Exhibit 4.7
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ALCO STANDARD CORPORATION
$35,000,000 10.51% SERIES A SENIOR NOTES DUE APRIL 24, 2001
$25,000,000 8.61% SERIES B SENIOR NOTES DUE APRIL 1, 2005
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ASSUMPTION AGREEMENT
AND
AMENDED AND RESTATED NOTE AGREEMENT
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Dated as of May 13, 1994
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TABLE OF CONTENTS
(Not Part of Agreement)
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1. BACKGROUND; AUTHORIZATION OF
ASSUMPTION; ASSUMPTION;
AUTHORIZATION OF AMENDMENT AND
RESTATEMENT OF EXISTING AGREEMENTS
AND EXISTING ERSKINE NOTES;
AUTHORIZATION OF ISSUANCE OF NOTES................................. 1
1A. Background.................................................... 1
1B. Authorization of Assumption; Assumption....................... 2
1C. Authorization of Amendment and
Restatement of Existing Agreements
and Existing Erskine Notes;
Authorization of Issuance of Notes............................ 2
2. AMENDMENT AND RESTATEMENT;
PURCHASE AND SALE OF NOTES;
FAILURE TO DELIVER................................................. 3
2A. Amendment and Restatement..................................... 3
2B. Purchase and Sale of Notes.................................... 4
2C. Failure to Deliver............................................ 4
3. CONDITIONS OF CLOSING.............................................. 4
3A. Opinion of Purchaser's Special Counsel........................ 5
3B. Opinion of Company's Counsel.................................. 5
3C. Representations and Warranties; No Default.................... 5
3D. Purchase Permitted By Applicable Laws......................... 5
3E. Proceedings................................................... 5
3F. Certificates of Good Standing/
Qualification to Do Business.................................. 6
3G. No Material Adverse Change.................................... 6
3H. Due Diligence................................................. 6
3I. Yield-Maintenance, Fees and Expenses.......................... 6
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4. PREPAYMENTS....................................................... 7
4A. Required Prepayments......................................... 7
4B. Optional Prepayment With Yield-
Maintenance Amount........................................... 7
4C. Notice of Optional Prepayment................................ 7
4D. Partial Payments Pro Rata.................................... 8
4E. Retirement of Notes.......................................... 8
5. AFFIRMATIVE COVENANTS............................................. 8
5A. Reporting Requirements....................................... 8
5A(1). General Information.................................. 8
5A(2). Quarterly Officer's Certificates..................... 11
5A(4). Special Information.................................. 11
5B. Inspection of Property....................................... 12
5C. Covenant to Secure Notes Equally............................. 12
5D. Maintenance of Insurance..................................... 13
5F. Maintenance of Corporate Existence/
Compliance With Law/Preservation of Property................. 13
5G. Compliance with Environmental Laws........................... 13
5H. No Integration............................................... 14
5I. Financial Records............................................ 14
5K. Credit Facilities............................................ 14
6. NEGATIVE COVENANTS................................................ 15
6A. Working Capital and other Limitations........................ 15
6A(1) Working Capital........................................ 15
6A(2) Funded Debt to Net Worth Ratios........................ 16
6A(3) Interest Coverage Ratios............................... 16
6A(4) Contingent Liabilities................................. 16
6A(5) Net Worth.............................................. 17
6B. Restriction on Dividends and
Purchases of Stock........................................... 17
6C. Liens, Debt and Other Restrictions........................... 17
6C(1) Liens.................................................. 17
6C(2) Debt................................................... 18
6C(3) Merger or Consolidation................................ 18
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6C(4) Sale or Discount of Receivables........................ 19
6C(6) Transactions with Related Party........................ 19
6C(7) Investments............................................ 19
6D. Sale of Property............................................. 19
6E. Subsidiary Stock and Debt.................................... 20
6F. ERISA........................................................ 21
6G. Environmental Matters........................................ 21
6H. Specified Laws............................................... 21
7. EVENTS OF DEFAULT................................................. 22
7A. Acceleration................................................. 22
7B. Rescission of Acceleration................................... 25
7C. Notice of Acceleration or Rescission......................... 26
7D. Other Remedies............................................... 26
8. REPRESENTATIONS AND WARRANTIES.................................... 26
8A. Organization................................................. 27
8B. Financial Statements......................................... 27
8C. Actions Pending.............................................. 28
8D. Outstanding Debt............................................. 28
8E. Title to Properties.......................................... 28
8F. Taxes........................................................ 28
8G. Conflicting Agreements and Other Matters..................... 29
8H. Offering of Notes............................................ 29
8I. Use of Proceeds.............................................. 30
8J. ERISA........................................................ 30
8K. Governmental Consent......................................... 30
8L. Environmental Compliance..................................... 31
8M. Disclosure................................................... 32
9. REPRESENTATIONS OF THE PURCHASER.................................. 32
9A. Nature of Purchase........................................... 32
9B. Source of Funds.............................................. 33
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10. DEFINITIONS....................................................... 33
10A. Yield-Maintenance Terms..................................... 33
10B. Other Terms................................................. 35
10C. Accounting Principles,
Terms and Determinations.................................... 44
11. MISCELLANEOUS..................................................... 44
11A. Note Payments............................................... 44
11B. Expenses.................................................... 45
11C. Consent to Amendments....................................... 46
11D. Form, Registration, Transfer and Exchange
of Notes; Lost Notes........................................ 46
11E. Persons Deemed Owners; Participations....................... 47
11F. Survival of Representations and Warranties;
Entire Agreement............................................ 47
11G. Successors and Assigns; Transfer Provisions................. 48
11H. Disclosure to Other Persons; Confidentiality................ 48
11I. Notices..................................................... 49
11J. Payments Due on Non-Business Days........................... 50
11K. Satisfaction Requirement.................................... 50
11L. Independence of Covenants................................... 50
11M. Governing Law............................................... 50
11N. Severability................................................ 50
11O. Descriptive Headings........................................ 51
11P. Counterparts................................................ 51
11Q. No Novation................................................. 51
PURCHASER SCHEDULE
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of Company's Counsel
SCHEDULE 8A Subsidiaries
SCHEDULE 8D Outstanding Debt
ALCO STANDARD CORPORATION
825 Duportail Road
Wayne, Pennsylvania 19087-5589
as of May 13, 1994
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
The undersigned, ALCO STANDARD CORPORATION, an Ohio corporation (the
"Company"), hereby agrees with you as follows:
1. BACKGROUND; AUTHORIZATION OF ASSUMPTION; ASSUMPTION; AUTHORIZATION OF
AMENDMENT AND RESTATEMENT OF EXISTING AGREEMENTS AND EXISTING ERSKINE NOTES;
AUTHORIZATION OF ISSUANCE OF NOTES.
1A. Background. Erskine authorized the issue of and issued to you on
March 30, 1989 its 10.70% Senior Notes due 2001 (as amended up to, but
excluding, the Date of Closing; individually, an "Existing Erskine Note" and
collectively the "Existing Erskine Notes") in the original aggregate principal
amount of $35,000,000 pursuant to, and in accordance with the terms of, that
certain Note and Warrant Purchase Agreement dated as of March 30, 1989 (as
amended up to, but excluding, the Date of Closing, the "Existing Note
Agreement") among Erskine, Erskine House and you. The Existing Erskine Notes
were substantially in the form of Exhibit A attached to the Existing Note
Agreement. On March 29, 1990, Erskine authorized the issue of and issued to you
its $25,000,000 9.21% preferred stock due 2005 (as amended up to, but excluding,
the Date of Closing, individually, the "Erskine Preferred Stock"; the "Existing
Erskine Notes" and the "Erskine Preferred Stock" sometimes collectively referred
to herein as the "Existing Erskine Instruments") pursuant to, and in accordance
with the terms of, that certain
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Preferred Stock and Warrant Purchase Agreement dated March 29, 1990 (as amended
up to, but excluding, the Date of Closing, the "Preferred Stock Agreement"; the
Existing Note Agreement and the Preferred Stock Agreement sometimes collectively
referred to herein as the "Existing Agreements") among Erskine, Erskine House
and you. In June 1993, the Company, through a Wholly-Owned Subsidiary,
purchased the outstanding stock of Erskine House.
1B. Authorization of Assumption; Assumption. The Company hereby
authorizes its assumption of, and subject to your consent, hereby agrees that it
is bound by, and assumes and agrees to be fully liable in respect of and to
perform and discharge, all of the liabilities, obligations and undertakings of
Erskine, whether now existing or hereafter arising, provided for in the Existing
Agreements and/or the Existing Erskine Instruments, including, without
limitation, any indemnification provisions and the obligation to duly and
punctually pay the principal of, including any required prepayments of
principal, and interest on, the Existing Erskine Notes in accordance with the
terms and provisions of the Existing Note Agreement and the Existing Erskine
Notes. You, by your execution of this Agreement and subject to the satisfaction
of the conditions set forth in Section 3 of this Agreement, hereby consent to
such assumption, which assumption shall be effective simultaneously with the
transactions contemplated by paragraph 1C below.
1C. Authorization of Amendment and Restatement of Existing Agreements and
Existing Erskine Notes; Authorization of Issuance of Notes. The Company hereby
authorizes, and agrees and consents to, the Assumption and Restatement in their
entirety of the Existing Agreements and the Existing Erskine Notes, as provided
for herein. The Company authorizes the issue of its senior promissory notes in
the aggregate principal amount of $60,000,000, as follows:
(i) as the amendment and restatement of, and substitution for, the
Existing Erskine Notes, the Company will issue its Series A Senior Notes
in the aggregate principal amount of $35,000,000, to mature April 24,
2001, to bear interest on the unpaid balance thereof from the date thereof
until the principal thereof shall have become due and payable at 10.51%
per annum and on overdue payments at the rate specified therein, and to be
substantially in the form of Exhibit A attached hereto (the "Series A
Notes"); and
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(ii) in exchange for the retirement of the Erskine Preferred Stock,
the Company will issue its Series B Senior Notes in the aggregate
principal amount of $25,000,000, to mature April 1, 2005, to bear interest
on the unpaid balance thereof from the date thereof until the principal
thereof shall have become due and payable at 8.61% per annum and on
overdue payments at the rate specified therein and to be substantially in
the form of Exhibit A attached hereto (the "Series B Notes").
The term "Notes" as used in this Agreement shall mean the Existing Erskine
Notes, as amended and restated by Exhibit A to this Agreement, and each
promissory note delivered pursuant to any provision of this Agreement (including
the Series A Notes and Series B Notes) and each promissory note delivered in
substitution or exchange for any Note pursuant to any such provision. The term
"Note" shall refer to any of the Notes. Notes which have the same (i) final
maturity, (ii) installment payment dates, (iii) installment payment amounts (as
a percentage of the original principal amount of each Note), (iv) interest rate,
and (v) interest payment periods, are herein called a "Series" of Notes.
2. AMENDMENT AND RESTATEMENT; PURCHASE AND SALE OF NOTES; FAILURE TO
DELIVER.
2A. Amendment and Restatement. Subject to the terms and conditions of
this Agreement, you, by your execution of this Agreement, hereby agree and
consent to the amendment and restatement in its entirety of the Existing
Agreements by this Agreement and, upon the satisfaction of such terms and
conditions, the Existing Agreements shall be deemed so amended and restated.
Subject to the terms and conditions of this Agreement, you, by your execution of
this Agreement, hereby further agree and consent to the amendment and
restatement in their entirety of the Existing Erskine Notes by the substitution
of the Series A Notes therefor. On May 13, 1994, or such other date as may be
acceptable to you and the Company (herein called the "Closing" or the "Date of
Closing"), the Company agrees, subject to the terms and conditions of this
Agreement, to execute and deliver to you, at the offices of King & Spalding, 120
West 45th Street, New York, New York, the aggregate principal amount of the
Series A Notes set forth opposite your name in the Purchaser Schedule attached
to this Agreement as Annex 1 (the "Purchaser Schedule"), in the form of a single
Series A Note (or such greater number of Notes) dated the Date of Closing and
registered in your name (or in the name of your
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nominee). Contemporaneously with the receipt by you of such Series A Notes, you
agree to deliver to the Company for cancellation the Existing Erskine Notes held
by you (the foregoing transactions are hereinafter referred to collectively as
the "Assumption and Restatement"). All amounts owing under, and evidenced by,
the Existing Erskine Notes as of the Date of Closing shall continue to be
outstanding under, and shall after the Date of Closing be evidenced by the
Series A Notes, and shall be repayable in accordance with this Agreement and the
Series A Notes.
