11
<PAGE>
(b) has no notice (actual or implied) that an act of the
Administrative Agent, Receiver or Attorney is unnecessary or
improper;
and whenever the Administrative Agent, a Receiver or an Attorney deals
with the Mortgaged Property, that dealing is authorised and valid as
far as anyone involved with that dealing is concerned. The receipt of
the Administrative Agent or a Receiver or Attorney for any money
payable to the Mortgagor discharges the person paying that money to the
extent of the payment.
8. RECEIVER'S POWERS
8.1 General
Unless the terms of the Receiver's appointment say otherwise, the
Receiver has the following powers over the Mortgaged Property which the
Receiver is appointed to deal with:
(a) all the rights and powers given by law to mortgagees in
possession, receivers or receivers and managers; and
(b) all the rights and powers of the Administrative Agent under
this document and at law (other than the power to appoint
Receivers); and
(c) power to obtain financial accommodation from the
Administrative Agent, alone or together with any other person,
for a purpose and on the terms that the Receiver considers
expedient in connection with the Mortgaged Property; and
(d) power to secure the payment or repayment of indebtedness
relating to that financial accommodation by a Security
Interest over the Mortgaged Property, however it ranks for
priority with the Mortgage or a Collateral Security. The
Receiver may exercise these rights and powers in the name of
the Mortgagor or otherwise.
8.2 Receiver is agent of Mortgagor
A Receiver is the agent of the Mortgagor. The Mortgagor alone is
responsible for the Receiver's acts and defaults. But the Receiver, to
the extent required by law, ceases to be the agent of the Mortgagor if
a resolution is passed or an order is made to Wind Up the Mortgagor.
The Receiver may become the agent of the Administrative Agent if the
Administrative Agent gives a notice to the Receiver in writing to that
effect. The Administrative Agent may appoint a further Receiver,
despite that resolution or order.
8.3 Accountability of Receiver
A Receiver is not responsible for a loss arising in connection with the
exercise or execution of the Receiver's powers, nor for any act or
default of an employee or agent of the Administrative Agent or the
Receiver. A Receiver need not account for more money
12
<PAGE>
than the Receiver actually receives.
9. POWER OF ATTORNEY
9.1 Appointment and powers
The Mortgagor for valuable consideration irrevocably appoints the
Administrative Agent, each officer of the Administrative Agent and each
Receiver separately as its attorneys to do the following on the
Mortgagor's behalf and in the name of the Mortgagor or the Attorney:
(a) anything which the Mortgagor must do under a Relevant
Agreement; and
(b) anything which, in the opinion of the Attorney:
(i) would give effect to a right, power or remedy of the
Administrative Agent or a Receiver; or
(ii) the Mortgagor should do,
under a Relevant Agreement; and
(c) enter into or execute transactions, documents and agreements
which, in the opinion of the Attorney, the Mortgagor should
enter into or execute under a Relevant Agreement; and
(d) use the Mortgagor's name to exercise the powers of the
Administrative Agent or a Receiver under a Relevant Agreement,
the law or otherwise,
(e) obtain the issue of duplicate certificates for the Mortgagor's
Securities if the original certificates are lost or destroyed
or believed to be so; and
(f) direct payment or any delivery of a dividend, notice, scrip or
attend to any other matter relating to the Mortgaged Property;
and
(g) perfect a security given by the Mortgagor in favour of the
Administrative Agent over the Mortgaged Property; and
(h) exercise voting rights or any other power, right or remedy
relating to the Mortgaged Property;
and the Mortgagor agrees to ratify anything done by an Attorney under
this power of attorney.
Anything is this Section 9.1 to the contrary notwithstanding, the
Administrative Agent and the Receiver agree that they will not exercise
any rights under the power of attorney provided for in this Section 9.1
unless an Event of Default shall have
13
<PAGE>
occurred and be continuing.
9.2 Attorney may delegate powers
An Attorney may delegate its powers (including the power to delegate)
to any person for any period and may revoke the delegation.
9.3 Purpose
The power of attorney created under this clause is irrevocable and is
granted to secure the performance by the Mortgagor of the Mortgagor's
obligations under each Relevant Agreement to which the Mortgagor is a
party.
10. NOTICES FROM THE ADMINISTRATIVE AGENT
All notices, requests and demands to or on the Mortgagor or
Administrative Agent must be effected in the manner provided in
subsection 12.2 of the Credit Agreement.
11. PRESERVING RIGHTS, POWERS AND REMEDIES
11.1 Preservation
(a) The fact that the Administrative Agent does not exercise, or
delays the exercise of, any right, power or remedy does not
affect any of its other rights, powers or remedies.
(b) The fact that the Administrative Agent delays the exercise of
any right, power or remedy does not constitute a waiver of
that right, power or remedy.
(c) The fact that the Administrative Agent exercises a right,
power or remedy does not prevent the Administrative Agent from
exercising that right, power or remedy again.
(d) This document does not operate to extinguish or prejudice any
right, power or remedy of the Administrative Agent under a
Relevant Agreement.
11.2 Moratorium legislation
A moratorium does not apply to a Relevant Agreement or the recovery of
the Borrower Obligations except if:
(a) the Administrative Agent agrees in writing that it does; or
(b) it cannot be excluded by law.
11.3 Voidable payments
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If any payment made to the Administrative Agent by or for a Debtor or
the Mortgagor is repaid or void or found to be void, voidable or
repayable for any reason, then:
(a) that payment has not discharged the relevant liability of the
Mortgagor; and
(b) the Administrative Agent may recover the amount of that
payment from the Mortgagor,
despite any release, settlement or discharge in connection with the
Borrower Obligations.
11.4 Effect of release
Each indemnity given by the Mortgagor to the Administrative Agent under
this document is a continuing indemnity. A full or partial release of
this Mortgage does not release the Mortgagor from liability under an
indemnity unless the release is specifically of that indemnity.
12. MISCELLANEOUS
12.1 No obligations to exercise rights or give consent, consent must be in
writing
(a) Each of the Administrative Agent and a Receiver may:
(i) exercise or not exercise any right, power or remedy;
and
(ii) give or not give consent; and
(iii) make or not make a decision,
under this document, in its absolute discretion without giving
a reason and without being liable or accountable for the
consequences.
(b) A consent given or a right, power or remedy waived by the
Administrative Agent is effective only if given or waived in
writing.
12.2 No marshalling
The Administrative Agent need not resort to a Collateral Security or
other Security Interest before exercising a power under this document.
12.3 Surplus proceeds
If surplus money remains in the hands of the Administrative Agent or a
Receiver after payment of all the Borrower Obligations (and
satisfaction of any obligation ranking in priority to the Borrower
Obligations or secured by a Security Interest over the Mortgaged
Property):
15
<PAGE>
(a) no trust arises over that surplus money; and
(b) that surplus money does not carry interest and the
Administrative Agent or Receiver may pay it to an account in
the name of the Mortgagor (whether or not opened by the
Administrative Agent or Receiver for that purpose). The
Administrative Agent or Receiver is then no longer liable for
the surplus money.
12.4 Applying receipts
The Administrative Agent may apply or appropriate money received to
reduce the Borrower Obligations in the order, and to satisfy whatever
part of the Borrower Obligations, as provided in the Relevant
Agreements.
12.5 The Administrative Agent may assign rights
The Administrative Agent may assign or otherwise deal with its rights
and benefits under this document.
12.6 Dealing with third parties
No person need enquire whether the Administrative Agent, a Receiver or
an Attorney has executed or registered an instrument or exercised a
right, power or remedy properly or with authority.
12.7 Certificates
A certificate signed by an officer of the Administrative Agent stating:
(a) that a specified sum of money is owing or payable (or both)
under a Relevant Agreement;
(b) that an Event of Default has occurred; or
(c) something relevant to the rights or obligations of the
Administrative Agent or the Mortgagor under a Relevant
Agreement, whether relating to the Borrower Obligations or
otherwise,
is admissible in proceedings and is conclusive evidence of the matters
stated except if there is manifest error.
12.8 If due date not a business day
If anything should be done under this document on a day other than a
business day, it must be done on the previous business day.
12.9 Severability
16
<PAGE>
(a) The parties agree that a construction of this document that
results in all provisions being enforceable is to be preferred
to a construction that does not so result.
(b) If, despite the application of paragraph (a), a provision of
this document is illegal or unenforceable;
(i) and it would be legal and enforceable if a word or
words were omitted, that word or those words are
severed; and
(ii) in any other case, the whole provision is severed,
and the remainder of this document continues in
force.
12.10 Governing law and jurisdiction
This document is governed by the law applicable in the State of New
York and the Mortgagor submits to the non-exclusive jurisdiction of the
courts of the State of New York.
12.11 The Administrative Agent need not execute
This document is enforceable by the Administrative Agent even if the
Administrative Agent does not execute it.
17
<PAGE>
EXECUTED as a deed.
U.S. OFFICE PRODUCTS COMPANY
By:.................................
Name:
Title:
18
<PAGE>
Schedule 1
----------
MORTGAGE RECORDINGS
IN THE STATE OF __________________
Description of Mortgage Recording Office
- ----------------------- ----------------
<PAGE>
Schedule 2
----------
FILING OFFICES
IN THE STATE OF____________________
<PAGE>
June 10, 1998
CDR-PC Acquisition, L.L.C.
c/o Clayton, Dubilier & Rice Fund V Limited Partnership
1403 Foulk Road, Suite 106
Wilmington, Delaware 19803
Gentlemen:
Reference is made to the Investment Agreement, dated as of
January 12, 1998 (as amended by Amendment No. 1 thereto dated February 3,
1998, the "Investment Agreement"), between U.S. Office Products Company (the
"Company") and CDR-PC Acquisition, L.L.C. (the "Investor"). Capitalized terms
used herein without other definition shall have the respective meanings
specified in the Investment Agreement.
This letter will confirm our agreement that the Company
shall, as soon as practicable after the date hereof (and in any event within
30 days), furnish to Investor (a) certificates of the Company's transfer
agents for the Common Stock and the 2001 Notes (the "Transfer Agent
Certificates"), as to the aggregate number of shares of Common Stock and 2001
Notes outstanding as of the Closing Date, and (b) a certificate of the
Controller of the Company (the "Adjustment Certificate"), as to the
adjustments made to the conversion price of the 2001 Notes as a result of the
Tender Offer and the Distributions (the "Adjustments").
Promptly after the delivery of the Transfer Agent
Certificates and the Adjustment Certificate, the Company shall issue to
Investor, (i) in exchange for the Special Warrant issued to Investor at the
Closing, a new Special Warrant, dated the date hereof and of like tenor,
covering a number of shares of Common Stock determined pursuant to Section
1.01 of the Investment Agreement, reflecting the increase in the number of
shares of Common Stock into which the 2001 Notes are convertible as a result
of the Adjustments, as well as any change in the number of
<PAGE>
2001 Notes outstanding as of the Closing Date reflected in the Transfer Agent
Certificates (and taking into account, without duplication, any intervening
adjustments required pursuant to the antidilution provisions of the Special
Warrant); (ii) in exchange for the Warrant issued to Investor at the Closing,
a new Warrant, dated the date hereof and of like tenor, covering a number of
shares of Common Stock determined pursuant to Section 1.01 of the Investment
Agreement and with an exercise price determined pursuant to the Investment
Agreement, reflecting the increase in the number of shares of Common Stock
covered by the Special Warrant delivered pursuant to clause (i), as well as
any change in the number of shares of Common Stock and/or 2001 Notes
outstanding as of the Closing Date reflected in the Transfer Agent
Certificate (and taking into account, without duplication, any intervening
adjustments required pursuant to the antidilution provisions of the Warrant);
and (iii) if required, in exchange for the certificate evidencing the Shares
issued to Investor at the Closing, a new Certificate, evidencing a number of
Shares determined pursuant to Section 1.01 of the Investment Agreement,
reflecting any change in the number of shares of Common Stock and/or 2001
Notes outstanding as of the Closing Date reflected in the Transfer Agent
Certificate.
Very truly yours,
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Mark D. Director
--------------------------
Mark D. Director
Executive Vice President-
Administration, General
Counsel and Secretary
Agreed:
CDR-PC ACQUISITION, L.L.C.
By: /s/ Brian D. Finn
----------------------
Brian D. Finn
Executive Vice President
<PAGE>
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED BY AN AGREEMENT ON FILE AT THE OFFICES OF THE
CORPORATION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
U.S. Office Products Company
Common Stock Purchase Warrant
Expiring June 10, 2010
New York, N.Y.
June 10, 1998
No. W-001
U.S. Office Products Company, a Delaware corporation (the
"Company"), for value received, hereby certifies that CDR-PC Acquisition,
L.L.C., a Delaware limited liability company (the "Purchaser"), or its permitted
assigns, is entitled to purchase from the Company 9,147,777* duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock, par value
$.001 per share, of the Company (the "Common Stock") at the purchase price per
share determined pursuant to Sections 1.1 and 2 hereof, at any time or from time
to time after June 10, 2000, but prior to 5:00 P.M., New York City time, on June
10, 2010 (or such later date as may be determined pursuant to Section 18), all
subject to the terms, conditions and adjustments set forth below in this
Warrant.
- --------
* Equal to the number of shares of Common Stock acquired by the Purchaser
at the Closing and the number of shares into which the Special Warrants
will become exercisable in respect of 2001 Notes not converted as of
the Closing Date. After delivery of the transfer agents' certificates
as contemplated by the letter agreement of even date herewith between
the Company and the Purchaser, a new Warrant of like tenor and dated
the date hereof shall be issued in accordance with such letter
agreement.
<PAGE>
This Warrant is the Common Stock Purchase Warrant (the
"Warrant," such term to include all Warrants issued in substitution therefor)
originally issued on June 10, 1998 (the "Closing Date") in connection with the
issue and sale by the Company of 9,092,106 shares of its Common Stock pursuant
to the Investment Agreement, dated as of January 12, 1998, between the Company
and the Purchaser (as amended, the "Investment Agreement"). The Warrant
originally so issued evidences rights to purchase 9,147,777 duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock, par value
$.001 per share (such number of shares of Common Stock referred to herein as the
"Initial Exercise Shares"), subject to adjustment as provided herein. Certain
capitalized terms used in the Warrant are defined in Section 13.
1. Exercise of Warrant. 1.1. Manner of Exercise. (a) The
Warrant may be exercised by the holder of the Warrant or any portion hereof (the
"Holder"), in whole or in part, during normal business hours on any Business Day
following the second anniversary of the Closing Date by surrender of the
Warrant, with the form of subscription at the end hereof (or a reasonable
facsimile thereof) (the "Subscription Notice") duly executed by such Holder, to
the Company at its principal office (or, if such exercise shall be in connection
with an underwritten Public Offering of shares of Common Stock (or Other
Securities) subject to the Warrant, at the location at which the Company shall
have agreed to deliver the shares of Common Stock (or Other Securities) subject
to such offering), accompanied by payment, in cash or by certified or official
bank check payable to the order of the Company, in the amount (such amount
referred to herein as the "Exercise Price") obtained by multiplying (i) the
number of shares of Common Stock (without giving effect to any adjustment
provided for in Section 2) designated in such Subscription Notice by (ii)
$44.27,* and such Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) determined as provided in Section 2 hereof.
(b) In lieu of tendering the Exercise Price to the Company,
the holder may elect to perform a "Cashless Exercise" of the Warrant, in whole
or in part, by surrendering the Warrant to the Company, with a duly executed
Subscription Notice marked "Cashless Exercise" and designating the number of
- --------
* Equal to $405 million divided by the Initial Exercise Shares (as
adjusted pursuant to the letter agreement referred to in the preceding
footnote).
<PAGE>
shares of Common Stock desired by the Holder out of the total for which the
Warrant is exercisable (without giving effect to any adjustments provided for in
Section 2). The Holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities) having a value (at the Market Price) that is equal to the
excess of (i) the then Market Price per share of Common Stock (or Other
Securities) multiplied by the number of the shares of Common Stock (or Other
Securities) (determined as of the date immediately preceding the date of any
such Subscription Notice) into which the Warrant, or portion thereof designated
by the Holder, would have been exercisable pursuant to Section 1.1(a) upon
payment of the Exercise Price by the Holder over (ii) the Exercise Price the
Holder would have been required to pay under Section 1.1(a) in respect of such
an exercise.
1.2. When Exercise Deemed Effected. Each exercise of the
Warrant shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which the Warrant shall have been surrendered to
the Company as provided in Section 1.1, and at such time the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock (or Other Securities) shall be issuable upon such exercise as provided in
Section 1.2 shall be deemed to have become the holder or holders of record
thereof.
1.3. Delivery of Stock Certificates, etc. As soon as
practicable after the exercise of the Warrant, in whole or in part, and in any
event within five Business Days thereafter (unless such exercise shall be in
connection with an underwritten Public Offering of shares of Common Stock (or
Other Securities) subject to the Warrant, in which event, concurrently with such
exercise), the Company at its expense (including the payment by it of any taxes
applicable to an issuer upon the issuance of shares, but excluding transfer
taxes) shall cause to be issued in the name of and delivered to the Holder or,
subject to Section 6, as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share of such Common Stock
(or Other Securities) on
<PAGE>
the Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment therein) to the number of such shares called
for on the face of the Warrant minus the number of such shares
designated by the Holder upon such exercise as provided in Section 1.1.
1.4. Company to Reaffirm Obligations. The Company shall, at
the time of or at any time after each exercise of the Warrant, upon the request
of the Holder, acknowledge in writing its continuing obligation to afford to
such holder all rights (including, without limitation, any right of registration
of the Warrant and of any shares of Common Stock (or Other Securities) issuable
upon exercise of the Warrant pursuant to Section 7) to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of the
Warrant, provided that if any such Holder shall fail to make any such request,
the failure shall not affect the continuing obligation of the Company to afford
such rights to such Holder.
2. Adjustment of Common Stock Issuable upon Exercise. 2.1.
Number of Shares; Warrant Price. The number of shares of Common Stock which the
Holder shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock which would
otherwise (but for any application of the provisions of this Section 2) be
issuable upon such exercise, as designated by the Holder pursuant to Section
1.1, by a fraction of which (i) the numerator is $44.27* and (ii) the
denominator is the Warrant Price (as defined below) in effect on the date of
such exercise. The "Warrant Price," which shall initially be $44.27* shall be
adjusted and readjusted from time to time as provided in Section 2 hereof and,
as so adjusted or readjusted, shall remain in effect until a further adjustment
or readjustment thereof is required by Section 2.
2.2. Stock Dividends, Subdivisions and Combinations. If at
any time the Company shall:
- --------
* Equal to $405 million divided by the Initial Exercise Shares (as
adjusted pursuant to the letter agreement referred to in the first
footnote).
<PAGE>
(i) issue or deliver any Additional Shares of Common Stock as
a result of the declaration or payment of a dividend of Common Stock
payable in, or other distribution to holders of Common Stock of,
Additional Shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) after effecting the one-for-four reverse stock split
effected immediately prior to the issuance of this Warrant, combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock,
then the Warrant Price then in effect shall be adjusted to equal (1) the Warrant
Price in effect immediately prior to such event multiplied by the number of
shares of Common Stock for which the Warrant is exercisable immediately prior to
the adjustment divided by (2) the number of shares of Common Stock which a
record holder of the same number of shares of Common Stock for which the Warrant
is exercisable immediately prior to the happening of such event would own or be
entitled to receive after the happening of such event.
2.3. Extraordinary Dividends and Distributions. If at any time
the Company shall distribute to all holders of its outstanding Common Stock
evidences of indebtedness of the Company, cash (other than a regular quarterly
dividend payable in cash out of earned surplus in an amount not exceeding 2% of
the average of the Market Price of the Common Stock on the fifteen trading days
immediately preceding the date of declaration of such dividend) or assets or
securities other than the Common Stock (any such evidences of indebtedness,
cash, assets or securities, the "Assets"), then, in each case, the Warrant Price
then in effect shall be reduced to a price determined by multiplying such
Warrant Price by a fraction,
(i) the numerator of which shall be the Market Price then in
effect less the value of such Assets applicable to one share of Common
Stock, and
(ii) the denominator of which shall be such Market Price.
Any adjustment required by this Section 2.3 shall be made
whenever any such distribution is made, and shall become effective on the date
<PAGE>
of distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
2.4. Issuance of Additional Shares of Common Stock.
(a) If at any time after the date hereof the Company shall
(except as hereinafter provided) issue or sell any Additional Shares of Common
Stock without consideration or in exchange for consideration in an amount per
Additional Share of Common Stock less than the Market Price at the time the
Additional Shares of Common Stock are issued, then the Warrant Price then in
effect shall be reduced to a price determined by multiplying such Warrant Price
by a fraction,
(i) the numerator of which shall be (x) the number of shares
of Common Stock outstanding immediately prior to such issue or sale
plus (y) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at
the Market Price, and
(ii) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale.
(b) The provisions of paragraph (a) of this Section 2.4 shall
not apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 2.2.
2.5. Issuance of Contingent Stock. If at any time after the
date hereof the Company shall increase the number of Shares issuable upon the
exercise of the Special Warrants as a result of the issuance of any Contingent
Stock, then the Warrant Price then in effect shall be reduced to a price
determined by multiplying such Warrant Price by a fraction,
(a) the numerator of which shall be the number of shares of
Common Stock for which the Warrant was exercisable immediately prior to
the adjustment; and
(b) the denominator of which shall be (i) the number of shares
of Common Stock for which the Warrant was exercisable immediately prior
to the adjustment plus (ii) the increase in the number of Shares
issuable
<PAGE>
upon the exercise of the Special Warrant as a result of the issuance
of such Contingent Stock.
If Holder is entitled to an adjustment to the Warrant Price pursuant to this
Section 2.5 as a result of the issuance of Contingent Stock, no other adjustment
shall be made with respect to such issuance under Section 2.6 or 2.7.
2.6. Issuance of Warrants or Other Rights. If at any time
after the date hereof the Company shall take a record of holders of Common Stock
for the purpose of entitling them to receive a distribution of, or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities, whether or not such rights thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Market Price in effect immediately
prior to the time of such issue or sale, then the Warrant Price shall be
adjusted as provided in Section 2.4 on the basis that the maximum number of
shares of Common Stock issuable pursuant to all such warrants or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the Company
shall have received all of the consideration payable therefor, if any, as of the
date of the actual issuance of such warrants or other rights. No further
adjustments of the Warrant Price shall be made upon the actual issuance of such
Common Stock or of such Convertible Securities upon exercise of such warrants or
other rights or upon the actual issuance of such Common Stock upon such
conversion or exchange of such Convertible Securities.
2.7. Issuance of Convertible Securities. If at any time the
Company shall take a record of the holders of Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Market Price in effect immediately prior to the
time of such issue or sale, then the Warrant Price shall be adjusted as provided
in Section 2.4 on the basis that the maximum number of shares of Common Stock
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to
<PAGE>
have been issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the Warrant Price shall be made
under this Section 2.7 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 2.6. No
further adjustments of the Warrant Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible Securities,
and, if any issuance or sale of such Convertible Securities is made upon
exercise of any warrant or other right to subscribe for or to purchase or any
warrant or other right to purchase any such Convertible Securities for which
adjustments of the Warrant Price have been or are to be made pursuant to other
provisions of this Section 2, no further adjustments of the Warrant Price shall
be made by reason of such issuance or sale.
2.8. Superseding Adjustment. If, at any time after any
adjustment of the number of shares of Common Stock for which the Warrant is
exercisable shall have been made pursuant to Section 2.6 or 2.7 as the result of
any issuance of warrants, rights or Convertible Securities,
(i) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or
a portion of such warrants or rights, or the right of conversion or
exchange with respect to all or a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, or
(ii) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms of
such other Convertible Securities, shall be increased solely by virtue
of provisions therein contained for an automatic increase in such
consideration per share upon the occurrence of a specified date or
event,
then such previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such rights or options
or other Convertible Securities effective as of the date of such
<PAGE>
previous adjustment on the basis of
(A) treating the number of Additional Shares of Common Stock
or other property, if any, theretofore actually issued or issuable
pursuant to the previous exercise of any such warrants or rights or any
such right of conversion or exchange, as having been issued on the date
or dates of any such exercise and for the consideration actually
received and receivable therefor, and
(B) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other
property are issuable under such warrants or rights or other
Convertible Securities,
whereupon a new adjustment of the number of shares of Common Stock for which the
Warrant is exercisable shall be made effective as of the date of such previous
adjustment, which new adjustment shall supersede the previous adjustment so
rescinded and annulled. Any reduction in the number of shares of Common Stock
for which the Warrant is exercisable as a result of this Section 2.8 shall be
applied in its entirety to the number of shares of Common Stock for which the
Warrant is exercisable as of the date such new adjustment is made.
2.9. Consolidation, Merger, Sale of Assets, Reorganization,
etc. (a) In case at any time (and whether or not the Warrant is then
exercisable) the Company shall be a party to any transaction (including without
limitation a merger, consolidation, sale of all or substantially all of the
Company's assets or recapitalization of the Common Stock) in which the
previously outstanding Common Stock shall be changed into or exchanged for
different securities of the Company or changed into or exchanged for common
stock or other securities of another corporation or interests in a noncorporate
entity or other property (including cash) or any combination of any of the
foregoing (each such transaction being hereinafter referred to as the
"Transaction") then, as a condition to the consummation of the Transaction,
lawful and adequate provisions shall be made so that, upon the basis and terms
and in the manner provided in this Section 2.9, the Holder, upon the exercise of
the Warrant, shall be entitled to receive, in lieu of the Common Stock issuable
upon such exercise prior to such consummation, the stock and other securities,
cash and property to which the Holder would have been entitled upon the
consummation of the
<PAGE>
Transaction if the Holder had exercised the Warrant immediately prior thereto,
subject to adjustments (subsequent to such consummation) as nearly equivalent as
possible to the adjustments provided for in Section 2.
(b) Notwithstanding anything contained herein to the contrary,
the Company will not effect any Transaction unless, prior to the consummation
thereof, each corporation or entity (other than the Company) which may be
required to deliver any stock, securities, cash or property upon the exercise of
the Warrant as provided herein shall assume, by written instrument delivered to,
and reasonably satisfactory to, the Holder, (i) the obligations of the Company
hereunder (and if the Company shall survive the consummation of such
Transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company hereunder) and (ii) the
obligation to deliver to the Holder such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions, the Holder may be
entitled to receive, and such corporation or entity shall have similarly
delivered to the Holder an opinion of counsel for such corporation or entity,
which counsel shall be satisfactory to the Holder, stating that the Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the applicable provisions of Section 2)
shall be applicable to the stock, securities, cash or property which such
corporation or entity may be required to deliver upon any conversion of any
Warrants or the exercise of any rights pursuant hereto.
(c) Upon any liquidation, dissolution or winding up of the
Company (and whether or not the Warrant is then exercisable), the Holder shall
receive such cash or property (less the Warrant Price) which the Holder would
have been entitled to receive upon the happening of such liquidation,
dissolution or winding up had the Warrant been exercised in full and the shares
of Common Stock in respect of such exercise issued immediately prior to the
occurrence of such liquidation, dissolution or winding-up.
2.10. Other Dilutive Events. In case any event shall occur
as to which the provisions of Section 2 are not strictly applicable but the
failure to make any adjustment would not fairly protect the exercise rights
with respect to the Warrant in accordance with the essential intent and
principles of such Section, then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent
with the essential intent and
<PAGE>
principles established in Section 2, necessary to preserve, without
dilution, the exercise rights represented by the Warrant. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the Holder of the
Warrant and shall make the adjustments, if any, described therein.
2.11. No Dilution or Impairment. The Company will not, by
amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms hereof, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be reasonably necessary or appropriate in order to protect the
rights of the Holders of this Warrant against dilution in respect of which the
Holders are not fully protected by this Section 2 or other impairment. Without
limiting the generality of the foregoing, the Company
(a) will not permit the par value of any shares of Common
Stock receivable upon the exercise of the Warrant to exceed the amount
payable therefor upon such exercise,
(b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock on the exercise of the
Warrant from time to time outstanding, and
(c) will not take any action which results in any adjustment
of the Warrant Price if the total number of shares of Common Stock (or
Other Securities) issuable after such action upon the complete exercise
of the Warrant would exceed the total number of shares of Common Stock
(or Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such
exercise.
2.12. Other Provisions Applicable to Adjustments under this
Section 2. The following provisions shall be applicable to the making of
adjustments to the number of shares of Common Stock for which the Warrant is
exercisable provided for in this Section 2:
(i) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional
Shares of
<PAGE>
Common Stock or any Convertible Securities shall be issued
for cash consideration, the cash consideration received by the Company
therefor shall be the amount of the cash received by the Company
therefor, or, if such Additional Shares of Common Stock or Convertible
Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering
price (in any such case subtracting (A) any amounts paid or receivable
for accrued interest or accrued dividends and without taking into
account (B) any compensation, discounts or expenses paid or incurred by
the Company for and in the under writing of, or otherwise in connection
with, the issuance thereof). To the extent that such issuance shall be
for a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed to
be fair value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the Company. In
case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase
such Additional Shares of Common Stock or Convertible Securities shall
be issued in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be
the fair value, as determined by an independent investment banking firm
retained by the Company, which firm may be an independent investment
banking firm regularly retained by the Company, of such portion of the
assets and business of the nonsurviving corporation as such firm shall
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, warrants or other rights, as the case may be.
The consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase
the same shall be the consideration received by the Company for issuing
such warrants or other rights plus the additional consideration payable
to the Company upon exercise of such warrants or other rights. The
consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the
consideration, if any, received by the Company for issuing warrants or
other rights to subscribe for or purchase such Convertible Securities,
plus the consideration paid or payable to the Company in respect of the
subscription for or purchase of such Convertible Securities, plus the
additional consideration, if any, payable to the Company upon the
exercise of the right of conversion or exchange in such Convertible
<PAGE>
Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than
Common Stock, the Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or
satisfied.
(ii) Computation of Asset Value. To the extent that any Assets
shall be distributed to all holders of the Company's outstanding Common
Stock in cash, the value of such Assets shall be the amount of cash so
distributed, or, if such Assets are securities offered by the Company
for subscription, the subscription price, or if such Assets are
securities sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price (in any such
case adding any accrued interest or dividends but without taking into
account any compensation, discounts or expenses paid or incurred by the
Company in connection therewith). To the extent that the Company shall
so distribute Assets other than cash, except as herein otherwise
expressly provided, then the value of such Assets shall be deemed to be
fair value of such Assets at the time of such distribution as
determined in good faith by the Board of Directors of the Company.
(iii) When Adjustment to Be Made. The adjustments required by
this Section 2 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any adjustment
of the number of shares of Common Stock for which the Warrant is
exercisable that would otherwise be required may be postponed (except
in the case of a subdivision or combination of shares of the Common
Stock, as provided for in Section 2.2) up to but not beyond the date of
exercise if such adjustment either by itself or with other adjustments
not previously made adds or subtracts less than 1% of the shares of
Common Stock for which the Warrant is exercisable immediately prior to
the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed
shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 2 and not previously
made, would result in a minimum adjustment or on the date of exercise.
For the purpose of any adjustment, any specified event shall be deemed
to have occurred at the close of business on the date of its
occurrence.
<PAGE>
(iv) Fractional Interest; Rounding. In computing adjustments
under this Section 2, fractional interests in Common Stock shall be
taken into account to the nearest 1/10th of a share, and adjustments in
the Warrant Price shall be made to the nearest $.01.
(v) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive subscription or purchase rights and shall, thereafter
and before the distribution to stockholders thereof, legally abandon
its plan to deliver such subscription or purchase rights, then no
adjustment shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(vi) Escrow of Warrant Stock. If the Holder exercises the
Warrant after any property becomes distributable pursuant to this
Section 2 by reason of the taking of any record of the holders of
Common Stock, but prior to the occur rence of the event for which such
record is taken, any Additional Shares of Common Stock issuable upon
exercise by reason of such adjustment shall be deemed the last shares
of Common Stock for which the Warrant is exercised (notwithstanding any
other provision to the contrary herein). Such shares or other property
shall be held in escrow for the Holder by the Company to be issued to
the Holder upon and to the extent that the event actually takes place,
upon payment of the Exercise Price. Notwithstanding any other provision
to the contrary herein, if the event for which such record was taken
fails to occur or is rescinded, then such escrowed shares shall be
canceled by the Company and escrowed property returned.
(vii) Shareholder Rights Plans. Rights or warrants distributed
by the Company to all holders of Common Stock pursuant to a shareholder
rights plan (or "poison pill") entitling the holders thereof to
subscribe for or purchase shares of the Company's capital stock, which
rights or warrants, until the occurrence of a specified event or events
(a "Trigger Event"), (x) are deemed to be transferred with the Common
Stock in respect of which they are issued, (y) are not exercisable, and
(z) are also issued in respect of future issuances of Common Stock,
shall be deemed not to have been distributed for purposes of Section
2.6 and 2.7 (and no adjustment to the Warrant Price under those
Sections shall be required) until the occurrence of the earliest
Trigger Event. If upon the occurrence of any event such
<PAGE>
right or warrant becomes exercisable to purchase different securities,
evidences of indebtedness or other assets or entitles its holder to
purchase a different amount of the foregoing or to purchase
any of the foregoing at a different purchase price (an "Other Trigger
Event"), then the occurrence of each such Other Trigger Event shall be
deemed to be the date of issuance and Record Date with respect to a new
right or warrant (and a termination or expiration of the existing right
or warrant without exercise by the holder thereof to the extent not
actually exercised). In addition, in the event of any distribution (or
deemed distribution) of rights or warrants, or any Trigger Event or
Other Trigger Event with respect thereto, that resulted in an
adjustment of the Warrant Price under Section 2.6 or 2.7, (1) in the
case of any such rights or warrants which shall have been redeemed or
repurchased without exercise by the holders thereof, the Warrant Price
shall be adjusted upon such redemption or repurchase to give effect to
such distribution, Trigger Event or Other Trigger Event, as the case
may be, as though it were an extraordinary cash distribution equal to
the per-share redemption or repurchase price received by a holder of
Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights), made to all holders of Common Stock
on the date of such redemption or repurchase, and (2) in the case of
such rights or warrants all of which shall have expired or been
terminated without exercise, the Warrant Price shall be readjusted as
if such rights or warrants had never been issued.
3. Notice of Adjustment. Whenever the number of shares of
Common Stock for which the Warrant is exercisable or the Warrant Price shall be
adjusted pursuant to Section 2, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment, the method by
which the adjustment was calculated, the number of shares of Common Stock for
which the Warrant is exercisable and the Warrant Price after giving effect to
such adjustment or change. The Company shall promptly cause a signed copy of
such certificate to be delivered to the Holder. The Company shall keep at the
office of the Company copies of all such certificates and cause the same to be
available for inspection during normal business hours by the Holder.
4. Accountants' Report as to Adjustments. In each case of any
ad justment or readjustment to the shares of Common Stock (or Other Securities)
issuable upon the exercise of the Warrant, the Company at its expense shall
<PAGE>
promptly compute such adjustment or readjustment in accordance with the terms of
the Warrant and cause independent public accountants of recognized national
standing selected by the Company (which may be the regular auditors of the
Company) to verify such computation and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based, including without limitation a statement of (a) the consideration
received or to be received by the Company for any Additional Shares of Common
Stock issued or sold or deemed to have been issued, (b) the number of shares of
Common Stock outstanding or deemed to be outstanding, and (c) the Warrant Price
in effect immediately prior to such issuance or sale and as adjusted and
readjusted (if required by Section 2) on account thereof. The Company shall
forthwith mail a copy of each such report to each Holder and shall, upon the
written request at any time of any Holder, furnish to such Holder a like report
setting forth the Warrant Price at the time in effect and showing in reasonable
detail how it was calculated. The Company shall also keep copies of all such
reports at its principal office and shall cause the same to be available for
inspection at such office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by the Holder.
5. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of
its Common Stock for the purpose of determining the holders thereof who
are entitled to receive any dividend payable in, or other distribution
of, Additional Shares of Common Stock, or any other dividend (other
than a regular quarterly dividend payable in cash out of earned surplus
in an amount not exceeding 2% of the average of the Market Price of the
Common Stock on the fifteen trading days immediately preceding the date
of the declaration of such dividend) or other distribution, or any
right to subscribe for, purchase or otherwise acquire any Additional
Shares of Common Stock or any Convertible Securities, or to receive any
other right,
(b) any subdivision of outstanding shares of Common Stock into
a larger number of shares of Common Stock, or any combination of such
shares into smaller number of shares of Common Stock,
(c) any issuance of Contingent Stock, any capital
reorganization of the Company, any reclassification or recapitalization
of the capital stock of
<PAGE>
the Company or any consolidation or merger involving the Company and
any other Person or any transfer of all or substantially all the
assets of the Company to any other Person, or
(d) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall mail to each Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, (ii) the date or expected date on which any such
subdivision, combination or issuance is to take place, and the amount of Common
Stock or Contingent Stock that shall be the subject of such subdivision,
combination or issuance and (iii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 15 Business Days prior to the date specified in subdivisions
(i), (ii) and (iii) above.
6. Restrictions on Transfer. (a) Other than as specifically
approved by a majority of the Non-Investor Directors, prior to the second
anniversary of the Closing Date, the Purchaser shall not, directly or
indirectly, sell, transfer or otherwise dispose of any Warrants (except to any
Affiliate of the Purchaser).
(b) Other than as specifically approved by a majority of the
Non- Investor Directors, prior to the fifth anniversary of the Closing Date,
Purchaser will not, directly or indirectly, sell, transfer or otherwise dispose
of the Warrant, in whole or in part, except (i) pursuant to a registered
underwritten public offering effected under the Registration Rights Agreement
with the intent to achieve a broad distribution, (ii) in accordance with the
volume and manner-of-sale limitations of Rule 144 promulgated under the
Securities Act of 1933 (the "Securities Act") (regardless of whether such
limitations are applicable), (iii) in a transaction exempt from the registration
requirements of the Securities Act with any Person or group (within the meaning
of Section 13(d)(3)
<PAGE>
of the Securities and Exchange Act of 1934 (the "Exchange Act")) of Persons, if,
prior to and after giving effect to such sale, such Person or group of Persons
(x) does not or would not, to Purchaser's knowledge after due inquiry,
Beneficially Own (provided that for purposes of this Section 6(b) a Person shall
be deemed to Beneficially Own all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time) 5% or more of the then outstanding shares of Common Stock or (y) is an
investment company registered under the Investment Company Act of 1940, as
amended, or (iv) in connection with a Buyout Transaction. Purported transfers of
the Warrant that are not in compliance with this Section 6(b) shall be of no
force or effect.
(c) The provisions of Sections 6(a) and 6(b) shall terminate
and be of no further force or effect on the earlier to occur of (i) the fifth
anniversary of the Closing Date or (ii) the date on which the percentage of the
Total Voting Power represented by the aggregate voting power of all Voting
Securities then owned by Purchaser (other than any Voting Securities acquired in
violation of the Investment Agreement) is greater than 50%.
(d) Prior to the seventh anniversary of the Closing Date,
Purchaser will not, directly or otherwise, dispose of the Warrant, or any
portion thereof, representing the right to acquire 15% or more of the then
outstanding Common Stock to any Person or group (within the meaning of Section
13(d)(3) of the Exchange Act) without first offering the Company the right to
make an offer to purchase the Warrant proposed to be so sold, transferred or
otherwise disposed of. The provisions of the previous sentence shall terminate
and be of no effect on the date on which the percentage of the Total Voting
Power represented by the aggregate voting power of all Voting Securities then
owned by Purchaser (other than any Voting Securities acquired in violation of
the Investment Agreement) is greater than 50%.
(e) Any shares issued upon the exercise of the Warrant shall
be considered "Shares" for purposes of the Investment Agreement and shall be
subject to the transfer restrictions stated in Article VII thereof.
(f) Except as otherwise permitted by this Section 6, the
Warrant originally issued pursuant to the Investment Agreement, each Warrant
issued upon direct or indirect transfer or in substitution for any Warrant
pursuant to Section 12 hereof, each certificate for Common Stock (or Other
Securities) issued upon the exercise of any Warrant and each certificate
issued upon the
<PAGE>
direct or indirect transfer of any such Common Stock (or Other Securities)
(other than, with respect to the first legend, shares of Common Stock (or
Other Securities), Warrants or Warrant Shares that are no longer subject to
the provisions of Section 6(a) and other than, with respect to the second
legend, shares of Common Stock (or Other Securities), Warrants or Warrant
Shares which have been transferred in a transaction registered under the
Securities Act or exempt from the registration requirements of the Securities
Act pursuant to Rule 144 thereunder or any similar rule or regulation) shall
be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON FILE AT THE OFFICES OF
THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
(g) The restrictions imposed by Section 6(f) hereof upon the
transferability of Restricted Securities shall cease and terminate as to any
particular Restricted Securities (a) when such securities shall have been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering such Restricted Securities, (b) when,
in the opinion of counsel for the Holder, which counsel shall be reasonably
satisfactory to the Company, such restrictions are no longer required in order
to insure compliance with the Securities Act, or (c) when such securities have
been beneficially owned, by a Person who has not been an affiliate of the
Company for at least three months, for a period of at least one year (or such
shorter period as may be applicable under Rule 144 under the Securities Act or
any successor thereto), all as determined under Rule 144 under the Securities
Act. Whenever such restrictions shall terminate as to any Restricted Securities,
as soon as practicable thereafter and in any event within five days, the Holder
thereof shall be entitled to receive from the Company, without expense (other
than transfer
<PAGE>
taxes, if any), new securities of like tenor not bearing the applicable legend
set forth in Section 6(f) hereof.
7. Registration Rights. The Warrant and all shares of Common
Stock (and Other Securities) issued upon the exercise of the Warrant are subject
to and entitled to the benefits of the registration rights provisions set forth
in the Registration Rights Agreement, dated as of June 10, 1998, between the
Company and the Purchaser (the "Registration Rights Agreement").
8. Availability of Information. The Company shall comply with
the reporting requirements of sections 13 and 15(d) of the Exchange Act (whether
or not it shall be required to do so pursuant to such sections) and shall comply
with all public information reporting requirements of the Commission (including
Rule 144 promul gated by the Commission under the Securities Act) from time to
time in effect and relating to the availability of an exemption from the
Securities Act for the sale of any Restricted Securities. The Company shall
cooperate with each holder of any Restricted Securities in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of any Restricted Securities. The Company shall furnish to the Holder, or
to any Holder of a portion of the Warrant, promptly upon their becoming
available, copies of all reports on Form 10-K and Form 10-Q and proxy statements
filed by the Company with the Commission, and copies of all regular and periodic
reports and all registration statements and prospectuses filed by the Company
with any securities exchange or with the Commission.
9. Reservation of Stock, etc. The Company shall at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the Warrant, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of the Warrant at the time outstanding. All
shares of Common Stock (or Other Securities) shall be duly authorized and, when
issued upon such exercise, shall be validly issued and, in the case of shares,
fully paid and nonassessable with no liability on the part of the holders
thereof.
10. Repurchases of Stock. The Company shall not repurchase any
shares of Common Stock (or Other Securities) if as a result thereof the
exercisability of the Warrant may be impaired, restricted or otherwise limited.
11. Listing on Securities Exchanges. The Company shall list on
<PAGE>
each national securities exchange on which any Common Stock may at any time be
listed, and shall maintain such listing of, all shares of Common Stock from time
to time issuable upon the exercise of the Warrant, subject to official notice of
issuance upon the exercise of the Warrant. The Company shall also so list on
each national securities exchange, and shall maintain such listing of, any Other
Securities, if at the time any securities of the same class shall be listed on
such national securities exchange by the Company. In addition, at the request of
the Purchaser, the Company shall list on each national securities exchange on
which any Common Stock may at any time be listed, and shall maintain such
listing of, the Warrant.
12. Ownership, Transfer and Substitution of the Warrant.
12.1. Ownership of Warrant. The Company may treat the Person in whose name
the Warrant, or any Warrant or Warrants issued in substitution therefor, is
registered on the register kept at the principal office of the Company as the
owner and the Holder thereof for all purposes, notwithstanding any notice to
the contrary, except that, if and when any Warrant is properly assigned in
blank, the Company may (but shall not be obligated to) treat the bearer
thereof as the owner of such Warrant for all purposes, notwithstanding any
notice to the contrary. Subject to Section 6, a Warrant, if properly
assigned, may be exercised by a new Holder without first having a new Warrant
issued.
12.2. Transfer and Exchange of the Warrant. Upon the surrender
of the Warrant, properly endorsed, for registration of transfer or for exchange
at the principal office of the Company, the Company at its expense shall
(subject to compliance with Section 6, if applicable) execute and deliver to or
upon the order of the Holder thereof a new Warrant or Warrants of like tenor, in
the name of such Holder or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant or Warrants so surrendered.
12.3. Replacement of the Warrant. Upon receipt of evidence
reason ably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant held by a Person other than the Purchaser, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any such mutilation, upon surrender of such Warrant for
cancellation at the principal office of the Company, the Company at its expense
shall execute and deliver, in lieu thereof, a new Warrant of like tenor.
<PAGE>
13. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Additional Shares of Common Stock: all shares (including
treasury shares but excluding Contingent Stock) of Common Stock issued or sold
by the Company after the Closing Date, whether or not subsequently reacquired or
retired by the Company, other than (i) shares of Common Stock issued upon the
exercise of the Warrant and the Special Warrant; (ii) shares issued or sold
pursuant to the exercise or conversion of options, warrants, convertible
securities, or other rights that were disclosed on the Revised Option Schedule;
(iii) shares issued or sold to the Company's Employee Stock Purchase Plan, or
any successor plan thereto, to the extent such shares are issued or sold at a
purchase price not less than 85% of the Market Price; (iv) shares issued or sold
to Purchaser or its Affiliates; or (v) shares issued upon the conversion of, or
for the purchase of, any 2001 Notes or the 2003 Notes outstanding immediately
following the Distributions.
Affiliate: with respect to any Person, any Person that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
Assets: the meaning specified in Section 2.3.
Beneficially Own: with respect to any securities shall mean
having "beneficial ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act), including pursuant to any agreement, arrangement
or under standing, whether or not in writing.
Business Day: any day other than a Saturday or a Sunday or a
day on which commercial banking institutions in the City of New York are
authorized by law to be closed, provided that, in determining the period within
which certificates or Warrants are to be issued and delivered pursuant to
Section 1.3 at a time when shares of Common Stock (or Other Securities) are
listed or admitted to trading on any national securities exchange or in the
over-the-counter market and in determining the Market Price of any securities
listed or admitted to trading on any national securities exchange or in the
over-the-counter market, "Business Day" shall mean any day when the principal
exchange in which securities are then listed or admitted to trading is open for
trading or, if such securities are traded in the over-the-counter market in the
<PAGE>
United States, such market is open for trading, and provided further that any
reference to "days" (unless Business Days are specified) shall mean calendar
days.
Buyout Transaction: a tender offer, merger, sale of all or
substantially all the Company's assets or any similar transaction that offers
each holder of Voting Securities (other than, if applicable, the Person
proposing such transaction) the opportunity to dispose of Voting Securities
Beneficially Owned by each such holder for the same consideration or otherwise
contemplates the acquisition of Voting Securities Beneficially Owned by each
such holder for the same consideration.
Closing Date: the meaning specified in the second paragraph
of the Warrant.
Commission: the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act or the
Exchange Act, whichever is the relevant statute for the particular purpose.
Common Stock: the Company's Common Stock, as constituted on
the date hereof, any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference.
Company: the meaning specified in the opening paragraphs of
the Warrant.
Contingent Stock: shares of Common Stock issued after the
Closing Date pursuant to (i) the Amendment to Stock Purchase Agreement, dated as
of June 20, 1996, by and between the Company and Eric Watson, as the same may be
amended from time to time, or (ii) any security, option, warrant, call,
subscription, right, contract, commitment, arrangement or understanding in
existence on January 12, 1998 or June 10, 1998 but not disclosed on the Revised
Option Schedule.
Convertible Securities: any evidences of indebtedness (other
than 2001 Notes and 2003 Notes), shares of stock (other than Common Stock) or
<PAGE>
other securities directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock.
Exchange Act: the Securities Exchange Act of 1934, or any
successor statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934 shall include a reference to the
comparable section, if any, of any such successor statute.
Exercise Price: the meaning specified in Section 1.1.
Holder: the meaning specified in Section 1.1.
Initial Exercise Shares: the meaning specified in the opening
paragraphs of the Warrant.
Investment Agreement: the meaning specified in the second
paragraph of the Warrant.
Market Price: on any date specified herein, (a) in the case of
securities that have an existing public trading market, the amount per security
equal to (i) the last sale price of such security, regular way, on such date or,
if no such sale takes place on such date, the average of the closing bid and
asked prices thereof on such date, in each case as officially reported on the
principal national securities exchange on which the same are then listed or
admitted to trading, or (ii) if no such security is then listed or admitted to
trading on any national securities exchange but such security is designated as a
national market system security by the NASD, the last trading price of such
security on such date, or if such security is not so designated, the average of
the reported closing bid and asked prices thereof on such date as shown by the
NASD automated quotation system or, if no shares thereof are then quoted in such
system, as published by the National Quotation Bureau, Incorporated or any
successor organization, and in either case as reported by any member firm of the
New York Stock Exchange selected by the Company, and (b) in the case of
securities that do not have an existing public trading market and in the case of
other property, the higher of (i) the book value thereof as determined by
agreement between the Company and the Holder, or if the Company and the Holder
fail to agree, by any firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company, as of the last day
of any month ending within
<PAGE>
60 days preceding the date as of which the determination is to be made and (ii)
the fair value thereof (w) determined by an agreement between the Company and
the Holder or (x) if the Company and the Holder fail to agree, determined
jointly by an independent investment banking firm retained by the Company and by
an independent investment banking firm retained by the Holder, either of which
firms may be an independent investment banking firm regularly retained by the
Company or the Holder or (y) if the Company or the Holder shall fail so to
retain an independent investment banking firm within five Business Days of the
retention of such firm by the Holder or the Company, as the case may be,
determined solely by the firm so retained or (z) if the firms so retained by the
Company and by the Holder shall be unable to reach a joint determination within
15 Business Days of the retention of the last firm so retained, determined by
another independent investment banking firm chosen by the first two such firms
and which is not a regular investment banking firm of the Company or the Holder.
NASD: the National Association of Securities Dealers, Inc.
Non-Investor Director: any member of the Board of
Directors not nominated by the Purchaser pursuant to Article IV of the
Investment Agreement.
Other Securities: any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or otherwise)
which the Holder at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or other securities pursuant to
Section 2.9 or otherwise.
Person: an individual, a partnership, an association, a joint
venture, a corporation, a business, a trust, an unincorporated organization or a
government or any department, agency or subdivision thereof.
Public Offering: any offering of Common Stock to the public
pursuant to an effective registration statement under the Securities Act.
Purchaser: the meaning specified in the first paragraph of the
Warrant.
<PAGE>
Registration Rights Agreement: the meaning specified in
Section 7 of the Warrant.
Restricted Securities: (a) any Warrants bearing the applicable
legend set forth in Section 6(f), (b) any shares of Common Stock (or Other
Securities) which have been issued upon the exercise of Warrants and which are
evidenced by a certificate or certificates bearing the applicable legend set
forth in such section, and (c) unless the context otherwise requires, any shares
of Common Stock (or Other Securities) which are at the time issuable upon the
exercise of Warrants and which, when so issued, shall be evidenced by a
certificate or certificates bearing the applicable legend set forth in such
section.
Revised Option Schedule: the schedule, dated June 10, 1998 and
delivered to the Purchaser on such date, listing options, warrants, convertible
securities and other rights relating to capital stock of the Company.
Securities Act: the Securities Act of 1933, or any successor
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. Reference to a particular section of the
Securities Act of 1933 shall include a reference to the comparable section, if
any, of any such successor statute.
Special Warrant: the Common Stock Purchase Special Warrant
issued pursuant to the Investment Agreement.
Subsidiary: as to any Person, any corporation at least a
majority of the shares of stock of which having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency) is, at the time as of which the determination is being made,
owned by such Person, or one or more of its Subsidiaries or by such Person and
one or more of its Subsidiaries.
Total Voting Power: at any time the total combined voting
power in the general election of directors of all the Voting Securities then
outstanding.
Transaction: the meaning specified in Section 2.9.
Transfer: unless the context otherwise requires, any sale,
assignment, pledge or other disposition of any security, or of any interest
therein,
<PAGE>
which could constitute a "sale" as that term is defined in Section 2(3)
of the Securities Act.
2001 Notes: 5 1/2% convertible subordinated notes due 2001
issued pursuant to an Indenture, dated as of February 7, 1996, between the
Company and State Street Bank and Trust Company.
2003 Notes: 5 1/2% convertible subordinated notes due 2003
issued pursuant to an Indenture, dated as of May 22, 1996, between the Company
and Chase Manhattan Bank, N.A.
Voting Securities: at any time shares of any class of capital
stock of the Company which are then entitled to vote generally in the election
of directors.
Warrant: the meaning specified in the second paragraph of the
Warrant.
Warrant Price: the meaning specified in Section 2.1.
Warrant Shares: the shares of Common Stock (and Other
Securities) issuable upon exercise of the Warrant.
14. Remedies. The Company stipulates that the remedies at law
of the Holder in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of the Warrant are not
and shall not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
15. No Rights or Liabilities as Stockholder. Nothing contained
in the Warrant shall be construed as conferring upon the Holder hereof any
rights as a stockholder of the Company or as imposing any liabilities on such
Holder to purchase any securities or as a stockholder of the Company, whether
such liabilities are asserted by the Company or by creditors or stockholders of
the Company or otherwise.
16. Notices. All notices and other communications under the
Warrant, except notices of the exercise of any Warrant (which shall be effected
<PAGE>
in the manner provided in Section 1), shall be in writing and shall be mailed by
registered or certified mail, return receipt requested, addressed as follows or
to such other address as such party may have designated to the other in writing:
(a) if to the Purchaser, to it at:
CDR-PC Acquisition, L.L.C.
c/o Clayton, Dubilier & Rice Fund V
Limited Partnership
1043 Foulk Road, Suite 106
Wilmington, Delaware
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Brian D. Finn
Telecopy No.: (212) 893-7061
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg
Telecopy No.: (212) 909-6836
(b) if to any other Holder or any holder of any Common Stock
(or Other Securities), at the registered address of such
Holder as set forth in the register kept at the principal
office of the Company,
or
(c) if to the Company, to it at:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W.
<PAGE>
Suite 600 East
Washington, D.C. 20007
Attention: Mark D. Director
Telecopy No.: (202) 339-6727
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George P. Stamas
Telecopy No.: (202) 663-6363
17. Miscellaneous. The Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. The agreements of the Company contained in the Warrant
other than those applicable solely to the Warrant and the Holder thereof shall
inure to the benefit of and be enforceable by any Holder or Holders at the time
of any shares of Common Stock (or Other Securities) issued upon the exercise of
the Warrant, whether so expressed or not. THE WARRANT SHALL BE CONSTRUED AND
ENFORCED IN ACCORD ANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE
EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION). The section headings in the Warrant are for
purposes of convenience only and shall not constitute a part hereof.
18. Expiration; Notice. The Company shall give the Holder no
less than 45 days' nor more than 90 days' notice of the expiration of the right
to exercise the Warrant. The right to exercise the Warrant shall expire at 5:00
P.M., New York City time, on June 10, 2010, unless the Company shall fail to
give such notice as aforesaid, in which event the right to exercise the Warrant
shall not expire until 5:00 P.M., New York City time, on a date 45 days after
the date on which the Company shall give the Holder hereof notice of the
expiration of the right to exercise the Warrant.
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Mark D. Director
--------------------------------------
Name: Mark D. Director
Title: Executive Vice President--Administration,
General Counsel and Secretary
<PAGE>
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To: U.S. Office Products Company
The undersigned registered holder of the within Warrant hereby
irrevoc ably exercises such Warrant for, and purchases thereunder, ________*
shares of Common Stock of U.S. Office Products Company, and herewith makes
payment [of $ ]** [by application, pursuant to Section 1.1(b) of such Warrant,
of [a portion of] the Warrant representing a right to purchase ________* shares
of Common Stock],*** and requests that the certificates for such shares be
issued in the name of, and delivered to ______________ whose address is
__________.
Dated:
------------------
[HOLDER]****
[Address]
By
-----------------------------
Name:
Title:
- --------
* Insert here the number of shares called for on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to which
the Warrant is being exercised), in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant, may be delivered upon exercise. In the case
of a partial exercise, a new Warrant or Warrants shall be issued and
delivered, representing the unexercised portion of the Warrant, to the
holder surrendering the same.
** Delete inapplicable language in brackets.
*** Delete inapplicable language in brackets.
**** Signature must conform in all respects to name of holder as specified
on the face of the Warrant.
<PAGE>
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the
within Warrant hereby sells, assigns and transfers unto ________________ the
right repre sented by such Warrant to purchase ______ shares of Common Stock of
U.S. Office Products Company to which such Warrant relates, and appoints
___________ Attorney to make such transfer on the books of U.S. Office Products
Company maintained for such purpose, with full power of substitution in the
premises.
Dated:
--------------------
[HOLDER]*
[Address]
By
-----------------------------
Name:
Title:
Signed in the presence of:
- --------------------------
- -------------------
* Signature must conform in all respects to name of holder as specified
on the face of the Warrant.
<PAGE>
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED
BY AN AGREEMENT ON FILE AT THE OFFICES OF THE CORPORATION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS.
U.S. Office Products Company
Common Stock Purchase Special Warrant
Expiring June 10, 2010
New York, N.Y.
June 10, 1998
No. SW-001
U.S. Office Products Company, a Delaware corporation (the "Company"),
for value received, hereby certifies that CDR-PC Acquisition, L.L.C., a
Delaware limited liability company (the "Purchaser"), or its permitted
assigns, is entitled to purchase from the Company 55,671*
- -------------------
* A number of shares equal to the difference between (i) 24.9% of the
outstanding shares of Common Stock as of the Closing Date (taking into
account the one-for-four reverse stock split) after giving effect to the
issuance of the shares of Common Stock acquired by the Purchaser at the
Closing Date (the "Shares") and the exercise of this Warrant, and
assuming the conversion into Common Stock of all the 2001 Notes
outstanding on the Closing Date at the conversion price in effect prior
to the adjustments to be made as a result of the Equity Tender Offer and
the Distributions, and (ii) 24.9% of the outstanding shares of Common
Stock as of the Closing Date after giving effect to the issuance of the
Shares. [Assumes [ ] shares of Common Stock and [ ] 2001 Notes
outstanding on the Closing Date. After the adjustments are made to the
conversion price of 2001 Notes as a result of the Equity Tender Offer and
the Distributions, a new Special Warrant of like tenor and dated the date
hereof shall be issued reflecting the effects of such adjustments, in
accordance with the letter agreement of even date herewith between the
Company and Purchaser.
<PAGE>
and the Purchaser (as amended, the "Investment Agreement"). The Special
Warrant originally so issued evidences rights to purchase 55,671 duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock, par value $.001 per share, subject to adjustment as provided herein.
The number of shares of Common Stock that the Special Warrant represents the
right to purchase is the sum of the Part A Number and the Part B Number.
Upon issuance of the Special Warrant, the Part A Number is 55,671 and the
Part B Number is zero. Certain capitalized terms used in the Special Warrant
are defined in Section 13.
1. Exercise of Warrant. 1.1. Vesting. Upon issuance, the Special
Warrant shall be fully vested except that the holder of the Special Warrant
or any portion of hereof (the "Holder") shall not exercise more than the
portion of the Special Warrant representing a right to obtain a number of
shares of Common Stock equal to the Part B Number. If, at any time after the
Closing Date and before the day immediately following the second anniversary
of the Closing Date, any of the 2001 Notes shall be converted into Common
Stock, then immediately following such conversion the Part A Number shall be
decreased by 33.16% of the number of shares of Common Stock issued upon such
conversion and the Part B Number shall be increased by a like amount. As of
the day immediately following the second anniversary of the Closing Date, the
Part B Number shall be the sum of the Part A Number and the Part B Number
existing immediately prior to such time, and the Part A Number shall
thereafter be zero.
1.2. Manner of Exercise. (a) Subject to the rights and
restrictions set forth above in Section 1.1, the Special Warrant may be
exercised by the Holder, in whole or in part, during normal business hours on
any Business Day by surrender of the Special Warrant, with the form of
subscription at the end hereof (or a reasonable facsimile thereof) (the
"Subscription Notice") duly executed by such Holder, to the Company at its
principal office (or, if such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other Securities)
subject to the Special Warrant, at the location at which the Company shall
have agreed to deliver the shares of Common Stock (or Other Securities)
subject to such offering), accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount (such
amount referred to herein as the "Exercise Price") obtained by multiplying
(i) the number of shares of Common Stock (without giving effect to any
adjustment provided for in Section 2) designated in such Subscription Notice
by (ii) $0.01, and such Holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully paid and
<PAGE>
nonassessable shares of Common Stock (or Other Securities) determined as
provided in Section 2 hereof.
(b) In lieu of tendering the Exercise Price to the Company, the
holder may elect to perform a "Cashless Exercise" of the Special Warrant, in
whole or in part, by surrendering the Special Warrant to the Company, with a
duly executed Subscription Notice marked "Cashless Exercise" and designating
the number of shares of Common Stock desired by the Holder out of the total
for which the Special Warrant is exercisable (without giving effect to any
adjustments provided for in Section 2). The Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) having a value
(at the Market Price) that is equal to the excess of (i) the then Market
Price per share of Common Stock (or Other Securities) multiplied by the
number of the shares of Common Stock (or Other Securities) (determined as of
the date immediately preceding the date of any such Subscription Notice) into
which the Special Warrant, or portion thereof designated by the Holder, would
have been exercisable pursuant to Section 1.2(a) upon payment of the Exercise
Price by the Holder over (ii) the Exercise Price the Holder would have been
required to pay under Section 1.2(a) in respect of such an exercise.
1.3. When Exercise Deemed Effected. Each exercise of the Special
Warrant shall be deemed to have been effected immediately prior to the close
of business on the Business Day on which the Special Warrant shall have been
surrendered to the Company as provided in Section 1.2, and at such time the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock (or Other Securities) shall be issuable upon such
exercise as provided in Section 1.2 shall be deemed to have become the holder
or holders of record thereof.
1.4. Delivery of Stock Certificates, etc. As soon as practicable
after the exercise of the Special Warrant, in whole or in part, and in any
event within five Business Days thereafter (unless such exercise shall be in
connection with an underwritten Public Offering of shares of Common Stock (or
Other Securities) subject to the Special Warrant, in which event,
concurrently with such exercise), the Company at its expense (including the
payment by it of any taxes applicable to an issuer upon the issuance of
shares, but excluding transfer taxes) shall cause to be issued in the name of
and delivered to the Holder or, subject to Section 6, as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct,
<PAGE>
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securi-ties) to which such Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash in an amount equal to the same fraction of
the Market Price per share of such Common Stock (or Other Securities) on
the Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Special Warrant or
Special Warrants of like tenor, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock equal (without
giving effect to any adjustment therein) to the number of such shares
called for on the face of the Special Warrant minus the number of such
shares designated by the Holder upon such exercise as provided in Section
1.1.
1.5. Company to Reaffirm Obligations. The Company shall, at the
time of or at any time after each exercise of the Special Warrant, upon the
request of the Holder, acknowledge in writing its continuing obligation to
afford to such Holder all rights (including, without limitation, any right of
registration of the Special Warrant and of any shares of Common Stock (or
Other Securities) issuable upon exercise of the Special Warrant pursuant to
Section 7) to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of the Special Warrant, provided that
if any such Holder shall fail to make any such request, the failure shall not
affect the continuing obligation of the Company to afford such rights to such
Holder.
2. Adjustments. 2.1. General. The Part A Number and the Part B
Number, comprising the number of shares of Common Stock for which the Special
Warrant is exercisable, shall be subject to adjustment from time to time as
set forth in this Section 2.
2.2. Adjustment to Part A Number. (a) If at any time prior to the
day immediately following the second anniversary of the Closing Date any
event causes the number of shares of Common Stock issuable upon conversion of
the then outstanding 2001 Notes to be increased, then the Part A Number
immediately after such increase shall be increased by the amount equal to
33.16% of the difference between (i) the number of shares of Common Stock
<PAGE>
issuable upon conversion of the 2001 Notes immediately prior to such event
and (ii) the number of shares of Common Stock issuable upon conversion of the
2001 Notes immediately after such event.
(b) If at any time prior to the day immediately following the
second anniversary of the Closing Date any combination of the outstanding
shares of Common Stock into a smaller number of shares of Common Stock causes
the number of shares of Common Stock issuable upon conversion of the then
outstanding 2001 Notes to be decreased, then the Part A Number immediately
after such decrease shall be decreased by the amount equal to 33.16% of the
difference between (i) the number of shares of Common Stock issuable upon
conversion of the 2001 Notes immediately after such combination and (ii) the
number of shares of Common Stock issuable upon conversion of the 2001 Notes
immediately prior to such combination.
(c) No adjustment to the Part A Number shall be made pursuant to
Section 2.2 after the second anniversary of the Closing Date.
2.3. Stock Dividends, Subdivisions and Combina tions. If at any
time the Company shall:
(i) issue or deliver any Additional Shares of Common Stock as a
result of the declaration or payment of a dividend of Common Stock
payable in, or other distribution to the holders of Common Stock of, Addi
tional Shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(iii) after effecting the one-for-four reverse stock split effected
immediately prior to the issuance of this Special Warrant, combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock,
then the Part B Number shall be adjusted to equal the number of shares of
Common Stock which a record holder of the same number of shares of Common
Stock for which the Special Warrant is exercisable immediately prior to the
happening of such event would own or be entitled to receive after the
happening of such event.
<PAGE>
2.4. Extraordinary Dividends and Distributions. If at any time the
Company shall distribute to all holders of its outstanding Common Stock
evidences of indebtedness of the Company, cash (other than a regular
quarterly dividend payable in cash out of earned surplus in an amount not
exceeding 2% of the average of the Market Price of the Common Stock on the
fifteen trading days immediately preceding the date of declaration of such
dividend) or assets or securities other than the Common Stock (any such
evidences of indebtedness, cash, assets or securities, the "Assets"), then,
in each case, the Part B Number then in effect shall be increased to the
number determined by multiplying such Part B Number by a fraction,
(a) the numerator of which shall be the Market Price then in effect,
and
(b) the denominator of which shall be the Market Price then in
effect less the value of such Assets applicable to one share of Common
Stock.
Any adjustment required by this Section 2.4 shall be made whenever
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
2.5. Issuance of Additional Shares of Common
Stock.
(a) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock without
consideration or in exchange for consideration in an amount per Additional
Share of Common Stock less than the Market Price at the time the Additional
Shares of Common Stock are issued, then the Part B Number immediately after
such issuance shall be equal to the Part B Number immediately prior to such
issuance multiplied by a fraction,
(i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale, and
(ii) the denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or
sale plus (y) the number of shares of Common Stock which the aggregate
<PAGE>
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at the
Market Price.
(b) The provisions of paragraph (a) of this Sec tion 2.5 shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 2.3.