2B. Purchase and Sale of Notes. The Company will issue and sell to you
and, subject to the terms and conditions of this Agreement, you will purchase
from the Company, the Series B Notes in the principal amount specified opposite
your name for purchase by you in the Purchaser Schedule on the Date of Closing
in exchange for the retirement of the Erskine Preferred Stock. The sale and
exchange shall take place simultaneously with the Assumption and Restatement at
the offices of King & Spalding. At the Closing, the Company will deliver to you
the aggregate principal amount of the Series B Notes set forth opposite your
name in the Purchaser Schedule, in the form of a single Series B Note (or such
greater number of Notes) dated the Date of Closing and registered in your name
(or in the name of your nominee). Contemporaneously with the receipt by you of
such Series B Notes, you agree to deliver to the Company the Erskine Preferred
Stock held by you to be retired by the Company. All amounts owing under, and
evidenced by, the Erskine Preferred Stock as of the Date of Closing shall
continue to be outstanding under, and shall after the Date of Closing be
evidenced by the Series B Notes, and shall be repayable in accordance with this
Agreement and the Series B Notes.
2C. Failure to Deliver. If on the Date of Closing, the Company fails to
tender to you the Notes to be acquired by you on such date or if the terms and
conditions of this Agreement have not been satisfied, you shall be relieved of
all further obligations under this Agreement. Nothing in this paragraph shall
operate to relieve the Company from any obligations under this Agreement, the
Existing Agreements or the Existing Erskine Instruments or to waive any of your
rights against the Company, Erskine or Erskine House.
3. CONDITIONS OF CLOSING. It is the intention of the parties hereto
that the assumption of the Existing Erskine Notes by the Company, the issuance
of the Series A Notes and the Series B Notes and the execution, delivery and
full effectiveness of this Agreement be simultaneously
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effected. Your obligation to purchase the Notes at the Closing is subject to
the satisfaction of the following conditions on or before the Date of Closing:
3A. Opinion of Purchaser's Special Counsel. You shall have received from
King & Spalding, who are acting as special counsel for you in connection with
this transaction, a favorable opinion satisfactory to you as to such matters
incident to the matters herein contemplated as you may reasonably request.
3B. Opinion of Company's Counsel. You shall have received from
J. Kenneth Croney, Vice President and General Counsel of the Company, a
favorable opinion reasonably satisfactory to you and substantially in the form
of Exhibit B.
3C. Representations and Warranties; No Default. The representations and
warranties in paragraph 8 shall be true in all material respects on and as of
the date of such Closing, except to the extent of changes caused by the
transactions herein contemplated; no Event of Default or Default shall exist on
the Date of Closing; and the Company shall have delivered to you an Officer's
Certificate, dated the Date of Closing, to both such effects.
3D. Purchase Permitted By Applicable Laws. The purchase of and payment
for the Notes on the terms and conditions herein provided (including the use of
the proceeds of such Notes) shall not violate any applicable law or governmental
regulation (including, without limitation, section 5 of the Securities Act or
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and shall not subject you to any tax (other than any tax on income earned),
penalty, liability or other onerous condition under or pursuant to any
applicable law or governmental regulation, and you shall have received such
evidence as you may reasonably request to establish compliance with this
condition.
3E. Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all related
documents shall be reasonably satisfactory in substance and form to you, and you
shall have received such counterpart originals or certified or other copies of
such documents as you may reasonably request. In this connection, the Company
shall deliver to you:
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(i) copies of its articles of incorporation (certified as of a recent
date by the Secretary of the State of its incorporation) and its by-laws
(certified by its Secretary) as in effect on the Date of Closing;
(ii) copies (certified by its Secretary) of all corporate action
taken by the Company to authorize the signing, delivery and performance of
this Agreement and the Notes and the issuance of the Notes;
(iii) certificates of incumbency and specimen signatures of the
Company's officers authorized to sign and deliver this Agreement and the
Notes.
3F. Certificates of Good Standing/Qualification to Do Business. You
shall have received a good standing certificate for the Company issued by the
Secretary of State of the State of its incorporation.
3G. No Material Adverse Change. You shall have received a certificate
from the chief financial officer of the Company, dated the Date of Closing,
stating that no material adverse change in the financial condition, business,
operations or prospects of the Company or its Subsidiaries, taken as a whole,
has occurred since September 30, 1993.
3H. Due Diligence. You shall have completed your due diligence review of
the Company and its Subsidiaries, including, without limitation, compliance with
Environmental Requirements, and shall have been satisfied with the results.
3I. Fees and Expenses. (a) The Company shall have paid in immediately
available funds by wire transfer to the account specified in the Purchaser
Schedule with reference to "Alco Standard, Structuring Fee" the structuring fee
in an aggregate amount equal to $125,000 owed to you; and
(b) The Company shall have paid in immediately available funds the fees
and expenses of King & Spalding.
4. PREPAYMENTS. The Notes must be prepaid by the Company as specified
in paragraph 4A and may, at the Company's option, be prepaid as specified in
paragraph 4B.
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4A. Required Prepayments. Until the Notes shall be paid in full, the
Company shall make the following prepayment of the Notes, without Yield-
Maintenance Amount.
(i) on the Series A Notes, the Company shall prepay the sum of
$7,000,000 on April 24 in each of the years 1997 to 2000, inclusive, and
such principal amounts of the Series A Notes, together with interest
thereon to the prepayment dates, shall become due on such prepayment
dates. The remaining principal amount of the Series A Notes, together
with interest accrued thereon, shall become due on April 24, 2001, the
maturity date of the Series A Notes.
(ii) on the Series B Notes, the Company shall prepay the sum of
$4,166,600 on April 1 in each of the years 2000 to 2004, inclusive, and
such principal amount of the Series B Notes, together with interest
thereon to the prepayment dates, shall become due on such prepayment
dates. The remaining principal amount of the Series B Notes, together
with interest accrued thereon, shall become due on April 1, 2005, the
maturity date of the Series B Notes.
4B. Optional Prepayment With Yield-Maintenance Amount. The Notes may be
prepaid, in whole at any time or in part from time to time, at the option of the
Company, at 100% of the principal amount so prepaid plus accrued and unpaid
interest thereon to the prepayment date and the Yield-Maintenance Amount, if
any, with respect to each Note. Any partial prepayment of the Notes under this
paragraph 4B shall be in integral multiples of $1,000,000 and applied in
satisfaction of required prepayments of principal under paragraph 4A in inverse
order of their scheduled due dates.
4C. Notice of Optional Prepayment. The Company shall give each holder of
a Note irrevocable written notice of any prepayment under paragraph 4B not less
than 10 Business Days before the prepayment date. The notice shall state the
prepayment date and the principal amount of the Notes, and the Notes held by
such holder, to be prepaid on such date and shall state that the prepayment is
to be made under paragraph 4B. When written notice has been given to each
holder of a Note, the principal amount of the Notes specified in the notice,
together with accrued and unpaid interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect thereto, shall become due and
payable on the prepayment date. On or before the day on which it gives written
notice under this paragraph
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4C, the Company shall inform, by telephone, each holder of Notes which shall
have designated a recipient of such notice in the Purchaser Schedule attached
hereto or in written notice to the Company, of the principal amount of the Notes
to be prepaid and the prepayment date.
4D. Partial Payments Pro Rata. Upon any partial prepayment of the Notes
pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any Subsidiary or Affiliate other than by
prepayment pursuant to paragraph 4A or 4B) in proportion to the respective
outstanding principal amounts thereof.
4E. Retirement of Notes. The Company shall not, and shall not permit any
Subsidiary or Affiliate to, prepay or otherwise retire in whole or in part prior
to their stated final maturity (other than by prepayment pursuant to paragraph
4A or 4B or upon acceleration of such final maturity pursuant to paragraph 7A),
or purchase or otherwise acquire, directly or indirectly, Notes held by any
holder unless the Company or such Subsidiary or Affiliate shall have offered to
prepay or otherwise retire or purchase or otherwise acquire, as the case may be,
the same proportion of the aggregate principal amount of Notes held by each
other holder of Notes at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any Subsidiary or Affiliate shall not be deemed to be
outstanding for any purpose under this Agreement, except as provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS.
5A. Reporting Requirements.
5A(1) General Information. The Company covenants that it will
deliver to each holder of Notes in quadruplicate:
(i) as soon as practicable and in any event within 60 days after the
end of each quarterly period (other than the fourth quarterly period) in
each fiscal year,
(1) Consolidated statements of income, stockholders' equity and
cash flows for the period from the
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beginning of the current fiscal year to the end of such quarterly
period, and
(2) a Consolidated balance sheet as at the end of such quarterly
period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and satisfactory in form to the Required Holder(s) and certified by
an authorized financial officer of the Company as fairly presenting, in
all material respects, the financial condition of the Company and its
Consolidated Subsidiaries as of the end of such period and the results of
their operations for the period then ended in accordance with generally
accepted accounting principles, subject to changes resulting from normal
year-end adjustments and the inclusion of abbreviated footnotes; provided,
however, that delivery pursuant to clause (iii) below of copies of the
Quarterly Report on Form 10-Q of the Company for such quarterly period
filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this clause (i);
(ii) as soon as practicable and in any event within 90 days after the
end of each fiscal year,
(1) Consolidated statements of income, stockholders' equity and
cash flows for such year, and
(2) a Consolidated balance sheet as at the end of such year,
setting forth in each case in comparative form corresponding Consolidated
figures from the preceding annual audit, all in reasonable detail and
satisfactory in scope to the Required Holder(s) and reported on by
independent public accountants of recognized standing selected by the
Company whose report shall be without limitation as to the scope of the
audit and reasonably satisfactory in substance to the Required Holder(s);
provided, however, that delivery pursuant to clause (iii) below of copies
of the Annual Report on Form 10-K of the Company for such year filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii);
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(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its public stockholders and copies of all registration
statements (without exhibits) and all reports (other than any
registration statement filed on Form S-8) which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other report
submitted to the Company or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of the
books of the Company or any Subsidiary;
(v) promptly upon receipt thereof, a copy of each report, survey,
study, evaluation, assessment or other document prepared by any
consultant, engineer, Environmental Authority or other Person relating to
compliance by the Company or any Subsidiary with any Environmental
Requirements, if the cost of remediation, repair or compliance may be
reasonably expected to exceed $10,000,000 in any one case or in the
aggregate;
(vi) at such times as the Company is no longer subject to the
reporting requirements of section 13 or 15(d) of the Exchange Act, with
reasonable promptness, upon the request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by such
holder, such financial and other information as such holder may reasonably
determine to be necessary in order to permit compliance with the
information requirements of Rule 144A under the Securities Act in
connection with the resale of Notes. For the purpose of this clause
(vii) the term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act; and
(vii) with reasonable promptness, such other financial data as a
Significant Holder may reasonably request;
5A(2) Quarterly Officer's Certificates. Together with each delivery
of financial statements required by clauses 5A(i) and (ii) above, the Company
will deliver to each Significant Holder an Officer's Certificate demonstrating
(with computations in reasonable detail upon the request of
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any holder of a Note) compliance with the provisions of paragraphs 6A, 6B, 6C(1)
and 6C(7) and stating that there exists no Event of Default or Default, or, if
any Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Company has taken, is taking or proposes
to take with respect thereto;
5A(3) Special Information. The Company also covenants that within 5
Business Days after any Responsible Officer obtains knowledge of:
(a) an Event of Default or Default;
(b) a material adverse change in the financial condition, business or
operations of the Company and its Subsidiaries, taken as a whole;
(c) legal proceedings filed against the Company and/or any
Subsidiary, which reasonably could be expected to have a material adverse
effect on the financial condition, business or operations of the Company
and its Subsidiaries, taken as a whole, or which in any manner draws into
question the validity of or reasonably could be expected to impair the
ability of the Company to perform its obligations under this Agreement or
the Notes;
(d) a default under any agreement or note evidencing Debt for which
the Company or any Subsidiary is liable;
(e) the occurrence of any other event that reasonably could be
expected to impair the ability of the Company to meet its obligations
hereunder;
(f) any (i) Environmental Liabilities, (ii) pending, threatened or
anticipated Environmental Proceedings, (iii) Environmental Notices, (iv)
Environmental Judgments and Orders, or (v) Environmental Releases at, on,
in, under or in any way affecting the Properties which reasonably could be
expected to have a material adverse effect on the business, operations or
financial condition of the Company and its Subsidiaries, taken as a whole;
or
(g) with respect to any Plan that is subject to the funding
requirements of Section 302 of ERISA or Section 412 of the Code,
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the Company (i) has given or is required to give notice to the Pension
Benefit Guaranty Corporation that a material reportable event has occurred
with respect to such Plan, (ii) has delivered notice to the Pension
Benefit Guaranty Corporation of any intent to withdraw from or terminate
any such Plan, or (iii) has failed to make timely a contribution to any
such Plan;
the Company will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company or such Subsidiary has taken, is taking or proposes to take with respect
thereto.