2.6. Issuance of Contingent Stock. If at any time after the date
hereof the Company shall issue any Contingent Stock, then the Part B Number
immediately after such issuance shall be increased by the amount equal to
33.16% of the number of the shares of Contingent Stock so issued.
2.7. Issuance of Warrants or Other Rights. If at any time the
Company shall take a record of holders of Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not such rights thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities shall be less than the Market Price in effect immediately prior to
the time of such issue or sale, then the Part B Number shall be adjusted as
provided in Section 2.5 on the basis that the maximum number of shares of
Common Stock issuable pursuant to all such warrants or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the
Company shall have received all of the consideration payable therefor, if
any, as of the date of the actual issuance of such warrants or other rights.
No further adjustments of the Part B Number shall be made upon the actual
issuance of such Common Stock or of such Conver tible Securities upon
exercise of such warrants or other rights or upon the actual issuance of such
Common Stock upon such conversion or exchange of such Convertible Securities.
2.8. Issuance of Convertible Securities. If at any time the Company
shall take a record of the holders of Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or
<PAGE>
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the Market Price in effect immediately prior to the time of such issue
or sale, then the Part B Number shall be adjusted as provided in Section 2.5
on the basis that the maximum number of shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have
received all of the consideration payable therefor, if any, as of the date of
actual issuance of such Convertible Securities. No adjustment of the Part B
Number shall be made under this Section 2.8 upon the issuance of any
Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants
or other rights pursuant to Section 2.7. No further adjustments of the Part
B Number shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities, and, if any issuance
or sale of such Convertible Securities is made upon exercise of any warrant
or other right to subscribe for or to purchase or any warrant or other right
to purchase any such Convertible Securities for which adjustments of the Part
B Number have been or are to be made pursuant to other provisions of this
Section 2, no further adjustments of the Part B Number shall be made by
reason of such issuance or sale.
2.9. Superseding Adjustment. If, at any time after any adjustment of
the number of shares of Common Stock for which the Warrant is exercisable
shall have been made pursuant to Section 2.7 or 2.8 as the result of any
issuance of warrants, rights or Convertible Securities,
(i) such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and
all or a portion of such warrants or rights, or the right of
conversion or exchange with respect to all or a portion of
such other Convertible Securities, as the case may be, shall
not have been exercised, or
(ii) the consideration per share for which shares of Common Stock
are issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such
consideration per share upon the occurrence of a specified date or event,
<PAGE>
then such previous adjustment shall be rescinded and annulled and the
Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
rights or options or other Convertible Securities effective as of the date of
such previous adjustment on the basis of
(A) treating the number of Additional Shares of Common Stock or
other property, if any, theretofore actually issued or issuable pursuant
to the previous exercise of any such warrants or rights or any such right
of conversion or exchange, as having been issued on the date or dates of
any such exercise and for the consideration actually received and
receivable therefor, and
(B) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immedi ately after the time of such increase of the con
sideration per share for which shares of Common Stock or other property
are issuable under such warrants or rights or other Convertible
Securities,
whereupon a new adjustment of the number of shares of Common Stock for which
the Special Warrant is exercisable shall be made effective as of the date of
such previous adjustment, which new adjustment shall supersede the previous
adjustment so rescinded and annulled. Any reduction in the number of shares
of Common Stock for which the Special Warrant is exercisable as a result of
this Section 2.9 shall be applied in its entirety to the number of shares of
Common Stock for which the Special Warrant is exercisable as of the date such
new adjustment is made.
2.10. Consolidation, Merger, Sale of Assets, Reorganization, etc.
(a) In case at any time (and whether or not the Special Warrant is then
exercisable) the Company shall be a party to any transaction (including
without limitation a merger, consolidation, sale of all or substantially all
of the Company's assets or recapitalization of the Common Stock) in which the
previously outstanding Common Stock shall be changed into or exchanged for
different securities of the Company or changed into or exchanged for common
stock or other securities of another corporation or interests in a
noncorporate entity or
<PAGE>
other property (including cash) or any combination of any of the foregoing
(each such transaction being hereinafter re ferred to as the "Transaction")
then, as a condition to the consummation of the Transaction, lawful and
adequate provisions shall be made so that, upon the basis and terms and in
the manner provided in this Section 2.10, the Holder, upon the exercise of
the Special Warrant, shall be entitled to receive, in lieu of the Common
Stock issuable upon such exercise prior to such consummation, the stock and
other securities, cash and property to which the Holder would have been
entitled upon the consummation of the Transaction if the Holder had exercised
the Special Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in Section 2.
(b) Notwithstanding anything contained herein to the contrary, the
Company will not effect any Transaction unless, prior to the consummation
thereof, each corporation or entity (other than the Company) which may be
required to deliver any stock, securities, cash or property upon the exercise
of the Special Warrant as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the Holder, (i) the obligations
of the Company hereunder (and if the Company shall survive the consummation
of such Transaction, such assumption shall be in addition to, and shall not
release the Company from, any continuing obligations of the Company
hereunder) and (ii) the obligation to deliver to the Holder such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions, the Holder may be entitled to receive, and such corporation or
entity shall have similarly delivered to the Holder an opinion of counsel for
such corporation or entity, which counsel shall be satisfactory to the
Holder, stating that the Special Warrant shall thereafter continue in full
force and effect and the terms hereof (including, without limitation, all of
the applicable provisions of Section 2) shall be applicable to the stock,
securities, cash or property which such corporation or entity may be required
to deliver upon any conversion of any Special Warrants or the exercise of any
rights pursuant hereto.
(c) Upon any liquidation, dissolution or winding up of the Company
(whether or not the Special Warrant is then exercisable), the Holder shall
receive such cash or property which the Holder would have been entitled to
receive upon the happening of such liquidation, dissolution or winding up (i)
had the Special Warrant been exercisable to obtain a number of shares equal
to the sum of (A) the sum of the Part A Number and the Part B Number and (B)
33.16% of the
<PAGE>
number of shares of Contingent Stock that the Company then has a fixed
obligation to issue (to the extent the Persons entitled to receive such
Contingent Stock will participate in such liquidation, dissolution or winding
up as a result of such obligation), to the extent not already included in
clause (A), (ii) had the Special Warrant been exercised in full in respect of
such shares, and (iii) had the shares of Common Stock in respect of such
exercise been issued immediately prior to the occurrence of such liquidation,
dissolution or winding-up.
2.11. Other Dilutive Events. In case any event shall occur as to
which the provisions of Section 2 are not strictly applicable but the failure
to make any adjustment would not fairly protect the exercise rights with
respect to the Special Warrant in accordance with the essential intent and
principles of such Section, then, in each such case, the Company shall
appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent
with the essential intent and principles established in Sec tion 2, necessary
to preserve, without dilution, the exercise rights represented by the Special
Warrant. Upon receipt of such opinion, the Company will promptly mail a copy
thereof to the Holder of the Special Warrant and shall make the adjustments,
if any, described therein.
2.12. No Dilution or Impairment. The Company will not, by amendment
of its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms hereof, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be reasonably necessary or appropriate in order to protect the
rights of the Holders of the Special Warrant against dilution in respect of
which the Holders are not fully protected by this Section 2 or other
impairment. Without limiting the generality of the foregoing, the Company
(a) will not permit the par value of any shares of Common Stock
receivable upon the exercise of the Special Warrant to exceed
the amount payable therefor upon such exercise,
(b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of the Special Warrant from
time to time outstanding, and
<PAGE>
(c) will not take any action which results in any adjustment of the
number of shares of Common Stock for which the Special Warrant is then
exercisable if the total number of shares of Common Stock (or Other
Securities) issuable after such action upon the complete exercise of the
Special Warrant would exceed the total number of shares of Common Stock
(or Other Securities) then authorized by the Company's certi ficate of
incorporation and available for the purpose of issue upon such exercise.
2.13. Other Provisions Applicable to Adjustments under this Section
2. The following provisions shall be applicable to the making of adjustments
to the number of shares of Common Stock for which the Special Warrant is
exercisable provided for in this Section 2:
(i) Computation of Consideration. To the extent that any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash
consideration, the cash consideration received by the Company therefor
shall be the amount of the cash received by the Company therefor, or, if
such Additional Shares of Common Stock or Convertible Securities are
offered by the Company for subscription, the subscription price, or, if
such Additional Shares of Common Stock or Convertible Securities are sold
to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting
(A) any amounts paid or receivable for accrued interest or accrued
dividends and without taking into account (B) any compensation, discounts
or expenses paid or incurred by the Company for and in the underwriting
of, or otherwise in connection with, the issuance thereof). To the extent
that such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be fair value of such consideration at
the time of such issuance as determined by the Board of Directors of the
Company. In case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase
such Additional Shares of Common Stock or Convertible Securities shall be
issued in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be
the fair value, as determined by an independent investment
<PAGE>
banking firm retained by the Company, which firm may be an independent
investment banking firm regularly retained by the Company, of such
portion of the assets and business of the nonsurviving corporation as
such firm shall determine to be attributable to such Additional Shares of
Common Stock Convertible Securities, warrants or other rights, as the
case may be. The consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants or other rights to subscribe for or
purchase the same shall be the consideration received by the Company for
issuing such warrants or other rights plus the additional consideration
payable to the Company upon exercise of such warrants or other rights.
The consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the
consideration, if any, received by the Company for issuing warrants or
other rights to subscribe for or purchase such Convertible Securities,
plus the consideration paid or payable to the Company in respect of the
subscription for or purchase of such Convertible Securities, plus the
additional consideration, if any, payable to the Company upon the
exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional Shares
of Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, the
Company shall be deemed to have received for such Additional Shares of
Common Stock or Convertible Securities a consideration equal to the
amount of such dividend so paid or satisfied.
(ii) Computation of Asset Value. To the extent that any Assets shall
be distributed to all holders of the Company's outstanding Common Stock
in cash, the value of such Assets shall be the amount of cash so
distributed, or, if such Assets are securities offered by the Company for
subscription, the subscription price, or if such Assets are securities
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such
case adding any accrued interest or dividends but without taking into
account any compensation, discounts or expenses paid or incurred by the
Company in connection therewith). To the extent that the Company shall
so distribute Assets other than cash, except as herein otherwise
expressly provided, then the value of such Assets shall be deemed to be
fair value of such Assets at the time of such distribution as determined
in good faith by the Board of Directors of the Company.
(iii) When Adjustment to Be Made. The adjustments required by
<PAGE>
this Section 2 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which the Special Warrant is
exercisable that would otherwise be required may be postponed (except in
the case of a subdivision or combination of shares of the Common Stock,
as provided for in Section 2.2) up to but not beyond the date of exercise
if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than 1% of the shares of Common
Stock for which the Special Warrant is exercisable immediately prior to
the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed
shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 2 and not previously
made, would result in a minimum adjustment or on the date of exercise.
For the purpose of any adjustment, any specified event shall be deemed to
have occurred at the close of business on the date of its occurrence.
(iv) Fractional Interest; Rounding. In computing adjustments under
this Section 2, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(v) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive subscription or purchase rights and shall, thereafter and
before the distribution to stockholders thereof, legally abandon its plan
to deliver such subscription or purchase rights, then no adjustment shall
be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and
annulled.
(vi) Escrow of Warrant Stock. If the Holder exercises the Special
Warrant after any property becomes distributable pursuant to this Section
2 by reason of the taking of any record of the holders of Common Stock,
but prior to the occurrence of the event for which such record is taken,
any Additional Shares of Common Stock issuable upon exercise by reason of
such adjustment shall be deemed the last shares of Common Stock for which
the Special Warrant is exercised (notwithstanding any other provision to
the
<PAGE>
contrary herein). Such shares or other property shall be held in escrow
for the Holder by the Company to be issued to the Holder upon and to the
extent that the event actually takes place, upon payment of the Exercise
Price. Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is rescinded,
then such escrowed shares shall be cancelled by the Company and escrowed
property returned.
(vii) Shareholder Rights Plans. Rights or warrants distributed by the
Company to all holders of Common Stock pursuant to a shareholder rights
plan (or "poison pill") entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock, which rights or warrants,
until the occurrence of a specified event or events (a "Trigger Event"),
(x) are deemed to be transferred with the Common Stock in respect of
which they are issued, (y) are not exercisable, and (z) are also issued
in respect of future issuances of Common Stock, shall be deemed not to
have been distributed for purposes of Section 2.7 and 2.8 (and no
adjustment to the number of shares issuable upon exercise of the Special
Warrant under those Sections shall be required) until the occurrence of
the earliest Trigger Event. If upon the occurrence of any event such
right or warrant becomes exercisable to purchase different securities,
evidences of indebtedness or other assets or entitles its holder to
purchase a different amount of the foregoing or to purchase any of the
foregoing at a different purchase price (an "Other Trigger Event"), then
the occurrence of each such Other Trigger Event shall be deemed to be the
date of issuance and Record Date with respect to a new right or warrant
(and a termination or expiration of the existing right or warrant without
exercise by the holder thereof to the extent not actually exercised). In
addition, in the event of any distribution (or deemed distribution) of
rights or warrants, or any Trigger Event or Other Trigger Event with
respect thereto, that resulted in an adjustment of the number of shares
issuable upon exercise of the Special Warrant under Section 2.7 or 2.8,
(1) in the case of any such rights or warrants which shall have been
redeemed or repurchased without exercise by the holders thereof, the
number of shares of Common Stock issuable upon exercise of the Special
Warrant shall be adjusted upon such redemption or repurchase to give
effect to such distribution, Trigger Event or Other Trigger Event, as the
case may be, as though it were an extraordinary cash distribution equal
to the per-share redemption or repurchase price received by a holder of
Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights), made to all holders of Common Stock on
the date of such redemption or repurchase, and (2) in the case of such
rights or warrants all of which shall have expired or been terminated
without exercise, the number of
<PAGE>
shares of Common Stock issuable upon exercise of the Special Warrant
shall be readjusted as if such rights or warrants had never been issued.
3. Notice of Adjustment. Whenever the number of shares of Common
Stock for which the Special Warrant is exercisable shall be adjusted pursuant
to Section 2, the Company shall forthwith prepare a certificate to be
executed by the chief financial officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment, the method by which
the adjustment was calculated, the number of shares of Common Stock for which
the Special Warrant is exercisable and the Exercise Price after giving effect
to such adjustment or change. The Company shall promptly cause a signed copy
of such certificate to be delivered to the Holder. The Company shall keep at
the office of the Company copies of all such certificates and cause the same
to be available for inspection during normal business hours by the Holder.
4. Accountants' Report as to Adjustments. In each case of any
adjustment or readjustment to the shares of Common Stock (or Other
Securities) issuable upon the exercise of the Special Warrant, the Company at
its expense shall promptly compute such adjustment or readjustment in
accordance with the terms of the Special Warrant and cause independent public
accountants of recognized national standing selected by the Company (which
may be the regular auditors of the Company) to verify such computation and
prepare a report setting forth such adjustment or readjust ment and showing
in reasonable detail the method of calculation thereof and the facts upon
which such adjustment or readjustment is based, including without limitation
a statement of (a) the consideration received or to be received by the
Company for any Additional Shares of Common Stock issued or sold or deemed to
have been issued, and (b) the number of shares of Common Stock outstanding or
deemed to be outstanding. The Company shall forthwith mail a copy of each
such report to each Holder and shall, upon the written request at any time of
any Holder, furnish to such Holder a like report setting forth the number of
shares of Common Stock for which the Special Warrant is then exercisable and
showing in reasonable detail how it was calculated. The Company shall also
keep copies of all such reports at its principal office and shall cause the
same to be available for inspection at such office during normal business
hours by any Holder or any prospective purchaser of the Special Warrant
designated by the Holder.
5. Notices of Corporate Action. In the event of
<PAGE>
(a) any taking by the Company of a record of the holders of its
Common Stock for the purpose of determining the holders thereof who are
entitled to receive any dividend payable in, or other distribution of,
Additional Shares of Common Stock, or any other dividend (other than a
regular quarterly dividend payable in cash out of earned surplus in an
amount not exceeding 2% of the average of the Market Price of the Common
Stock on the fifteen trading days immediately preceding the date of the
declaration of such dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any Additional Shares of
Common Stock or any Convertible Securities or to receive any other right,
(b) any subdivision of outstanding shares of Common Stock into a
larger number of shares of Common Stock, or any combination of such
shares into a smaller number of shares of Common Stock,
(c) any issuance of Contingent Stock, any capital reorganization of
the Company, any reclassification or recapitalization of the capital
stock of the Company or any consolidation or merger involving the Company
and any other Person or any transfer of all or substantially all the
assets of the Company to any other Person, or
(d) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall mail to each Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend , distribution or right, and the amount and character of such
dividend, distribution or right, (ii) the date or expected date on which any
such subdivision, combination or issuance is to take place, and the amount of
Common Stock or Contingent Stock that shall be the subject of such
subdivision, combination or issuance and (iii) the date or expected date on
which any such reorganization, reclassification, re capitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place and the time, if any such time is to be fixed, as of which the
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for the
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
15 Business Days prior to the date specified in subdivisions (i), (ii) and
(iii) above.
<PAGE>
6. Restrictions on Transfer. (a) Other than as specifically
approved by a majority of the Non-Investor Directors, prior to the second
anniversary of the Closing Date, the Purchaser shall not, directly or
indirectly, sell, transfer or otherwise dispose of any Special Warrants
(except to any Affiliate of the Purchaser).
(b) Other than as specifically approved by a majority of the
Non-Investor Directors, prior to the fifth anniversary of the Closing Date,
Purchaser will not, directly or indirectly, sell, transfer or otherwise
dispose of the Special Warrant, in whole or in part, except (i) pursuant to a
registered underwritten public offering effected under the Registration
Rights Agreement with the intent to achieve a broad distribution, (ii) in
accordance with the volume and manner-of-sale limitations of Rule 144
promulgated under the Securities Act of 1933 (the "Securities Act")
(regardless of whether such limitations are applicable), (iii) in a
transaction exempt from the registration requirements of the Securities Act
with any Person or group (within the meaning of Section 13(d)(3) of the
Securities and Exchange Act of 1934 (the "Exchange Act")) of Persons, if,
prior to and after giving effect to such sale, such Person or group of
Persons (x) does not or would not, to Purchaser's knowledge after due
inquiry, Beneficially Own (provided that for purposes of this Section 6(b) a
Person shall be deemed to Beneficially Own all shares that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time) 5% or more of the then outstanding shares of
Common Stock or (y) is an investment company registered under the Investment
Company Act of 1940, as amended, or (iv) in connection with a Buyout
Transaction. Purported transfers of the Special Warrant that are not in
compliance with this Section 6(b) shall be of no force or effect.
(c) The provisions of Sections 6(a) and 6(b) shall terminate and be
of no further force or effect on the earlier to occur of (i) the fifth
anniversary of the Closing Date or (ii) the date on which the percentage of
the Total Voting Power represented by the aggregate voting power of all
Voting Securities then owned by Purchaser (other than any Voting Securities
acquired in violation of the Investment Agreement) is greater than 50%.
(d) Prior to the seventh anniversary of the Closing Date, Purchaser
will not, directly or otherwise, dispose of the Special Warrant, or any
portion thereof, representing the right to acquire 15% or more of the then
outstanding Common Stock to any Person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) without first offering the Company the
right to make an
<PAGE>
offer to purchase the Special Warrant proposed to be so
sold, transferred or otherwise disposed of. The provisions
of the previous sentence shall terminate and be of no effect
on the date on which the percentage of the Total Voting
Power represented by the aggregate voting power of all
Voting Securities then owned by Purchaser (other than any
Voting Securities acquired in violation of the Investment
Agreement) is greater than 50%.
(e) Any shares issued upon the exercise of the
Special Warrant shall be considered "Shares" for purposes of
the Investment Agreement and shall be subject to the
transfer restrictions stated in Article VII thereof.
(f) Except as otherwise permitted by this Section
6, the Special Warrant originally issued pursuant to the
Investment Agreement, each Special Warrant issued upon
direct or indirect transfer or in substitution for any
Special Warrant pursuant to Section 12 hereof, each
certificate for Common Stock (or Other Securities) issued
upon the exercise of any Special Warrant and each
certificate issued upon the direct or indirect transfer of
any such Common Stock (or Other Securities) (other than,
with respect to the first legend, shares of Common Stock (or
Other Securities), Special Warrants or Warrant Shares that
are no longer subject to the provisions of Section 6(a) and
other than, with respect to the second legend, shares of
Common Stock (or Other Securities), Special Warrants or
Warrant Shares which have been transferred in a transaction
registered under the Securities Act or exempt from the
registration requirements of the Securities Act pursuant to
Rule 144 thereunder or any similar rule or regulation) shall
be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT
ON FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH
<PAGE>
LAWS."
(g) The restrictions imposed by Section 6(f)
hereof upon the transferability of Restricted Securities
shall cease and terminate as to any particular Restricted
Securities (a) when such securities shall have been
effectively registered under the Securities Act and disposed
of in accordance with the registration statement covering
such Restricted Securities, (b) when, in the opinion of
counsel for the Holder, which counsel shall be reasonably
satisfactory to the Company, such restrictions are no longer
required in order to insure compliance with the Securities
Act, or (c) when such securities have been beneficially
owned, by a Person who has not been an affiliate of the
Company for at least three months, for a period of at least
one year (or such shorter period as may be applicable under
Rule 144 under the Securities Act or any successor thereto),
all as determined under Rule 144 under the Securities Act.
Whenever such restrictions shall terminate as to any
Restricted Securities, as soon as practicable thereafter and
in any event within five days, the Holder thereof shall be
entitled to receive from the Company, without expense (other
than transfer taxes, if any), new securities of like tenor
not bearing the applicable legend set forth in Section 6(f)
hereof.
7. Registration Rights. The Special Warrant and
all shares of Common Stock (and Other Securities) issued
upon the exercise of the Special Warrant are subject to and
entitled to the benefits of the registration rights
provisions set forth in the Registration Rights Agreement,
dated as of June 10, 1998, between the Company and the
Purchaser (the "Registration Rights Agreement").
8. Availability of Information. The Company
shall comply with the reporting requirements of sections 13
and 15(d) of the Exchange Act (whether or not it shall be
required to do so pursuant to such sections) and shall
comply with all public information reporting requirements of
the Commission (including Rule 144 promulgated by the
Commission under the Securities Act) from time to time in
effect and relating to the availability of an exemption from
the Securities Act for the sale of any Restricted
Securities. The Company shall cooperate with each holder of
any Restricted Securities in supplying such information as
may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required
by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any
Restricted Securities. The Company shall furnish to the
Holder, or to any Holder of a portion of the Special
Warrant, promptly upon their becoming available, copies of
<PAGE>
all reports on Form 10-K and Form 10-Q and proxy statements
filed by the Company with the Commission, and copies of all
regular and periodic reports and all registration statements
and prospectuses filed by the Company with any securities
exchange or with the Commission.
9. Reservation of Stock, etc. The Company shall
at all times reserve and keep available, solely for issuance
and delivery upon exercise of the Special Warrant, the
number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of the Special Warrant
at the time outstanding. All shares of Common Stock (or
Other Securities) shall be duly authorized and, when issued
upon such exercise, shall be validly issued and, in the case
of shares, fully paid and nonassessable with no liability on
the part of the holders thereof.
10. Repurchases of Stock. The Company shall not
repurchase any shares of Common Stock (or Other Securities)
if as a result thereof the exercisability of the Special
Warrant may be impaired, restricted or otherwise limited.
11. Listing on Securities Exchanges. The Company
shall list on each national securities exchange on which any
Common Stock may at any time be listed, and shall maintain
such listing of, all shares of Common Stock from time to
time issuable upon the exercise of the Special Warrant,
subject to official notice of issuance upon the exercise of
the Special Warrant. The Company shall also so list on each
national securities exchange, and shall maintain such
listing of, any Other Securities, if at the time any
securities of the same class shall be listed on such
national securities exchange by the Company. In addition,
at the request of the Purchaser the Company shall list on
each national securities exchange on which any Common Stock
may at any time be listed, and shall maintain such listing
of, the Special Warrant.
12. Ownership, Transfer and Substitution of the
Special Warrant. 12.1. Ownership of Special Warrant. The
Company may treat the Person in whose name the Special
Warrant, or any Special Warrant or Special Warrants issued
in substitution therefor, is registered on the register kept
at the principal office of the Company as the owner and the
Holder thereof for all purposes, notwithstanding any notice
to the contrary, except that, if and when any Special
Warrant is properly assigned in blank, the Company may (but
shall not be obligated to) treat the bearer thereof as the
owner of such Special Warrant for all
<PAGE>
purposes, notwithstanding any notice to the contrary.
Subject to Section 6, a Special Warrant, if properly
assigned, may be exercised by a new Holder without first
having a new Special Warrant issued.
12.2. Transfer and Exchange of the Special
Warrant. Upon the surrender of the Special Warrant,
properly endorsed, for registration of transfer or for
exchange at the principal office of the Company, the Company
at its expense shall (subject to compliance with Section 6,
if applicable) execute and deliver to or upon the order of
the Holder thereof a new Special Warrant or Special Warrants
of like tenor, in the name of such Holder or as such Holder
(upon payment by such Holder of any applicable transfer
taxes) may direct, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock
called for on the face or faces of the Special Warrant or
Special Warrants so surrendered.
12.3. Replacement of the Special Warrant. Upon
receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of any Special
Warrant and, in the case of any such loss, theft or
destruction of any Special Warrant held by a Person other
than the Purchaser, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or, in the
case of any such mutilation, upon surrender of such Special
Warrant for cancellation at the principal office of the
Company, the Company at its expense shall execute and
deliver, in lieu thereof, a new Special Warrant of like
tenor.
13. Definitions. As used herein, unless the
context otherwise requires, the following terms have the
following respective meanings:
Additional Shares of Common Stock: all shares
(including treasury shares but excluding Contingent Stock)
of Common Stock issued or sold by the Company after the
Closing Date, whether or not subsequently reacquired or
retired by the Company, other than (i) shares of Common
Stock issued upon the exercise of the Special Warrant and
the Warrant; (ii) shares issued or sold pursuant to the
exercise or conversion of options, warrants, convertible
securities, or other rights that were disclosed on the
Revised Option Schedule; (iii) shares issued or sold to the
Company's Employee Stock Purchase Plan, or any successor
plan thereto, to the extent such shares are issued or sold
at a purchase price not less than 85% of the Market Price;
(iv) shares issued or sold to Purchaser or its Affiliates;
or (v) shares issued upon the conversion of, or for the
purchase of, any 2001 Notes or the 2003 Notes outstanding
immediately
<PAGE>
following the Distributions.
Affiliate: with respect to any Person, any Person
that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such Person.
Assets: the meaning specified in Section 2.4.
Beneficially Own: with respect to any securities
shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange
Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
Business Day: any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in
the City of New York are authorized by law to be closed,
provided that, in determining the period within which
certificates or Special Warrants are to be issued and
delivered pursuant to Section 1.3 at a time when shares of
Common Stock (or Other Securities) are listed or admitted to
trading on any national securities exchange or in the
over-the-counter market and in determining the Market Price
of any securities listed or admitted to trading on any
national securities exchange or in the over-the-counter
market, "Business Day" shall mean any day when the principal
exchange in which securities are then listed or admitted to
trading is open for trading or, if such securities are
traded in the over-the-counter market in the United States,
such market is open for trading, and provided further that
any reference to "days" (unless Business Days are specified)
shall mean calendar days.
Buyout Transaction: a tender offer, merger, sale
of all or substantially all the Company's assets or any
similar transaction that offers each holder of Voting
Securities (other than, if applicable, the Person proposing
such transaction) the opportunity to dispose of Voting
Securities Beneficially Owned by each such Holder for the
same consideration or otherwise contemplates the acquisition
of Voting Securities Beneficially Owned by each such Holder
for the same consideration.
Closing Date: the meaning specified in the second
paragraph of the Special Warrant.
<PAGE>
Commission: the Securities and Exchange
Commission or any other Federal agency at the time ad
ministering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular
purpose.
Common Stock: the Company's Common Stock, as
constituted on the date hereof, any stock into which such
Common Stock shall have been changed or any stock resulting
from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of
the Company the holders of which have the right, without
limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after
the payment of dividends and distributions on any shares
entitled to preference.
Company: the meaning specified in the opening
paragraphs of the Special Warrant.
Contingent Stock: shares of Common Stock issued
after the Closing Date pursuant to (i) the Amendment to
Stock Purchase Agreement, dated as of June 20, 1996, by and
between the Company and Eric Watson, as the same may be
amended from time to time, or (ii) any security, option,
warrant, call, subscription, right, contract, commitment,
arrangement or understanding in existence on January 12,
1998 or June 10, 1998 but not disclosed on the Revised
Option Schedule.
Convertible Securities: any evidences of
indebtedness (other than 2001 Notes and 2003 Notes), shares
of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock.
Exchange Act: the Securities Exchange Act of
1934, or any successor statute, and the rules and
regulations of the Commission thereunder, all as the same
shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934 shall include
a reference to the comparable section, if any, of any such
successor statute.
Exercise Price: the meaning specified in Section
1.1.
Holder: the meaning specified in Section 1.1.
Investment Agreement: the meaning specified in
the second
<PAGE>
paragraph of the Special Warrant.
Market Price: on any date specified herein,
(a) in the case of securities that have an existing public
trading market, the amount per security equal to (i) the
last sale price of such security, regular way, on such date
or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in
each case as officially reported on the principal national
securities exchange on which the same are then listed or
admitted to trading, or (ii) if no such security is then
listed or admitted to trading on any national securities
exchange but such security is designated as a national
market system security by the NASD, the last trading price
of such security on such date, or if such security is not so
designated, the average of the reported closing bid and
asked prices thereof on such date as shown by the NASD
automated quotation system or, if no shares thereof are then
quoted in such system, as published by the National
Quotation Bureau, Incorporated or any successor or
ganization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Company,
and (b) in the case of securities that do not have an
existing public trading market and in the case of other
property, the higher of (i) the book value thereof as
determined by agreement between the Company and the Holder,
or if the Company and the Holder fail to agree, by any firm
of independent public accountants of recognized standing
selected by the Board of Directors of the Company, as of the
last day of any month ending within 60 days preceding the
date as of which the determination is to be made and (ii)
the fair value thereof (w) determined by an agreement
between the Company and the Holder or (x) if the Company and
the Holder fail to agree, determined jointly by an
independent investment banking firm retained by the Company
and by an independent investment banking firm retained by
the Holder, either of which firms may be an independent
investment banking firm regularly retained by the Company or
the Holder or (y) if the Company or the Holder shall fail so
to retain an independent investment banking firm within five
Business Days of the retention of such firm by the Holder or
the Company, as the case may be, determined solely by the
firm so retained or (z) if the firms so retained by the
Company and by the Holder shall be unable to reach a joint
determination within 15 Business Days of the retention of
the last firm so retained, determined by another independent
investment banking firm chosen by the first two such firms
and which is not a regular investment banking firm of the
Company or the Holder.
NASD: the National Association of Securities
Dealers, Inc.
<PAGE>
Non-Investor Director: any member of the Board of
Directors not nominated by the Purchaser pursuant to Article
IV of the Investment Agreement.
Other Securities: any stock (other than Common
Stock) and other securities of the Company or any other
Person (corporate or otherwise) which the Holder at any time
shall be entitled to receive, or shall have received, upon
the exercise of the Special Warrant, in lieu of or in
addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in
replacement of Common Stock or other securities pursuant to
Section 2.10 or otherwise.
Person: an individual, a partnership, an
association, a joint venture, a corporation, a business, a
trust, an unincorporated organization or a government or any
department, agency or subdivision thereof.
Public Offering: any offering of Common Stock to
the public pursuant to an effective registration statement
under the Securities Act.
Purchaser: the meaning specified in the first
paragraph of the Special Warrant.
Registration Rights Agreement: the meaning
specified in Section 7 of the Special Warrant.
Restricted Securities: (a) any Special Warrants
bearing the applicable legend set forth in Section 6(f), (b)
any shares of Common Stock (or Other Securities) which have
been issued upon the exercise of the Special Warrants and
which are evidenced by a certificate or certificates bearing
the applicable legend set forth in such section, and (c)
unless the context otherwise requires, any shares of Common
Stock (or Other Securities) which are at the time issuable
upon the exercise of the Special Warrants and which, when so
issued, shall be evidenced by a certificate or certificates
bearing the applicable legend set forth in such section.
Revised Option Schedule: the schedule, dated June
10, 1998 and delivered to the Purchaser on such date,
listing options, warrants, convertible securities and other
rights relating to capital stock of the Company.
Securities Act: the Securities Act of 1933, or
any successor
<PAGE>
statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act of
1933 shall include a reference to the comparable section, if
any, of any such successor statute.
Special Warrant: the meaning specified in the
second paragraph of the Special Warrant.
Subsidiary: as to any Person, any corporation at
least a majority of the shares of stock of which having
general voting power under ordinary circumstances to elect a
majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power
by reason of the happening of any contingency) is, at the
time as of which the determination is being made, owned by
such Person, or one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries.
Total Voting Power: at any time the total
combined voting power in the general election of directors
of all the Voting Securities then outstanding.
Transaction: the meaning specified in Section
2.10.
Transfer: unless the context otherwise requires,
any sale, assignment, pledge or other disposition of any
security, or of any interest therein, which could constitute
a "sale" as that term is defined in Section 2(3) of the
Securities Act.
2001 Notes: 5 1/2% convertible subordinated notes
due 2001 issued pursuant to an Indenture, dated as of
February 7, 1996, between the Company and State Street Bank
and Trust Company.
2003 Notes: 5 1/2% convertible subordinated notes
due 2003 issued pursuant to an Indenture, dated as of May
22, 1996, between the Company and Chase Manhattan Bank, N.A.
Voting Securities: at any time shares of any class
of capital stock of the Company which are then entitled to
vote generally in the election of directors.
Warrant: the Common Stock Purchase Warrant issued
pursuant
<PAGE>
to the Investment Agreement.
Warrant Shares: the shares of Common Stock (and
Other Securities) issuable upon exercise of the Special
Warrant.
14. Remedies. The Company stipulates that the
remedies at law of the Holder in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of the Special Warrant are
not and shall not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically
enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
15. No Rights or Liabilities as Stockholder.
Nothing contained in the Special Warrant shall be construed
as conferring upon the Holder hereof any rights as a
stockholder of the Company or as imposing any liabilities on
such Holder to purchase any securities or as a stockholder
of the Company, whether such liabilities are asserted by the
Company or by creditors or stockholders of the Company or
otherwise.
16. Notices. All notices and other communica
tions under the Special Warrant, except notices of the
exercise of any Special Warrant (which shall be effected in
the manner provided in Section 1, shall be in writing and
shall be mailed by registered or certified mail, return
receipt requested, addressed as follows or to such other
address as such party may have designated to the other in
writing:
(a) if to the Purchaser, to it at:
CDR-PC Acquisition, L.L.C.
c/o Clayton, Dubilier & Rice Fund V
Limited Partnership
1043 Foulk Road, Suite 106
Wilmington, Delaware
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
<PAGE>
Attention: Brian D. Finn
Telecopy No.: (212) 893-7061
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg
Telecopy No.: (212) 909-6836
(b) if to any other Holder or any holder of any
Common Stock (or Other Securities), at the
registered address of such Holder as set forth in
the register kept at the principal office of the
Company,
or
(c) if to the Company, to it at:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W.
Suite 600 East
Washington, D.C. 20007
Attention: Mark D. Director
Telecopy No.: (202) 339-6727
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George P. Stamas
Telecopy No.: (202) 663-6363
17. Miscellaneous. The Special Warrant and any
term hereof may be changed, waived, discharged or terminated
only by an instrument in writing
<PAGE>
signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. The
agreements of the Company contained in the Special Warrant
other than those applicable solely to the Special Warrant
and the Holder thereof shall inure to the benefit of and be
enforceable by any Holder or Holders at the time of any
shares of Common Stock (or Other Securities) issued upon the
exercise of the Special Warrant, whether so expressed or
not. THE SPECIAL WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF
CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION). The section headings in the Special
Warrant are for purposes of convenience only and shall not
constitute a part hereof.
18. Expiration; Notice. The Company shall give
the Holder no less than 45 days' nor more than 90 days'
notice of the expiration of the right to exercise the
Special Warrant. The right to exercise the Special Warrant
shall expire at 5:00 P.M., New York City time, on June 10,
2010, unless the Company shall fail to give such notice as
aforesaid, in which event the right to exercise the Special
Warrant shall not expire until 5:00 P.M., New York City
time, on a date 45 days after the date on which the Company
shall give the Holder hereof notice of the expiration of the
right to exercise the Special Warrant.
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Mark D. Director
--------------------------------------
Name: Mark D. Director
Title: Executive Vice President--Administration,
General Counsel and Secretary
<PAGE>
FORM OF SUBSCRIPTION
(To be executed only upon exercise of the Special Warrant)
To: U.S. Office Products Company
The undersigned registered holder of the within
Special Warrant hereby irrevocably exercises such Special
Warrant for, and purchases thereunder,
________* shares of Common Stock of U.S. Office
Products Company, and herewith makes payment [of
$ ]** [by application, pursuant to Section
1.2(b) of such Special Warrant, of [a portion of] the
Special Warrant representing a right to purchase ________*
shares of Common Stock], and requests
that the certificates for such shares be issued in the name
of, and delivered to ______________ whose address is __________.
Dated:-----------------
[HOLDER](****)
[ADDRESS]
By-----------------------------------
Name:
Title:
- -----------------
Insert here the number of shares called for on the face of the Special
Warrant (or, in the case of a parital exercise, the portion thereof as
to which the Special Warrant is being exercised), in either case
without making any adjustment for additional Common Stock or any other
stock or other securities or property or cash which, pursuant to the
adjustment provisions of the Special Warrant, may be delivered upon
exercise. In the case of a partial exercise, a new Special Warrant,
may be delivered upon exercise. In the case of a partial exercise, a
new Special Warrant or Special Warrants shall be issued and
delievered, representing the unexercised portion of the Special
Warrant, to the holder surrendering the same.
** Delete inapplicable language in brackets.
*** Delete inapplicable language in brackets.
**** Signature must conform in all respects to name of holder as specified
on the face of the Special Warrant.
<PAGE>
FORM OF ASSIGNMENT
(To be executed only upon transfer of the Special Warrant)
For value received, the undersigned registered
holder of the within Special Warrant hereby sells, assigns
and transfers unto ________________ the right represented by
such Special Warrant to purchase ______ shares of Common
Stock of U.S. Office Products Company Corporation to which
such Special Warrant relates, and appoints ___________
Attorney to make such transfer on the books of U.S. Office
Products Company maintained for such purpose, with full
power of substitution in the premises.
Dated:---------------------
[HOLDER]
[Address]
By
--------------------------
Name:
Title:
Signed in the presence of:
- --------------------------
* Signature must conform in all respects to name of holder as specified on
the face of the Special Warrant.
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
REGISTRATION RIGHTS AGREEMENT
Dated as of June 10, 1998
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Background..........................................................................................1
2. Definitions.........................................................................................1
3. Registration........................................................................................7
3.1 Demand Registration......................................................................7
(a) Requests........................................................................7
(b) Obligation to Effect Registration...............................................7
(c) Shelf Registration..............................................................7
(d) Effective Registration Statement................................................8
(e) Pro Rata Allocation.............................................................8
(f) Inclusion of Other Securities in Demand Registration............................8
3.2 Piggyback Registration...................................................................9
3.3 Registration Procedures.................................................................11
3.4 Underwritten Offerings..................................................................17
(a) Underwritten Offerings Exclusive...............................................17
(b) Underwriting Agreement.........................................................17
(c) Selection of Underwriters......................................................18
(d) Hold Back Agreements...........................................................18
3.5 Preparation; Reasonable Investigation...................................................19
3.6 Other Registrations.....................................................................19
3.7 Indemnification.........................................................................19
(a) Indemnification by the Company.................................................19
(b) Indemnification by the Sellers.................................................20
(c) Notices of Claims, etc.........................................................21
(d) Other Indemnification..........................................................22
(e) Other Remedies.................................................................22
(f) Officers and Directors.........................................................23
3.8 Expenses.......................................................................................23
4. Miscellaneous......................................................................................23
4.1 Rule 144; Legended Securities; etc......................................................23
4.2 Amendments and Waivers..................................................................23
4.3 Nominees for Beneficial Owners..........................................................24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4.4 Successors, Assigns and Transferees.....................................................24
4.5 Notices.................................................................................24
4.6 No Inconsistent Agreements..............................................................26
4.7 Remedies; Attorneys' Fees...............................................................26
4.8 Severability............................................................................26
4.9. Headings................................................................................26
4.10. Counterparts............................................................................27
4.11. Governing Law...........................................................................27
4.12 No Third Party Beneficiaries............................................................27
4.13 Consent to Jurisdiction.................................................................27
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
June 10, 1998, among U.S. Office Products Company, a Delaware corporation (the
"Company"), and CDR-PC Acquisition, L.L.C., a Delaware limited liability company
(the "Purchaser").
1. Background. (a) The Company is a party to an Investment
Agreement, dated as of January 12, 1998 (as amended, the "Investment
Agreement"), with the Purchaser, pursuant to which the Company agreed to sell to
the Purchaser and the Purchaser agreed to purchase from the Company for an
aggregate purchase price of $270 million (the "Investment"), upon the terms and
subject to the conditions set forth therein, (x) 9,092,106 shares of Common
Stock (as such number of shares may be adjusted as contemplated by the letter
agreement, dated the date hereof, between the Company and the Purchaser, the
"Shares"), (y) Special Warrants representing the right to acquire a number of
shares of Common Stock equal to the difference between (i) 24.9% of the sum of
(A) the outstanding shares of Common Stock as of the Closing Date after giving
effect to the issuance of the Shares and the exercise of the Special Warrants,
and assuming the conversion into Common Stock of all the 2001 Notes outstanding
on the Closing Date at the conversion price resulting from adjustments made as a
result of the Tender Offer and the Distributions and (B) the number of any
shares of Contingent Stock that are issued, and (ii) the number of Shares and
(z) Warrants to purchase one share of Common Stock for each Share so purchased
and for each share into which the Special Warrants become exercisable.
In order to induce the Purchaser to enter into the Investment
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement for the benefit of the Purchaser and its direct and indirect
transferees. The execution and delivery of this Agreement is a condition to the
Purchaser's obligations pursuant to the Investment Agreement.
(b) This Agreement shall become effective with respect to any
Registrable Securities upon the issuance or sale of Registrable Securities
pursuant to the Investment Agreement. This Agreement shall remain in effect upon
the assignment or transfer of Registrable Securities by the Purchaser or a
Holder to an Affiliate, a Distributee or other successors, assigns and
transferees of Purchaser of such Holder pursuant to Section 4.4.
<PAGE>
2. Definitions. For purposes of this Agreement, the following
terms have the following respective meanings:
"2001 Notes" mean all of the Company's issued and outstanding
5 1/2% Convertible Subordinated Notes due 2001 issued pursuant to an Indenture,
dated as of February 7, 1996, between the Company and State Street Bank and
Trust Company.
"Additional Shares" means shares of Common Stock (other than
Warrant Shares and Special Warrant Shares) acquired by Purchaser after the
Closing Date, to the extent that the acquisition of such shares is not
prohibited by the Investment Agreement.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly Controlling, Controlled by or under common Control
with such first Person. "Control" means the power to direct or cause the
direction of management or policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
Any director, member of management or other employee of the Company or any of
its Subsidiaries who would not otherwise be an Affiliate of the Purchaser shall
not be deemed to be an Affiliate of the Purchaser.
"Agreement" is defined in the first paragraph of this
Agreement.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
to close.
"Closing Date" means the date the Investment is made under the
Investment Agreement.
"Common Stock" means the Common Stock, par value of $.001 per
share, of the Company.
"Company" is defined in the first paragraph of this Agreement.
"Contingent Stock" means Common Stock issued after the Closing
Date pursuant to (i) the Amendment to Stock Purchase Agreement, dated as of June
20, 1996, by and between the Company and Eric Watson or (ii) any security,
option, warrant, call, subscription, right, contract, commitment, arrangement or
understanding in existence on January 12, 1998 or June 10, 1998 but not
disclosed on the Revised Option Schedule, dated June 10, 1998
<PAGE>
and delivered to the Purchaser on such date, listing options, warrants,
convertible securities and other rights relating to capital stock of the
Company.
"DTC" means the Depository Trust Company.
"Distributee" means any person that is a member, stockholder
or partner of Purchaser, or any person that is a member, stockholder or partner
of a Distributee to which Registrable Securities are transferred or distributed
by Purchaser or Distributee.
"Distributions" is defined in the Investment Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
thereunder which shall be in effect at the time. Any reference to a particular
section thereof shall include a reference to the corresponding section, if any,
of any such successor federal statute, and the rules and regulations thereunder.
"Holder" means any holder of Registrable Securities, including
an Affiliate, a Distributee or other successors, assigns and transferees of
Purchaser or a Holder that has received Registrable Securities pursuant to
Section 4.4.
"Investment" is defined in Section 1(a).
"Investment Agreement" is defined in Section 1(a).
"Legacy Agreement" means the Subscription Agreement, dated as
of March 28, 1996, between the Company and Legacy Capital Fund, Inc., as in
effect on January 12, 1998.
"NASD" means the National Association of Securities Dealers,
Inc.
"Person" means any natural person, firm, partnership,
association, corporation, company, trust, business trust, governmental entity or
other entity.
"Postponement Period" is defined in Section 3.3(p).
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A), as amended or supplemented
by any
<PAGE>
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Purchaser" is defined in the introduction to this Agreement.
"Registrable Securities" means (a) the Shares, (b) the
Additional Shares, (c) the Warrant Shares, (d) the Warrants, (e) the Special
Warrant Shares, (f) the Special Warrants and (g) any securities issued or
issuable with respect to any Shares, Additional Shares, Warrants or Special
Warrants referred to in the foregoing clauses (a) through (g), (i) upon any
conversion or exchange thereof, (ii) by way of stock dividend or other
distribution, stock split or reverse stock split or (iii) in connection with a
com bination of shares, recapitalization, merger, consolidation, exchange offer
or other reorganization. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (A) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such Registration State ment, (B) such securities
shall have been distributed to the public in reliance upon Rule 144, (C) subject
to the provisions of Section 4.1(b)(ii), such securities shall have been
otherwise transferred, new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force or (D) such securities shall have been acquired by the
Company. In determining the number of Registrable Securities outstanding at any
time or whether the Holders of the requisite number of Registrable Securities
have taken any action hereunder and in calculating the number of Registrable
Securities for all other purposes under this Agreement, each Warrant and Special
Warrant shall be deemed to have been exercised (to the fullest extent then
determinable) and such calculation shall include the number of Warrant Shares
and Special Warrant Shares then deliverable upon the exercise of such Warrant or
Special Warrant (to the fullest extent then determinable).
"Registration Expenses" All fees and expenses incident to the
performance of or compliance with the provisions of this Agreement, whether or
<PAGE>
not any registration statement is filed or becomes effective, including, without
limitation, all (i) registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in connection
with an underwritten offering, (B) fees and expenses of compliance with state
securities or blue sky laws (including, without limitation, fees and
disbursements of counsel for the underwriter or underwriters in connection with
blue sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as provided in Section 3.3(e)), and (C) fees and other expenses
associated with the listing of the Warrants, Warrant Shares, Special Warrants,
Special Warrant Shares and Additional Shares on the Nasdaq Stock Market and any
other applicable exchange, (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with DTC and of printing prospectuses), (iii) fees and
disbursements of all independent certified public accountants referred to in
Section 3.3 (including, without limitation, the reasonable expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Rule 2720 of the NASD Rules of Conduct, (v) liability insurance
under the Securities Act or any other securities laws, if the Company desires
such insurance, (vi) fees and expenses of all attorneys, advisers, appraisers
and other persons retained by the Company or any Subsidiary of the Company,
(vii) internal expenses of the Company and its Subsidiaries (including, without
limitation, all salaries and expenses of officers and employees of the Company
and its Subsidiaries performing legal or accounting duties), (viii) the expense
of any annual audit, (ix) the expenses relating to printing, word processing and
distributing all registration statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement and (x) the reasonable out-of-pocket expenses of the
Holders of the Registrable Securities being registered in such registration
incurred in connection therewith including, without limitation, the reasonable
fees and disbursements of not more than one counsel (together with appropriate
local counsel) chosen by the Holders of a majority of the Registrable Securities
to be included in such Registration Statement. "Registration Expenses" shall not
include any underwriting discounts or commissions or any transfer taxes payable
in respect of the sale of Registrable Securities by the Holders thereof.
"Registration Statement" means any registration statement of
the Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and supplements to any such
<PAGE>
registration statement, including post-effective amendments, in each case
including the Prospectus, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Rule 144" means Rule 144 (or any successor provision) under
the Securities Act.
"Rule 145" means Rule 145 (or any successor provision) under
the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time. Any reference to a particular section thereof
shall include a reference to the corresponding section, if any, of any such
successor federal statute, and the rules and regulations thereunder.
"SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
"Shares" is defined in Section 1(a).
"Special Registration" means the registration of shares of
equity securities and/or options or other rights in respect thereof to be
offered solely to directors, members of management, employees, consultants or
sales agents, distributors or similar representatives of the Company or its
direct or indirect Subsidiaries, solely on Form S-8 or any successor form.
"Special Warrants" is defined in the Investment Agreement.
"Special Warrant Shares" means shares of Common Stock issuable
upon exercise of the Special Warrants.
"Subsidiary" means, with respect to any Person, any
corporation or Person, a majority of the outstanding voting stock or other
equity interests of which is owned, directly or indirectly, by that Person.
"Tender Offer" is defined in the Investment Agreement.
<PAGE>
"underwritten registration" or "underwritten offering" means a
registration in which securities of the Company (including Registrable
Securities) are sold to an underwriter for reoffering to the public.
"Warrants" means warrants entitling the holder thereof to
purchase one share of Common Stock for each Share and Special Warrant purchased
by the Purchaser pursuant to the Investment Agreement, on the terms and subject
to the conditions set forth in Exhibit 2 thereof.
"Warrant Shares" means shares of Common Stock issuable upon
exercise of the Warrants.
3. Registration.
3.1 Demand Registration.
(a) Requests. Subject to the provisions of Section 3.6, at any
time or from time to time as of the date hereof, Holders of not less than 25% of
the then outstanding Registrable Securities shall have the right to make written
requests that the Company effect up to four registrations under the Securities
Act of all or part of the Registrable Securities of the Holders making such
request, which requests shall specify the intended method of disposition thereof
by such Holders, including whether the registration requested is for an
underwritten offering. For a registration to be underwritten, a majority of the
Holders requesting registration (as measured by ownership of Registrable
Securities) must so request. The Company shall not be required to effect more
than four registrations under this Section 3.1.
(b) Obligation to Effect Registration. Within 10 days after
receipt by the Company of any request for registration pursuant to Section
3.1(a), the Company shall promptly give written notice of such requested
registration to all Holders, and thereupon will use its best efforts to effect
the registration under the Securities Act of
(i) the Registrable Securities which the Company has been so
requested to register pursuant to Section 3.1(a), and
(ii) all other Registrable Securities which the Company has
been requested to register by the Holders thereof by written request
given to the Company within 10 days after the Company has given such
written notice (which request shall specify the intended method of
disposition of
<PAGE>
such Registra ble Securities),all to the extent required to permit the
disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered.
(c) Shelf Registration. If requested by Holders of a majority
of the Registrable Securities as to which registration has been requested
pursuant to this Section 3.1, and if the Company is eligible to file such
Registration Statement on Form S-3, the Registration Statement covering such
Registrable Securities shall provide for the sale by the Holders thereof of the
Registrable Securities from time to time on a delayed or a continuous basis
under Rule 415 under the Securities Act. If more than one underwritten offering
is requested under any particular shelf registration, each such additional
underwritten offering shall constitute a separate "demand" registration for
purposes of Section 3.1(a).
(d) Effective Registration Statement. A registration requested
pursuant to Section 3.1(a) shall not be deemed to have been effected unless it
is declared effective by the SEC and remains effective for the period specified
in Section 3.3(b). Notwithstanding the preceding sentence, a registration
requested pursuant to Section 3.1(a) that does not become effective after the
Company has filed a Registration Statement with respect thereto by reason of the
refusal to proceed of the Holders of Registrable Securities requesting the
registration, or by reason of a request by a majority of the Selling Holders
participating in such registration that such registration be withdrawn, shall be
deemed to have been effected by the Company at the request of such Holders.
(e) Pro Rata Allocation. If the Holders of a majority of the
Registrable Securities for which registration is being requested pursuant to
Section 3.1(a) deter mine, based on consultation with the managing underwriters
or, in an offering which is not underwritten, with an investment banker, that
the number of securities to be sold in any such offering should be limited due
to market conditions or otherwise, Holders of Registrable Securities proposing
to sell their securities in such registration shall share pro rata in the number
of securities being offered (as determined by the Holders holding a majority of
the Registrable Securities for which registration is being re quested in
consultation with the managing underwriters or investment banker, as the case
may be) and registered for their account, such sharing to be based on the number
of Registrable Securities as to which registration was requested by such
Holders.
(f) Inclusion of Other Securities in Demand Registration.
<PAGE>
(i) The Company may, subject to the remainder of this Section
3.1(f), elect to include in any Registration Statement made pursuant to Section
3.1(a), authorized but unissued shares of Common Stock or shares of Common Stock
held as treasury stock.
(ii) Notwithstanding any other provision of this Section 3(f),
the Company shall not register securities (other than Registrable Securities)
for sale for the account of any Person (other than the Company) in any
registration requested pursuant to Section 3.1(a) unless (x) permitted to do so
by the written consent of the Holders holding at least a majority of the
Registrable Securities proposed to be sold in such registration or (y) required
pursuant to Section 10 of the Legacy Agreement.
(iii) If any Registration Statement made pursuant to Section
3.1(a) involves an underwritten offering and the managing underwriter of such
offering (or, in connection with an offering that is not underwritten, an
investment banker) shall advise the Company that, in its view, the number of
securities requested to be included in such Registration exceeds the largest
number that can be sold in an orderly manner in such offering within a price
range acceptable to the selling Holders, the Company shall include in such
Registration:
(A) first, all shares of Common Stock requested to
be included in such Registration by the selling Holders as provided in Section
3.1(e); and
(B) second, to the extent that the number of
securities to be registered pursuant to clause (A) is less than the largest
number that can be sold in an orderly manner in such offering within a price
range acceptable to the selling Holders, securities that the Company proposes to
register (except to the extent otherwise required pursuant to Section 10 of the
Legacy Agreement); and
(C) third, to the extent that the number of shares
registered pursuant to clauses (A) and (B) is less than the largest number that
can be sold in an orderly manner in such offering within a price range
acceptable to the selling Holders, the securities requested to be included by
any other holders (if permitted by the Holders pursuant to Section 3.2(f)(ii)).
The securities to be included in any such registration pursuant to clause (C)
shall be allocated on a pro rata basis among all holders requesting that
securities be included in such registration pursuant to such clause on the basis
of the number
<PAGE>
of securities requested to be included by such holders.
3.2 Piggyback Registration. If the Company at any time
proposes to register any of its common stock under the Securities Act (other
than a Registration relating solely to the sale of securities to participants in
a Company stock plan, on Form S-4 with respect to any merger, consolidation or
acquisition, pursuant to Section 3.1 or pursuant to a Special Registration),
whether or not for sale for its own account, and the registration form to be
used may be used for the registration of Registrable Securities, it shall each
such time give prompt written notice to all Holders of Registrable Securities of
its intention to do so and, upon the written request of any Holder of
Registrable Securities given to the Company within 10 days after the Company has
given any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such holder and the intended method of disposition
thereof), the Company will use its best efforts to effect the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by the Holders thereof, to the extent required to permit
the disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered, provided that:
(a) if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of
the Registration Statement filed in connection with such registration,
the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of
such determination to each Holder that was previously notified of such
registration and, thereupon, shall not register any Registrable
Securities in connection with such registration (but shall nevertheless
pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any Holders to request that a
registration be effected under Section 3.1; and
(b) if the Company shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not
underwritten, by an investment banker) that in their or its opinion the
number of securities requested to be included in such registration
(whether by the Company, pursuant to this Section 3.2 or pursuant to
any other rights granted by the Company to a holder or holders of its
securities to request or demand such registration or in clusion of any
such securities in any such registration) exceeds the number of such
securities which can be
<PAGE>
sold in such offering in an orderly manner within a price range that
is acceptable to the Company, the Company shall include in such
Registration:
(i) first, all shares of Common Stock that the
Company proposes to register for its own account (except to
the extent otherwise required pursuant to Section 10 of the
Legacy Agreement); and
(ii) second, to the extent that the number of shares
registered pursuant to clause (i) is less than the largest
number that can be sold in an orderly manner in such offering
within a price range acceptable to the Company, (x) the
Registrable Securities requested to be included by the Holders
and (y) in the case of a registration initially requested or
demanded by a holder or holders of securities other than the
Registrable Securities, the securities requested or demanded
to be registered by such other holders; and
(iii) third, to the extent that the number of shares
registered pursuant to clauses (i) and (ii) is less than the
largest number that can be sold in an orderly manner in such
offering within a price range acceptable to the Company, the
securities requested to be included by any other holders,
and the Company shall so provide in any registration agreement
hereinafter entered into with respect to any of its securities.
The securities to be included in any such registration
pursuant to clause (ii) or (iii) shall be allocated on a pro rata basis among
all holders requesting that securities be included in such registration pursuant
to such clause on the basis of the number of securities requested to be included
by such holders.
No registration effected under this Section 3.2 shall relieve
the Company from its obligation to effect registrations upon request under
Section 3.1. The Company shall not be obligated to cause any "piggyback"
registration to be underwritten.
3.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
<PAGE>
Securities under the Securities Act as provided in Sections 3.1 and 3.2, the
Company shall:
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement with respect to such securities, make all
required filings with the NASD and use best efforts to cause such
Registration Statement to become effective at the earliest possible
date;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith and such other documents as may be necessary to
keep such Registration Statement effective until the earlier of (i) 30
days after the effective date of such Registration Statement (360 days
in the case of a Shelf Registration pursuant to Section 3.1(c)) or (ii)
the consummation of the disposition by the Holders of all the
Registrable Securities covered by such Registration Statement and
otherwise comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration
Statement;
(c) furnish to counsel (if any) selected by the Holders of a
majority of the Registrable Securities covered by such Registration
Statement and to counsel for the underwriters in any underwritten
offering copies of all documents proposed to be filed with the SEC in
connection with such registration a reasonable time prior to the
proposed filing thereof and give reasonable consideration in good faith
to any comments of such Holders, counsel and underwriters. The Company
shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto pursuant to a registration under
Section 3.1(a) if the Holders of a majority of the Registrable
Securities covered by such Registration Statement, their counsel, or
the underwriters, if any, shall reasonably object in writing;
(d) furnish to each seller of Registrable Securities, without
charge, such reasonable number of conformed copies of such Registration
Statement and of each such amendment and supplement thereto (in each
case, including all exhib its (including exhibits incorporated by
reference), financial statements, schedules and all documents
incorporated therein, deemed to be incorporated therein by reference or
filed therewith, except that the Company shall not be obligated to
furnish any seller of securities with more than two copies of such
exhibits and documents), such number
<PAGE>
of copies of the Prospectus included in such Registration Statement
(including each preliminary prospectus and any summary prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to
facilitate the disposition of the securities owned by such seller;
(e) use its best efforts to register or qualify and cooperate
with the Holders of Registrable Securities, the underwriters and their
respective counsels in connection with the registration or
qualification (or exemption from such registration or qualification) of
the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
request; provided, however, that where Registrable Securities are
offered other than through an underwritten offering, the Company agrees
to cause its counsel to perform blue sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 3.3(e); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration
Statement is required to be effective hereunder and do any and all
other acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified,
subject itself to taxation in any juris diction wherein it is not so
subject, or take any action which would subject it to general service
of process in any jurisdiction wherein it is not so subject;
(f) in connection with an underwritten public offering only,
furnish to each seller of Registrable Securities a signed counterpart,
addressed to the sellers, of
(i) an opinion of counsel for the Company experienced
in securities law matters, dated the effective date of the
Registration Statement, and
(ii) a "cold comfort" letter signed by the
independent public accountants who have issued an audit report
on the Company's financial statements included in the
Registration Statement, subject to such seller having executed
and delivered to the independent public accountants such
certificates and documents as such accountants shall
reasonably request,
<PAGE>
covering substantially the same matters with respect to the
Registration Statement (and the Prospectus included therein) and, in
the case of such accoun tants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters
delivered to the underwriters in underwritten public offerings of
securities;
(g) (i) notify each Holder of Registrable Securities subject
to such Registration Statement if such Registration Statement, at the
time it or any amendment thereto became effective, (x) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading upon discovery by the Company of such material
misstatement or omission or (y) upon discovery by the Company of the
happening of any event as a result of which the Company believes there
would be such a material misstatement or omission, and, as promptly as
practicable, prepare and file with the SEC a post-effective amendment
to such registration statement and use best efforts to cause such
post-effective amendment to become effective such that such
registration statement, as so amended, shall not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and (ii) notify each Holder of Registrable Securities
subject to such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act,
if the Prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading upon discovery by the
Company of such material misstatement or omission or upon discovery by
the Company of the happening of any event as a result of which the
Company believes there would be a material misstatement or omission,
and, as promptly as is practicable, prepare and furnish to such Holder
a reasonable number of copies of a supplement to or an amendment of
such Prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such secu rities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances
<PAGE>
under which they were made, not misleading;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement of the Company complying with the provisions of Section 11(a)
of the Securities Act and Rule 158 under the Securities Act (or any
similar rule promulgated under the Securities Act) no later than 45
days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Securities are sold
to an underwriter or to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to an underwriter or
to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of the
relevant Registration Statement, which statements shall cover said
12-month periods;
(i) promptly notify each Holder of any Registrable Securities
covered by such Registration Statement, their counsel and the
underwriters (i) when such Registration Statement, or any
post-effective amendment to such Registration Statement, shall have
become effective, or any amendment of or supplement to the Prospectus
used in connection therewith shall have been filed, (ii) of any request
by the SEC to amend such Registration Statement or to amend or
supplement such Prospectus or for additional information, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of
such Registration Statement or of any order preventing or suspending
the use of any preliminary prospectus or the initiation or threatening
of any proceedings for any of such purposes, (iv) of the suspension of
the qualification of such securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any of such
purposes and (v) if at any time when a Prospectus is to be required by
the Securities Act to be delivered in connection with the sale of the
Registrable Securities, the representations and warranties of the
Company contained in any agreement (including the underwriting
agreement contemplated in Section 3.4(b) below), to the knowledge of
the Company, cease to be true and correct in any material respect;
(j) use its best efforts to prevent the issuance of any order
suspending the effectiveness of the Registration Statement or of any
<PAGE>
order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the
Registrable Securities covered thereby for sale in any jurisdiction,
and, if any such order is issued, to obtain the withdrawal of any such
order at the earliest possible moment;
(k) if requested by the managing underwriter, if any, or the
Holders of a majority of the Registrable Securities being sold in
connection with an underwriting offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as
the managing underwriter, if any, or such Holders reasonably request to
be included therein to comply with applicable law and (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(l) cooperate with the Holders and the managing underwriter,
if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends whatsoever and
shall be in a form eligible for deposit with DTC, and enable such
Registrable Securities to be in such denominations and registered in
such names as the underwriters, if any, or Holders may reasonably
request at least two business days prior to any sale of Registrable
Securities in a firm commitment underwritten public offering;
(m) use its best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with, and to
obtain the consent or approval of, each governmental agency or
authority, whether federal, state, local or foreign, which may be
required to effect such registration or the offering or sale in
connection therewith or to enable the selling Holders to offer, or to
consummate the disposition of, the Registrable Securities subject to
such Registration Statement, except as may be required solely as a
consequence of the nature of such selling Holder's business, in which
case the Company will cooperate in all reasonable respects with the
filing of the Registration Statement and the granting of such
approvals;
(n) prior to the effective date of the Registration Statement,
(i) provide the registrar for the Common Stock or such other
Registrable
<PAGE>
Securities with printed certificates for such securities in a form
eligible for deposit with DTC and (ii) provide a CUSIP number for such
securities; and
(o) cause the Warrants, Warrant Shares, Special Warrants and
Special Warrant Shares to be listed on the NASDAQ NMS (or such other
automated trading system or exchange as shall be the primary trading
system or exchange for the Common Stock) in the event that the
Registrable Securities covered by such Registration Statement include
any Warrants, Warrant Shares, Special Warrants or Special Warrant
Shares not already so listed; and
(p) have the right -- if the Board of Directors of the
Company, in its good faith judgment, determines that any Registration
of shares of Common Stock should not be made or continued because it
would materially interfere with any material financing, acquisition,
corporation reorganization, merger, or other transaction involving the
Company or any of its subsidiaries (a "Valid Business Reason") -- (i)
to postpone filing a Registration Statement until such Valid Business
Reason no longer exists, but in no event for more than 90 days, and
(ii) to cause any Registration Statement that has already been filed to
be withdrawn and its effectiveness terminated or to postpone amending
or supplementing such Registration Statement until such Valid Business
Reason no longer exists, but in no event for more than 90 days (the
"Postponement Period"); provided, however, that in no event shall the
Company be permitted to postpone or withdraw a Registration Statement
within 190 days after the expiration of the Postponement Period.
The Company may require each Holder of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such Holder and the distribution of such
securities as the Company may from time to time reasonably request in writing
and as shall be required by law in connection therewith. Each such Holder agrees
to furnish promptly to the Company all infor mation required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
The Company agrees not to file or make any amendment to any
Registration Statement with respect to any Registrable Securities, or any
amendment of or supplement to the Prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably
<PAGE>
withheld, except that no such consent shall be required for any disclosure that
is required by law.
By the acquisition of Registrable Securities, each Holder
shall be deemed to have agreed that upon receipt of any notice from the Company
pursuant to Sec tion 3.3(g) or (p), such Holder will promptly discontinue such
Holder's disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder shall have
received, in the case of clause (i) of Section 3.3(g), notice from the Company
that such Registration Statement has been amended, as contemplated by Section
3.3(g); in the case of clause (ii) of Section 3.3(g), copies of the supplemented
or amended Prospectus contemplated by Section 3.3(g); or, in the case of Section
3.3(p), the time period specified has elapsed or such Holder has received notice
from the Company that the Postponement Period has been terminated. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, in such
Holder's possession of the Prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event that the Company shall give any
such notice, the period mentioned in Section 3.3(b) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such Registration Statement shall have received the copies
of the supplemented or amended Prospectus contemplated by Section 3.3(g).
3.4 Underwritten Offerings. The provisions of this Section 3.4
do not establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 3.1 through 3.3, to any
registration that is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a registration
requested pursuant to Section 3.1 is for an underwritten offering, only
securities that are to be distributed by the underwriters may be included in the
registration.