5B. Inspection of Property. The Company covenants that, at such
reasonable times and as often as a Significant Holder may reasonably request, it
will permit any Person designated by a Significant Holder in writing, at the
Company's expense, to:
(i) visit and inspect any of the properties of the Company and any
Subsidiary;
(ii) examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts
therefrom; and
(iii) discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company or any Subsidiary
and independent public accountants to the Company.
5C. Covenant to Secure Notes Equally. The Company covenants that if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
paragraph 6C(1) (unless prior written consent shall have been obtained under
paragraph 11C), it will make or cause to be made effective provision whereby the
Notes will be secured by such Lien equally and ratably with any and all other
Debt thereby secured so long as any such other Debt shall be so secured.
5D. Maintenance of Insurance. The Company covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
13
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses.
5E. Maintenance of Corporate Existence/Compliance with Law/Preservation
of Property. The Company covenants that, except as permitted under paragraph
6C(3) and 6D, it and each Subsidiary will do or cause to be done all things
necessary to:
(i) preserve, renew and keep in full force and effect the corporate
existence of the Company and its Subsidiaries (other than those
Subsidiaries not material to the financial condition, business or
operations of the Company and its Subsidiaries taken as a whole);
(ii) comply with all laws and regulations (including, without
limitation, laws and regulations relating to equal employment opportunity
and employee safety) applicable to it and any Subsidiary except where the
failure to comply could not reasonably be expected to have a material
adverse effect on the business, operations or financial condition of the
Company and its Subsidiaries, taken as a whole;
(iii) maintain, preserve and protect all material intellectual
property of the Company and its Subsidiaries; and
(iv) preserve all the remainder of its property used or useful in
the conduct of its business and keep the same in good repair, working
order and condition excluding normal wear and tear.
5F. Compliance with Environmental Laws. The Company covenants that it
and each Subsidiary will, comply in a timely fashion with, or operate pursuant
to valid waivers of the provisions of, all applicable Environmental
Requirements, including, without limitation, the emission of wastewater
effluent, solid and hazardous waste and air emissions together with any other
applicable Environmental Requirements for conducting, on a timely basis,
periodic tests and monitoring for contamination of ground water, surface water,
air and land and for biological toxicity of the aforesaid, and all applicable
regulations of the Environmental Protection Agency or other relevant federal,
state or local governmental authority, except where the failure to comply could
not reasonably be expected to have a material adverse effect on the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole. The Company agrees to indemnify and
14
hold you, your officers, agents and employees (each an "Indemnified Person")
harmless from any loss, liability, claim or expense that you may incur or suffer
as a result of a breach by the Company or any Subsidiary, as the case may be, of
this covenant other than as a result of the gross negligence or wilful
misconduct of such Indemnified Person. The Company shall not be deemed to have
breached or violated this paragraph 5G if the Company or any Subsidiary is
challenging in good faith by appropriate proceedings diligently pursued the
application or enforcement of such Environmental Requirements for which adequate
reserves have been established in accordance with generally accepted accounting
principles.
5G. No Integration. The Company covenants that it has taken and will
take all necessary action so that the issuance of the Notes does not and will
not require registration under the Securities Act. The Company covenants that
no future offer and sale of debt securities of the Company of any class will be
made if there is a reasonable possibility that such offer and sale would, under
the doctrine of "integration", subject the issuance of the Notes to you to the
registration requirements of the Securities Act.
5H. Financial Records. The Company covenants that it and each Subsidiary
will, keep proper books of record and account in which full and correct entries
(subject to normal year end adjustments and, as to interim statements, the
absence of footnotes) will be made of the business and affairs of the Company or
such Subsidiary under generally accepted accounting principles consistently
applied (except for changes disclosed in the financial statements furnished to
you pursuant to paragraph 5A and concurred in by the independent public
accountants referred to in paragraph 5A).
5I. Credit Facilities. If (in the opinion of the Required Holders) any
of the covenants, representations and warranties or events of default, or any
other term or provision contained in any Credit Facility, is more favorable to
the banks, financial institutions or other Person who has extended credit
pursuant to such Credit Facility than are the terms of this Agreement to the
holders of Notes, this Agreement shall, coincident with the effectiveness of
such more favorable covenant, representation and warranty, event of default,
term or provision, be deemed to be automatically amended without further action
to contain such more favorable covenant, representation and warranty, event of
default, term or provision, and the Company covenants to provide any
documentation requested by a holder of a Note to evidence such amendment.
15
6. NEGATIVE COVENANTS. Unless the Required Holders otherwise agree in
writing, the Company shall not, and shall not permit any Consolidated
Subsidiary, to take any of the following actions or permit the occurrence or
existence of any of the following events or conditions:
6A. Working Capital and other Limitations. The Company covenants that it
will not at any time permit:
6A(1) Working Capital. Consolidated current assets at any time to be
less than the greater of either (x) consolidated current liabilities plus U.S.
$250,000,000 or (y) 150% of consolidated current liabilities. For purposes
hereof, consolidated current assets and consolidated current liabilities shall
be determined in accordance with generally accepted accounting principles,
except that:
(a) any loans or advances made by the Company or a Subsidiary shall
not be treated as a current asset;
(b) indebtedness for borrowed money due within one year from the date
of issuance may, at the option of the Company, be treated either as a
current liability or a long term liability, provided, that any such
indebtedness which the Company elects to treat as a long term liability
(x) shall not exceed in the aggregate U.S. $400,000,000 all of which shall
constitute unused availability under existing credit facilities of the
Company having a maturity of more than one year from any date of
determination (availability shall mean that (1) such amount is committed
and unborrowed, (2) no event of default or event which with the passing of
time or giving of notice or both would constitute an event of default
shall have occurred under such credit facility, and (3) all conditions to
a borrowing under the credit facility could be satisfied by the Company),
(y) shall be treated as Funded Debt for the purposes of clauses 6A(2) and
6A(3) of this paragraph, and (z) shall be deemed to be a long term
liability in accordance with such election for the purposes of this
Agreement at the time of receipt by each Significant Holder from the
Company of an appropriate schedule, descriptively identifying such
indebtedness, which schedule shall accompany the financial statements to
be furnished under paragraph 5A(1)(i) and (ii) hereof; and
6A(2) Funded Debt to Net Worth Ratios. Senior Funded Debt of the
Company and its Consolidated Subsidiaries (x) to exceed 45% of
16
the sum of Senior Funded Debt and Subordinated Funded Debt of the Company and
its Consolidated Subsidiaries plus the consolidated minority interest
obligations shown on the most recently delivered consolidated balance sheet of
the Company and its Consolidated Subsidiaries and the Consolidated Net Worth of
the Company and its Consolidated Subsidiaries, or (y) plus Subordinated Funded
Debt of the Company and its Consolidated Subsidiaries, taken together, to exceed
55% of the sum of Senior Funded Debt and Subordinated Funded Debt of the Company
and its Consolidated Subsidiaries plus the consolidated minority interest
obligations shown on the most recently delivered consolidated balance sheet of
the Company and its Consolidated Subsidiaries and the Consolidated Net Worth of
the Company and its Consolidated Subsidiaries; and
6A(3) Interest Coverage Ratios. The consolidated earnings (before
reduction for taxes and after interest expense has been added back) of the
Company and its Consolidated Subsidiaries for the most recent four quarters to
be less than 3.5 times the consolidated interest expense of the Company and its
Consolidated Subsidiaries for such four quarters. For purposes of calculating
such ratio, (a) the Finance Leasing Subsidiaries shall be treated as if they
were accounted for under the equity accounting method (i.e., the net or deficit
of their income over their expenses shall be taken into account in determining
consolidated earnings of the Company and its Consolidated Subsidiaries but their
aggregate interest expense shall not be added to the consolidated interest
expense of the Company and its Consolidated Subsidiaries) and (b) the amount of
either unusual or special non-operating gains or unusual or special non-
operating losses during such four quarters that, in either the case of losses or
gains, exceed, individually or in the aggregate, U.S. $25,000,000 shall be
excluded. The total of either such gains or such losses up to and including
U.S. $25,000,000 of either or both is to be included in the consolidated
earnings for purposes of calculating compliance with this clause (iii); and
6A(4) Contingent Liabilities. Contingent Liabilities to exceed the
sum of U.S. $20,000,000 plus 10% of Consolidated Net Worth; and
6A(5) Net Worth. Consolidated Net Worth to be less than
$750,000,000.
6B. Restriction on Dividends and Purchases of Stock. The Company will
not declare or pay a dividend on any class of its capital stock or make any
other distribution to its stockholders, or expend an aggregate
17
amount of funds or other property to purchase, redeem or otherwise acquire for
value any shares of its capital stock in excess of (x) the aggregate amount on a
cumulative basis of (i) U.S. $370,000,000 plus (ii) consolidated net income
after taxes of the Company earned after September 30, 1993 and (iii) the
aggregate amount received after September 30, 1993 as the net cash proceeds of
the sale of any shares of its capital stock less (y) the aggregate amount of all
such dividends, distributions and expenditures made after September 30, 1993.
For purposes of this paragraph 6B, the calculation shall exclude: (x) stock
splits, dividends paid, or distributions made, in stock of the Company; or (y)
exchanges of stock of one or more classes of the Company, except to the extent
cash or other value is involved in such exchange. The term "stock" as used in
this paragraph 6B shall include warrants or options to purchase stock.
6C. Liens, Debt and Other Restrictions. The Company covenants that it
will not and will not permit any Consolidated Subsidiary to:
6C(1) Liens. Create, assume or suffer to exist any Lien upon any of
its property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Notes pursuant to
paragraph 5C), except:
(i) Liens for taxes (including ad valorem and property taxes) and
assessments or governmental charges or levies not yet due or which are
being actively contested in good faith by appropriate proceedings;
(ii) other Liens incidental to the conduct of its business or the
maintenance, operation, construction or ownership of its property and
assets (including pledges or deposits in connection with workers'
compensation and social security taxes, assessments and charges, and
landlords, mechanics and materialmen Liens and survey exceptions or
encumbrances, easements or reservations, rights-of-way, or zoning
restrictions) provided that (A) such Liens were not incurred in connection
with the borrowing of money, or the obtaining of advances or credit or the
payment of the deferred purchase price of property and (B) the existence
of such Lien does not materially detract from the value of such property
or assets to the Company or any Consolidated Subsidiary or unreasonably
interfere with the ordinary conduct of business;
18
(iii) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business to secure (or to obtain
letters of credit that secure) the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds,
purchase, construction or sales contracts and other similar obligations,
in each case not incurred or made in connection with Debt;
(iv) Liens created after the Date of Closing in connection with the
borrowing or pledge of receivables which Liens when added to all
transactions contemplated by paragraph 6C(4) do not exceed, in the
aggregate, 10% of Consolidated Net Worth; and
(v) any right of set off or banker's lien (whether by common law,
statute, contract or otherwise) in favor of any Person to whom neither the
Company nor Consolidated Subsidiary owes any Debt; or
6C(2) Debt. Create, incur, assume or suffer to exist any Debt,
except:
(i) Debt of any Subsidiary to the Company or any Wholly-Owned
Subsidiary;
(ii) other Debt of Consolidated Subsidiaries permitted under
paragraph 6A; and
(iii) other Debt of the Company (other than Debt owed to a
Subsidiary) permitted under paragraph 6A;
6C(3) Merger or Consolidation. Merge, consolidate or exchange
shares with any other Person, except that:
(i) any Subsidiary may merge or consolidate with the Company or
any Wholly-Owned Subsidiary; provided, in the case of a Wholly-Owned
Subsidiary, it remains a Wholly-Owned Subsidiary after the merger or
consolidation; and
(ii) the Company may merge or consolidate with any other
corporation (including a Subsidiary) if the continuing or surviving
corporation is the Company and immediately after such merger or
19
consolidation, no Default or Event of Default shall have occurred or
exist; or
6C(4) Sale or Discount of Receivables. Sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable except as permitted by clause (iv) of paragraph
6C(1); or
6C(5) Transactions with Related Party. Effect any transaction with
any Affiliate or Subsidiary by which any asset or services of the Company or a
Subsidiary of the Company is transferred to such Affiliate or Subsidiary, or
from such Affiliate or Subsidiary or enter into any other transaction with an
Affiliate or Subsidiary, on terms more favorable than would be reasonably
expected to be given in a similar transaction with an unrelated entity (a
"Related Transaction") if such Related Transaction individually or taken
together with all other Related Transactions could reasonably be expected to
have a material adverse effect on the Company and its Consolidated Subsidiaries,
taken as a whole; or
6C(6) Investments. Make, or permit to remain, an Investment in a
Finance Leasing Subsidiary which results in the aggregate amount or value at any
time outstanding of such Investments to exceed 20% of the Consolidated Net Worth
of the Company and its Consolidated Subsidiaries.
6D. Sale of Property. The Company will not, and will not permit any
Consolidated Subsidiary to, sell, lease or transfer all or substantially all of
its assets unless after immediately giving effect thereto (i) the Company is in
compliance with the covenants and provisions contained herein and (ii) such
sale, lease or transfer shall not have any materially adverse effect upon the
financial condition of the Company and its ability to perform its obligations
hereunder. Notwithstanding this provision, any Consolidated Subsidiary may
sell, lease or transfer all or substantially all of its assets to any other
Consolidated Subsidiary or to the Company.
6E. Subsidiary Stock and Debt. The Company will not:
(i) permit any Subsidiary directly or indirectly to sell, assign,
pledge or otherwise dispose of any Debt of the Company or any other
Subsidiary, or any shares of stock of (or warrants, rights or options to
acquire stock of) any other Subsidiary, except to the
20
Company or a Wholly-Owned Subsidiary and except pursuant to paragraph 6D;
(ii) permit any Subsidiary to enter into or otherwise be bound by
or subject to any contract or agreement (including, without limitation,
any provision of its certificate or articles of incorporation or bylaws)
that restricts its ability to pay dividends or other distributions on
account of its stock; or
(iii) permit any of its Subsidiaries directly or indirectly to
create, incur, assume, suffer to exist, Guarantee or otherwise become, be
or remain liable with respect to any Debt in an aggregate amount
outstanding at any time in excess of 10% of Consolidated Net Worth plus
the amount of such Debt outstanding on the Date of Closing except (A) Debt
owing exclusively to the Company or another Subsidiary, (B) Debt of a
Subsidiary outstanding on the date that the Company acquires such
Subsidiary and not created in contemplation of such acquisition, (C) Debt
with respect to property to be used by the Company or its Subsidiaries,
the interest on which Debt is exempt from Federal income tax pursuant to
section 103 of the Code, (D) Debt of any foreign Subsidiary that is not
guaranteed by the Company or any other Subsidiary, (E) Debt of Finance
Leasing Subsidiaries owing to the Company or any of its Consolidated
Subsidiaries to the extent not prohibited under paragraph 6C(7) hereof,
(F) Debt of Finance Leasing Subsidiaries to a Person or Persons other than
the Company and its Consolidated Subsidiaries provided that such Debt is
not guaranteed by the Company or any of its Consolidated Subsidiaries, and
(G) unsecured Debt of Unisource Canada in an amount not to exceed U.S.
$200,000,000 (or the equivalent amount on any day in Canadian currency
calculated after giving effect to a conversion of such amount from U.S.
Dollars to Canadian dollars calculated at the buy spot rate quoted for
wholesale transactions by Corestates Bank, N.A. at approximately 11:00
a.m. Philadelphia time).
6F. ERISA. The Company covenants that it will not nor permit any
Subsidiary to:
(i) terminate or withdraw from any Plan resulting in the incurrence
of any material liability to the Pension Benefit Guaranty Corporation;
21
(ii) engage in or permit any Person to engage in any prohibited
transaction (as defined in Section 4975 of the Code) involving any Plan
(other than a Multiemployer Plan) which would subject the Company or any
Subsidiary to any material tax, penalty or other liability;
(iii) incur or suffer to exist any material accumulated funding
deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, involving any Plan (other than a
Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition which
presents a risk of incurring a material liability to the Pension Benefit
Guaranty Corporation.
6G. Environmental Matters. The Company covenants that it will not, and
will not permit any Third Party to, use, produce, manufacture, process,
generate, store, dispose of, manage at, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials used,
produced, released or managed in the ordinary course of business in compliance
with all applicable Environmental Requirements except where the failure to do so
could not reasonably be expected to have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries
taken as a whole and except for Hazardous Materials released in amounts which do
not require remediation pursuant to applicable Environmental Requirements or if
remediation is required, such remediation could not reasonably be expected to
have a material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries taken as a whole.
6H. Specified Laws. Neither the Company nor any agent acting on its
behalf will take any action which could reasonably be expected to cause this
Agreement or the Notes to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Exchange Act, in any case as in effect now or as the same may hereafter be
in effect.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
22
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or
Yield-Maintenance Amount payable with respect to any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on any
Note for more than 5 calendar days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of or
interest on any other obligation for money borrowed (or any Capitalized
Lease Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation (other than a current trade payable
which does not constitute Debt) issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage
or any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with respect
thereto; or the Company or any Subsidiary fails to perform or observe any
other agreement, term or condition contained in any agreement under which
any such obligation is created (or if any other event thereunder or under
any such agreement shall occur and be continuing) and the effect of such
failure or other event is to cause, or to permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due (or to be repurchased by the Company
or any Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default
shall occur or such a failure or other event causing or permitting
acceleration (or resale to the Company or any Subsidiary) shall occur and
be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company herein or
by the Company or any of its officers in any writing furnished in
connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made; or
23
(v) the Company fails to perform or observe any agreement
contained in paragraph 6; or
(vi) the Company fails to perform or observe any other agreement
contained herein and such failure shall not be remedied within 30 days
after any Responsible Officer obtains actual knowledge thereof or after
receipt by the Company of written notice from a holder of a Note of such
failure; or
(vii) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of the Company or
any Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein
called the "Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by,
a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
relating to the Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein; or an order, judgment or decree
is entered appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings, and
such order, judgment or decree remains unstayed and in effect for more
than 60 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the
24
Company and such order, judgment or decree remains unstayed and in effect
for more than 60 days; or
(xii) any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company
or such Subsidiary which requires the divestiture of assets representing a
substantial part (being an amount equal to 10% of consolidated assets), or
the divestiture of the stock of a Subsidiary whose assets represent a
substantial part, of the consolidated assets of the Company and its
Subsidiaries (determined in accordance with generally accepted accounting
principles) or which requires the divestiture of assets, or stock of a
Subsidiary, which shall have contributed at least 10% of consolidated
earnings (as calculated pursuant to paragraph 6A(3)) for any of the three
fiscal years then most recently ended, and such order, judgment or decree
remains unstayed and in effect for more than 60 days; or
(xiii) a final judgment or judgments in an amount in excess of
$10,000,000, individually or in the aggregate, shall be rendered against
the Company or any Subsidiary (for which no insurer has acknowledged, in
writing, responsibility for liability, subject to customary deductible)
and, within 60 days after entry thereof, such judgment is not discharged
or execution thereof stayed pending appeal, or within 60 days after the
expiration of any such stay, such judgment is not discharged; or
(xiv) the Company or any ERISA Affiliate, in its capacity as an
employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount exceeding
$10,000,000;
then:
(a) if such event is an Event of Default specified in clause
(i) or (ii) of this paragraph 7A, the holder of any Note (other than the
Company or any Subsidiary or Affiliate) may at its option, by written
notice to the Company, declare such Note to be, and such Note shall
thereupon be and become, immediately due and payable at par together
with interest accrued and unpaid thereon, without presentment, demand,
protest or other notice of any kind (including,
25
without limitation, notice of intent to accelerate), all of which are
hereby waived by the Company, and
(b) if such event is any Event of Default of this paragraph 7A with
respect to the Company, the Required Holder(s) may, at its or their
option, by written notice to the Company, declare all of the Notes to be,
and all of the Notes shall thereupon be and become, immediately due and
payable, together with interest accrued and unpaid thereon and, to the
extent permitted by applicable law, the Yield-Maintenance Amount, if any,
with respect to each Note, without presentment, demand, protest or other
notice of any kind (including, without limitation, notice of intent to
accelerate), all of which are hereby waived by the Company, provided that,
to the extent permitted by applicable law, the Yield-Maintenance Amount,
if any, with respect to each Note shall be due and payable upon such
declaration only if:
(x) the Required Holder(s) shall have given to the Company, at
least 10 Business Days before such declaration, written notice
stating its or their intention so to declare the Notes to be
immediately due and payable and identifying one or more such Events
of Default whose occurrences on or before the date of such notice
permits such declaration, and
(y) one or more of the Events of Default so identified shall be
continuing at the time of such declaration.
7B. Rescission of Acceleration. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if:
(i) the Company shall have paid all accrued and unpaid overdue
interest on the Notes, the principal of and Yield-Maintenance Amount, if
any, payable with respect to any Notes which have become due otherwise
than by reason of such declaration, and accrued and unpaid interest on
such overdue interest and overdue principal and Yield-Maintenance Amount
at the rate specified in the Notes,
26
(ii) the Company shall not have paid any amounts which have become
due solely by reason of such declaration,
(iii) all Events of Default and Defaults, other than non-payment of
amounts which have become due solely by reason of such declaration, shall
have been cured or waived pursuant to paragraph 11C, and
(iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement.
No such rescission or annulment shall extend to or affect any subsequent Event
of Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
as follows:
8A. Organization. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Ohio, and each
Subsidiary is duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated. Schedule 8A hereto is an accurate and
complete list of all Subsidiaries as of the Date of Closing, including the
27
jurisdiction of incorporation and ownership of all such Subsidiaries. The
Company and each Subsidiary has the corporate power to own its respective
properties and to carry on its respective businesses as now being conducted and
is duly qualified and authorized to do business in each other jurisdiction in
which the character of its respective properties or the nature of its respective
businesses require such qualification or authorization except where the failure
to be so qualified or authorized could not reasonably be expected to have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries, taken as a whole.
8B. Financial Statements. The Company has furnished you with the
following financial statements, identified by a principal financial officer of
the Company:
(i) a Consolidated balance sheet as at the last day of the fiscal
year ending September 30, 1993, a Consolidated statement of income for
each such year, and Consolidated statements of stockholder's equity and
cash flows for such year, all reported on by Ernst & Young; and
(ii) a Consolidated balance sheet as at December 31, 1993 and
Consolidated statements of income, stockholders' equity and cash flows for
the three-month period ended on each such date, prepared by the Company.
Those financial statements (including any related schedules and/or notes) are
true and correct in all material respects (subject, as to interim statements, to
the absence of footnotes or to changes resulting from normal year-end
adjustments) and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved and
show all liabilities, direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles. The balance sheets
fairly present, in all material respects, the Consolidated financial condition
of the Company and its Subsidiaries as at the dates thereof, and the statements
of income, stockholders' equity and cash flows fairly present, in all material
respects, the Consolidated results of the operations of the Company and its
Subsidiaries, the changes in the Company's stockholders' equity and their
Consolidated cash flows for the periods indicated. There has been no material
adverse change in the business, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole since September 30, 1993.