(b) Underwriting Agreement. If requested by the underwriters
for any underwritten offering by Holders pursuant to a registration requested
under Section 3.1, the Company shall enter into an underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Holders of a majority of the
Registrable Securities to
<PAGE>
be covered by such registra tion and to the underwriters and to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in agree ments of this type, including,
but not limited to, indemnities to the effect and to the extent provided in
Section 3.7, provisions for the delivery of officers' certificates, opinions of
counsel and accountants' "cold comfort" letters, and hold-back arrangements. The
Holders of Registrable Securities to be distributed by such underwriters shall
be parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the agreements on the
part of, the Company to and for the benefit of such underwriters be made to and
for the benefit of such Holders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement shall
also be conditions precedent to the obligations of such Holders. No such Holder
shall be re quired by the Company to make any representations or warranties to,
or agreements with, the Company or the underwriters other than as set forth in
Section 3.4(d) and representations, warranties or agreements regarding such
Holder and such Holder's in tended method of distribution.
(c) Selection of Underwriters. Whenever a registration
requested pursuant to Section 3.1 is for an underwritten offering, the Holders
of a majority of the Registrable Securities to be registered pursuant to such
offering shall have the right to select one or more underwriters to administer
the offering, subject to the consent of the Company, which shall not be
unreasonably withheld. If the Company at any time proposes to register any of
its securities under the Securities Act for sale for its own account and such
securities are to be distributed by or through one or more underwriters, the
Company shall have the right to select one or more underwriters to administer
the offering, subject to the consent of the Holders of a majority of Registrable
Securities to be registered pursuant to such offering, which shall not be
unreasonably withheld. In all cases in this Section 3.4(c), at least one of the
underwriters chosen by the Holders or the Company shall be an underwriter of
nation ally recognized standing.
(d) Hold Back Agreements. If and whenever the Company proposes
to register any of its equity securities under the Securities Act, whether or
not for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 3.1 or 3.2, each Holder,
if required by the managing underwriter in an underwritten offering, agrees by
acquisition of such Registrable Securities not to effect (other than pursuant to
such registration) any public sale or distribution, including, but not limited
to, any sale pursuant to Rule 144, of any Registrable Securities, any other
equity
<PAGE>
securities of the Company or any securities convertible into or exchangeable or
exercisable for any equity securities of the Company during the 10 days prior
to, and for 90 days after, the effective date of such registration, to the
extent timely notified in writing by the Company or the managing underwriter,
and the Company agrees to cause each holder of any equity security, or of any
security conver tible into or exchangeable or exercisable for any equity
security, of the Company pur chased from the Company at any time other than in a
public offering to enter into a similar agreement with the Company. The
foregoing provisions shall not apply to any Holder if such Holder is prevented
by applicable statute or regulation from entering into any such agreement;
provided, however, that any such Holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of any applicable class of Registrable Securities commencing on the
date of sale of such applicable class of Registrable Securities unless it has
provided 45 days prior written notice of such sale or distribution to the
underwriter or underwriters. The Company further agrees not to effect (other
than pursuant to such registration or pursuant to a Special Registration) any
public sale or distribution, or to file any Registration Statement (other than
such registration or a Special Registration) covering any, of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the 10 days prior to, and for 90 days after, the
effective date of such registration if required by the managing underwriter.
3.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each Registration Statement registering
Registrable Securities under the Securities Act, the Company shall give the
Holders of such Registrable Securities so to be registered and their
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such Registration Statement,
each Prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, and shall give each of them such access to all
pertinent financial, corporate and other documents and properties of the Company
and its Subsidiaries, and such opportunities to discuss the business of the
Company with its officers, directors, employees and the independent public
accountants who have issued audit reports on its financial statements as shall
be necessary, in the opinion of such Holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
3.6 Other Registrations. If and whenever the Company is
required
<PAGE>
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 3.1 or 3.2, and if such
registration shall not have been withdrawn or abandoned, the Company shall not
be obligated to and shall not file any Registration Statement with respect to
any of its securities (including Registrable Securities) under the Securities
Act (other than a Special Registration), whether of its own accord or at the
request or demand of any holder or holders of such securities, until a period of
180 days shall have elapsed from the effective date of such previous
registration, provided that the Company shall not be excused from filing a
registration statement by virtue of this Section 3.6 more than once in a 360 day
period.
3.7 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
Section 3.1 or 3.2, the Company shall indemnify and hold harmless the seller of
such securities, its directors, officers, and employees, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls such seller or any such
participating person within the meaning of either Sec tion 15 of the Securities
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several, to which such seller or any such
director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such securities were registered under the Securities Act, any Prospectus or
preliminary prospectus included therein, or any amendment or supplement thereto,
or (ii) any omission or alleged omission to state a material fact required to be
stated in any such Registration Statement, Prospectus, preliminary prospectus,
amendment or supplement or necessary to make the statements therein not
misleading; and the Company shall reimburse such seller and each such director,
officer, employee, participating person and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defend ing any such loss, claim, liability, action or proceeding as such
expenses are incurred; provided that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or omission made in any such
Registration Statement, Prospectus, preliminary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such
<PAGE>
seller or participating person expressly for use in the preparation thereof.
(b) Indemnification by the Sellers. In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
Section 3.1 or 3.2, each of the prospective sellers of such securities, will
indemnify and hold harmless the Company, each director of the Company, each
officer of the Company who shall sign such Registration Statement, and each
other person, if any, who controls the Company or any such participating person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all losses, claims, damages or liabilities, joint
or several, to which the Company or any such director, officer, em ployee,
participating person or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which such securities were
registered under the Securities Act, any Prospectus or preliminary prospectus
included therein, or any amendment or supple ment thereto, or any omission or
alleged omission to state a material fact with respect to such seller required
to be stated in any such Registration Statement, Prospectus, preliminary
prospectus, amendment or supplement or necessary to make the statements therein
not misleading if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by such
seller expressly for use in the preparation of any such Registration Statement,
Prospectus, preliminary prospectus, amendment or supplement; provided that the
liability of each such seller shall be in proportion to and limited to the net
amount received by such seller (after deducting any underwriting discount and
expenses) from the sale of Registrable Securities pursuant to such Registration
Statement.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim re ferred to in the preceding paragraphs of this Section 3.7,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party hereunder, give prompt written notice to the
latter of the commencement of such action, provided that the failure of any
indemnified party to give notice as provided therein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 3.7 unless the failure to provide prompt written notice shall cause
actual prejudice to the indemnifying party. In case any such action is brought
against an indemnified party and it
<PAGE>
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to retain counsel reasonably satisfactory to such
indemnified party to defend against such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel and the
payment of such fees by the indemnifying party or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them or (iii) the indemnifying party has not retained counsel to defend
such proceeding, in which case (under any of such clauses (i), (ii) or (iii)) it
is understood that (x) the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties and (y) such firm shall be designated in writing by the
Holders of a majority of the Registrable Securities included in such
Registration Statement in the case of parties indemnified pursuant to Section
3.7(a) and by the Company in the case of parties indemnified pursuant to Section
3.7(b). All fees and expenses that an indemnified party is entitled to receive
from an indemnifying party under this Section 3.7 shall be reimbursed as they
are incurred, provided that each such indemnified party shall promptly repay
such fees and expenses if it is finally judicially determined that such
indemnified party is not entitled to indemnification hereunder. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of such indemnified party, which consent shall not be unreasonably
withheld, consent to entry of any judgment or enter into any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Section 3.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
such Registrable Securities under any federal or state law or regulation of
governmental authority other than the Securities Act.
<PAGE>
(e) Other Remedies. If for any reason the foregoing indemnity
is unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Holders of Registrable Securities covered by the Registration
Statement in question and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just
and equitable if contribution pursuant to this Section 3.7 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the immediately preceding
paragraph of this Section 3.7 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. No party shall be liable for contribution under this Section
3.7(e) except to the extent and under such circumstances as such party would
have been liable to indemnify under this Section 3.7 if such indemnification
were enforceable under applicable law.
(f) Officers and Directors. As used in this Section 3.7, the
terms "officers" and "directors" shall include the partners of Holders which are
partnerships and the members of Holders which are limited liability companies.
3.8 Expenses. The Company shall pay all Registration Expenses
in connection with each registration of Registrable Securities pursuant to this
Section 3.
<PAGE>
4. Miscellaneous.
4.1 Rule 144; Legended Securities; etc. (a) The Company shall
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if
the Company is not required to file such reports, it shall, upon the request of
any Holder, make publicly available such information as necessary to permit
sales pursuant to Rule 144 or Rule 145), and shall take such further action as
any Holder may reasonably request, all to the extent required from time to time
to enable such holder to sell shares of Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 or Rule 145. Upon the request of any Holder, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements.
(b) The Company shall issue new certificates for Registrable
Securities without a legend restricting further transfer if (i) such securities
have been sold to the public pursuant to an effective Registration Statement
under the Securities Act (other than Form S-8 if the Holder of such Registrable
Securities is an Affiliate) or Rule 144, or (ii) (x) such issuance is otherwise
permitted under the Securities Act, (y) the Holder of such shares has delivered
to the Company an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to the Company, to such effect and (z) the Holder of
such shares expressly requests the issuance of such certificates in writing.
4.2 Amendments and Waivers. This Agreement may be amended,
modified or supplemented, and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the Holder or Holders of at least a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders whose securities are being sold pursuant to
a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders may be given by Holders
of at least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided, however, that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance
<PAGE>
with the provisions of the immediately preceding sentence. No amendment,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless set forth in writing. Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party or parties granting such waiver
in any other respect or at any other time.
4.3 Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election and unless notice is otherwise
given to the Company by the record owner, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any Holder
or Holders pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any Holder or Holders
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
4.4 Successors, Assigns and Transferees. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors assign and transferees. Purchaser or a Holder may assign
its rights hereunder to an Affiliate or to a Distributee or to other successors,
assigns and transferees of Purchaser or such Holder. This Agreement shall
survive any transfer of Registrable Securities to and shall inure to the benefit
of an Affiliate, a Distributee or such other successors, assigns and transferees
of Purchaser or such Holder. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of Registrable Securities,
subject to the provisions respecting the minimum numbers or percentages of
shares of Registrable Securities required in order to be entitled to certain
rights, or take certain actions, contained herein.
4.5 Notices. All notices and other communications in
connection with this Agreement shall be in writing. Any notice or other
communication in connection herewith shall be deemed duly given to any party (a)
two Business Days after it is sent by express, registered or certified mail,
return receipt requested, postage prepaid, (b)
one Business Day after it is sent by overnight courier, (c) when delivered by
hand, if personally delivered or (d) when receipt is acknowledged by the
addressee, if telecopied. Notices shall be addressed, if to
<PAGE>
any Holder not a party hereto on the date hereof, to the address of such Holder
in the stock record books of the Company, and if to the Company to the following
address:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W.
Suite 600 East
Washington, D.C. 20007
Facsimile: (202) 339-6727
Attention: Mark D. Director
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Facsimile: (202) 663-6363
Attention: George P. Stamas
or at such other address or addresses as the Company may have designated in
writing to each holder of Registrable Securities at the time outstanding. Copies
of any notice or other communication given under the Agreement shall also be
given to:
Clayton, Dubilier & Rice Fund V
Limited Partnership
1403 Foulk Road, Suite 106
Wilmington, Delaware 19803
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Facsimile: (212) 407-5200
Attention: Brian D. Finn
and to:
<PAGE>
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
Attention: Franci J. Blassberg
Any party may give any notice or other communication in connection herewith
using any other means (including, but not limited to, messenger service, telex
or ordinary mail), but no such notice or other communication shall be deemed to
have been duly given unless and until it is actually received by the individual
for whom it is intended.
4.6 No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement, or amend any existing agreement, with
respect to its securities if such agreement would be inconsistent with the
rights granted to the Holders by this Agreement.
4.7 Remedies; Attorneys' Fees. Each Holder of Registrable
Securities, in addition to being entitled to exercise all rights provided herein
or granted by law, in cluding recovery of damages, shall be entitled to specific
performance of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of any provision of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate. As between the parties to this Agreement, in any action or proceeding
brought to enforce any provision of this Agreement, or where any provision
hereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorney's fees in addition to its costs and expenses and
any other available remedy.
4.8 Severability. If any clause, provision or section of this
Agreement shall be invalid, illegal or unenforceable, the invalidity, illegality
or unenforceability of such clause, provision or section shall not affect the
enforceability or validity of any of the remaining clauses, provisions or
sections hereof to the extent permitted by applicable law. The invalidity of any
one or more phrases, sentences, clauses, Sections or subsections of this
Agreement shall not affect the remaining portions of this Agreement.
4.9. Headings. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
<PAGE>
4.10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same instrument.
4.11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without giving effect to its principles or rules of conflict of laws that
would require the application of the laws of any other jurisdiction.
4.12 No Third Party Beneficiaries. Except as provided in
Sections 3.7 and 4.4, nothing in this Agreement shall confer any rights upon any
person or entity other than the parties hereto, each such party's respective
successors and permitted assigns.
4.13 Consent to Jurisdiction. Each party irrevocably submits
to the personal exclusive jurisdiction of the United States District Court for
the Southern District of New York for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
(and, to the extent permitted under applicable rules of procedure, agrees not to
commence any action, suit or proceeding relating hereto except in such court).
Each party further agrees that service of any process, summons, notice or
document hand delivered or sent by registered mail to such party's respective
address set forth in Section 4.5 will be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each party irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the United States District Court for
the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in such court that any
such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Mark D. Director
--------------------------------------
Name: Mark D. Director
Title: Executive Vice President--Administration,
General Counsel and Secretary
CDR-PC ACQUISITION, L.L.C.
By: /s/ Brian D. Finn
--------------------------------------
Name: Brian D. Finn
Title: Executive Vice President
<PAGE>
CONSULTING AGREEMENT
This CONSULTING AGREEMENT, dated as of June 10, 1998 (the
"Agreement"), by and between U.S. Office Products Company, a Delaware
corporation (the "Company"), and Clayton, Dubilier & Rice, Inc., a Delaware
corporation ("CD&R"),
W I T N E S S E T H:
WHEREAS, the Company and CDR-PC have entered into an
Investment Agreement, dated as of January 12, 1998 (as amended by Amendment No.
1 thereto dated as of February 3, 1998, the "Investment Agreement"), subject to
the terms and conditions set forth therein;
WHEREAS, the Company and CD&R are entering into this Agreement
pursuant to Section 9.03(h) of the Investment Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into an Indemnification Agreement, dated as
of the date hereof (the "Indemnification Agreement"), by and among the Company,
CDR-PC Acquisition, L.L.C., a Delaware limited liability company ("CDR-PC"),
Clayton, Dubilier & Rice Fund V Limited Partnership, a Cayman Islands exempted
limited partnership (together with any other investment vehicle managed by CD&R,
the "CD&R Fund"), and CD&R (capitalized terms used herein without definition
having the meanings ascribed in the Indemnification Agreement);
WHEREAS, CD&R has performed financial, management advisory and
other services for the Company, including but not limited to providing
assistance in connection with (i) the preparation, negotiation, execution and
delivery of the Distribution Agreement and other agreements, instruments and
documents relating to the Restructuring Transactions or any transactions
contemplated thereby, (ii) the preparation, filing and circulation of the Proxy
Statement, Equity 13E-4, 2001 Debt 13E-4, 2003 Debt 13E-4, S-4, Distribution
S-1s, and related materials to the stockholders of the Company, (iii) the
retention of various financial and other advisors and consultants in connection
with the Investment, Restructuring Transactions and Securities Offerings, (iv)
the preparation, negotiation, execution and delivery of the commitment, fee and
engagement letters, registration rights and purchase agreements, credit
agreements, indentures and
<PAGE>
indenture supplements, guarantees, mortgages, pledge agreements and other
security agreements, subscription, registration rights and participation
agreements, exchange agent agreements, and other agreements, instruments and
documents, relating to the Senior Secured Credit Facilities, the Senior
Subordinated Note Offering, or otherwise relating to the Financing or the other
Restructuring Transactions, (v) the preparation and circulation of information
and offering memoranda and other materials in connection with the Senior Secured
Credit Facilities and the Senior Subordinated Note Offering and (vi) the
structuring, implementation and consummation of the foregoing transactions;
WHEREAS, the Company desires to receive financial and
managerial advisory services from CD&R, and CD&R desires to provide such
services to the Company;
NOW, THEREFORE, in consideration of the premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, the parties hereto hereby agree as follows:
1. Engagement. The Company hereby engages CD&R as a
consultant, and CD&R hereby agrees to provide financial and managerial advisory
ser vices to the Company, all on the terms and subject to the conditions set
forth below.
2. Services, etc. (a) CD&R hereby agrees during the term of
this Agreement to assist, advise and consult with the respective Boards of
Directors and management of the Company and its Subsidiaries in such manner and
on such business, management and financial matters, and provide such other
financial and other advisory services (collectively, the "Continuing Services"),
as may be reasonably requested from time to time by the Board of Directors of
the Company, including but not limited to assistance, advice or consultation in:
(i) establishing and maintaining banking, legal and other business
relation ships for the Company and its Subsidiaries;
(ii) developing and implementing corporate and business strategy
and planning for the Company and its Subsidiaries, including
plans and programs for improving operating, marketing and
financial performance, budgeting of future corporate
investments, acquisition and divestiture strategies, and
reorganizational programs;
(iii) arranging future debt and equity financings and refinancings;
and
<PAGE>
(iv) providing professional employees to serve as directors or
officers of the Company and its Subsidiaries.
(b) The Company will furnish CD&R with such information as
CD&R reasonably believes appropriate to its engagement hereunder (all such
information so furnished being referred to herein as the "Information"). The
Company recognizes and confirms that (i) CD&R will use and rely primarily on the
Information and on in formation available from generally recognized public
sources in performing the services to be performed hereunder and (ii) CD&R does
not assume responsibility for the accuracy or completeness of the Information
and such other information. CD&R will keep all non-public Information
confidential except to the extent such Information (x) is required to be
disclosed by law or pursuant to stock exchange rules or (y) shall have become
public other than through unauthorized disclosure by CD&R.
3. Compensation; Payment of Expenses. (a) The Company agrees
to pay to CD&R, as compensation for the Continuing Services rendered and to be
rendered by CD&R hereunder, a fee of $500,000 per year (the "Continuing Services
Fee"), payable on the first day of each month in monthly installments of
$41,666.66 in arrears commencing on July 1, 1998. Such Continuing Services Fee
may, in the sole discretion of a majority of the members of the Company's Board
of Directors who are not affiliated with CD&R, be increased but may not be
decreased without the prior written consent of CD&R. If any employee of CD&R
shall be elected to serve on the Board of Directors or as an officer of the
Company (a "Designated Director"), in consideration of the Continuing Services
Fee being paid to CD&R, CD&R shall cause such Designated Director to waive any
and all fees (including stock options) to which such director would otherwise be
entitled as a director for any period for which the Continuing Services Fee or
any installment thereof is paid and for which such Designated Director continues
to be employed by CD&R.
(b) The Company agrees to reimburse CD&R for such travel and
other reasonable out-of-pocket expenses ("Expenses") as may have been or be
incurred by CD&R and its employees, agents and advisors in the course or on
account of rendering of the Continuing Services, including but not limited to
any reasonable fees and expenses of any legal, accounting or other professional
advisors to CD&R engaged in connection with the Continuing Services (provided
that such fees and expenses of advisors to CD&R shall not exceed $200,000 per
annum in the aggregate without the prior consent of the Company) and any
reasonable expenses incurred by any Designated Director in connection with the
performance of his duties as a director. CD&R may submit monthly expense
statements, which shall be payable within thirty days from the date of such
submission.
<PAGE>
4. Term, etc. (a) This Agreement shall be in effect until, and
shall terminate upon, the earlier to occur of (x) the fifth anniversary of the
date hereof and (y) the date on which CDR-PC is entitled to nominate only one
member of the Board of Directors of the Company pursuant to Section 4.01 of the
Investment Agreement. The provisions of this Agreement shall survive any
termination of this Agreement, except for the provisions of Section 1, Section
2(a), the first sentence of Section 2(b) and (solely as to any portion of the
Continuing Services Fee or any Expense not paid or reimbursed prior to such
termination and not required to be paid or reimbursed thereafter pursuant to
Section 4(c) hereof) Section 3 hereof.
(b) Upon any consolidation or merger, or any conveyance,
transfer or lease of all or substantially all of the assets of the Company, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made, shall succeed to,
and be substituted for, the Company under this Agreement with the same effect as
if such successor corporation had been a party thereto. No such consolidation,
merger or conveyance, transfer or lease of all or substantially all of the
assets of the Company shall have the effect of terminating this Agreement or of
releasing the Company or any such successor corporation from its obligations
hereunder.
(c) Upon any termination of this Agreement, any accrued and
unpaid installment of the Continuing Services Fee or portion thereof (pro rated,
with respect to the month in which such termination occurs, for the portion of
such month that precedes such termination), and any unpaid and unreimbursed
Expenses that shall have been incurred prior to such termination (whether or not
such Expenses shall then have become payable), shall be immediately paid or
reimbursed, as the case may be, by the Company. In the event of the liquidation
of the Company, all amounts due CD&R hereunder shall be paid to CD&R before any
liquidating distributions or similar payments are made to stockholders of the
Company.
5. Indemnification. The Company confirms and reaffirms its
obligations pursuant to the Indemnification Agreement.
6. Independent Contractor Status. The parties agree that CD&R
shall perform services hereunder as an independent contractor, retaining control
over and responsibility for its own operations and personnel. Neither CD&R nor
any of its employees or agents shall, solely by virtue of this Agreement or the
arrangements hereunder, be considered employees or agents of the Company nor
shall any of them have authority to contract in the name of or bind the Company,
except (a) to the extent that any
<PAGE>
professional employee of CD&R may be serving as a director or officer of the
Company pursuant to Section 2(a)(iv) hereof or (b) as expressly agreed to in
writing by the Company.
7. Notices. Any notice or other communication required or
permitted to be given or made under this Agreement by one party to the other
party shall be in writing and shall be deemed to have been duly given and
effective (i) on the date of delivery if delivered personally or (ii) when sent
if sent by prepaid telegram, or mailed first-class, postage prepaid, registered
or certified mail, or facsimile transmission as follows (or to such other
address as shall be given in writing by one party to the other party in
accordance herewith):
If to the Company, to:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W.
Suite 600 East
Washington, D.C. 20007
Telephone: (202) 339-6700
Facsimile: (202) 339-6727
Attention: Mark D. Director
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Telephone: (202) 663-6000
Facsimile: (202) 663-6363
Attention: George P. Stamas
If to CD&R, to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Facsimile: (212) 407-5252
<PAGE>
Attention: Brian D. Finn
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Franci J. Blassberg
8. Entire Agreement. This Agreement, together with the
Indemnification Agreement and the Investment Agreement, (a) contains the
complete and entire understanding and agreement of CD&R and the Company with
respect to the sub ject matter hereof and (b) supersedes all prior and
contemporaneous understandings, conditions and agreements, oral or written,
express or implied, in respect of the subject matter hereof, including but not
limited to in respect of the engagement of CD&R in connection with the subject
matter hereof. There are no representations or warranties of CD&R in connection
with this Agreement or the services to be provided hereunder, except as
expressly made and contained in this Agreement.
9. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns and to each Indemnitee, provided that, neither
CD&R nor the Company may assign any of its rights or obligations under this
Agreement without the express written consent of the other party hereto. This
Agreement is not intended to confer any right or remedy hereunder upon any
person other than the parties to this Agreement and their respective successors
and permitted assigns and each Indemnitee.
12. Governing Law. This Agreement shall be governed in all
respects
<PAGE>
including as to validity, interpretations and effects by the laws of the State
of New York, without giving effect to its principles or rules of conflict of
laws to the extent such principles or rules would require or permit the
application of the laws of another jurisdiction. The Company and CD&R hereby
irrevocably submit to the jurisdiction of the courts of the State of New York
and the Federal courts of the United States of America, in each case located in
the State, City and County of New York, solely in respect of the interpretation
and enforcement of the provisions of this Agreement, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
such courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a New York State or Federal court. The
Company and CD&R hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of any such dispute and
agree that mailing of process or other papers in connection with any such action
or proceeding in the manner provided in Section 7, or in such other manner as
may be permitted by law, shall be valid and sufficient service thereof.
13. Waiver of Jury Trial. Each party hereto acknowledges and
agrees that any controversy that may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore it hereby irrevocably
and unconditionally waives any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or validity of this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (b) it understands
and has considered the implications of this waiver, (c) it makes this waiver
voluntarily, and (d) it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications contained in this Section
13.
14. Amendment; Waivers. No amendment, modification, supplement
or discharge of this Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by the party or Indemnitee
against whom enforcement of the amendment, modification, supplement, discharge
or waiver is sought (and in the case of the Company, approved by resolution of
the Board of Directors of the Company). Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party or Indemnitee granting such
waiver in any other respect or at any other time. Neither the
<PAGE>
waiver by any of the parties hereto or any Indemnitee of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any
party hereto or any Indemnitee on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right, powers or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions,
rights, power or privileges hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that
any party or Indemnitee may otherwise have at law or in equity or otherwise.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
CLAYTON, DUBILIER & RICE, INC.
By: /s/ Joseph L. Rice, III
--------------------------------------
Name: Joseph L. Rice, III
Title: Chairman
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Mark D. Director
--------------------------------------
Name: Mark D. Director
Title: Executive Vice President--Administration,
General Counsel and Secretary
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of June 10, 1998 (the
"Agreement"), by and among U.S. Office Products Company, a Delaware corporation
(the "Company"), CDR-PC Acquisition, L.L.C., a Delaware limited liability
company ("CDR-PC"), Clayton, Dubilier & Rice Fund V Limited Partnership, a
Cayman Islands exempted limited partnership (together with any other investment
vehicle managed by CD&R, the "CD&R Fund"), and Clayton, Dubilier & Rice, Inc., a
Delaware corporation ("CD&R"). Capitalized terms used herein and not otherwise
defined have the meanings set forth in Section 1 of this Agreement.
WHEREAS, the sole member of CDR-PC is the CD&R Fund, and the
CD&R Fund is managed by CD&R, and the general partner of the CD&R Fund is CD&R
Associates V Limited Partnership, a Cayman Islands exempted limited partnership
(together with any general partner of any other investment vehicle managed by
CD&R, "CD&R Associates"), and the general partners of CD&R Associates are CD&R
Investment Associates II, Inc., a Cayman Islands exempted company, CD&R Cayman
Investment Associates, Inc., a Cayman Islands exempted company, and CD&R
Investment Associates, Inc., a Delaware corporation (the general partners of
CD&R Associates (including any Person that may become a general partner thereof
in the future) are collectively referred to herein as "Associates Inc.");
WHEREAS, the Company and CDR-PC have entered into an
Investment Agreement, dated as of January 12, 1998 (as amended by Amendment No.
1 thereto dated as of February 3, 1998, the "Investment Agreement"), providing
for the issuance and sale by the Company to CDR-PC of shares of Common Stock,
Special Warrants and Warrants, subject to the terms and conditions set forth
therein (the "Investment");
WHEREAS, this Agreement is being entered into pursuant to
Section 9.03(h) of the Investment Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into a Consulting Agreement, dated as of the
date hereof, by and between the Company and CD&R (the "Consulting Agreement");
WHEREAS, in connection with the solicitation by the Company of
proxies of its stockholders to vote in favor of the Investment and a
one-for-four reverse stock split (the "Reverse Stock Split"), the Company
prepared and filed with the Securities and Exchange Commission (the
"Commission") a proxy statement on Schedule 14A, dated April 30, 1998 (as the
same may be amended from time to time, the "Proxy Statement");
WHEREAS, in connection with the offer (the "Tender Offer") by
the Company to purchase 37,037,037 shares of its Common Stock, including shares
issuable upon exercise of options to purchase Common Stock, at $27.00 per share
(or in the case
<PAGE>
of shares underlying stock options, $27.00 minus the exercise price per share of
such options), the Company prepared and filed with the Commission a Tender Offer
Statement on Schedule 13E-4, dated May 4, 1998 (as the same may be amended from
time to time, the "Equity 13E-4"), and CDR-PC and the CD&R Fund prepared and
filed with the Commission a Tender Offer Statement on Schedule 14D-1, dated May
4, 1998 (as the same may be amended from time to time, the "14D-1");
WHEREAS, in connection with the distribution (the
"Distributions") by the Company to its stockholders of all of the common stock
of its wholly owned subsidiaries that hold substantially all of the businesses
and assets of, and are responsible for substantially all of the liabilities
associated with, the Company's technology solutions (Aztec Technology Partners,
Inc.), print management (Workflow Management, Inc.), educational supplies
(School Specialty, Inc.) and corporate travel services (Navigant International,
Inc.) businesses (the "Spin-Off Companies"), the Company prepared and filed with
the Commission a Registration Statement on Form S-1 for each of the Spin- Off
Companies, each dated February 19, 1998 (as the same may be amended from time to
time, the "Distribution S-1s");
WHEREAS, in connection with the issuance (the "Spin-Off
Company Primary Offerings") by each of the Spin-Off Companies of additional
shares of their common stock at approximately the same time as the
Distributions, the Company prepared and filed with the Commission a Registration
Statement on Form S-1 for each of the Spin-Off Companies, each dated March 6,
1998 (as the same may be amended from time to time, the "IPO S-1s");
WHEREAS, in connection with the offer (the "2001 Note Exchange
Offer") by the Company to exchange shares of its Common Stock for its 5 1/2%
Convertible Subordinated Notes due 2001, the Company prepared and filed with the
Commission a Registration Statement on Form S-4, dated April 17, 1998 (as the
same may be amended from time to time, the "S-4"), and a Tender Offer Statement
on Schedule 13E-4, dated May 1, 1998 (as the same may be amended from time to
time, the "2001 Debt 13E-4");
WHEREAS, in connection with the offer (the "2003 Note Tender")
by the Company to purchase its 5 1/2% Convertible Subordinated Notes due 2003,
the Company prepared and filed with the Commission a Tender Offer Statement on
Schedule 13E-4, dated May 5, 1998 (as the same may be amended from time to time,
the "2003 Debt 13E- 4");
WHEREAS, in order to finance the Tender Offer, the 2003 Note
Tender and the other transactions contemplated by the Investment Agreement,
refinance existing
<PAGE>
debt and provide liquidity for ongoing business needs, the Company (a) entered
into a Credit Agreement, dated as of June 9, 1998, among the Company, The Chase
Manhattan Bank as Administrative Agent, Bankers Trust Company as Syndication
Agent, Merrill Lynch Capital Corporation as Documentation Agent, Chase
Securities, Inc., and the other lenders named therein, providing for borrowing
of up to a maximum principal amount of $1.225 billion (the "Senior Secured
Credit Facilities"); and (b) offered and sold (the "Senior Subordinated Note
Offering"), in an offering to institutional investors pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act"),
$400,000,000 aggregate principal of 9.75% Senior Subordinated Notes due 2008
(the "Senior Subordinated Notes");
WHEREAS, CD&R has performed financial, management advisory and
other services for the Company, including but not limited to providing
assistance in connection with (i) the preparation, negotiation, execution and
delivery of the Distribution Agreement, dated as of June 9, 1998, between the
Company, Workflow Management, Inc., School Specialty, Inc., Aztec Technology
Partners, Inc. and Navigant International, Inc., and other agreements,
instruments and documents relating to the Restructuring Transactions or any
transactions contemplated thereby, (ii) the preparation, filing and circulation
of the Proxy Statement, Equity 13E-4, 2001 Debt 13E-4, 2003 Debt 13E-4, S-4,
Distribution S-1s, and related materials to the stockholders of the Company,
(iii) the retention of various financial and other advisors and consultants in
connection with the Investment, Restructuring Transactions and Securities
Offerings, (iv) the preparation, negotiation, execution and delivery of the
commitment, fee and engagement letters, registration rights and purchase
agreements, credit agreements, indentures and indenture supplements, guarantees,
mortgages, pledge agreements and other security agreements, subscription,
registration rights agreements, exchange agent agreements, and other agreements,
instruments and documents, relating to the Senior Secured Credit Facilities, the
Senior Subordinated Note Offering, or otherwise relating to the Financing or the
other Restructuring Transactions, (v) the preparation and circulation of
information and offering memoranda and other materials in connection with the
Senior Secured Credit Facilities and the Senior Subordinated Note Offering and
(vi) the structuring, implementation and consummation of the foregoing
transactions;
WHEREAS, it is contemplated that the Company will offer (the
"Senior Subordinated Note Exchange Offer") to exchange the Senior Subordinated
Notes for substantially identical notes to be registered on Form S-4;
WHEREAS, the Company or one or more of its Subsidiaries from
time to time in the future (a) may offer and sell or cause to be offered and
sold equity or debt securities (such offerings, together with the Senior
Subordinated Note Exchange Offer, being collectively referred to as the
"Subsequent Offerings"), including without limitation
<PAGE>
(i) offerings of shares of common stock of the Company, and/or options to
purchase such shares, to employees, directors, managers and consultants of and
to the Company or any Subsidiary (a "Management Offering"), and (ii) one or more
offerings of debt securities for the purpose of refinancing any indebtedness of
the Company or any Subsidiary or for other corporate purposes, and (b) may
repurchase, redeem or otherwise acquire certain securities (and options in
respect thereof) of the Company or one or more of its Subsidiaries (any such
repurchase or redemption being referred to herein as a "Redemption");
WHEREAS, after giving effect to the Distributions and the
Tender Offer, CDR-PC will be the largest stockholder of the Company; and
WHEREAS, the parties hereto recognize the possibility that
claims might be made against and liabilities incurred by CD&R, CDR-PC, the CD&R
Fund, CD&R Associates, Associates Inc. or related persons or affiliates under
applicable securities laws or otherwise in connection with the Restructuring
Transactions or the Securities Offerings, or relating to other actions or
omissions of or by the Company or its Sub sidiaries, or relating to the
provision by CD&R of management consulting, monitoring and financial advisory
services to the Company or its Subsidiaries, and the parties hereto accordingly
wish to provide for CD&R, CDR-PC, the CD&R Fund, CD&R Associates, Associates
Inc. and related persons and affiliates to be indemnified in respect of any such
claims and liabilities;
NOW, THEREFORE, in consideration of the foregoing premises,
and the mutual agreements and covenants and provisions herein set forth, the
parties hereto hereby agree as follows:
1. Definitions.
(a) "Claim" means with respect to any Indemnitee, any claim
against such Indemnitee involving any Obligation with respect to which such
Indemnitee may be entitled to be defended and indemnified by the Company under
this Agreement.