28
8C. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary, or any properties or rights of the Company or any
Subsidiary, by or before any court, arbitrator or administrative or governmental
body which could reasonably be expected result in any material adverse change in
the business, condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole.
8D. Outstanding Debt. Neither the Company nor any Subsidiary has any
Debt outstanding except as permitted by paragraphs 6A and 6C(2). There is no
default under the provisions of any instrument evidencing any Debt or of any
agreement relating thereto. Schedule 8D hereto is an accurate and complete list
of Debt of the Company and its Subsidiaries as of December 31, 1993.
8E. Title to Properties. The Company and each Subsidiary have good and
indefeasible title to their respective real properties (other than leased
properties or which individually or in the aggregate are not material to the
Company) and good title to all of their other respective properties and assets,
including the properties and assets reflected in the balance sheet as at
September 30, 1993 referred to in paragraph 8B (other than properties and assets
disposed of in the ordinary course of business or which individually or in the
aggregate are not material to the Company), subject to no Lien of any kind
except Liens permitted by paragraph 6C(1). All leases necessary in any material
respect for the conduct of the respective business of the Company and its
Subsidiaries are valid and subsisting and are in full force and effect.
8F. Taxes. The Company has and each Subsidiary has filed all federal,
state and other income tax returns which, to the best knowledge of the
Responsible Officers of the Company, are required to be filed (giving effect to
any extensions granted), and each has paid all taxes as shown on such returns
and on all assessments received by it to the extent that such taxes have become
due (including any extensions granted), except such taxes as are being contested
in good faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles.
8G. Conflicting Agreements and Other Matters. Neither the Company nor
any Subsidiary is a party to any contract or agreement or subject to any charter
or other corporate restriction which materially and adversely affects its
business, property or assets, or financial condition of the
29
Company and its Subsidiaries taken as a whole. Neither the execution nor
delivery of this Agreement or the Notes, nor the offering, issuance and sale of
the Notes, nor fulfillment of nor compliance with the terms and provisions
hereof and of the Notes will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary pursuant to, the charter or by-laws
of the Company or any Subsidiary, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Company or any Subsidiary
is subject. Neither the Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Debt of the
Company or such Subsidiary, any agreement relating thereto or any other contract
or agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of, Debt of the Company of the type to be
evidenced by the Notes.
8H. Offering of Notes. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than accredited investors, and neither the
Company nor any agent acting on its behalf has taken any action which would
reasonably be expected to subject the issuance or sale of the Notes to the
provisions of section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction. The Company hereby
represents and warrants to you that, within the preceding twelve months, neither
the Company nor any other Person acting on behalf of the Company has offered or
sold to any Person (other than accredited investors) any Notes, or any
securities of the same or a similar class as the Notes, or any other
substantially similar securities of the Company.
8I. Use of Proceeds. Neither the Company nor any Subsidiary owns (other
than margin stock of insignificant amounts received by the Company as payment
for accounts receivable) or has any present intention of acquiring any "margin
stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors of
the Federal Reserve System (herein called "margin stock"). None of such
proceeds has been or will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any margin
stock or for the purpose of maintaining,
30
reducing or retiring any Debt which was originally incurred to purchase or carry
any stock that is currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation G. Neither the Company nor any agent acting on its behalf has taken
any action which might cause this Agreement or the Notes to violate Regulation
G, Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
is or would be materially adverse to the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
Neither the Company, any Subsidiary or any ERISA Affiliate has incurred or
presently expects to incur any withdrawal liability under Title IV of ERISA with
respect to any Multiemployer Plan which is or would be materially adverse to the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole. The execution and delivery of this Agreement
and the issuance and sale of the Notes will be exempt from, or will not involve
any transaction which is subject to, the prohibitions of section 406 of ERISA
and will not involve any transaction in connection with which a penalty could be
imposed under section 502(i) of ERISA or a tax could be imposed pursuant to
section 4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the accuracy of your
representation in paragraph 9B.
8K. Governmental Consent. Assuming the representations made by you in
paragraph 9 are accurate, neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or administrative or
governmental body (other than those which are made or obtained prior to Closing
and routine filings after the date of any Closing with the Securities and
Exchange Commission and/or state Blue Sky authorities) in connection with the
execution and delivery of this Agreement, the offering,
31
issuance, sale or delivery of the Notes or fulfillment of or compliance with the
terms and provisions hereof or of the Notes.
8L. Environmental Compliance.
(i) The Company and its Subsidiaries and all of their respective
Properties have complied at all times and in all respects with all Environmental
Requirements where failure to comply could reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole.
(ii) Neither the Company nor any Subsidiary is subject to any
Environmental Liability or Environmental Requirement which could reasonably be
expected to have a material adverse effect on the business, condition (financial
or otherwise) or operations of the Company and its Subsidiaries, taken as a
whole.
(iii) Neither the Company nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state statute similar to
CERCLA which could reasonably be expected to have a material adverse effect on
the business condition (financial or otherwise) or operations of the Company and
its Subsidiaries, taken as a whole. None of the Properties has been identified
on any current or proposed National Priorities List under 40 C.F.R. (S) 300 or
any list arising from a state statute similar to CERCLA which could reasonably
be expected to have a material adverse effect on the business condition
(financial or otherwise) or operations of the Company and its Subsidiaries,
taken as a whole. None of the Properties has been identified on any CERCLIS
list which could reasonably be expected to have a material adverse effect on the
business condition (financial or otherwise) or operations of the Company and its
Subsidiaries, taken as a whole.
(iv) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, released, managed at or
shipped or transported to or from the Properties or are otherwise present at,
on, in or under the Properties or, to the actual knowledge of the Company, at or
from any adjacent site or facility, except for Hazardous Materials used,
produced, manufactured, processed, generated, stored, disposed of, released and
managed in the ordinary course of business in compliance with all applicable
Environmental Requirements and except for
32
Hazardous Materials present in amounts which have not required and do not
require remediation, pursuant to applicable law or regulation, or if remediation
is required, such remediation could not reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries, taken as a whole.
(v) The Company and each Subsidiary have procured all permits necessary
under Environmental Requirements for the conduct of their respective businesses
or is otherwise in compliance with all applicable Environmental Requirements,
except to the extent the failure to do so could not reasonably be expected to
have a material adverse effect on the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries, taken as a whole.
8M. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to you by or on behalf of the Company in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact peculiar to the Company or any
Subsidiary which materially adversely affects or in the future may (so far as
the Company can now reasonably foresee) materially adversely affect the
business, property or assets, or financial condition of the Company and its
Subsidiaries taken as a whole and which has not been set forth in this Agreement
or in the other documents, certificates and statements furnished to you by or on
behalf of the Company prior to the Date of Closing in connection with the
transactions contemplated hereby.
9. REPRESENTATIONS OF THE PURCHASER. You represent as follows:
9A. Nature of Purchase. You represent to the Company, and, by agreeing
to the assumption of the Existing Erskine Notes by the Company, the Amendment
and Restatement thereof and the substitution of the Series A Notes for the
Existing Erskine Notes and the issuance of the Series B Notes for the retirement
of the Erskine Preferred Stock, it is specifically understood and agreed, that
you are acquiring the Notes to be purchased by you hereunder for your own
account and not with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of your property shall at all times be and remain within your control.
33
9B. Source of Funds. No part of the funds being used by you to pay the
purchase price of the Notes being purchased by you hereunder constitutes assets
allocated to any separate account maintained by you in which any employee plan.
For the purpose of this paragraph 9B, the term "separate account" shall have the
respective meanings specified in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined in
the introductory sentence and in paragraphs 1 and 2 shall have the respective
meanings specified therein, and the following terms shall have the meanings
specified with respect thereto below:
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4B or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Discounted Value" shall mean, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the Y-M Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate (or such other display as may replace Page 678 on
the Telerate) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Y-M Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any
34
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be determined,
if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities.
"Remaining-Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Telerate" shall mean Telerate Services, Inc. or such other nationally
recognized service providing comparable services as you may select as a
substitute therefor.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
"Y-M Business Day" shall mean any day other than a Saturday, Sunday or
a day on which commercial banks in New York City are required or authorized to
be closed.
35
10B. Other Terms.
"Affiliate" shall mean with respect to any Person, any other Person
(a) directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person, (b) which other Person beneficially
owns or holds 5% or more of the shares of any class of Voting Stock of such
Person or (c) 5% or more of any class of the Voting Stock of which is
beneficially owned or held by such designated entity. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
entity, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such entity,
whether through the ownership of Voting Stock or by contract or otherwise.
Affiliate shall not include Subsidiaries.
"Agreement" as used herein and in the Notes, shall mean this Note
Agreement as it may be amended, restated, modified or supplemented from time to
time in accordance with its terms.
"Assumption and Restatement" is defined in paragraph 2A of the
Agreement.
"Bankruptcy Law" is defined in clause (viii) of paragraph 7A.
"Board" shall mean, for any Person, its Board of Directors or
equivalent governing body.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which commercial banks in New York City or are required or authorized
to be closed.
"Capitalized Lease Obligation" shall mean any rental obligation
which, under generally accepted accounting principles, would be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
36
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Inventory System established pursuant to CERCLA.
"Closing" is defined in paragraph 2A of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Consolidated" shall mean the consolidated financial information of
the Company and its Subsidiaries under generally accepted accounting principles.
"Consolidated Net Worth" shall be determined in accordance with
generally accepted accounting principles and shall mean the sum (as reflected in
the consolidated balance sheet of the Company and its Consolidated Subsidiaries)
of (i) the stated dollar amount of outstanding capital stock, (ii) the stated
dollar amount of additional paid in capital, if any, plus (iii) the amount of
surplus and retained earnings minus (iv) the cost of treasury shares and the
excess of redemption value over the stated value of preferred stock of the
Company and its Consolidated Subsidiaries.
"Consolidated Subsidiaries" shall mean all Subsidiaries except the
Finance Leasing Subsidiaries.
"Contingent Liabilities" shall mean letters of credit (excluding
commercial documentary letters of credit), any Guarantee to banks or other
lenders of indebtedness of another Person, and liabilities associated with
interest rate hedging agreements, provided, however, that Contingent Liabilities
shall not be deemed to include any recorded liability provided for on the
Company's consolidated balance sheet.
"Credit Facilities" shall mean, collectively, (i) the Amended and
Restated Credit Agreement dated as of September 30, 1993 among the Company, Alco
Office Products (UK) PLC, Corestates Bank, N.A., The Chase Manhattan Bank, N.A.,
Deutsche Bank AG, The Toronto-Dominion Bank and Corestates Bank, N.A., as Agent,
and any agreement, instrument or other document entered into as a replacement or
supplement thereto; (ii) any other agreement or other writing evidencing the
commitment to advance funds to the Company; (iii) any agreement, instrument or
other writing from time to time entered into in connection with any of the
37
foregoing; and/or (iv) any amendment, modification or supplement to or
restatement or replacement of any of the foregoing.
"Date of Closing" is defined in paragraph 2A of this Agreement.
"Debt" shall mean with respect to any Person, at any date of
determination,
(i) all indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed (including, without
limitation, all Capitalized Lease Obligations); and
(ii) all indebtedness, whether or not for borrowed money, secured
by any Lien on any property or asset owned or held by such Person subject
thereto, whether or not the indebtedness secured thereby shall have been
assumed by such Person; and
(iii) any indebtedness, whether or not for borrowed money, with
respect to which such Person has become directly or indirectly liable and
which represents or has been incurred to finance the purchase price (or a
portion thereof) of any property or services or business acquired by such
Person, whether by purchase, consolidation, merger or otherwise other than
any trade payable in the ordinary course of business that is a current
liability under generally accepted accounting principles; and
(iv) any indebtedness of the character referred to in clauses (i),
(ii) or (iii) of this definition deemed to be extinguished under generally
accepted accounting principles but for which such Person remains legally
liable to the extent the market value of any assets such Person has placed
in trust for the benefit of the holders of that indebtedness is less than
the aggregate amount of that indebtedness; and
(v) any indebtedness of any other Person of the character referred
to in subdivision (i), (ii), (iii) or (iv) of this definition with respect
to which the Person whose Debt is being determined has become liable by
way of a Guarantee;
38
all as determined in accordance with generally accepted accounting principles,
provided, however, Debt shall not include endorsement of negotiable instruments
for collection in the ordinary course of business.