(b) "Common Stock" means the common stock, par value $.001 per
share, of the Company.
(c) "Financing" means the financing provided for by the Senior
Secured Credit Facilities and the Senior Subordinated Notes.
(d) "Indemnitee" means each of CD&R, CDR-PC, the CD&R Fund,
CD&R Associates, Associates Inc., their respective successors and assigns, and
each of
<PAGE>
their respective directors, officers, partners, employees, agents, advisors,
representatives, holders of voting securities and controlling persons (within
the meaning of the Securities Act) and their respective successors and assigns,
and any Person (other than the Company and its Subsidiaries) that controls, is
controlled by, or is under common control with, CD&R, and the directors,
officers, partners, employees, agents, advisors, representatives, holders of
voting securities and controlling persons (within the meaning of the Securities
Act) of such Person and their respective successors and assigns.
(e) "Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust, or unincorporated organization.
(f) "Obligations" means, collectively, any and all claims,
obligations, liabilities, causes of actions, actions, suits, proceedings,
investigations, judgments, decrees, losses, damages, fees, costs and expenses
(including without limitation interest, penalties and fees and disbursements of
attorneys, accountants, investment bankers and other professional advisors), in
each case whether incurred, arising or existing with respect to third parties at
any time or from time to time.
(g) "Related Document" means any agreement, certificate,
instrument or other document to which the Company or any Subsidiary may be a
party or by which it or any of its properties or assets may be bound or affected
from time to time relating in any way to the Restructuring Transactions or any
Securities Offering or any of the transactions contemplated thereby, including
without limitation, in each case as the same may be amended, modified, waived or
supplemented from time to time, (A) any registration statement, including the
S-4, the Distribution S-1s and the IPO S-1s, filed by or on behalf of the
Company or any Subsidiary with the Commission in connection with the
Restructuring Transactions or any Securities Offering, including all exhibits,
financial statements and schedules appended thereto, and any submissions to the
Commission in connection therewith, (B) any prospectus, preliminary or
otherwise, included in such registration statements or otherwise filed by or on
behalf of the Company or any Sub sidiary in connection with the Restructuring
Transactions or any Securities Offering or used to offer or confirm sales of
their respective securities in any Securities Offering, (C) any private
placement or offering memorandum or circular, or other information or materials
distributed by or on behalf of the Company or any Subsidiary or any placement
agent or underwriter in connection with the Restructuring Transactions or any
Securities Offering, (D) any federal, state or foreign securities law or other
governmental or regulatory filings or applications made in connection with any
Securities Offering, the Restructuring Transactions, or any of the transactions
contemplated thereby, (E) any deal-manager, underwriting, subscription,
purchase, stockholders, option or registration rights agreement or plan entered
into or adopted by the Company or any Subsidiary in
<PAGE>
connection with the Restructuring Transactions or any Securities Offering, (F)
any quarterly, annual or current reports filed by the Company or any Subsidiary
with the Commission or any prospectus, proxy statement or transaction
statements, including the Proxy Statement, the Equity 13E-4, the 2001 Debt
13E-4, the 2003 Debt 13E-4 and the 14D-1, filed by or on behalf of the Company,
any Subsidiary or any Indemnitee with the Commission in connection with the
Restructuring Transactions or any transaction contemplated thereby, including
all exhibits, financial statements and schedules appended thereto, and any
submission to the Commission in connection therewith.
(h) "Restructuring Transactions" means the Investment, the
Tender Offer, the Distributions, the other transactions contemplated by the
Investment Agreement, the Spin-Off Company Primary Offerings, the Reverse Stock
Split, the 2001 Note Exchange Offer, the 2003 Note Tender, the Financing and the
Senior Subordinated Note Offering.
(i) "Securities Offerings" means the 2001 Note Exchange Offer,
the Spin-Off Company Primary Offerings, the Senior Subordinated Note Offering,
the Senior Subordinated Note Exchange Offer, any Redemption, any Management
Offering and any other Subsequent Offering.
(j) "Special Warrants" means rights to receive additional
shares of Common Stock equal to 24.9% (after giving effect to issuance of such
additional shares upon exercise of the Special Warrants) of (a) the additional
shares that are issuable upon conversion of any 2001 Notes that remain
outstanding on the date hereof and (b) shares of Common Stock issued pursuant to
(i) the Amendment to Stock Purchase Agreement, dated as of June 20, 1996, by and
between the Company and Eric Watson, as the same may be amended from time to
time, or (ii) any security, option, warrant, call, subscription, right,
contract, commitment, arrangement or understanding in existence on January 12,
1998 or June 10, 1998 but not disclosed on the Revised Option Schedule, dated
June 10, 1998 and delivered to CDR-PC on such date, listing options, warrants,
convertible securities and other rights relating to capital stock of the
Company.
(k) "Subsidiary" means each corporation or other person or
entity in which the Company owns or controls, directly or indirectly, capital
stock or other equity interests representing at least 25% of the outstanding
voting stock or other equity interests.
(l) "Warrants" means rights to purchase one share of Common
Stock for (i) each share of Common Stock purchased by CDR-PC under the
Investment Agreement and (ii) each share of Common Stock into which the Special
Warrants
<PAGE>
become exercisable.
2. Indemnification.
(a) The Company agrees to indemnify, defend and hold harmless
each Indemnitee:
(i) from and against any and all Obligations in any way resulting
from, arising out of or in connection with, based upon or relating to
(A) the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any other applicable securities or
other laws, in connection with any Restructuring Transaction, any
Securities Offering, any Related Document or any of the transactions
contemplated thereby, (B) any other action or failure to act of the
Company or any Subsidiary or any of their predecessors, whether such
action or failure has occurred or is yet to occur or (C) except to the
extent that any such Obligation is found in a final judgment by a
court of competent jurisdiction to have resulted from the gross
negligence or wilful or intentional misconduct of any of the
Indemnitees, the performance by CD&R of management consulting,
monitoring, financial advisory or other services for the Company or
any Subsidiary (whether performed prior to the date hereof, hereafter,
pursuant to the Consulting Agreement or otherwise); and
(ii) to the fullest extent permitted by applicable law, from
and against any and all Obligations in any way resulting from, arising
out of or in connection with, based upon or relating to (A) the fact
that such Indemnitee is or was a director or an officer of the Company
or any Subsidiary, as the case may be, or is or was serving at the
request of such corporation as a director, officer, employee or agent
of or advisor or consultant to another corporation, partnership, joint
venture, trust or other enterprise or (B) any breach or alleged breach
by such Indemnitee of his or her fiduciary duty as a director or an
officer of the Company or any Subsidiary, as the case may be;
in each case including but not limited to any and all reasonable fees,
costs and expenses (including without limitation reasonable fees and
disbursements of attorneys) incurred by or on behalf of any Indemnitee
in asserting, exercising or enforcing any of its rights, powers,
privileges or remedies in respect of this Agreement or the Consulting
Agreement.
(b) Without in any way limiting the foregoing Section 2(a),
the Company agrees to indemnify, defend and hold harmless each Indemnitee from
and against any and all Obligations resulting from, arising out of or in
connection with, based
<PAGE>
upon or relating to liabilities under the Securities Act, the Exchange Act or
any other applicable securities or other laws, rules or regulations in
connection with (i) the inaccuracy or breach of or default under any
representation, warranty, covenant or agreement in any Related Document, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any Related Document or (iii) any omission or alleged omission to state in any
Related Document a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) Notwithstanding the foregoing provisions of this Section
2, the Company shall not be obligated to indemnify any Indemnitee from and
against any such Obligation to the extent that such Obligation arises out of or
is based upon an untrue statement or omission made in a Related Document in
reliance upon and in conformity with written information furnished by any of the
Indemnitees to the Company expressly for use in the preparation of such Related
Document.
3. Contribution.
(a) Except to the extent that Section 3(b) is applicable, if
for any reason the indemnity provided for in Section 2(a) is unavailable or is
insufficient to hold harmless any Indemnitee from any of the Obligations covered
by such indemnity, then the Company shall contribute to the amount paid or
payable by such Indemnitee as a result of such Obligation in such proportion as
is appropriate to reflect (i) the relative fault of the Company and the
Subsidiaries, on the one hand, and the Indemnitees, on the other, in connection
with the state of facts giving rise to such Obligation, (ii) if such Obligation
results from, arises out of, is based upon or relates to the Restructuring
Transactions or any Securities Offering, the relative benefits received by the
Company and the Subsidiaries, on the one hand, and the Indemnitees, on the
other, from such Restructuring Transaction or Securities Offering and (iii) if
required by applicable law, any other relevant equitable considerations.
(b) If for any reason the indemnity specifically provided for
in Section 2(b) is unavailable or is insufficient to hold harmless any
Indemnitee from any of the Ob ligations covered by such indemnity, then the
Company shall contribute to the amount paid or payable by the Indemnitees as a
result of such Obligation in such proportion as is appropriate to reflect (i)
the relative fault of the Company and the Subsidiaries, on the one hand, and the
<PAGE>
Indemnitees, on the other, in connection with the information contained in or
omitted from any Related Document, which inclusion or omission resulted in the
inaccuracy or breach of or default under any representation, warranty, covenant
or agreement therein, or which information is or is alleged to be untrue,
required to be stated therein or necessary to make the statements therein not
misleading, (ii) the relative benefits received by the Company and the
Subsidiaries, on the one hand, and the Indemnitees, on the other, from such
Restructuring Transaction or Securities Offering and (iii) if required by
applicable law, any other relevant equitable considerations.
(c) For purposes of Section 3(a), the relative fault of the
Company and the Subsidiaries, on the one hand, and of the Indemnitees, on the
other, shall be determined by reference to, among other things, their respective
relative intent, knowledge, access to information and opportunity to correct the
state of facts giving rise to such Obligation. For purposes of Section 3(b), the
relative fault of the Company and the Subsidiaries on the one hand, and of the
Indemnitees, on the other, shall be deter mined by reference to, among other
things, (i) whether the included or omitted information relates to information
supplied by the Company or the Subsidiaries on the one hand, or by the
Indemnitees, on the other, and (ii) their respective relative intent, knowledge,
access to information and opportunity to correct such inaccuracy, breach,
default, untrue or alleged untrue statement, or omission or alleged omission.
For purposes of Section 3(a) or 3(b), the relative benefits received by the
Company and the Subsidiaries, on the one hand, and the Indemnitees, on the
other, shall be determined by weighing the direct monetary proceeds to the
Company and the Subsidiaries, on the one hand, and the Indemnitees, on the
other, from such Securities Offering.
(d) The parties hereto acknowledge and agree that it would not
be just and equitable if contributions pursuant to Section 3(a) or 3(b) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in such
respective Section. The Company shall not be liable under Section 3(a) or 3(b),
as applicable, for contribution to the amount paid or payable by any Indemnitee
except to the extent and under such circumstances as the Company would have been
liable to indemnify, defend and hold harmless such Indemnitee under the
corresponding Section 2(a) or 2(b) (in either case as interpreted by Section
2(c)), as applicable, if such indemnity were enforceable under applicable law.
No Indemnitee shall be entitled to contribution from the Company with respect to
any Obligation covered by the indemnity specifically provided for in Section
2(b) in the event that such Indemnitee is finally determined to be guilty of
fraudulent misrepresen tation (within the meaning of Section 11(f) of the
Securities Act) in connection with such Obligation and the Company is not guilty
of such fraudulent misrepresentation.
4. Indemnification Procedures.
(a) Whenever any Indemnitee shall have actual knowledge of the
reasonable likelihood of the assertion of a Claim, CD&R (acting on its own
behalf or, if requested by any such Indemnitee other than itself, on behalf of
such Indemnitee) or such Indemnitee shall notify the Company in writing of the
Claim (the "Notice of Claim") with
<PAGE>
reasonable promptness after such Indemnitee has such knowledge relating to
such Claim and has notified CD&R thereof. The Notice of Claim shall specify
all material facts known to CD&R (or if given by such Indemnitee, such
Indemnitee) that may give rise to such Claim and the monetary amount or an
estimate of the monetary amount of the Obligation involved if CD&R (or if
given by such Indemnitee, such Indemnitee) has knowledge of such amount or a
reasonable basis for making such an estimate. The failure of CD&R to give
such Notice of Claim shall not relieve the Company of its indemnification
obligations under this Agreement except to the extent that such omission
results in a failure of actual notice to the Company and it is materially
injured as a result of the failure to give such Notice of Claim. The Company
shall, at its expense, undertake the defense of such Claim with attorneys of
its own choosing reasonably satisfactory to CD&R. CD&R may participate in
such defense with counsel of CD&R's choosing at its own expense. In the event
that the Company does not undertake the defense of the Claim within a
reasonable time after CD&R has given the Notice of Claim, or in the event
that CD&R shall in good faith determine that, in the defense of any claim,
the interests of the Company may be in conflict with those of any Indemnitee,
CD&R may, at the expense of the Company and after giving notice to the
Company of such action, (i) undertake the defense of the Claim and (ii) with
the consent of the Company (which shall not be unreasonably withheld or
delayed), compromise or settle the Claim, all for the account of and at the
risk of the Company. In the defense of any Claim, (x) the Company shall act
diligently and in good faith and (y) the Company shall not (where it is in
control of such Claim), except with the consent of CD&R, and CD&R shall not
(where it is in control of such Claim), except with the consent of the
Company, consent to entry of any judgment or enter into any settlement that
includes any injunctive or other non-monetary relief, or that does not
include as an unconditional term thereof the giving by the person or persons
asserting such Claim to such Indemnitee of a release from all liability with
respect to such Claim. In each case, CD&R and each Indemnitee seeking
indemnification hereunder will cooperate with the Company, so long as the
Company is conducting the defense of the Claim, in the preparation for and
the prosecution of the defense of such Claim, including making available
evidence within the control of CD&R or such Indemnitee, as the case may be,
and persons needed as witnesses who are employed by CD&R or such Indemnitee,
as the case may be, in each case as reasonably needed for such defense and at
cost, which cost, to the extent reasonably incurred, shall be paid by the
Company.
(b) The Company hereby agrees to advance reasonable costs and
expenses, including attorney's fees, incurred by CD&R (acting on its own behalf
or, if requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) in defending any Claim in advance of the final disposition of such
Claim upon receipt of an undertaking by or on behalf of CD&R to repay amounts so
advanced if it shall ultimately be determined that CD&R or such Indemnitee is
not entitled to be indemnified by the Company as authorized by this Agreement.
<PAGE>
(c) CD&R shall notify the Company in writing of the amount of
any Claim actually paid by CD&R (the "Notice of Payment") in accordance with
this Agreement. The amount of any Claim actually paid by CD&R shall bear simple
interest at the rate equal to Chase Manhattan Bank's prime rate as of the date
of such payment plus 2% per annum, from the date the Company receives the Notice
of Payment to the date on which the Company shall repay the amount of such Claim
plus interest thereon, if any, to CD&R.
5. Certain Covenants; Other Indemnities. The rights of each
Indemnitee to be indemnified under any other agreement, document, certificate or
instrument or applicable law, including without limitation the Investment
Agreement, are independent of and in addition to any rights of such Indemnitee
to be indemnified under this Agreement. The rights of each Indemnitee and the
obligations of the Company here under shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnitee. The
Company shall implement and maintain in full force and effect any and all
corporate articles or charter and by-law provisions that may be necessary or
appropriate to enable it to carry out its obligations hereunder to the fullest
extent permitted by applicable corporate law, including without limitation a
provision of its certificate of incorporation eliminating liability of a
director for breach of fiduciary duty to the fullest extent permitted by
applicable corporate law, as it may be amended from time to time.
6. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered by certified or registered mail
(first class postage prepaid and return receipt requested), facsimile, overnight
courier or hand delivery, as follows:
If to the Company, to:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W.
Suite 600 East
Washington, D.C. 20007
Telephone: (202) 339-6700
Facsimile: (202) 339-6727
Attention: Mark D. Director
with a copy to:
Wilmer, Cutler & Pickering
<PAGE>
2445 M. Street, N.W.
Washington, D.C. 20037
Telephone: (202) 663-6000
Facsimile: (202) 663-6363
Attention: George P. Stamas
If to CDR-PC, to:
CDR-PC Acquisition, L.L.C.
c/o Clayton, Dubilier & Rice
Fund V Limited Partnership
1403 Foulk Road, Suite 106
Wilmington, Delaware 19803
Attention: Brian D. Finn
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Facsimile: (212) 407-5252
Attention: Brian D. Finn
if to the CD&R Fund, to:
Clayton, Dubilier & Rice
Fund V Limited Partnership
1403 Foulk Road, Suite 106
Wilmington, Delaware 19803
Attention: Brian D. Finn
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
<PAGE>
New York, New York 10152
Telephone: (212) 407-5200
Facsimile: (212) 407-5252
Attention: Brian D. Finn
if to CD&R or any other Indemnitee to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Facsimile: (212) 407-5252
Attention: Brian D. Finn
or to such other address or such other person as the Company, CDR-PC, the CD&R
Fund or CD&R, as the case may be, shall have designated by notice to the other
parties hereto. All communications hereunder shall be effective upon receipt by
the party to which they are addressed. A copy of any notice or other
communication given under this Agreement shall also be given to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Franci J. Blassberg
7. Governing Law. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the law of the
State of New York without giving effect to its principles or rules of conflict
of laws to the extent such principles or rules would require or permit the
application of the laws of another jurisdiction, except to the extent that the
corporate law of another jurisdiction specifically and mandatorily applies, in
which case such law shall apply.
8. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby.
<PAGE>
9. Miscellaneous. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be binding upon and inure
to the benefit of each party hereto and its successors and permitted assigns,
and each other Indemnitee, but neither this Agreement nor any right, interest or
obligation hereunder shall be assigned, whether by operation of law or
otherwise, by the Company, without the prior written consent of CDR-PC, the CD&R
Fund and CD&R. This Agreement is not intended to confer any right or remedy
hereunder upon any person other than each of the parties hereto and their
respective successors and permitted assigns and each other Indemnitee. No
amendment, modification, supplement or discharge of this Agreement, and no
waiver hereunder shall be valid and binding unless set forth in writing and duly
executed by the party or other Indemnitee against whom enforcement of the
amendment, modification, supplement or discharge is sought. Neither the waiver
by any of the parties hereto or any other Indemnitee of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any party
hereto or any other Indemnitee on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right, powers or privilege
hereunder, shall be construed as a waiver of any other breach or default of a
similar nature, or as a waiver of any provisions hereof, or any rights, powers
or privileges hereunder. The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies that any party or other
Indemnitee may otherwise have at law or in equity or otherwise. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement by their authorized representatives as of the date first above
written.
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Mark D. Director
--------------------------------------
Name: Mark D. Director
Title: Executive Vice President--Administration,
General Counsel and Secretary
CDR-PC ACQUISITION, L.L.C.
By: /s/ Brian D. Finn
--------------------------------------
Name: Brian D. Finn
Title: Executive Vice President
CLAYTON, DUBILIER & RICE
FUND V LIMITED PARTNERSHIP
By: CD&R Associates V Limited Partnership,
the General Partner
By: CD&R Investment Associates II, Inc.,
its managing general partner
By: /s/ Joseph L. Rice, III
--------------------------------
Name: Joseph L. Rice, III
Title: Chairman
<PAGE>
CLAYTON, DUBILIER & RICE, INC.
By: /s/ Joseph L. Rice, III
--------------------------------
Name: Joseph L, Rice, III
Title: Chairman
<PAGE>
Exhibit 99.11
EXECUTION COPY
TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT, dated as of June 9, 1998 ("Agreement"),
among U.S. Office Products Company, a Delaware corporation ("USOP"), Workflow
Management, Inc., a Delaware corporation ("Workflow Management"), School
Specialty, Inc., a Delaware corporation ("School Specialty"), Aztec
Technology Partners, Inc., a Delaware corporation ("Aztec") and Navigant
International, Inc., a Delaware corporation ("Navigant"). USOP, Workflow
Management, School Specialty, Aztec and Navigant are hereinafter jointly
referred to as the "Companies." Workflow Management, School Specialty, Aztec
and Navigant are hereinafter jointly referred to as the "Spin-Off Companies."
WITNESSETH
WHEREAS, USOP is the common parent of an affiliated group of domestic
corporations, including the Spin-Off Companies, which has elected to file
consolidated federal income Tax returns;
WHEREAS, USOP and the Spin-Off Companies entered into an agreement, dated
as of June __, 1998 (the "Distribution Agreement"), to, among other things,
provide for the distribution by USOP of all of the issued and outstanding
shares of common stock of the Spin-Off Companies to the holders of record of
shares of common stock of USOP (other than shares held in the treasury of
USOP); divest USOP of all businesses, operations and liabilities relating to
the businesses to be conducted by the Spin-Off Companies after the
Distributions; and allocate and assign responsibility for certain liabilities
among USOP, the Spin-Off Companies and their respective Subsidiaries;
WHEREAS, pursuant to the Distribution Agreement (i) USOP will cause
certain Workflow Subsidiaries to be merged into Workflow Management or into a
Workflow Subsidiary; (ii) USOP will contribute to Workflow Management (x) all
its right, title and interest in and to all the shares of capital stock (or
other ownership interests) that it owns, directly or indirectly, of the
Workflow Subsidiaries other than shares of stock (or other ownership
interests) of the Workflow Subsidiaries that are already owned, directly or
indirectly, by Workflow Management or that are to be merged into Workflow
Management or into a Workflow Subsidiary and (y) certain other assets; and
(iii) Workflow Management will assume certain liabilities so that the
Workflow Group is consolidated under Workflow Management prior to the
Workflow Distribution (such mergers, contributions and assumptions of
liabilities, the "Workflow Contribution");
<PAGE>
WHEREAS, pursuant to the Distribution Agreement (i) USOP will cause
certain School Specialty Subsidiaries to be merged into School Specialty or
into a School Specialty Subsidiary; (ii) USOP will contribute to School
Specialty (x) all its right, title and interest in and to all the shares of
capital stock (or other ownership interests) that it owns, directly or
indirectly, of the School Specialty Subsidiaries other than shares of stock
(or other ownership interests) of the School Specialty Subsidiaries that are
already owned, directly or indirectly, by School Specialty or that are to be
merged into School Specialty or into a School Specialty Subsidiary and (y)
certain other assets and (iii) School Specialty will assume certain
liabilities so that the School Specialty Group is consolidated under School
Specialty prior to the School Specialty Distribution defined herein (such
mergers, contributions and assumptions of liabilities, the "School Specialty
Contribution");
WHEREAS, pursuant to the Distribution Agreement (i) USOP will cause
certain Aztec Subsidiaries to be merged into Aztec or into an Aztec
Subsidiary; (ii) USOP will contribute to Aztec (x) all its right, title and
interest in and to all the shares of capital stock (or other ownership
interests) that it owns, directly or indirectly, of the Aztec Subsidiaries
other than shares of stock (or other ownership interests) of the Aztec
Subsidiaries that are already owned, directly or indirectly, by Aztec or that
are to be merged into Aztec or into an Aztec Subsidiary and (y) certain other
assets; and (iii) Aztec will assume certain liabilities so that the
Technology Group is consolidated under Aztec prior to the Technology
Distribution defined herein (such mergers, contributions and assumptions of
liabilities, the "Technology Contribution");
WHEREAS, pursuant to the Distribution Agreement (i) USOP will cause certain
Navigant Subsidiaries to be merged into a Navigant Subsidiary; (ii) USOP will
contribute to Navigant (x) all its right, title and interest in and to all
the shares of capital stock (or other ownership interests) that it owns,
directly or indirectly, of the Navigant Subsidiaries other than shares of
stock (or other ownership interests) of the Navigant Subsidiaries that are
already owned, directly or indirectly, by Navigant or that are to be merged
into Navigant or into a Navigant Subsidiary and (y) certain other assets; and
(iii) Navigant will assume certain liabilities so that the Travel Group is
consolidated under Navigant prior to the Travel Distribution defined herein
(such mergers, contributions and assumptions of liabilities, the "Travel
Contribution");
WHEREAS, pursuant to the Distribution Agreement, USOP will distribute all
the shares of stock that it owns in each of Workflow Management (the
"Workflow Distribution"), School Specialty (the "School Specialty
Distribution"), Aztec (the "Technology Distribution") and Navigant (the
"Travel Distribution") to its shareholders (collectively, the
"Distributions") and, as a result of the Distributions, the Spin-Off
Companies and their Subsidiaries will not be included in the consolidated
federal income Tax return of USOP for the portion of the year following the
Distributions or in future years; and
WHEREAS, the Companies desire to allocate the Tax burdens and benefits of
transactions which occurred on or prior to the Distribution Date, and to
provide for certain other
2
<PAGE>
Tax matters, including the assignment of responsibility for the preparation
and filing of Tax returns and the prosecution and defense of any Tax
controversies.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Companies (each on its own behalf and on behalf of each of its
Subsidiaries) hereby agree as follows:
SECTION 1
Definitions
As used in this Agreement, the following terms shall have the following
meaning:
"Adverse Tax Act" shall mean, for any Person, (i) any action or actions of
such Person, or any omission or omissions by such Person of an action or
actions reasonably available to it, after the Distribution Date, or (ii) a
knowing or willful inaccuracy or inaccuracies of any representation made by
any Company by or on behalf of any member of such Company's Group to USOP's
outside tax counsel in connection with such firm's rendering an opinion to
the Companies as to certain Tax aspects of the Contributions and
Distributions as of the Distribution Date, if such action(s) or
inaccuracy(ies) materially contribute to a Final Determination that any of
the Contributions or Distributions results in the recognition of gain to USOP
by virtue of any of the Contributions or Distributions failing to qualify
under sections 355 or 368 of the Code, including without limitation, by
reason of any stock or securities of any of the Spin-Off Companies failing to
qualify as "qualified property" within the meaning of section 355(c)(2) of
the Code, or otherwise.
"Agreement" shall mean this Tax Allocation Agreement.
"Allocable Federal Income Tax Liability" shall mean, for any Group, the
Separate Consolidated Federal Income Tax Liability of such Group, as adjusted
to reflect (i) any AMT (but only if there is a consolidated AMT), (ii) any
Taxes for which USOP is obligated to indemnify such Groups pursuant to
Section 10(b) of this Agreement, and (iii) any Taxes for which such Group's
Spin-Off Company is obligated to indemnify USOP pursuant to Section 3(d) of
this Agreement.
"AMT" shall mean the alternative minimum tax imposed by Section 55 of the
Code.
"Aztec" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Aztec Subsidiary" shall mean those entities that immediately after the
completion of the Distributions will be Subsidiaries of Aztec.
3
<PAGE>
"Closing Date" shall have the meaning assigned to such term in the
Investment Agreement.
"Companies" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Consolidated Returns" shall mean (i) the consolidated U.S. federal income
Tax return of USOP for the period ending on April 25, 1998 and (ii) the
consolidated U.S. federal income Tax return of USOP for the period commencing
on April 26, 1998 and including the Spin-Off Company Groups through and
including the Distribution Date and including the USOP Group through and
including April 24, 1999.
"Contributions" shall mean the Workflow Contribution, the School Specialty
Contribution, the Technology Contribution, and the Travel Contribution,
together with all property transfers and other transactions undertaken for
the purpose of accomplishing the Workflow Contribution, the School Specialty
Contribution, the Technology Contribution, or the Travel Contribution.
"Controlled Return" shall mean (a) the Consolidated Returns, (b) any Prior
Period Consolidated Return and (c) any combined, affiliated or unitary income
Tax returns for any taxable period beginning on or prior to the Distribution
Date that includes USOP or any Retained Subsidiary.
"Distributing Tax Payor" shall have the meaning assigned to such term in
Section 10(a)(iii) of this Agreement.
"Distribution Agreement" shall have the meaning assigned to such term in
the recitals to this Agreement.
"Distribution Date" shall mean the date on which the Distributions are
effective for U.S. federal income Tax purposes.
"Distributions" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Final Determination" shall mean the final resolution of liability for any
Tax for any taxable period, including any related interest or penalties, by
or as a result of: (i) a final and unappealable decision, judgment, decree or
other order of a court of competent jurisdiction; (ii) a closing agreement or
accepted offer in compromise under Section 7121 or 7122 of the Code, or
comparable agreement under the laws of other jurisdictions, which resolves
the entire Tax
4
<PAGE>
liability for such Tax for such taxable period; (iii) any allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered
(including by way of offset) by the applicable Taxing jurisdiction; or (iv)
any other final disposition, including by reason of the expiration of the
applicable statute of limitations.
"FTC" shall mean the foreign tax credit pursuant to Section 27 of the Code.
"Group" shall mean the USOP Group, Workflow Group, School Specialty Group,
Technology Group and/or Travel Group, as the context may require.
"Investment Agreement" shall mean the Investment Agreement dated as of
January 12, 1998 by and between USOP and CDR-PC Acquisition, L.L.C., a
Delaware limited liability company, as amended by Amendment No. 1 thereto,
dated as of February 3, 1998.
"IPO" shall mean, as to any Spin-Off Company, the initial public offering
of securities to be conducted by such company, which offering is scheduled to
occur on or about the Distribution Date.
"IRS" shall mean the Internal Revenue Service of the United States.
"Losses" shall mean any and all Taxes, claims, demands, liabilities,
obligations, losses, costs, expenses, fines or damages (whether absolute,
accrued, conditional or otherwise, and whether or not resulting from third
party claims), including interest and penalties with respect thereto and
out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any rights related thereto.
"Market Capitalization" shall mean, for any entity, the market
capitalization of such entity determined on the basis of the average closing
price for the common stock of such entity for the five-day period ending on
the tenth day after the Distribution Date.
"Navigant" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Navigant Subsidiary" shall mean those entities that immediately after the
completion of the Distributions will be Subsidiaries of Navigant.
"Person" shall mean any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or department or agency of a government.
5
<PAGE>
"Prime Rate" shall mean the 'prime rate' charged by Citibank, N.A., New
York, New York, as such rate shall be changed from time to time, compounded
daily on the basis of a year of 365/366 days and actual days elapsed.
"Prior Period Consolidated Return" shall mean any U.S. federal consolidated
income Tax return of USOP filed, or to be filed, for taxable periods
commencing prior to April 27, 1997.
"Retained Subsidiaries" shall mean all of the Subsidiaries of USOP other
than the Spin-Off Companies and the Spin-Off Company Subsidiaries.
"Restricted Transaction" shall mean for any Spin-Off Company (i) any
issuance of capital stock (including, without limitation, in connection with
any public offering or any acquisition by such Spin-Off Company, or in
connection with any merger or consolidation of another Person into such
Spin-Off Company or any Subsidiary of such Spin-Off Company, and including
any delivery of capital stock from the treasury of such Spin-Off Company),
other than an IPO or in connection with the exercise of any employee stock
option granted on or prior to the Distribution Date; (ii) any issuance of
securities convertible into, or exercisable or exchangeable for, capital
stock of such Spin-Off Company; or (iii) any merger or consolidation or other
business combination of such Spin-Off Company into another Person or any sale
or transfer of all or substantially all of such Spin-Off Company's assets to
another Person.
"School Specialty" shall have the meaning assigned to such term in the
preamble to this Agreement.
"School Specialty Contribution" shall have the meaning assigned to such
term in the recitals to this Agreement.
"School Specialty Distribution" shall have the meaning assigned to such
term in the recitals to this Agreement.
"School Specialty Group" shall mean School Specialty and each School
Specialty Subsidiary.
"School Specialty Subsidiary" shall mean those entities that immediately
after the completion of the Distributions will be Subsidiaries of School
Specialty.
"Separate Consolidated Federal Income Tax Liability" shall mean, for any
Group and any taxable year or portion thereof during which it is included in
the Consolidated Returns or any Prior Period Consolidated Return, the U.S.
federal income Tax liability which such Group would have incurred if such
Group, on a stand-alone basis, had been an affiliated group eligible to file
a consolidated return for such taxable year or any portion thereof and had
filed such a return for such period, computed without regard to AMT.
6
<PAGE>
"Spin-Off Companies" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Spin-Off Company Groups" shall mean the Workflow Group, the School
Specialty Group, the Technology Group and the Travel Group.
"Spin-Off Company Subsidiaries" shall mean the Workflow Subsidiaries, the
School Specialty Subsidiaries, the Aztec Subsidiaries and the Navigant
Subsidiaries.
"Subsidiary" shall mean any corporation, partnership, limited liability
company, joint venture or other entity (i) in which another Person owns,
directly or indirectly, ownership interests sufficient to elect a majority of
the Board of Directors (or Persons performing similar functions)
(irrespective of whether at the time any other class or classes of ownership
interests of such corporation, partnership, limited liability company, joint
venture or other entity shall or might have such voting power upon the
occurrence of any contingency) or (ii) of which another Person is a general
partner or an entity performing similar functions (e.g., a trustee or
managing member).
"Tax" or "Taxes" shall mean all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, federal or other body,
and without limiting the generality of the foregoing, shall include income,
sales, use, ad valorem, gross receipts, license, value added, franchise,
transfer, recording, withholding, payroll, wage withholding, employment,
excise, occupation, unemployment insurance, social security, business
license, business organization stamp, environmental, premium and property
taxes, together with any related interest, penalties and additions to any
such tax, or additional amounts imposed by any Taxing Authority.