"Disposition" is defined in paragraph 6D of this Agreement.
"Environmental Authority" shall mean any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Judgments and Orders" shall mean all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
degree or order.
"Environmental Liabilities" shall mean any liabilities, whether
accrued or contingent, arising from or relating in any way to any Environmental
Requirements.
"Environmental Notices" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also shall
mean (i) any written communication from any other Person threatening litigation
or administrative proceedings against or involving the Company relating to
alleged violation of any Environmental Requirements and (ii) any complaint,
petition or similar documents filed by any other Person commencing litigation or
administrative proceedings against or involving the Company relating to alleged
violation of any Environmental Requirements.
"Environmental Proceedings" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
39
"Environmental Releases" shall mean releases (as defined in CERCLA or
under any applicable state or local environmental law or regulation) of
Hazardous Materials. Environmental Releases does not include releases for which
no remediation or reporting is required by applicable Environmental Requirements
and which do not present a danger to health, safety or the environment.
"Environmental Requirements" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"Erskine" shall mean Erskine Holdings, Inc., a Delaware corporation
and a Wholly-Owned Subsidiary of Erskine House.
"Erskine House" shall mean Erskine House Group plc, a British
corporation and a Wholly-Owned Subsidiary of the Company.
"Erskine Preferred Stock" is defined in paragraph 1A of the
Agreement.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any rules or regulations promulgated thereunder.
40
"Existing Agreements" is defined in paragraph 1A of the Agreement.
"Existing Erskine Instruments" is defined in paragraph 1A of the
Agreement.
"Existing Erskine Note" is defined in paragraph 1A of the Agreement.
"Existing Note Agreement" is defined in paragraph 1A of the
Agreement.
"Fair Market Value" shall mean at any time, the sale value of
property that would be realized in an arm's-length sale at such time between an
informed and willing buyer, and an informed and willing seller, under no
compulsion to buy or sell, respectively.
"Finance Leasing Subsidiaries" shall mean Alco Capital Resource,
Inc., a Delaware corporation; Alco Capital Resource Canada Limited, a Canadian
corporation; and TNL Financial, Inc., a Texas corporation, and their respective
successor corporations.
"Funded Debt" shall mean any obligation payable more than one year
from the date of the creation thereof which under generally accepted accounting
principles is shown on the consolidated balance sheet as a liability (excluding
reserves for deferred income taxes and other reserves to the extent that such
reserves do not constitute obligations for borrowed money and excluding the
portion of any such obligation properly classified as a current liability) and
including, without limitation, Capitalized Lease Obligations.
"Guarantee" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Debt, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans,
41
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor of
such obligation, or to make payment for any products, materials or supplies or
for any transportation or services regardless of the non-delivery or non-
furnishing thereof, in any such case if the purpose or intent of such agreement
is to provide assurance that such obligation will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected against loss in respect thereof. The amount
of any Guarantee shall be equal to the outstanding principal amount of the
obligation guaranteed or such lesser amount to which the maximum exposure of the
guarantor shall have been specifically limited.
"Hazardous Materials" shall mean (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or
any other petroleum product or by-product, (d) toxic substances, as defined in
the Toxic Substances Control Act of 1976, or in any applicable federal, state or
local law or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable federal, state or local law or regulation, as each such Act,
statute or regulation may be amended from time to time.
"Investment" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any other Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, capital stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise), or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction) or any other type of preferential arrangement for the purpose,
or having the effect, of protecting a creditor against loss or
42
securing the payment or performance of an obligation, including any rights of
setoff (whether by statute, common law, contract or otherwise).
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in paragraph 1 of this Agreement.
"Officer's Certificate" shall mean a certificate signed in the name of
the Company by its President, one of its Vice Presidents or its Treasurer.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an estate, an unincorporated organization or a
government or any department, instrumentality or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"Preferred Stock", as applied to any corporation, shall mean shares of
stock of such corporation which are entitled to preference or priority over any
other shares of such corporation in respect of the payment of dividends or
distribution of assets upon liquidation or both.
"Preferred Stock Agreement" is defined in paragraph 1A of the
Agreement.
"Properties" shall mean all real property owned, leased or otherwise
used or occupied by the Company or any Subsidiary, wherever located.
"Purchaser Schedule" is defined in paragraph 2A of the Agreement.
"Required Holder(s)" shall mean the holder or holders of at least 51%
of the aggregate principal amount of the Notes from time to time outstanding.
43
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, principal financial officer, principal accounting officer,
treasurer or assistant treasurer of the Company or any other senior executive
officer of the Company involved principally in its financial administration or
its controllership function.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and any rules or regulations promulgated thereunder.
"Senior Funded Debt" shall mean all Funded Debt other than
Subordinated Funded Debt.
"Series A Note" is defined in paragraph 1C of this Agreement.
"Series B Note" is defined in paragraph 1C of this Agreement.
"Significant Holder" shall mean (i) you, so long as you shall hold (or
be committed under this Agreement to purchase) any Note, or (ii) any other
Person which holds at least $5,000,000 of the aggregate principal amount of the
Notes from time to time outstanding.
"Subordinated Funded Debt" shall mean Funded Debt which has been
subordinated to all other Senior Funded Debt pursuant to subordination
provisions acceptable to each Significant Holder.
"Subsidiary" shall mean any corporation of which the Company directly
or indirectly owns or controls at least a majority of the outstanding Voting
Stock.
"Third Party" shall mean all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Company's business (consistent with its practices on the Date of
Closing) and on a temporary basis.
"Transferee" shall mean any direct or indirect transferee of all or
any part of any Note purchased by you under this Agreement.
"Unisource Canada" shall mean Unisource Canada, Inc., a corporation
continued under the federal laws of Canada, and which is a Wholly-Owned
Subsidiary.
44
"Voting Stock" shall mean, with respect to any corporation, any
shares of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of the Board of such corporation
(irrespective of whether 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).
"Wholly-Owned Subsidiary" shall mean any Subsidiary, all of the
Voting Stock of which shall, at the time of determination, be owned by the
Company or another Wholly-Owned Subsidiary.
10C. Accounting Principles, Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis consistent with the
most recent audited consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 5A or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 8B, subject in the case of, interim
statements to normal year end adjustments and to the absence of footnotes.
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as you shall hold
any Note, it will make payments of principal of, interest on, and any Yield-
Maintenance Amount payable with respect to such Note, which comply with the
terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to your
account or accounts as specified in the Purchaser Schedule attached hereto, or
such other account or accounts in the United States as you may designate in
writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree (and any Transferee shall agree as a
condition to the transfer of any Note or part thereof) that, before disposing of
any Note, you (and any such Transferee) will make a notation thereon (or on a
schedule attached thereto) of all
45
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as you
have made in this paragraph 11A.
11B. Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save you and any
Transferee harmless against liability for the payment of, all reasonable out-of-
pocket expenses actually incurred (including without limitation legal fees)
arising in connection with such transactions, including:
(i) all taxes (together in each case with interest and penalties,
if any), other than state or federal income taxes or franchise taxes,
including without limitation, all stamp, intangibles, recording and other
taxes, which may be payable with respect to the execution and delivery of
this Agreement or the execution, delivery or acquisition of any Note;
(ii) all reasonable document production and duplication charges and
the reasonable fees and expenses of any special counsel engaged by you or
any Transferee after the Date of Closing in connection with this Agreement
or the Notes and any subsequent proposed modification or waiver of, or
proposed consent under, this Agreement or the Notes, whether or not such
proposed modification or waiver shall be effected or proposed consent
granted; and
(iii) the reasonable costs and expenses, including reasonable
attorneys' fees, actually incurred by you or such Transferee in connection
with the restructuring, refinancing or "work out" of this Agreement or the
Notes or the transactions contemplated hereby or thereby or in enforcing
(or determining whether or how to enforce) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this Agreement or
the Notes or the transactions contemplated hereby or by reason of your or
any Transferee's having acquired any Note, including without limitation
costs and expenses incurred in any bankruptcy case.
The obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by you or any
Transferee and the payment of any Note.
46
11C. Consent to Amendments. Except as otherwise provided in paragraph 5I
hereof, this Agreement may be amended, and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, if the Company shall obtain the written consent to such amendment, action or
omission to act, of the Required Holder(s) except that, without the written
consent of the holder or holders of all Notes at the time outstanding, no
amendment to this Agreement shall change:
(i) the maturity of any Note,
(ii) the principal of, or the rate or time of payment of interest
on or any Yield-Maintenance Amount payable on any Note,
(iii) the time, amount or allocation of any prepayments, or
(iv) the proportion of the principal amount of the Notes required
for any consent, amendment, waiver or declaration.
Each holder of any Note at the time or thereafter outstanding shall be bound by
any consent authorized by this paragraph 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued thereafter may
bear a notation referring to any such consent. No course of dealing between the
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. The
Notes are issuable in registered form without coupons in denominations of at
least $1,000,000, except as may be necessary to reflect any principal amount not
evenly divisible by $1,000,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
a record of transfers of the Notes. Upon surrender for registration of transfer
of any Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and of a like
aggregate principal amount, registered in the name of such transferee or
transferees. At the option of the holder of any Note, such Note may be
exchanged for other Notes of like tenor and of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Note to be exchanged at
the principal office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver the Notes which
the holder making the
47
exchange is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of
any Note of the loss, theft, destruction or mutilation of such Note and, in the
case of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver a new
Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment for
registration of transfer, the Company shall treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and the Company shall not be affected by
notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person
(other than any Person not an institutional investor) on such terms and
conditions as may be determined by such holder in its sole and absolute
discretion.
11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by you of any Note or
portion thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made at any time
by or on behalf of you or any Transferee. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and understanding
between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
11G. Successors and Assigns; Transfer Provisions. All covenants and other
agreements in this Agreement contained by or on behalf of either
48
of the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto (including, without limitation, any
Transferee) whether so expressed or not.
11H. Disclosure to Other Persons; Confidentiality. The Company
acknowledges that the holder of any Note may deliver copies of any financial
statements and other documents or information delivered to such holder, and
disclose any other information disclosed to such holder, by or on behalf of the
Company or any Subsidiary in connection with or pursuant to this Agreement only
to:
(i) such holder's directors, officers, employees, agents and
professional consultants,
(ii) any other holder of any Note,
(iii) any Person to which such holder offers to sell such Note or
any part thereof, provided that each such Person agrees to observe the
confidentiality standards described in this paragraph 11H,
(iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, provided that each such
Person agrees to observe the confidentiality standards described in this
paragraph 11H,
(v) any Person from which such holder offers to purchase any
security of the Company, provided that each such Person agrees to observe
the confidentiality standards described in this paragraph 11H,
(vi) any federal or state regulatory authority having jurisdiction
over such holder,
(vii) the National Association of Insurance Commissioners or any
similar organization, or
(viii) any other Person to which such delivery or disclosure may be
necessary or reasonably appropriate (a) in compliance with any law, rule,
regulation or order applicable to such holder, (b) in response to any
subpoena or other legal process or informal
49
investigative demand or (c) in connection with any litigation to which
such holder is a party.
Subject to the foregoing, each holder of a Note hereby agrees to use its
best efforts to hold in confidence and not to disclose any Confidential
Information; provided, that such holder will be free, after notice to the
--------
Company, to correct any false or misleading information which may become public
concerning its relationship to the Company. For the purpose of this paragraph
11H, the term "Confidential Information" shall mean information about the
Company or any Subsidiary furnished by the Company or any Subsidiary to such
holder, but does not include any information (i) which as publicly known, or
otherwise known to such holder, at the time of disclosure, (ii) which
subsequently becomes publicly known through no act or omission by such holder,
or (iii) which otherwise becomes known to such holder other than through
disclosure by the Company or any Subsidiary.