"Tax Administrator" shall mean Don Platt, the Chief Financial Officer of
USOP, or such other person as USOP shall appoint with the consent of each of
the Spin-Off Companies, which consent shall not be unreasonably withheld or
delayed.
"Taxing Authority" shall mean any governmental or quasi-governmental body,
domestic or foreign, exercising any Taxing authority or Tax regulatory
authority.
"Tax Credits" shall include all credits against Tax pursuant to Subtitle A,
Chapter 1, Subchapter A, Part IV of the Code.
"Tax Item" shall mean any net operating loss, net capital loss, deduction
or credit (including, but not limited to, any FTC).
"Technology Contribution" shall have the meaning assigned to such term in
the recitals to this Agreement.
7
<PAGE>
"Technology Distribution" shall have the meaning assigned to such term in
the recitals to this Agreement.
"Technology Group" shall mean Aztec and each Aztec Subsidiary.
"Travel Contribution" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Travel Distribution" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Travel Group" shall mean Navigant and each Navigant Subsidiary.
"USOP" shall have the meaning assigned to such term in the preamble to this
Agreement.
"USOP Group" shall mean USOP and each Retained Subsidiary.
"USOP Stock Plan" shall mean any of the 1994 Amended and Restated Long-Term
Incentive Plan, the 1996 Non-Employee Directors' Stock Plan, the 1997A Stock
Option Plan for Employees of Mail Boxes Etc., the 1997B Stock Option Plan for
Employees of Mail Boxes Etc. and the 1997 Stock Option Plan for former
Non-Employee Directors of Mail Boxes Etc. (and any underlying original or
predecessor plans).
"Workflow Contribution" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Workflow Distribution" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Workflow Group" shall mean Workflow Management and each Workflow
Subsidiary.
"Workflow Management" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Workflow Subsidiary" shall mean those entities that immediately after the
completion of the Distributions will be Subsidiaries of Workflow Management.
"1186202" shall have the meaning assigned to such term in Section 2(d) of
this Agreement.
8
<PAGE>
SECTION 2
Tax Returns to be Filed
(a) Consolidated Returns and Prior Period Consolidated Returns.
(i) Each of the Companies will join, and will cause each of their
respective Subsidiaries to join, in the Consolidated Returns to the extent
each is eligible to join in such return under the provisions of the Code and
the regulations thereunder. The Tax Administrator will cause the Consolidated
Returns to be timely prepared and filed in accordance with applicable law,
provided that if the Tax Administrator prepares a Consolidated Return in a
manner that is inconsistent with the preparation and filing of the Prior
Period Consolidated Returns and such inconsistency would have a material
adverse effect on any Spin-Off Company or its Subsidiaries, the Tax
Administrator will obtain the prior written consent of such Spin-Off Company,
which consent shall not be unreasonably withheld. The Tax Administrator will
timely prepare and file any consents and requests for extension of time
within which to file the Consolidated Returns or any related information or
similar returns. The Tax Administrator shall make the Consolidated Returns
available to the Chief Financial Officers of the Spin-Off Companies for their
review prior to filing and shall furnish them a copy of the return promptly
after it is filed.
(ii) Each of the Spin-Off Companies agrees that it will cause its
respective Chief Financial Officer to furnish to the Tax Administrator on a
timely basis such information, schedules, analyses and any other items as may
be reasonably required to prepare the Consolidated Returns. Such
information, schedules, analyses and other items will be prepared in a manner
consistent with existing practice and in accordance with the work plan and
schedule to be agreed upon among the Tax Administrator and the Chief
Financial Officer of each of the Spin-Off Companies, acting reasonably, as
soon as practicable after the Distribution Date.
(iii) The Companies hereby agree to execute and deliver all
documentation reasonably required (including powers of attorney, if
requested) to enable the Tax Administrator to timely file, and to take all
actions necessary or incidental to the filing of, the Consolidated Returns
(including, without limitation, the execution of Treasury Form 1122), any
amendment of the Consolidated Returns or any Prior Period Consolidated
Return, or any return for which USOP has filing responsibility under Section
2(d). The Tax Administrator shall decide in his reasonable discretion whether
to file an amended return, and no consent of any Company shall be required
for the filing of any such amended return.
(iv) Taxes with respect to the Consolidated Returns or any Prior Period
Consolidated Return shall be paid or caused to be paid by USOP, which shall
act as agent of the Spin-Off Companies and their includable Subsidiaries in
all Tax matters having to do with the Consolidated Returns or any Prior
Period Consolidated Return.
9
<PAGE>
(b) Other Controlled Returns. The Tax Administrator shall cause any other
Controlled Returns and any amendment of any such Controlled Returns to be
timely prepared, filed and paid, utilizing procedures substantially similar
to those provided in Section 2(a) of this Agreement with respect to the
Consolidated Returns and Prior Period Consolidated Returns.
(c) Other Tax Returns. The Companies shall, and shall cause their
respective Subsidiaries to, timely prepare and file Tax returns for any
taxable period beginning prior to the Distribution Date (other than
Controlled Returns) in those jurisdictions in which they are required to do
so in a manner consistent with past practice. Taxes shown as payable on any
Tax return filed by one of the Companies pursuant to this Section 2(c) shall
be paid or caused to be paid by the Company responsible under this Section
2(c) for filing such return or causing such return to be filed. The Tax
Administrator shall have the right to approve any Tax returns filed pursuant
to this Section 2(c) prior to such filing if USOP could be liable for Taxes
due with respect to any such Tax returns under principles analogous to
Treasury regulation section 1.1502-6.
(d) 1186202 Ontario Limited. Notwithstanding Section 2(c), USOP shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for 1186202 Ontario Limited, an Ontario corporation ("1186202") for all
periods ending prior to the Distributions and for all periods that include
the Distributions. USOP shall pay or cause to be paid, on a timely basis,
Taxes of 1186202 shown on such Tax Returns to the extent such Taxes are
attributable to any period or portion thereof ending on or before the
Distribution Date. Workflow Management and 1186202 shall furnish such Tax
information to USOP as USOP shall request for the purpose of preparing such
Tax Returns, and shall cooperate with USOP in the execution and filing of
such Tax Returns. Workflow Management and 1186202 shall permit USOP and its
advisors to control any audits of the Tax Returns of 1186202 to the extent
the audits relate to Tax for which USOP is responsible pursuant to this
Section 2(d).
SECTION 3
Consolidated Returns Computations of Tax and Payments
(a) Computations of Tax and Payments for the Consolidated Return year
ending on April 25, 1998:
(i) On or before July 14, 1998, an interim Tax settlement payment shall
be made to or by USOP by or to each of the Spin-Off Companies, as the case
may be, equal to the difference between their respective Group's Separate
Consolidated Federal Income Tax Liability (as reasonably determined by the
Tax Administrator) and the net amounts previously paid with respect to
estimated Taxes by such Group for the Consolidated Return year ending on
April 25, 1998.
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(ii) Based on computations to be prepared by the affected Spin-Off
Company and approved by the Tax Administrator, an adjusting payment equal to
the difference between its Group's Allocable Federal Income Tax Liability and
the net amounts previously paid with respect to estimated Taxes by such Group
for the Consolidated Return year ending on April 25, 1998, including payments
pursuant to Sections 3(a)(i) of this Agreement, shall be made to or by USOP
by or to such Spin-Off Company, as the case may be, on or before February 15,
1999 based on the Consolidated Return for the year ending April 25, 1998 as
filed.
(b) Computations of Tax and Payments for the Consolidated
Return year ending on April 24, 1999:
(i) On or before April 14, 1999, each of the Spin-Off Companies agrees
to make payments to USOP equal to the excess, if any, of its Group's
estimated Separate Consolidated Federal Income Tax Liability for the
Consolidated Return year ending on April 24, 1999 (as reasonably determined
by the Tax Administrator) over such Group's prior payments, including any
payments with respect to estimated Taxes for such Consolidated Return year,
and USOP agrees to make payments to each of the Spin-Off Companies equal to
the excess, if any, of their respective Group's prior payments with respect
to estimated Taxes for the Consolidated Return year ending on April 24, 1999
over such Group's estimated Separate Consolidated Federal Income Tax
Liability (as reasonably determined by the Tax Administrator) for the
Consolidated Return year ending on April 24, 1999.
(ii) On or before July 14, 1999, an interim Tax settlement payment
shall be made to or by USOP by or to each of the Spin-Off Companies, as the
case may be, equal to the difference between their respective Group's
Separate Consolidated Federal Income Tax Liability (as reasonably determined
by the Tax Administrator) and the net amounts previously paid with respect to
estimated Taxes by such Group for the Consolidated Return year ending on
April 24, 1999.
(iii) Based on computations to be prepared by the affected Spin-Off
Company and approved by the Tax Administrator, an adjusting payment equal to
the difference between its Group's Allocable Federal Income Tax Liability and
the net amounts previously paid by such Group with respect to estimated Taxes
for the Consolidated Return year ending on April 24, 1999, including payments
pursuant to Sections 3(b)(i) and 3(b)(ii) of this Agreement, shall be made to
or by USOP by or to such Spin-Off Company, as the case may be, on or before
February 15, 2000 based on the Consolidated Return for the year ending April
24, 1999 as filed. Each of the Spin-Off Companies shall increase or
decrease, as the case may be, its Group's liability for such adjusting
payment by the amount of any AMT credit carryforward allocated to its Group
under the consolidated return regulations which exceeds or is less than, as
the case may be, the AMT calculated on a separate consolidated basis.
(c) Computations of Tax and Payments for Controlled Returns Other than
Consolidated Returns. Tax Payments shall be made to or by USOP by or to each
of the Spin-Off
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Companies, as the case may be, utilizing procedures substantially similar to,
and determining the amount payable by or to each Group using, to the extent
possible, methods substantially similar to, those provided in Sections 3(a)
and 3(b) of this Agreement with respect to any Controlled Return other than a
Consolidated Return for any period beginning prior to the Distribution Date
and ending on or after April 25, 1998.
(d) Intercompany Transactions. Each of the Spin-Off Companies shall be
liable for and shall indemnify, defend and hold USOP harmless from and
against any Losses with respect to Taxes attributable to any "intercompany
transaction" to the extent such Loss is attributable to any "intercompany
item" that such Spin-Off Company or any of its Subsidiaries is required to
take into account immediately prior to the Distributions pursuant to Treasury
Regulations section 1.1502-13.
SECTION 4
Special Rules
(a) If the Tax liability (including any interest relating thereto) for
either Consolidated Return exceeds or is less than the total of the five
Groups' Allocable Federal Income Tax Liability (including any interest
relating thereto), a payment shall be made to or by USOP by or to each of the
Spin-Off Companies equal to each of the Spin-Off Companies pro rata portion
of such excess or shortfall based on their respective Group's relative
Allocable Federal Income Tax Liability (including any interest relating
thereto) for such Consolidated Return; provided, that AMT in an amount equal
to any AMT credit carryforward from the Consolidated Returns allocated to a
Group shall be charged to and paid by such Group.
(b) A payment shall be made to or by USOP by or to each of the Spin-Off
Companies utilizing procedures substantially similar to those provided in
Sections 4(a) of this Agreement with respect to any Controlled Return other
than a Consolidated Return for any period beginning prior to the Distribution
Date and ending on or after April 25, 1998.
(c) Each of the Companies agrees that, unless it obtains consent of the Tax
Administrator, all members of its Group will waive the carryback of any net
operating loss from a Tax period beginning on or after the Distribution Date
to the Consolidated Returns or Prior Period Consolidated Return.
SECTION 5
Deductions Related to Exercise of Options
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Notwithstanding anything to the contrary in Section 3 of this Agreement,
any Tax saving or other benefit attributable to any compensation deduction
arising from or in connection with the exercise by any employee of any
Company, or of any such Company's Subsidiaries (determined immediately after
the Distributions), of any option granted under any of the USOP Stock Plans
shall be apportioned to the entity whose shares were issued upon the exercise
of such option, provided that any compensation deduction arising from or in
connection with any such exercise on or prior to the Closing Date by any
employee of any Company or of any such Company's Subsidiaries (determined
immediately after the Closing Date) shall be apportioned to such Company.
SECTION 6
Dispute Resolution
In the event of a disagreement between the Tax Administrator and any or all
of the Spin-Off Companies, all computations or recomputations of federal or
state and local income and franchise Tax liability, and all computations or
recomputations of any amount or any payment (including, but not limited to,
computations of the amount of the Tax liability, any loss or credit or
deduction, federal statutory Tax rate change for a year, utilization of
carryback items, interest, penalties, and adjustments) and all determinations
of the amount of payments or repayments, or determinations of any other
nature necessary to carry out the terms of this Agreement will be reviewed by
the national office of Deloitte & Touche LLP (unless the disputing parties
unanimously agree on another accounting firm of national reputation), with
the costs of such review being shared equally by such disputing parties. If
any disagreement remains after any such review, including any disagreement as
to the construction, applicability or binding nature of this Agreement, that
disagreement shall be resolved by an arbitrator with the cost of such
arbitration being shared equally by such disputing parties; provided that
such arbitrator shall be a retired or former judge of the United States Tax
Court or such other qualified person as the relevant parties may agree to
designate; provided further, that, in the event that the relevant parties
agree to designate a qualified person (other than a retired or former judge
of the United States Tax Court), such other qualified person shall have had
substantial experience with regard to settling complex Tax disputes. The
decision of the arbitrator shall be binding on the parties.
If the procedures for resolving a dispute, controversy or claim between the
Companies or any of their respective Subsidiaries arising out of or relating
to this Agreement are not controlled by this Agreement, such dispute,
controversy or claim shall be resolved (and costs shall be apportioned)
pursuant to the procedures set forth in Article IX of the Distribution
Agreement.
SECTION 7
Survival of Terms
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The provisions of this Agreement shall survive the Distribution Date and
remain in full force until all periods of limitations, including any
extension or waiver periods, as well as the ten-year statute of limitations
with respect to FTC redeterminations, for the Controlled Return taxable
periods, have expired and no further carrybacks to such periods are possible
and for 30 days thereafter; provided that the provisions of this Agreement
shall remain in full force and effect with respect to any pending claim under
this Agreement until the final resolution of such claim.
SECTION 8
Parties to Cooperate
Each of the Companies shall, and shall cause their respective Subsidiaries
to, cooperate fully and to the extent reasonably requested by any other
Company in connection with the preparation and filing of any return or the
conduct of any audit, dispute, proceeding, suit or action concerning any
issues or any other matter contemplated hereunder. Such cooperation shall
include, without limitation, (i) the retention and provision on demand of
books, records, documentation or other information relating to any Tax matter
until the later of (x) the expiration of the applicable statute of limitation
(giving effect to any extension, waiver, or mitigation thereof) and (y) in
the event any claim has been made under this Agreement for which such
information is relevant, until a Final Determination with respect to such
claim, (ii) the provision of additional information with respect to, and
explanations of, Tax practices (including elections, accounting methods,
conventions and principles of taxation) and the provision of material
described in clause (i) of this Section 8; (iii) the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any Tax return by any member of one of the Groups, or in connection
with any audit, proceeding, suit or action addressed in the preceding
sentence; and (iv) the use by each of the Companies of its reasonable efforts
to obtain any documentation from a governmental authority or a third party
that may be necessary or helpful in connection with the foregoing. Each of
the Companies shall make its employees and facilities available on a mutually
convenient basis to facilitate such cooperation and shall retain as permanent
records all documentation necessary to enable it to determine any obligation
under this Agreement. The records described above will be made available to
representatives of any of the Companies within a reasonable time upon request
and may be photocopied on an as needed basis. The requesting Company shall
pay the reasonable out of pocket costs incurred by any Company, or Subsidiary
thereof, in cooperating with the requesting Company pursuant to this Section
8.
SECTION 9
Notices
Any notice, request, instruction or other communication to be given
hereunder by any party to another shall be in writing and shall be deemed to
have been duly given (i) on the
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date of delivery if delivered personally, or by telefacsimile, upon
confirmation of receipt, (ii) on the first business day following the date of
dispatch if delivered by Federal Express or other nationally reputable
next-day courier service with proof of delivery, or (iii) on the fifth
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice.
(a) If to Workflow Management:
Workflow Management, Inc.
240 Royal Palm Way
Palm Beach, Florida 33480
Attention: Thomas B. D'Agostino
Telefacsimile: (561) 659-7793
(b) If to School Specialty:
School Specialty, Inc.
1000 North Bluemound Drive
Appleton, Wisconsin 54914
Attention: Daniel P. Spalding
Telefacsimile: (920) 734-6276
(c) If to Aztec:
Aztec Technology Partners, Inc.
52 Roland Street
Boston, Massachusetts 02129
Attention: James E. Claypoole
Telefacsimile: (617) 623-58888
(d) If to Navigant:
Navigant International, Inc.
84 Inverness Circle East
Englewood, Colorado 80112-5314
Attention: Edward S. Adams
Telefacsimile: (303) 706-0770
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(e) If to USOP:
U.S. Office Products Company
1025 Thomas Jefferson Street, N.W., Suite 600 East
Washington, D.C. 20007-5490
Attention: Mark D. Director, Esq.
Kathleen Delaney, Esq.
Telefacsimile: (202) 339-6733
with copies to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
Eighteenth Floor
New York, NY 10152
Attention: Donald J. Gogel
Telefacsimile: (212) 407-5200
SECTION 10
Indemnification
(a) Pre-Distribution & Distribution Taxes.
(i) USOP Indemnification. USOP shall be liable for and shall
indemnify, defend and hold the Spin-Off Companies harmless from and against
any Losses with respect to Taxes that result from, or arise in connection
with, an Adverse Tax Act of USOP or any of the Retained Subsidiaries.
(ii) Spin-Off Companies Indemnification. The Spin-Off
Companies shall be jointly and severally liable for and shall jointly and
severally indemnify, defend and hold USOP harmless from and against any
Losses with respect to Taxes that result from, or arise in connection with,
an Adverse Tax Act of any of the Spin-Off Companies or any of their
respective Subsidiaries.
(iii) Multiple Adverse Tax Acts. If any Losses with respect to
Taxes result from, or arise in connection with, (a) an Adverse Tax Act of
USOP or any of the Retained Subsidiaries and (b) an Adverse Tax Act of any or
all of the Spin-Off Companies or any of their respective Subsidiaries (each
Spin-Off Company that is responsible or whose Subsidiary is responsible for
an Adverse Tax Act a "Distributing Tax Payor"), then the Spin-Off Companies
shall be jointly and severally liable for and shall jointly and severally
indemnify, defend and hold USOP harmless from and against a percentage of
such Losses with respect to Taxes equal to the percentage determined by
dividing (x) the aggregate Market Capitalizations of the Distributing Tax
Payors by (y) the aggregate Market Capitalizations of the Distributing Tax
Payors and USOP.
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(iv) No Adverse Tax Acts. If USOP incurs any Losses with
respect to Taxes resulting from the Contributions or Distributions, as a
result of the failure of the Contributions or Distributions to qualify under
Section 355 or 368 of the Code or otherwise, including, without limitation,
by reason of any stock or securities of any of the Spin-Off Companies failing
to qualify as "qualified property" within the meaning of Section 355(c)(2) of
the Code, except to the extent such Losses result from an Adverse Tax Act by
any of the Companies or any of their respective Subsidiaries, then each of
the Spin-Off Companies shall be liable for and shall indemnify, defend and
hold USOP harmless from the portion of such Losses that bears the same ratio
to the aggregate amount of such Losses as the Market Capitalization of such
Spin-Off Company bears to the aggregate Market Capitalization of all of the
Companies.
(b) Treasury Regulations Sections 1.1502-6 and 1.1502-77.
USOP shall be liable for and shall indemnify, defend and hold each of the
Spin-Off Companies harmless from and against any federal or state income or
franchise Taxes for the Consolidated Return or any Prior Period Consolidated
Return for which any of the Spin-Off Company Groups may be liable solely as a
result of the operation of Treasury Regulation Sections 1.1502-6 and
1.1502-77 or any state counterpart statute or regulation.
SECTION 11
Tax Deficiencies and Claims
(a) Except as otherwise provided in Section 11(b), the Tax
Administrator shall control all audits, examinations and proceedings with
respect to Taxes with respect to any Controlled Returns. The Tax
Administrator shall have overall responsibility for obtaining and
coordinating all responses in connection with any such proceedings with
respect to any Controlled Returns. To the extent that any such audit affects
one of the Groups, such Group shall prepare and submit such responses in a
manner consistent with prior practice; provided, however that the Tax
Administrator shall have the right to approve all such responses prior to
their submission. Adjustments affecting solely the taxable income, gain,
loss or deductions of, or Tax Credits generated by, any Group may be agreed
upon or settled only upon approval of that Group, which approval shall not be
unreasonably withheld or delayed.
(b) Spin-Off Company Claims. Any proposed or actual income
Tax deficiencies or refund claims with respect to Controlled Returns which
arise from the business activities of one of the Spin-Off Company Groups, and
do not otherwise affect any Controlled Return or the Tax treatment of the
Contributions or Distributions, may be defended or prosecuted by such Group
at its own cost and expense and with counsel and accountants of its own
selection; provided that in an action for an income Tax deficiency such Group
shall have theretofore acknowledged in writing its liability for such Taxes,
if any. The Tax Administrator
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may participate in any such prosecution or defense at USOP's cost and expense
(in either event such cost or expense is not to include the amount of any
payment of any Tax claim, interest or penalties, or of any compromise
settlement or other disposition thereof). Notwithstanding the foregoing,
none of the Spin-Off Company Groups shall have a right to an extension of the
statute of limitations beyond the time reasonably necessary to complete
review at the Appeals Division of the IRS or to any waiver of any other
procedural safeguard without the prior written consent of the Tax
Administrator, which consent shall not be unreasonably withheld. The
limitation expressed in the preceding sentence applies, but is not limited
to, the filing of a petition with the United States Tax Court. If one of the
Spin-Off Groups defends or prosecutes an action, it shall keep the Tax
Administrator informed of matters relating to such defense or prosecution.
(c) Cost of Advisors. In connection with the defense of any
audit of any Controlled Return, except with regard to claims described in
Section 11(b) of this Agreement, the Tax Administrator may retain advisors
and charge the reasonable cost of their services to the appropriate Group or
Groups.
SECTION 12
Payment of Deficiencies and Refunds
(a) The Allocable Federal Income Tax Liability and any other
Tax liability of the Spin-Off Company Groups with respect to any Controlled
Returns shall be adjusted in computations to be prepared by the relevant
Spin-Off Company Group and approved by the Tax Administrator with respect to
changes in the taxable income, loss, deduction or Tax credits of the relevant
Spin-Off Company Group:
(i) in each instance when payments are to be made to, or
refunds are received from, the relevant Taxing Authority;
(ii) when no payment is to be made or refund is to be received
due to offsetting adjustments, upon filing of an amended return, completion
of an audit and an appellate review by the relevant Taxing Authority; and
(iii) to reflect the results of any Final Determination.
Each of the Spin-Off Companies agree to pay to USOP additional amounts
(plus penalties and additions to Tax, if any) equal to any increases in the
Allocable Federal Income Tax Liability (or any other Tax liability with
respect to a Controlled Return) of such Spin-Off Company's Group resulting
from any such changes, and USOP agrees to pay to each of the Spin-Off
Companies amounts equal to any decreases in the Allocable Federal Income Tax
Liability (or any other Tax liability with respect to a Controlled Return) of
each such Spin-Off Company's Group resulting from any such changes, in each
case together with any interest relating thereto. For purposes of this
Agreement, unless specifically provided otherwise, interest shall be
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computed at the federal statutory rate used, pursuant to Section 6621(a) of
the Code, by the IRS in computing the interest payable to or by it on the net
balance due to or from the IRS. Any interest under Section 6621(c) of the
Code shall be charged to the Group whose separate deficiency gave rise to
such interest. If the separate deficiencies of more than one Group gave rise
to such interest, then such interest shall be allocated between or among such
Groups. Penalties levied in respect of any Controlled Return shall be charged
to the Group whose separate computations gave rise to such penalty.
(b) Amounts payable to or from USOP from or to any of the
Spin-Off Companies under Section 12(a) of this Agreement shall be paid upon
written request therefor approved by the Tax Administrator, together with
interest thereon from the original due date or such other date as may be
appropriate under the circumstances. Any amounts due to or from USOP from or
to any of the Spin-Off Companies under Section 12(a) of this Agreement as a
result of a payment to a Taxing Authority or the receipt of a refund shall be
paid within five working days after such payment or receipt, together with
appropriate interest thereon. If no payment is to be made or refund is to be
received due to offsetting items among the various Groups, then Tax and
interest (computed at the IRS overpayment rates) shall be paid within 30
calendar days after the completion of each of the audit and appellate review
of the Tax period in question and a Final Determination. After expiration of
the five day period (or, if applicable, 30 day period) any amounts unpaid
shall bear interest computed from the date of payment or receipt (or, if
applicable, completion or Final Determination) at the Prime Rate.
(c) No payment relating to a change in Allocable Federal
Income Tax Liability (or any other Tax liability with respect to a Controlled
Return) shall be made by or to any Group with respect to the IRS audit of any
Controlled Return until the audit has been completed with respect to all
Groups, unless such advance payment has been approved by the Tax
Administrator.
SECTION 13
Certain Post-Distribution Actions
(a) USOP.
(i) USOP shall comply with and otherwise not take any action
inconsistent with any representation or statement made, or to be made, by or
on behalf of any member of the USOP Group in connection with this Agreement
or to USOP's outside Tax counsel in connection with such firm's rendering an
opinion to the Companies as to certain Tax aspects of the Contributions and
Distributions.
(ii) Until two years after the Distribution Date, USOP will
maintain its status as a company engaged in the active conduct of a trade or
business, as defined in Section 355(b) of the Code.
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(b) Workflow Management.
(i) Workflow Management shall comply with and otherwise not
take action inconsistent with each representation and statement made, or to
be made, by or on behalf of any member of the Workflow Group in connection
with this Agreement or to USOP's outside Tax counsel in connection with such
firm's rendering an opinion to the Companies as to certain Tax aspects of the
Contributions and Distributions.
(ii) Until two years after the Distribution Date, Workflow
Management will maintain its status as a company engaged in the active
conduct of a trade or business, as defined in Section 355(b) of the Code.
(c) School Specialty.
(i) School Specialty shall comply with and otherwise not take
action inconsistent with each representation and statement made, or to be
made, by or on behalf of any member of the School Specialty Group in
connection with this Agreement or to USOP's outside Tax counsel in connection
with such firm's rendering an opinion to the Companies as to certain Tax
aspects of the Contributions and Distributions.
(ii) Until two years after the Distribution Date, School
Specialty will maintain its status as a company engaged in the active conduct
of a trade or business, as defined in Section 355(b) of the Code.
(d) Aztec.
(i) Aztec shall comply with and otherwise not take action
inconsistent with each representation and statement made, or to be made, by
or on behalf of any member of the Technology Group in connection with this
Agreement or to USOP's outside Tax counsel in connection with such firm's
rendering an opinion to the Companies as to certain Tax aspects of the
Contributions and Distributions.
(ii) Until two years after the Distribution Date, Aztec will
maintain its status as a company engaged in the active conduct of a trade or
business, as defined in Section 355(b) of the Code.
(e) Navigant.
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(i) Navigant shall comply with and otherwise not take action
inconsistent with each representation and statement made, or to be made, by
or on behalf of any member of the Travel Group in connection with this
Agreement or to USOP's outside Tax counsel in connection with such firm's
rendering an opinion to the Companies as to certain Tax aspects of the
Contributions and Distributions.
(ii) Until two years after the Distribution Date, Navigant
will maintain its status as a company engaged in the active conduct of a
trade or business, as defined in Section 355(b) of the Code.
(f) During the two-year period following the Distribution
Date, none of the Spin-Off Companies shall effect any Restricted Transaction
unless and until the following conditions have been satisfied or waived, in
writing, by USOP with respect to such Restricted Transaction:
(i) Such Company shall have given USOP at least 10 business
days' written notice prior to effecting such Restricted Transaction, which
notice shall describe the Restricted Transaction in detail reasonably
sufficient to permit analysis of the potential effect of the Restricted
Transaction on the U.S. federal income tax treatment of the Contributions and
the Distributions; provided, that such Company will not be required to
disclose the name of any other party participating in the Restricted
Transaction unless such disclosure is necessary to permit such analysis; and
provided further, that USOP will keep confidential all information relating
to the Restricted Transaction;
(ii) Such Company shall have afforded USOP and its
representatives 10 business days (which may overlap with the notice period in
Section 13(f)(i) of this Agreement) to discuss with the Spin-Off Company and
its representatives the terms of such Restricted Transaction, subject to the
provisos in Section 13(f)(i); and
(iii) At USOP's request, such Company shall have provided to
USOP, an opinion of outside counsel, reasonably satisfactory to USOP, in form
and substance reasonably satisfactory to USOP, to the effect that such
transaction will not adversely affect the U.S. federal income tax treatment
of the Contributions and/or the Distributions as transactions described in
Sections 355 and 368 of the Code.
SECTION 14
Entire Agreement and Termination of Existing Tax Allocation Agreements
This Agreement contains the entire agreement among the Companies with
respect to the subject matter hereof. Any and all existing tax allocation
agreements, written or unwritten, exclusively between any member of the USOP
Group and any member of any of the Spin-Off Company Groups other than this
Agreement shall be terminated immediately prior to the
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Distribution Date. Nothing in this Section 14 shall affect any provision of
the Distribution Agreement or of this Agreement relating to Taxes.
SECTION 15
Choice of Law; Successors and Assigns
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware applicable to contracts made and to be
performed entirely within such state, without regard to the conflicts of law
principles of such state.
The provisions of this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Companies and their respective
successors and permitted assigns.
SECTION 16
Modifications
This Agreement may not be amended, supplemented or discharged except by
performance or by an instrument in writing signed by all of the Companies.
SECTION 17
Counterparts
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the Companies have duly executed this Agreement as of
the date first above written.
U.S. OFFICE PRODUCTS COMPANY
By
---------------------------
Name:
Title:
WORKFLOW MANAGEMENT, INC.
By
---------------------------
Name:
Title:
SCHOOL SPECIALTY, INC.
By
---------------------------
Name:
Title:
AZTEC TECHNOLOGY PARTNERS, INC.
By
---------------------------
Name:
Title:
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NAVIGANT INTERNATIONAL, INC.
By
---------------------------
Name:
Title:
24
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EMPLOYEE BENEFITS SERVICES AND LIABILITIES AGREEMENT
This EMPLOYEE BENEFITS SERVICES AND LIABILITIES AGREEMENT dated as
of ___________, 1998 (the "Benefits Agreement"), between U.S. OFFICE PRODUCTS
COMPANY, a Delaware corporation (the "Company"), WORKFLOW MANAGEMENT, INC., a
Delaware corporation and wholly owned subsidiary of the Company ("Printco"),
SCHOOL SPECIALTY, INC., a Delaware corporation and wholly owned subsidiary of
the Company ("Schoolco"), AZTEC TECHNOLOGY PARTNERS, INC., a Delaware
corporation and wholly owned subsidiary of the Company ("Techco"), and
NAVIGANT INTERNATIONAL, INC., a Delaware corporation and wholly owned
subsidiary of the Company ("Travelco") pursuant to the agreement and plan of
distribution dated as of ____________, 1998 (the "Distribution Agreement")
among Company, Printco, Schoolco, Techco, and Travelco.
WHEREAS, the Board of Directors of the Company has determined that it
is appropriate and desirable to enter into the Benefits Agreement as an
Ancillary Agreement under the Distribution Agreement; and
WHEREAS, each of the Company, Printco, Schoolco, Techco, and Travelco
has determined that it is necessary and desirable to allocate and assign
responsibility for certain employee benefit liabilities in respect of the
activities of the businesses of such entities on and following the Distribution
Date.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Company, Printco, Schoolco, Techco, and Travelco agree as
follows:
1. PURPOSE AND DEFINITIONS
a. Purpose. The purpose of this Benefits Agreement is to set
forth the agreement of the Company, Printco, Schoolco, Techco, and Travelco
regarding the allocation and assignment of the respective rights and obligations
of each before and after the Distributions with respect to their current and
former employees and with respect to benefits and compensation matters.
b. Definitions. In addition to the terms defined elsewhere in
the text or in the Distribution Agreement, as used in this Benefits Agreement,
the following terms have the following meanings:
"Distributed Company Employees" shall mean the Printco
Employees, Schoolco Employees, Techco Employees, and Travelco Employees,
collectively.
<PAGE>
"Employee" shall mean, as to the Company and each
Distributed Company, an individual who is employed (including an individual who
is not actively employed because of an approved disability, lay-off with right
of recall or an authorized leave of absence (or who is receiving salary
continuation severance payments)) by the Company or the specified Distributed
Company or any of their respective Subsidiaries (other than, for the Company,
any Distributed Company or its Subsidiaries) immediately before the
Distribution.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Former Employee" shall mean a former employee of the
Company or the specified Distributed Company or any of their respective
Subsidiaries (other than, for the Company, any Distributed Company or its
Subsidiaries) whose employment terminated before the Distribution.
"Individual" shall mean each Employee and Former Employee.
Solely for purposes of Section 3(b), "Individual" shall also include
unsuccessful applicants for employment.
"Stand-Alone Plan" shall mean each benefit or compensation
plan, program, policy, or arrangement currently or formerly maintained for the
exclusive benefit of all or some Individuals with respect to the Company or the
applicable Distributed Company.