11I. Notices. All written communications provided for hereunder shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and
(i) if to you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at such other
address as you shall have specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to such other
holder at such address as such other holder shall have specified to the
Company in writing or, if any such other holder shall not have so
specified an address to the Company, then addressed to such other holder
in care of the last holder of such Note which shall have so specified an
address to the Company, and
(iii) if to the Company, addressed to it at 825 Duportail Road,
Wayne, Pennsylvania 19087-5589, Telephone: (215) 296-8000, Telecopy: (215)
296-3248, Attention: Vice President-Finance, or at such other address as
the Company shall have specified to the holder of each Note in writing.
11J. Payments Due on Non-Business Days. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on any Note that is due on a date other than a
50
Business Day shall be made on the next succeeding Business Day. If the date for
any payment is extended to the next succeeding Business Day by reason of the
preceding sentence, the period of such extension shall be included in the
computation of the interest payable on such Business Day.
11K. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to you or to the Required Holder(s), the
determination of such satisfaction shall be made by you or the Required
Holder(s), as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11L. Independence of Covenants. All covenants of the Company hereunder
shall be of independent effect so that if a particular action or condition is
not permitted by any one of such covenants, the fact that it would be permitted
by an exception to, or otherwise be within the other limitations of, another
covenant, shall not avoid the occurrence of an Event of Default or Default if
such action is taken or condition exists.
11M. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York. THE COMPANY HEREBY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE SOLE AND ABSOLUTE ELECTION OF THE
REQUIRED HOLDER(S) AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT OR THE NOTES SHALL BE LITIGATED IN SUCH
COURTS, AND THE COMPANY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH
COURTS.
11N. 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.
51
11O. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11P. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
11Q. No Novation. The Company has entered into this Agreement and the
Notes solely to amend, restate and restructure the terms of, and obligations
owing under and in connection with, the Existing Agreements. The Company does
not intend this Agreement and the Notes nor the transactions contemplated hereby
or thereby to be, and this Agreement and the Notes and the transactions
contemplated hereby or thereby shall not be construed to be, a novation of any
of the obligations owing under or in connection with the Existing Agreement.
[Signatures on Next Page.]
52
If you agree to the foregoing, please sign the form of acceptance on the
enclosed counterpart of this letter and return the same to the Company,
whereupon this letter shall become a binding agreement between the Company and
you.
Very truly yours,
ALCO STANDARD CORPORATION
By: /s/ Kathleen M. Burns
---------------------
Treasurer
The foregoing Agreement is
hereby accepted as of the date
first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Gail A. McDermott
----------------------
Vice President
Schedule 8A
SUBSIDIARIES OF REGISTRANT
--------------------------
The registrant is Alco Standard Corporation, an Ohio corporation, which has no
parent. The following sets forth information with respect to Alco's
subsidiaries as of April 30, 1994.
State or other
% Voting jurisdiction of
Securities incorporation
Subsidiary Owned (by whom) or organization
- ---------- --------------- ---------------
Alco Realty, Inc. (ARI) 100% Alco Delaware
Alco Canada Realty, Inc. 100% ARI Canada
375347 British Columbia Ltd. 100% ARI Canada
The Alco Standard Foundation 100% Alco Pennsylvania
Alco-Texas Realty, Inc. 100% Alco Texas
Chesterbrook Insurance Limited 100% Alco Bermuda
MDR Corporation (MDR) 100% Alco Delaware
AOP Brands, Inc. 100% MDR Delaware
AOP, Inc. (AOP) 100% MDR Delaware
Alco Business Machines, Inc. 100% AOP Delaware
Alco Capital Resource Canada Ltd. 100% AOP Canada
Alco Capital Resource, Inc. 100% AOP Georgia
Alco Office Products (UK) Plc (AOPUK) 100% AOP England
Erskine House Group PLC (EHGPLC) 100% AOPUK England
Erskine Holdings, Inc. (EHI) 100% EHGPLC Delaware
Advanced Image Systems, Inc. 100% EHI Delaware
Ameritech Equipment, Inc. 100% EHI Delaware
Copytex Corporation 100% EHI Delaware
Edgemont Sales Co., Inc. 100% EHI Delaware
Erskine Holding Funding
Corporation 100% EHI Delaware
Erskine Holdings Management Corp. 100% EHI Delaware
Mirex Corporation of Texas 100% EHI Delaware
Omi of California, Inc. 100% EHI Delaware
Sierra Office Concepts, Inc. 100% EHI Delaware
Standard Copier Machines, Inc. 100% EHI Delaware
Systems, Devices & Supplies, Inc. 100% EHI Delaware
University Copy Systems, Inc. 100% EHI Delaware
Zeno Systems of Colorado, Inc. 100% EHI Delaware
Zeno Systems of Georgia, Inc. 100% EHI Delaware
Zeno Systems of Houston, Inc. 100% EHI Delaware
Allegheny Business Machines, Inc. 100% AOP Delaware
Allstate Business Systems, Inc. 100% AOP Georgia
American Business Machines, Inc. 100% AOP Ohio
American Business Machines, Inc. 100% AOP Oregon
Associated Business Products, Inc. 100% AOP Idaho
Badger Business Products 100% AOP Delaware
Benndorf-Verster Limited 100% AOP Canada
Business Systems of Arizona, Inc. 100% AOP Delaware
Business Machines Center, Inc. (NSL) 100% AOP New Mexico
Calgary Copier, Ltd. 100% AOP Canada
Copier Consultants, Inc. 100% AOP North Carolina
State or other
% Voting jurisdiction of
Securities incorporation
Subsidiary Owned (by whom) or organization
- ---------- --------------- ---------------
Copy Corporation 100% AOP Kentucky
Copy Corporation of Canada Limited (CCC) 100% AOP Canada
Lion Business Machines, Ltd. 100% CCC Canada
Copy Data Group, Inc. 100% AOP Delaware
Copyline Corporation (Copy) 100% AOP California
Advanced Image Systems, Inc. 100% Copy California
Copy-Van, Incorporated 100% AOP Delaware
D.C. Hey Company, Inc. 100% AOP Minnesota
Halifax Office Products Limited 100% AOP Canada
Hovinga Business Systems, Inc. 100% AOP Michigan
Innovative Office Systems, Inc. (IOS) 100% AOP Texas
Innovative Office Systems-Louisiana
(IOSL) 100% IOS South Carolina
Copy Products, Inc. 100% IOSL Louisiana
International Office Systems, Inc. 100% AOP Delaware
Ken Parma's Copy Center, Inc. 100% AOP Texas
McDonald-Klein Business Products, Inc. 100% AOP Washington
O'Brien Business Equipment, Inc. 100% AOP Ohio
Office Products, Inc. (OP) 100% AOP Delaware
Office Group, Inc. (OG) 100% AOP Delaware
Office Group Industrie
Beteiligungs GmbH (OGBI) 50% OP, 50% OG Germany
IMM Industrie Beteiligungs
GmbH 49.9956% OGBI Germany
Omni Business Systems, Inc. 100% AOP Florida
S & S Office World, Inc. 100% AOP Texas
Southern Copy Machines, Inc. 100% AOP Delaware
Standard Office Systems of Sacramento, Inc. 100% AOP Delaware
SterCap, Ltd. (SCL) 100% AOP South Carolina
Venture Capital Management, Ltd. (VCM) 100% SCL South Carolina
Business Products, Ltd. (BPL) 100% VCM South Carolina
Modern Office Machines, Inc. (MOM) 100% BPL South Carolina
Modern Office Leasing, Inc. 100% MOM South Carolina
Advanced Office Machines, Inc. 100% MOM South Carolina
Ideal Leasing Company 100% MOM South Carolina
TNL Financial, Inc. 100% AOP Delaware
Taft Locke Companies 100% AOP Delaware
The T. Talbott Bond Company 100% AOP Maryland
Taylor-Made Office Systems, Inc. 100% AOP California
J. L. Teel Company, Inc. 100% AOP Delaware
Texas Copy Systems, Inc. 100% AOP Delaware
Uni-Copy Corporation of North Carolina 100% AOP Delaware
Unitech, Inc., of Mississippi 100% AOP Mississippi
University Copy Systems of Hawaii, Inc. 100% AOP Hawaii
Western Business Resources, Inc. 100% AOP South Dakota
Worcester Business Machines, Inc. 100% AOP Massachusetts
Xtec Office Systems, Inc. 100% AOP Pennsylvania
- 2 -
State or other
jurisdiction of
% Voting Securities incorporation or
Subsidiary Owned (by whom) organization
- ---------- ------------------- ----------------
Alco Standard Acquisition Capital Corporation 100% MDR Delaware
Alco Standard Ltd. 100% MDR Delaware
Alco Standard Petroleum Corporation 100% MDR Delaware
Alco Venture Capital Company 100% MDR Delaware
Office Automation, Inc. (OAI) 100% Alco Kansas
Office Automation Leasing, Inc. 100% OAI Kansas
PCA Holdings, Inc. 100% MDR Delaware
Unisource Worldwide, Inc. (UWI) 100% PCAHold Delaware
Central Products Company-Linden 100% UWI Delaware
Dygert/FCF, Inc. 100% UWI New York
PCA Brands, Inc. 100% UWI Delaware
PCA Sales Corporation 100% UWI Delaware
Paper Corporation of
North America (PCNA) 100% UWI Delaware
3813 Holdings, Ltd. 100% PCNA Canada
Unisource Canada, Inc. 100% PCNA Canada
Unisource International, Inc. 100% UWI Delaware
Partners Securities Company 100% Alco Delaware
TDFC Corporation 100% AFG Delaware
Upshur Coals Corporation 100% Alco West Virginia
Schedule 8D
ALCO STANDARD CORPORATION
DEBT
DECEMBER 31, 1993
($ IN THOUSANDS)
SHORT-TERM DEBT - VARIABLE RATE
INTEREST
AMOUNT RATE FACTOR
------ -------- ------
PAPER CORPORATION OF AMERICA
- ----------------------------
INTER-CITY PRUDENTIAL $ 140 5.00% $ 7
UNISOURCE - CANADA T. DOMINION BANK 2,719 5.50 150
VARIOUS 45,324 4.34 1,967
VARIOUS 3,777 5.50 208
ALCO OFFICE PRODUCTS
- --------------------
AMERITECH - SACRAMENTO JOHN FISHER 21 6.00* 1
RICOH 223 7.00 16
EDGEMONT J&D HEMMINGHAUS 27 6.00* 2
MOVINGA CITICORP 10 7.50 1
LION KELLY 101 7.75 8
CORPORATE
- ---------
NATIONAL WESTMINSTER 95,000 3.46 3,287
SHAWMUT 51,000 3.31 1,688
FIDELITY BANK 15,000 3.31 497
SAN PAOLO 10,000 3.50 350
CONTINENTAL ILLINOIS 20,000 3.50 700
------ -----
243,342 8,882
ACR - RECLASS OF ALCO I/C (4,457) 3.25 506
TOTAL SHORT-TERM DEBT - VARIABLE RATE $ 247,799 3.38% $ 8,376
======= ======
TOTAL SHORT-TERM DEBT - VARIABLE RATE $ 247,799 $ 8,376
TOTAL LONG-TERM DEBT - VARIABLE RATE 8,228 386
------- ------
TOTAL VARIABLE RATE DEBT $ 256,027 3.42% $ 8,762
======= ======
LONG-TERM DEBT - VARIABLE RATE
PAPER CORPORATION OF AMERICA
- ----------------------------
GARRETT - BUCHANAN TRUST COMPANY BANK $ 3,565 3.60% $ 128
ROURKE - ENO KEY BANK 299 3.90 12
ALCO OFFICE PRODUCTS
- --------------------
CALGARY CANADIAN IMPERIAL BANK 3,777 5.50 208
COPYVAN MITA CORP. 16 6.00* 1
MITA CORP. 12 6.00* 1
MERCHANTS EHFC 41 6.00* 2
MOM CSI 130 7.00 9
C&S 272 6.50 18
VARIOUS 1 6.00*
WESTERN BUSINESS VARIOUS 92 6.00* 6
ZENO - ATLANTA ERSKINE HOLDINGS 23 6.00* 1
------- ------
TOTAL LONG-TERM DEBT - VARIABLE RATE 8,228 4.69 386
======= ======
* RATE INFORMATION IS NOT AVAILABLE, THEREFORE, PRIME IS USED.
ALCO STANDARD CORPORATION
DEBT
DECEMBER 31, 1993
($ IN THOUSANDS)
LONG-TERM DEBT-FIXED RATE
INTEREST
AMOUNT RATE FACTOR
------ -------- ------
PAPER CORPORATION OF AMERICA
- ----------------------------
CARPENTER PAPER OMAHA NAT'L BANK $ 160 7.125% $ 11
COPCO PAPERS FRANKLIN COUNTY 5,700 11.OO 627
INTER-CITY NORTHWESTERN MUTUAL 367 9.875 36
NORTHWESTERN MUTUAL 850 8.375 71
MONARCH PAPER TRINITY RIVER 1,000 8.25 83
ALCO OFFICE PRODUCTS
- --------------------
A-COPY H.CHAMBERS 94 7.50 7
ALLEGHENY TEXAS NAT'L LEASING 8 11.00 1
BUSINESS MACHINES CENTER SUNWEST CREDIT 5 13.50 1
COPYVAN GENERAL MOTORS 10 7.90 1
DANA COMMERCIAL 33 15.10 5
DELTA VISUAL COMMUNICATIONS 130 9.00 12
ROBERT FOGETARY 116 9.00 10
D.C. HEY CARLSON 18 6.70 1
ERSKINE LTD. 873 6.38 56
ERSKINE HOLDINGS PRUDENTIAL 35,000 10.70 3,745
TEXAS COMMERCE 863 4.92 42
HALIFAX TD BANK 83 7.75 6
MERCHANTS 14 15.30 2
MOM ABS 25 12.50 3
IDEAL 93 9.00 8
NIGHTRIDER VARIOUS 7,234 11.00 796
OMI JLA CREDIT 76 6.39 5
KODAK 16 10.47 2
JLA CREDIT 3 12.65
DOWMAR 85 6.39 5
NORTHERN TELECOM 43 7.28 3
OMNI NORTHERN TELECOM 14 11.06 2
UNIV. COPY SYSTEMS - HAWAII AMERICAN NAT'L LEASING 11 14.22 2
AMERICAN NAT'L LEASING 4 17.14 1
AMERICAN NAT'L LEASING 7 12.51 1
GECC HAWAII LEASING 3 5.17
GECC HAWAII LEASING 3 5.57
WESTERN BUSINESS DODGE TOWN 3 14.00
BANK FIRST 8 11.00 1
XTEC UNISYS FINANCE 11 10.10 1
UNISYS FINANCE 1 10.48
UNISYS FINANCE 11 11.35 1
UNISYS FINANCE 1 10.52
YALE PRODUCTS 9 10.60 1
G.E. CAPITAL 63 9.60 6
VARIOUS 57 7.90 5
CORPORATE GROUP
- ---------------
CORPORATE G/L PRIVATE PLACEMENT 100,000 8.112 8,112
BOND ISSUE 150,000 8.875 13,313
TOTAL LONG-TERM DEBT - FIXED RATE $ 303,105 8.90% $ 26,985
======= ======
TOTAL LONG-TERM DEBT (EXCLUDING
UNKNOWNS) $ 311,333 8.79% $ 27,371
======= ======
TOTAL DEBT (EXCLUDING UNKNOWNS
& FINANCE SUB) $ 559,132 6.39% $ 35,747
======= ======
ALCO STANDARD CORPORATION
DEBT
DECEMBER 31, 1993
-----------------
($ IN THOUSANDS)
LONG-TERM DEBT -- UNKNOWNS INTEREST
AMOUNT RATE FACTOR
------ ---- ------
PAPER CORPORATION OF AMERICA
- ----------------------------
PCA CORPORATE $ 2,500
DIVISION LEDGER (2,500)
UNISOURCE 16,976
ALCO OFFICE PRODUCTS
- --------------------
BADGER TEXAS NAT'L. LEASING 34
ABM 3M MINESCO 17
MOM VARIOUS 18
TOTAL LONG-TERM DEBT -- UNKNOWNS $ 17,045
======
--------
TOTAL DEBT (EXCLUDING FINANCE SUB) $ 576,177
=======
LONG-TERM DEBT -- FINANCE SUBSIDIARY
ACR FIDELITY $ 25,000 6.26 % $ 1,565
DEUTSCHE BANK 30,000 5.89 1,767
SANWA BANK 15,000 5.92 888
CREDIT SUISSE 20,000 6.48 1,296
SANWA BANK 15,000 5.99 899
SHAWMUT BANK 20,000 4.01 802
PRUDENTIAL 12,000 8.55 1,026
PRUDENTIAL 25,000 8.62 2,155
TRUST CO. BANK 20,000 8.43 1,686
CREDIT SUISSE 25,000 5.92 1,480
DEUTSCHE BANK 21,000 7.37 1,548
TRUST CO. BANK 15,000 7.38 1,107
TRUST CO. BANK 32,000 5.32 1,702
FUJI BANK 25,000 5.26 1,315
NATIONS BANK 25,000 4.71 1,178
NATIONS BANK 25,000 5.29 1,323
SOCIETY NATIONAL 25,000 4.69 1,173
CREDIT SUISSE 20,000 4.13 826
TORONTO DOMINION 15,000 4.16 624
FIRST FIDELITY 18,000 5.18 932
RECLASS OF ALCO I/C (4,457) 3.25 506
ACR CANADA CANADIAN IMPERIAL BANK 22,964 5.50 1,263
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TOTAL LONG-TERM DEBT -- FINANCE SUBSIDIARY $ 446,507 6.06 % $ 27,061
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ALCO STANDARD CORPORATION
AVERAGE COST OF DEBT
DECEMBER 31, 1993
-----------------
($ IN THOUSANDS)
INTEREST
AMOUNT RATE FACTOR
------ -------- ------
ALCO CORPORATE
- --------------
CORPORATE LEDGER PRIVATE PLACEMENT $ 100,000 8.112 % $ 8,112
BOND ISSUE 150,000 8.875 13,313
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TOTAL CORPORATE $ 250,000 8.57 % $ 21,425
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A-1
EXHIBIT A
[FORM OF NOTE]
ALCO STANDARD CORPORATION
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN VIOLATION OF SUCH
LAWS.
____% SERIES [A] [B] SENIOR NOTE DUE APRIL ______
No. R_____ May __, 1994
$____________
FOR VALUE RECEIVED, the undersigned, ALCO STANDARD CORPORATION (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Ohio, hereby promises to pay to _____________________, or
registered assigns, the principal sum of _______ MILLION DOLLARS on May _____,
with interest (computed on the basis of a 360-day year--30-day month) (a) on the
unpaid principal balance thereof at the rate of ____% per annum from the date
hereof, payable [semi-annually] [quarterly] in arrears on the ____ day of
_________[, ________, ________] and _________ in each year, commencing with the
___________ next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Yield-Maintenance Amount (as defined in the Note
Agreement referred to below), payable semi-annually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the lesser of (i) the maximum rate permitted by applicable
law or (ii) greater of (a) ____%/*/ or (b) 2.0% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate.
Payments of principal or interest on and any Yield-Maintenance Amount
payable with respect to this Note are to be made at the main office of Morgan
Guaranty Trust Company of New York in New York City or at
- --------------------------
/*/ 2% above stated rate.
A-2
such other place as the holder hereof shall designate to the Company in writing,
in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Note Agreement, dated as of May 13, 1994 (herein called the
"Agreement"), between the Company and The Prudential Insurance Company of
America and is entitled to the benefits, and subject to the terms, thereof.
This Note is issued in registered form and, as provided in the Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal on the dates and in
the amounts specified in the Agreement. This Note is also subject to optional
prepayment, in whole or from time to time in part, on the terms specified in the
Agreement.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
The Company and any and all endorsers, guarantors and sureties severally
waive grace, demand, presentment for payment, notice of dishonor or default,
notice of intent to accelerate, notice of acceleration (to the extent set forth
in the Agreement), protest and diligence in collecting.
Should any debt represented by this Note be collected at law or in equity,
or in bankruptcy or other proceedings, or should this Note be placed in the
hands of attorneys for collection, the Company agrees to pay, in addition to the
principal, Yield-Maintenance Amount, if any, and interest due and payable
hereon, all costs of collecting or attempting to collect this Note,
A-3
including reasonable attorneys' fees and expenses (including those incurred in
connection with any appeal).
This Note is intended to be performed in the State of New York and shall
be construed and enforced in accordance with the law of such State. As provided
in paragraph 11M of the Agreement, the Company submits to the jurisdiction of
the Supreme Court of the State of New York located in New York County, New York
and the United States District Court for the Southern District of New York in
any action or proceeding relating to this Note.
ALCO STANDARD CORPORATION
By:______________________________
Title:
B-1
EXHIBIT B
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of General Counsel of the Company]
[Date of Closing]
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Ladies and Gentlemen:
We have acted as counsel for Alco Standard Corporation (the "Company") in
connection with the Note Agreement, dated as of May 13, 1994, between the
Company and you (the "Note Agreement"), pursuant to which the Company has issued
to you today 10.51% Series A Senior Notes due April 24, 2001, of the Company in
the aggregate principal amount of $35,000,000 and 8.61% Series B Senior Notes
due April 1, 2005, of the Company in the aggregate principal amount of
$25,000,000. All terms used herein that are defined in the Note Agreement have
the respective meanings specified in the Note Agreement. This letter is being
delivered to you in satisfaction of the condition set forth in paragraph 3B of
the Note Agreement and with the understanding that you are purchasing the Notes
in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of public
officials, certificates of officers of the Company and copies certified to our
satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as we have deemed relevant and
necessary as a basis for our opinion hereinafter set forth. We have relied upon
such certificates of public officials and of officers of the Company with
respect to the accuracy of material factual matters contained therein which were
not independently established. With respect to the opinion expressed
B-2
in paragraph 4 below, we have also relied upon the representation made by you in
paragraph 9A of the Note Agreement.
Based on the foregoing, it is our opinion that:
1. Each of the Company and each Consolidated Subsidiary is a corporation
duly organized and validly existing in good standing under the laws of the State
of the jurisdiction in which it is incorporated.
2. Each of the Company and each Consolidated Subsidiary has the
requisite corporate power to own its properties and carry on its businesses now
being conducted and is duly qualified and authorized to do business and is in
good standing in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification or authorization and
where the failure to be so qualified or authorized or to be in good standing
could reasonably be expected to have a material adverse effect on its financial
condition, business or operations.
3. The Note Agreement and the Notes have been duly authorized by all
requisite corporate action and duly executed and delivered by authorized
officers of the Company, and are valid obligations of the Company, legally
binding upon and enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Notes are entitled to the benefits of the Note
Agreement.
4. It is not necessary in connection with the offering, issuance, sale
and delivery of the Notes under the circumstances contemplated by the Note
Agreement to register the Notes under the Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
5. The extension, arranging and obtaining of the credit represented by
the Notes do not result in any violation of Regulation G, T or X of the Board of
Governors of the Federal Reserve System.
6. The execution and delivery of the Note Agreement and the Notes, the
offering, issuance and sale of the Notes and fulfillment of any
B-3
compliance with the respective provisions of the Note Agreement and the Notes do
not conflict with, or result in a breach of the terms, conditions or provision
of, or constitute a default under, or result in any violation of, or result in
the creation of any Lien upon any of the properties or assets of the Company
pursuant to, or require any authorization, consent, approval, exemption or other
action by or notice to or filing with any court, administrative or governmental
body or other Person (other than routine filings after the date hereof with the
Securities and Exchange Commission and/or state Blue Sky authorities) pursuant
to, the charter or by-laws of the Company, any applicable law (including any
securities or Blue Sky law), statute, rule or regulation or any agreement,
instrument, order, judgment or decree to which the Company or any Consolidated
Subsidiary is a party or otherwise subject.
This opinion may be relied upon by King & Spalding and any Transferee.
Very truly yours,