2. EMPLOYEES. Effective as of the Distribution Date and unless
otherwise provided by the Distribution Agreement, each Company Employee, Printco
Employee, Schoolco Employee, Travelco Employee, and Techco Employee will remain
an employee of his or her respective employer. Nothing contained in this Section
2 confers on any such person any right to continued employment, whether before
or after the Distribution Date, nor does it detract from or otherwise amend any
employment agreement currently in force, except as specifically noted.
3. GENERAL PRINCIPLES. Except as otherwise provided in this Benefits
Agreement, as of the Distribution Date:
a. Each party will remain or become responsible for its
respective Stand-Alone Plans.
b. The Company, Printco, Schoolco, Techco, and Travelco each
will be allocated Liability for employment-related claims regardless of when
filed (including, but not limited to, harassment and discrimination) based upon
whether the claimant was at the time the claim arose, respectively, a Company
Individual, Printco Individual, Schoolco Individual, Techco Individual, or
Travelco Individual.
c. Except as specifically provided herein, as of and after the
Distribution Date, all Liabilities with respect to employee benefit plans,
programs, or arrangements relating to
2
<PAGE>
(i) Company Former Employees that presently are Company liabilities will be
retained by the Company, (ii) Printco Former Employees that presently are
Company or Printco liabilities will be retained or assumed by Printco, as
applicable, (iii) Schoolco Former Employees that presently are Company or
Schoolco liabilities will be retained or assumed by Schoolco, as applicable,
(iv) Techco Former Employees that presently are Company or Techco liabilities
will be retained or assumed by Techco, as applicable, and (v) Travelco Former
Employees that presently are Company or Travelco liabilities will be retained or
assumed by Travelco, as applicable.
d. Except to the extent recognition of past service credit
would result in a duplication of benefits, the Company, Printco, Schoolco,
Techco, and Travelco each will give past service credit under its applicable
benefit plans, programs, policies and arrangements to participants therein to
the extent their past service credit was recognized under the comparable benefit
plan, program, policy, or arrangement of the Company or its Subsidiaries in
which the Employee participated immediately before the Distribution Date.
e. No provision of this Benefits Agreement requires any of the
parties to continue any plan, program, policy, or arrangement for any period of
time after the Distributions.
f. Each party will amend its respective plans, programs,
policies, and arrangements (whether newly established, assumed, or retained) to
the extent necessary to reflect the provisions of this Benefits Agreement.
g. Any Company Employee, Printco Employee, Schoolco Employee,
Techco Employee, or Travelco Employee who continues in employment with the
Company, Printco, Schoolco, Techco, or Travelco or any related Subsidiaries
following the Distribution Date will not be deemed to have terminated employment
solely as a result of the Distribution for purposes of any benefit or
compensation plan, program, policy, or arrangement maintained by the Company,
Printco, Schoolco, Techco, or Travelco.
h. The Company will release any third party beneficiary rights
it may have to enforce employment agreements assumed or retained by the
Distributed Companies (other than with respect to the Company's "Information,"
as defined in those agreements).
4. 401(k) PLAN
a. The Company will retain sponsorship of the U.S. Office
Products 401(k) Retirement Plan (the "Company 401(k) Plan").
b. Effective as of or as soon as practicable after the
Distribution, the Distributed Companies will each establish new qualified 401(k)
plans covering each Distributed Company and all or substantially all of its
Subsidiaries in the United States. Distributed Company Employees will cease
participation in the Company 401(k) Plan effective as close in time before the
Distribution Date as is reasonably practicable. Distributed Company Employees
who have outstanding participant loans under the Company 401(k) Plan will be
permitted to
3
<PAGE>
continue making loan payments to the Company 401(k) Plan until such time as the
loans are transferred to the Distributed Company's 401(k) Plan.
c. Upon receipt by the Company and each of the Distributed
Companies of favorable determination letters from the Internal Revenue Service
to the effect that a newly established plan meets the requirements for
qualification under Section 401(a) of the Code (or as the parties otherwise
mutually agree), the Company will cause to be transferred to the trusts
established under the newly-established 401(k) plans, the respective account
balances (including any related loans and qualified domestic relations orders)
and related assets of that employer's Employees. Upon such transfer, Printco,
Schoolco, Techco, and Travelco will assume the related liabilities.
5. MEDICAL PLANS
a. Effective as of the Distribution Date, each of the
Distributed Companies will assume or retain sponsorship of their respective
Stand-Alone Plans that are medical (including dental) plans and arrangements and
will assume or retain responsibility for continuation health coverage under
ERISA Section 601 et seq. with respect to their respective Individuals.
b. To the extent permitted under any applicable indemnity,
health maintenance organization or stop-loss contracts, any newly established
health plans will waive waiting periods, pre-existing conditions to the extent
waived or satisfied under the applicable Stand-Alone Plan, and credit
deductible/copayments satisfied by Employees, if any, who are transferring among
the respective employers in connection with the Distributions. The Company will
use its best efforts to assist the Distributed Companies in their negotiations
with any third parties to accomplish the waiver of such waiting periods and
pre-existing conditions and the crediting of such deductibles and co-payments.
6. CAFETERIA PLAN
a. The Company will amend the U.S. Office Products Cafeteria
Compensation Plan (the "Company Cafeteria Plan") to provide for spinning off to
each Distributed Company the portions of the Cafeteria Plan's obligations and
credits that apply to that Distributed Company.
b. Effective as of the Distribution Date, each Distributed
Company will adopt a cafeteria plan substantially identical to the Cafeteria
Plan to receive and implement the obligations and credits spun off from the
Cafeteria Plan.
c. Each Distributed Company will treat as remaining in effect
any elections the Distributed Company Employees made before the Distribution
with respect to the Health Care Reimbursement Plan Benefit, the Dependent Care
Assistance Program Benefit, the Health Insurance Benefit, and, to the extent
offered by the Distributed Company after the Distribution,
4
<PAGE>
the Dental Insurance Benefit (each "Benefit" having the meaning provided in the
Company Cafeteria Plan).
d. After the spinoffs described in this Section, Distributed
Company Employees will submit any claims for the plan year ending December 31,
1998 to their respective Distributed Company's plan and not to the Company
Cafeteria Plan.
7. SEVERANCE
Effective as of the Distribution Date, the Company, Printco, Schoolco,
Techco, and Travelco each will be liable for any severance pay and benefits
(including salary continuation) owing, as of or after the Distribution Date, to
Company Individuals, Printco Individuals, Schoolco Individuals, Techco
Individuals, and Travelco Individuals, respectively.
8. STOCK OPTIONS
a. The Company will retain the 1994 Amended and Restated USOP
Long-Term Incentive Plan (the "Company Stock Plan") and the obligations under
that plan with respect to stock options granted thereunder that are held by or
in respect of Company Employees.
b. The Distributed Companies will establish stock option plans
under which they will provide options to their respective Employees to replace
any options those employees hold under the Company Stock Plan and under which
they may offer additional options.
c. Any option granted by a Distributed Company in replacement
for an option under the Company Stock Plan will expressly provide that it is
being granted in full satisfaction of, and in substitution for, any and all
Company stock options with respect to which it relates.
9. FOREIGN PLANS
Subject to applicable local law requirements and to the extent
practicable, the respective rights and obligations of the Company, Printco,
Schoolco, Techco, and Travelco (and their respective Subsidiaries) with respect
to plans maintained by the Company and its Subsidiaries immediately before the
Distribution Date outside of the United States will be treated in a manner
consistent with the general principles described in Section 2 of this Benefits
Agreement; provided, however, that nothing herein shall be construed so as to
(A) modify the terms and conditions of employment of any Company Employee,
Printco Employee, Schoolco Employee, Techco Employee, or Travelco Employee who
is employed outside of the United States (a "Foreign Employee") or (B)
constitute an actual or constructive termination of any Foreign Employee's
employment with the Company, Printco, Schoolco, Techco, Travelco, or any of
their respective Subsidiaries, as applicable.
5
<PAGE>
10. COOPERATION
a. The Company and the Distributed Companies will cooperate in
providing each other and other necessary parties with such data as may be
necessary to administer their respective benefit plans in accordance with the
terms of this Agreement. To that end, each will share, and will cause their
affiliates to share, with each other and their respective agents and vendors
(without obtaining releases) all participant, plan design, and other information
necessary for the efficient and accurate administration of, compliance with laws
and regulations applicable to, and response to governmental authorities
regarding, their respective benefit plans, programs, and arrangements after the
Distribution. Each party to this agreement and their respective authorized
agents will, subject to applicable laws on confidentiality, be given reasonable
and timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of another party, to the extent
necessary for such administration.
b. The Company and the Distributed Companies agree to
cooperate in completing all necessary filings with the Internal Revenue Service,
Department of Labor, and Pension Benefit Guaranty Corporation with respect to
the matters provided herein and will apprise the other parties hereto of any
written or oral communication to or from any such agency with respect thereto
that may bear on such other parties' interests hereunder. The Company will make
all necessary Internal Revenue Service filings for the 1997 plan year and, if
applicable, any "short year" filings for the 1998 plan year, with respect to the
plans (other than Stand-Alone Plans) in which Distributed Company Employees
participated before the Distribution Date.
11. NO THIRD PARTY BENEFICIARIES.
Notwithstanding anything to the contrary herein, this Benefits
Agreement is solely for the benefit of the Company and the Distributed
Companies. There shall be no third party beneficiaries under this Benefits
Agreement, including, without limitation, any Company Individual, Printco
Individual, Schoolco Individual, Techco Individual, or Travelco Individual.
12. INCORPORATION BY REFERENCE.
This Benefits Agreement is part of the Distribution Agreement, and
shall be incorporated by reference into the Distribution Agreement as if set
forth fully therein. Without limiting the generality of the foregoing, the
parties acknowledge and agree that all provisions of the Distribution Agreement
relating to Indemnification, Dispute Resolution, Notices, and the other
provisions labeled "Miscellaneous" in the Distribution Agreement shall apply
with respect to the matters described herein as if such terms were incorporated
herein and a part hereof.
13. TAX DEDUCTIONS
Except as otherwise provided in Section 5 of the Tax Allocation
Agreement dated __________, 1998 between the Company, Printco, Schoolco, Techco
and Travelco, the parties intend that the party that actually bears the cost
(whether directly or indirectly) of making a
6
<PAGE>
payment with respect to, or (except as provided below) whose stock is used to
satisfy, a liability governed by this Agreement will be entitled to any and all
tax benefits associated therewith, including the benefit of taking an income tax
deduction with respect to such payment or satisfaction, and will be obligated to
satisfy all tax withholding obligations with respect there, and the parties
agree to take no action inconsistent with such intention. Notwithstanding that
intent, the parties recognize that it is possible that the Internal Revenue
Service or another taxing authority will take a different position. Therefore,
the parties agree that
if any of them is notified by the IRS or another taxing authority that
it is taking or proposes to take a different position, the party
receiving such notice will notify any others affected by the notice;
and
if, when, and to the extent that one party or its Subsidiary receives a
tax benefit as a result of a payment made by another party to satisfy a
liability governed by this Agreement, the benefiting party will pay or
cause its Subsidiary to pay the other party an amount equal to the "net
tax benefit" (as defined below) realized by the benefiting party, as
and when realized.
For this purpose, the "net tax benefit" to either party resulting from payment
or satisfaction of a liability will be deemed to equal the excess of (a) the
taxes that would have been paid by such party if such party had not paid or
satisfied such liability over (b) the taxes that the party actually pays.
14. MISCELLANEOUS
a. Complete Agreement; Construction. This Benefits Agreement, including
all Exhibits attached hereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all previous
negotiations, commitments, and writings with respect to such subject matter.
b. Supersession. In the event of any conflict between any of the terms
of this Benefits Agreement and the terms of either Distribution Agreement, the
terms of this Benefits Agreement will govern.
15. OTHER ACTIONS. The parties hereto shall take such other and further
actions as may be necessary or appropriate to carry out this Benefits Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Benefits Agreement to
be executed by their duly authorized officers as of the day and year first
written above.
U.S. OFFICE PRODUCTS COMPANY
by
-------------------------
Name:
Title:
WORKFLOW MANAGEMENT, INC.
by
-------------------------
Name:
Title:
SCHOOL SPECIALTY, INC.
by
-------------------------
Name:
Title:
AZTEC TECHNOLOGY PARTNERS, INC.
by
-------------------------
Name:
Title:
NAVIGANT INTERNATIONAL, INC.
by
-------------------------
Name:
Title:
8
<PAGE>
<PAGE>
Exhibit (c)(i)
/__/ Employee's Copy
/__/ Company's Copy
AMENDED SERVICES AGREEMENT
To Jonathan J. Ledecky:
This Agreement, amended as of June 8, 1998, establishes the terms of your
continuing employment with U.S. Office Products Company, a Delaware
corporation (the "Company"), and replaces your amended and restated
employment agreement with the Company dated as of November 4, 1997 (the "1997
Agreement"), as amended. This Agreement is contingent on and subject to the
closing of the distributions (the "Distributions") to the Company's
stockholders of the stock of Aztec Technology Partners, Inc., Navigant
International, Inc., School Speciality, Inc., and Workflow Management, Inc.
(the "Spincos"). If the Distributions do not close by September 30, 1998,
this Agreement will have no force or effect and your 1997 Agreement will
remain in place and in effect. You are resigning from the Board effective as
of and contingent on the Distributions.
Duties You agree to serve as a senior consultant to the Company
providing strategic business advice and high level
acquisition negotiations. In that capacity, you will report
to the Company's Board of Directors (the "Board"). The Board
can require such reports of your activities on the Company's
behalf as it reasonably deems appropriate. It can require
your services to the extent consistent with your other
contractual employment obligations to Consolidation Capital
Corporation ("CCC") and the Spincos, with the specific timing
of your services to be mutually agreed. You agree to comply
with the Company's generally applicable personnel policies to
the extent applicable to a person working on your schedule
and consistent with your obligations in this Agreement.
Term The term of this Agreement runs from the day following the
effective date of the Distributions (the "Closing Date")
through June 30, 2001, unless earlier terminated as provided
in this Agreement.
Salary You will receive an annual salary of $48,000 from the Closing
Date, payable in accordance with the Company's payroll
policies.
Company Your Company options will continue to vest and be exercisable
on their
<PAGE>
Options current schedules unless and until the Company properly
terminates your employment for Cause under this Agreement.
The Company will adjust the exercise price of your options
consistent with adjustments for substantially all of the
other optionholders' options.
Your existing Company options will not convert into Spinco
options.
The Company will accelerate your options if and to the extent
that the Company accelerates the exercisability of options
for substantially all management optionholders.
You waive any claim to participate in any matching or reload
program that may apply to other employees of the Company.
The unexercised portions of your Company options will expire
under their current terms or if, as finally determined by a
court, you violate the No Competition provision as it applies
to the Company.
Disgorging If a court finds that you violated the No
Option Competition provision, you agree that your
Gain unexercised options are retroactively
forfeited as of the date of the violation and
that, if you have exercised the options since
the violation began, you will promptly pay the
Company any Option Gain, net of any taxes
actually paid on the options. For purposes
of this Agreement, the "Option Gain" per share
you received on exercise of options on or
after the violation is
Stock for stock you have sold, the greater
Sold of (i) the spread between closing price
on the date of exercise and the exercise
price paid ("Exercise Spread") and (ii)
the spread between the price at which you
sold the stock and the exercise price
paid, and
Stock for stock you have retained, the greater
Retained of (i) Exercise Spread and (ii) the
spread between the closing price on the
date of the court's final determination
and the exercise price paid.
Benefits You are eligible for participation in the Company's generally
applicable benefit plans and programs (including its 401(k)
Plan) to the extent you satisfy their terms for
participation.
Expenses The Company will make available to you, on an as needed and
as mutually agreed basis, office space, secretarial
assistance, and supplies for the direct performance of your
services to the Company. It will pay or reimburse
Amended Services Agreement with Jonathan J. Ledecky Page 2 of 13
<PAGE>
you for reasonable business expenses relating to the
direct performance of such services to the Company
(including expenses incurred before the date of this
Agreement but not previously submitted, as long as you
submit the expenses by June 30, 1998), subject to limits
to be mutually agreed in advance, upon proper and timely
substantiation.
Amended Services Agreement with Jonathan J. Ledecky Page 3 of 13
<PAGE>
Spinco You will receive options in the Spincos in consideration for
Compensation your services as an employee of each Spinco.
Option Your Spinco options will cover 7.5% of the
outstanding common stock of each Spinco
determined as of the Distribution Date
(excluding the stock under the Spinco's
initial public offering), with no
anti-dilution provisions in the event of
issuance of additional shares of common stock
(other than with respect to stock splits or
reverse stock splits).
Term Each Spinco option will expire ten years from
the Closing Date.
Price Each Spinco option will have a per share
exercise price equal to the offering price in
the initial public offerings for each
Spinco or, if no initial public offering
commences on the Closing Date, at the fair
market value of the Spinco's common stock,
as determined under the Spinco's option
plan, for the date of the grant.
Schedule Each Spinco option will be fully vested when
granted, but may not be exercised until the
first anniversary of the Closing Date.
Your Spinco options with respect to a
particular Spinco will become exercisable
before that first anniversary if and to the
extent the relevant Spinco accelerates the
options for substantially all management
optionholders.
All unexercised portions of Spinco options
with respect to a particular Spinco will
expire if, as finally determined by a court,
you violate the No Competition provision as it
applies to the respective Spinco.
If a court finds that you violated the No
Competition provision with respect to a
particular Spinco, you agree that your
unexercised options from that Spinco are
retroactively forfeited as of the date of the
violation and that, if you have exercised the
options from that Spinco since the violation
began, you will promptly pay that Spinco any
Option Gain, net of any taxes actually paid
on the options.
All unexpired options will vest and be
exercisable at your death.
Termination The Company can terminate your employment under this
Agreement only for "cause." "Cause" means your (i) conviction
of or guilty or nolo contendere plea to a felony demonstrably
and materially injurious to the Company's business, and
resulting in a sentence of imprisonment, or (ii), as finally
determined by a court, violation of the No Competition
provision as it applies to the Company, provided that the
Company will give you 10 days to resolve the violation before
attempting to invoke this termination provision. For a
termination under (ii), you agree to repay any
Amended Services Agreement with Jonathan J. Ledecky Page 4 of 13
<PAGE>
salary you received from the Company between the date of the
violation and the date of the court's determination.
Severance If your employment ends because you resign or are properly
terminated for cause, you will not receive severance or
termination pay, your salary will end, and your Company
options will cease vesting. Except to the extent the law or
the terms of an applicable plan requires otherwise, neither
you nor your beneficiary or estate will have any rights or
claims under this Agreement or otherwise to receive severance
or any other compensation or to participate in any other
plan, arrangement, or benefit, after your termination of
employment, other than with respect to your options.
No Competition The Company hereby releases you, effective for acts or
omissions after the Closing Date, from any obligation under
your 1997 Agreement to notify the Company regarding corporate
opportunities.
Consistent with certain of your prior obligations under the
1997 Agreement, you will not, until after the end of the
Restricted Period, for any reason whatsoever, directly or
indirectly, for yourself or on behalf of or in conjunction
with any other person, persons, company, partnership,
corporation, or business of whatever nature:
Competition (i) engage, as an officer, director,
shareholder, owner, partner, joint venturer,
or in a managerial capacity, whether as an
employee, independent contractor, consultant,
or advisor, or as a sales representative, in
any business (other than an Excluded Business,
as defined below) selling any products or
services in direct competition with the
Company within 100 miles of where the Company
or where any of the Company's subsidiaries or
affiliates regularly maintains any of its or
their offices with employees (the
"Territory"), where "products or services" are
determined for this clause with respect to
products or services offered on or before
January 13, 1998 by the Company and/or any of
the Spincos and where the geographic
limitation is determined with reference to the
applicable entity and its subsidiaries (e.g.,
competition with respect to a Spinco is
determined by reference to the location where
that Spinco has an office with employees and
not to the locations of others);
Employees (ii) call upon any person who is, at that
time, within the Territory, an employee of the
Company (including the respective subsidiaries
and/or affiliates thereof) in a managerial
capacity for the purpose
Amended Services Agreement with Jonathan J. Ledecky Page 5 of 13
<PAGE>
or with the intent of enticing such employee
away from or out of the Company's employ
(including the respective subsidiaries and/or
affiliates thereof) other than a member of
your immediate family; or
Customers (iii) call upon any person or entity that is,
at that time, or that has been, within one
year prior to that time, a customer of the
Company (including the respective subsidiaries
and/or affiliates thereof) within the
Territory for the purpose of soliciting or
selling products or services in direct
competition with the Company (including the
respective subsidiaries and/or affiliates
thereof) within the Territory other than on
behalf of an Excluded Business.
For purposes of this Agreement, the
"Restricted Period" ends, for the Company and
its subsidiaries and affiliates after the
Closing Date, on the second anniversary of the
Closing Date, and ends, for each Spinco and
its subsidiaries and affiliates after the
Closing Date, on the later of the second
anniversary of the Closing Date and the date
one year after you leave employment with the
Spinco and its subsidiaries and affiliates.
For purposes of this Agreement, the "Excluded
Businesses" are the following
(i) any electrical contracting
business that, at the time of its
creation or acquisition and at all
later times, derives more than 50% of
its revenues from electrical
contracting and maintenance services,
without regard to whether it would
otherwise violate the No Competition
clause because it is also engaged in a
business directly competitive with
Aztec Technology Partners, Inc. or any
of its subsidiaries (together,
"Aztec"), provided that this exclusion
does not permit the business to engage
in any of the lines of business
described under "Consulting and
Engineering Services," "Systems and
Network Design and Implementation
Services" and "Software Development
and Implementation Services" in the
Aztec Form S-1 filed on June 3, 1998
(the "Aztec Specified Businesses")
other than as provided under (ii) or (vi)
in the Excluded Businesses;
Amended Services Agreement with Jonathan J. Ledecky Page 6 of 13
<PAGE>
(ii) any business whose revenue from
activities that compete with Aztec and
its subsidiaries, at the time of the
business's creation or acquisition and
at all later times, is less than $15
million per year, provided that this
exclusion does not permit the business
to engage in the Aztec Specified
Businesses other than (i) as provided
under (vi) in the Excluded Businesses
or (ii) through the pending CCC
acquisitions of National Network
Systems in Denver, Colorado and of
Chambers Electronics Communications in
Phoenix, Arizona;
(iii) any business engaged, and only to
the extent it is so engaged, in computer
monitoring for facilities management;
(iv) any business engaged, and only to
the extent that it is so engaged, in the
business of selling, supplying, or
distributing janitorial or sanitary
products or services;
(v) any business engaged, and only to
the extent it is so engaged, in the
managing or servicing of office
equipment (other than computers);
(vi) any business engaged, and only to
the extent it is so engaged, in providing
internet access services and
activities supportive of such services;
(vii) UniCapital Corporation's
business as described in its prospectus
as of the date of this Agreement; and
(viii) U.S. Marketing Services Inc.'s
("USM") shelf-stocking and merchandising,
and point of purchase display creation
and incentive marketing businesses,
as described in its registration
statement filed on the date of this
Agreement, so long as you are solely
an investor in USM and not an officer,
director, or employee of or consultant
to, USM; provided however, that your
service as a director will not violate
the foregoing requirement as long as
you cease to be a director no later
than the 90th day after the effective
date of USM's initial public offering;
Amended Services Agreement with Jonathan J. Ledecky Page 7 of 13
<PAGE>
provided, that in each case you are engaged in
such business only in a policy making role and
not in the entity's business in a manner that
would involve you in direct personal
competition with the Company (and its
subsidiaries) or the applicable Spinco (and
its subsidiaries), provided further that
this proviso does not prevent your
activities in furtherance of acquisitions
of Excluded Businesses, and provided further
that you will comply with your fiduciary
duties as a director of each of the Spincos
in connection with the Excluded Businesses.
To the extent permitted by your obligations to the relevant
Excluded Business, as an employee and/or director of the
Company and each Spinco (or their subsidiaries), you will
inform the relevant entity of any opportunities for it
associated with any of the Excluded Businesses.
In addition to (and not in lieu of) the restriction contained
in the Employees clause above, you agree that, during the
period that the restrictions contained in this No Competition
provision remain in effect, and so long as you are employed
by, or otherwise affiliated with, CCC, you will not, directly
or indirectly, offer employment with CCC to, or otherwise
allow CCC to employ, any person who
is employed by the Company or a subsidiary of the
Company at the time; or
was so employed by the Company or a subsidiary of the
Company within one year prior to such time; or
provides (or within the prior year provided) substantial
service to the Company or a subsidiary of the Company as
part of an entity that is or was a vendor or other
outside service provider to the Company or any
subsidiary; provided, however, that this provision
regarding vendors and outside service providers will not
apply after the Closing Date. In addition, the Company
specifically agrees that you may hire Jackie Scott and
Amy Blodgett, notwithstanding anything to the contrary
in the 1997 Agreement.
Notwithstanding the above, the foregoing covenant shall
not be deemed to prohibit you from acquiring capital stock
in CCC or any Excluded Business or serving as an officer,
director or employee or consultant to CCC, or acquiring as
an investment not more than 4.9% of the capital stock of a
competing business, whose stock is traded on a national
securities exchange or over-the-counter, provided that
such actions do not otherwise breach your obligations
hereunder; and provided further that actions of CCC after
you have ceased to be a director, officer, and employee of
CCC will not constitute a breach of this covenant despite
your continued stock ownership, so long as you are not
then directly assisting any competitive actions.
Amended Services Agreement with Jonathan J. Ledecky Page 8 of 13
<PAGE>
Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that
could be caused to the Company for which it would have no
other adequate remedy, you agree that the Company may enforce
the No Competition provisions by injunctions and restraining
orders.
You and the Company agree that you will not be in
violation of the No Competition provisions by virtue of
your investment in or other relationship to the Company,
any of the Spincos, or their respective subsidiaries, even
if one of those entities engages in direct competition
with another. You and the Company agree that CCC's
acquisition or retention of Wilson Electric Company, Inc.
("Wilson") and Wilson's engaging in any lines of business
in place as of the Closing Date do not violate the No
Competition provision.
You and the Company agree that the No Competition provisions
impose a reasonable restraint on you in light of the
Company's activities and business (including the Company's
subsidiaries and/or affiliates) on the date of the execution
of this Agreement.
The Company agrees to consider reasonably and within two
weeks of receipt any requests you make for a waiver from the
No Competition provisions for a particular acquisition.
You and the Company further agree that, if you enter into a
business or pursue other activities not in competition with
the Company (including the Company's subsidiaries), or
similar activities or business in locations the operation of
which, under such circumstances, does not violate the
Competition clause of this No Competition provision, and in
any event such new business, activities, or location is not
in violation of this No Competition provision or of your
obligations under this No Competition provision, if any, you
will not be chargeable with a violation of this provision if
the Company (including the Company's subsidiaries) shall
thereafter enter the same, similar, or a competitive (i)
business, (ii) course of activities, or (iii) location, as
applicable.
The covenants in this No Competition provision are severable
and separate, and the unenforceability of any specific
covenant does not affect the provisions of any other
covenant. Moreover, if any court of competent jurisdiction
shall determine that the scope, time, or territorial
restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced
to the fullest extent which the court deems reasonable, and
the Agreement shall thereby be reformed.
All of the covenants in this No Competition provision shall
be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim
or cause of action by you against the Company, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of
such covenants. It is specifically agreed that the Restricted
Period, during which your
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<PAGE>
agreements and covenants made in this provision shall be
effective, is computed by excluding from such computation any
time during which you are in violation of any provision of
the No Competition provision.
Notwithstanding any of the foregoing, if any applicable law
reduces the time period during which you are prohibited from
engaging in any competitive activity described in this
provision, you agree that the period for prohibition shall be
the maximum time permitted by law.
You specifically agree that the Company and the Spincos have
provided you with sufficient consideration for the
enforcement of the No Competition obligations for the
Restricted Period and for the assignment of this provision to
the Spincos.
After the Distributions, you agree that the Company will
assign to each Spinco the ability to enforce the
noncompetition provisions as to its own business.
Other The Company acknowledges that you are also employed by CCC
Employment and the Spincos, and agrees that such dual employment does
not breach this Agreement, unless and to the extent that you
thereby violate the No Competition provisions.
Return of All records, designs, patents, business plans, financial
Company statements, manuals, memoranda, lists and other property
Property delivered to or compiled by you by or on behalf of the
Company (including the respective subsidiaries thereof) or
their representatives, vendors, or customers that pertain to
the business of the Company (including the respective
subsidiaries thereof) shall be and remain the property of the
Company, and be subject at all times to its discretion and
control. Likewise, you will make reasonably available at the
Company's request during business hours all correspondence,
reports, records, acquisition materials, charts, advertising
materials and other similar data pertaining to the business,
activities, or future plans of the Company that you have
collected or obtained.
Trade You agree that you will not, during or after the term of this
Secrets Agreement with the Company, disclose the specific terms of
the Company's (including the respective subsidiaries thereof)
relationships or agreements with its or their respective
significant vendors or customers or any other significant and
material trade secret of the Company (including the
respective subsidiaries thereof) whether in existence or
proposed, to any person, firm, partnership, corporation or
business for any reason or
Amended Services Agreement with Jonathan J. Ledecky Page 10 of 13
<PAGE>
purpose whatsoever. For CCC or any other businesses with
which you are affiliated or in which you are a stockholder,
you may reach agreement on comparable terms with significant
vendors to the Company, so long as you do not provide copies
of or otherwise disclose the specific terms of the Company's
relationships or agreements.
Indemnification If you are made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an
action by the Company against you), by reason of the fact
that you are or were performing services under this Agreement
or the 1997 Agreement then the Company must indemnify you
against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, as actually and
reasonably incurred by you in connection therewith to the
fullest extent provided by Delaware law and in accordance
with the Company's Bylaws. Further, while you are expected at
all times to use your best efforts to faithfully discharge
your duties under this Agreement, the Company will not hold
you liable to itself or its subsidiaries or affiliates for
errors or omissions made in good faith where you have not
exhibited gross, willful, or wanton negligence or misconduct
or performed criminal or fraudulent acts that materially
damage the business of the Company; provided, however, that
this sentence shall not apply to acts or omissions between
the effective date of the 1997 Agreement and the Closing
Date.
No Prior You hereby represent and warrant to the Company that your
Agreements execution of this Agreement, your services to the Company,
and the performance of your agreements hereunder will not
violate or be a breach of any agreement with a former or
current employer, client, or any other person or entity.
Further, you agree to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses
of investigation, by any such third party that such third
party may now have or may hereafter come to have against the
Company based upon or arising out of any non-competition
agreement, invention, or secrecy agreement between you and
such third party that was in existence as of the date of this
Agreement.
Complete This Agreement is not a promise of future employment. You
Agreements have no oral representations, understandings, or agreements
with the Company or any of its officers, directors, or
representatives covering the same subject matter as this
Agreement. This written Agreement is the final, complete, and
exclusive statement and expression of the agreement between
the Company and you with respect to all the terms of this
Agreement, and it
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<PAGE>
cannot be varied, contradicted, or supplemented by evidence
of any prior or contemporaneous oral or written agreements.
This written Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the
Company and you, and no term of this Agreement may be waived
except by writing signed by the party waiving the benefit of
such term.
Notice Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: U.S. Office Products Company
1025 Thomas Jefferson Street, N.W.
Suite 600 East
Washington, D.C. 20007
Attention: General Counsel
To Employee: Jonathan J. Ledecky
1400 34th St., N.W.
Washington, D.C. 20007
Notice shall be deemed given and effective three days after
the deposit in the U.S. mail of a writing addressed as above
and sent first class mail, certified, return receipt
requested, or when actually received. Either party may change
the address for notice by notifying the other party of such
change in accordance with this Notice provision.
Severability If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and
possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. This severability
provision shall be in addition to, and not in place of, the
comparable provisions in the No Competition provision.
Governing Law This Agreement shall in all respects be construed according
to the laws of the State of Delaware, other than those
relating to conflicts of laws. Any decision as to breaches of
this Agreement or any provision herein shall be made pursuant
to a final, nonappealable decision of a court.
Binding Effect This Agreement binds and benefits the Company and each of the
and Assignment Spincos, each of their respective successors or assigns, and
your heirs and the personal representatives of your estate.
Without the Company's prior written consent, you may not
assign or delegate this Agreement or any or
Amended Services Agreement with Jonathan J. Ledecky Page 12 of 13
<PAGE>
all rights, duties, obligations, or interests under it. You
specifically agree that the Company may assign its rights
under No Competition, in whole or in part, to each Spinco
with respect to such Spinco's business.
Superseding Contingent upon the Closing and effective only in that event,
Effect this Agreement supersedes any prior oral or written
employment or severance agreements between you and the
Company (including specifically your 1997 Agreement
(including but not limited to its Change of Control
provisions) but specifically excluding your options to
purchase Company stock). Contingent upon the Closing and
effective only in that event, the 1997 Agreement will
terminate as of the Closing Date. Except as set forth above,
this Agreement supersedes all prior or contemporaneous
negotiations, commitments, agreements, and writings with
respect to the subject matter of this Agreement. All such
other negotiations, commitments, agreements, and writings
will have no further force or effect; and the parties to any
such other negotiation, commitment, agreement, or writing
will have no further rights or obligations thereunder.
Negotiated You agree that you have consulted with counsel of your own
Agreement selection and have negotiated the terms of this Agreement
with the Company. You and the Company agree that this
Agreement should not be construed against either party as the
"drafter."
U.S. OFFICE PRODUCTS COMPANY
Date: By: /s/ Thomas Morgan
-------------------- -----------------------------------
Thomas Morgan
President and Chief Executive Officer
I agree to and accept these terms:
Date: /s/ Jonathan J. Ledecky
-------------------- -----------------------------------
Jonathan J. Ledecky
Amended Services Agreement with Jonathan J. Ledecky Page 13 of 13
