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EXHIBIT 4.06
NASHUA CORPORATION
44 FRANKLIN STREET
NASHUA, NEW HAMPSHIRE 03061
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AMENDED AND RESTATED
NOTE AGREEMENT
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$15,000,000 11.85% SENIOR NOTES DUE DECEMBER 31, 1997
Dated as of April 5, 1996
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
FOUR GATEWAY CENTER
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
Ladies and Gentlemen:
Pursuant to a Note Agreement, dated as of September 13, 1991, as
amended by (i) Amendment No. 1, dated as of December 31, 1991, (ii) Amendment
No. 2, dated as of January 27, 1994, (iii) Amendment No. 3, dated as of May 12,
1994 and (iv) Amendment No. 4, dated as of December 31, 1994 (as so amended, the
"ORIGINAL NOTE AGREEMENT"), between you, as Purchaser, and the undersigned,
NASHUA CORPORATION, a Delaware corporation (together with its successors and
assigns, the "COMPANY"), you purchased at a closing on September 17, 1991 (the
"ORIGINAL CLOSING DATE") 100% of the $20,000,000 9.17% Senior Notes due March
20, 2001 issued under the Original Note Agreement, as amended by an allonge
dated December 31, 1994 (the "ORIGINAL SENIOR NOTES"). As of the date hereof,
you are the holder of 100% of such Original Senior Notes, the outstanding
principal balance of which is $15,000,000. Subject to the terms and conditions
hereof, the Company and you desire to amend and restate the Original Note
Agreement and the Original Senior Notes to reflect the understandings set forth
herein.
The Company hereby agrees with you as follows:
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1. THE AMENDED NOTES.
The Company will authorize the issue of its amended senior promissory
notes (the "SENIOR NOTES") in substitution for the Original Senior Notes in the
aggregate principal amount of Fifteen Million Dollars ($15,000,000), to be dated
the date of issue thereof, to mature on December 31, 1997, to bear interest on
the unpaid balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of eleven and eighty-five
one-hundredths percent (11.85%) per annum and on overdue principal, premium and
interest at the rate specified therein, and to be substantially in the form of
Exhibit A-1 attached to this Agreement. The term "NOTES" as used in this
Agreement shall include (i) each Senior Note delivered pursuant to any provision
of this Agreement and each Senior Note delivered in substitution or exchange for
any such Note pursuant to any such provision and (ii) each YMA Note delivered
pursuant to any provision of this Agreement and each YMA Note delivered in
substitution or exchange for any such Note pursuant to any such provision.
2. DELIVERY OF AMENDED SENIOR NOTES.
Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to deliver to you the Senior Notes against delivery by you
to the Company of the Original Senior Notes. The Senior Notes shall be in the
aggregate principal amount of Senior Notes set forth below your name in the
Purchaser Schedule (the "PURCHASER SCHEDULE") attached to this Agreement as
Annex 1, at one hundred percent (100%) of such aggregate principal amount. On
the date of closing, which shall be April 5, 1996, or such later date as the
Company, the Banks and you may agree to in writing (the "CLOSING DATE"), the
Company will deliver to you, at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, one or more Senior Notes registered
in your name, evidencing the aggregate principal amount of Senior Notes in the
denomination or denominations specified with respect to you in the Purchaser
Schedule, against delivery and cancellation of the Original Senior Notes.
3. CONDITIONS OF CLOSING.
Your obligation to deliver the Original Senior Notes to the Company
under this Agreement is subject to the satisfaction, on or before the Closing
Date, of the following conditions:
3A. OPINION OF PURCHASER'S SPECIAL COUNSEL. You shall have received
from King & Spalding, which is acting as special counsel for you in connection
with
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this transaction, a favorable opinion satisfactory to you and substantially in
the form of Exhibit B-1 to this Agreement.
3B. OPINIONS OF COMPANY'S COUNSEL. You shall have received from
Bingham, Dana & Gould, special counsel for the Company, and Paul Buffum,
Secretary and Counsel of the Company, favorable opinions satisfactory to you and
substantially in the form of Exhibits B-2 and B-3, respectively, to this
Agreement.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and
warranties contained in paragraph 8 of this Agreement and in the Security and
Financing Documents shall be true on and as of the Closing Date, except to the
extent of changes caused by the transactions provided for in this Agreement;
there shall exist on the Closing Date no Event of Default or Default; there
shall have occurred no material adverse change in the business, conditions or
operations (financial or otherwise) of the Company and its Subsidiaries taken as
a whole since December 31, 1995; and you shall have received a certificate dated
the Closing Date, in form and substance satisfactory to you, and signed by the
President or Chief Financial Officer of the Company, certifying to all such
effects and that the conditions specified in this paragraph 3 have been
fulfilled.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The delivery of the Senior
Notes in exchange for the Original Senior Notes on the Closing Date on the terms
and conditions provided in this Agreement 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 (excluding net income
taxes), penalty, liability or other onerous condition under or pursuant to any
applicable law or governmental regulation, and you shall have received such
certificates or other evidence as you may request to establish compliance with
this condition.
3E. PRIVATE PLACEMENT NUMBER. The Company shall have obtained a new
private placement number for the Senior Notes, if necessary, from the CUSIP
Service Bureau of Standard & Poor's Corporation.
3F. CLOSING EXPENSES. The Company shall have paid at the closing the
statement for the fees and disbursements of the special counsel to you
presented on the Closing Date.
3G. PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident to this Agreement shall be satisfactory in substance and form to you,
and you
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shall have received all such counterpart originals or certified or other copies
of such documents as you may reasonably request.
3H. ADDITIONAL CONDITIONS OF CLOSING. The Company shall have
satisfied the additional conditions set forth below on or before the Closing
Date:
(i) You have shall received executed or certified copies of the
Credit Agreement, the Collateral Agency and Intercreditor Agreement and
the other Security and Financing Documents, in each case in form and
substance reasonably satisfactory to you.
(ii) All conditions precedent set forth in this Agreement and the
Security and Financing Documents shall have been satisfied or (if
acceptable to you) waived in accordance with the terms of each such
agreement.
(iii) You shall have received the results of a recent search by a
Person satisfactory to you, of the Uniform Commercial Code, judgement
and tax lien filings which may have been filed with respect to personal
property of the Company, and the results of such search shall be
satisfactory to you.
(iv) There shall have occurred no material adverse change in the
business, conditions or operations (financial or otherwise) of the
Company and its Subsidiaries taken as a whole since December 31, 1995.
(v) You shall have received officers' certificates from the
Company and each of its domestic Subsidiaries in form and substance
satisfactory to you attaching thereto a copy of the resolutions of the
Board of Directors of the Company and each of such Subsidiaries
authorizing the transactions contemplated by this Agreement and the
Security and Financing Documents together with certified copies of the
charters, by-laws and certificates of good standing dated as of a
recent date with respect to the Company and each of its domestic
Subsidiaries.
(vi) You shall have received any necessary consents from the Banks
that you require as a condition to consummation of the transactions
contemplated by this Agreement.
(vii) You shall have received at the closing an amendment fee in
an amount equal to 0.375% of the then outstanding principal balance of
the Senior Notes, paid to you in immediately available funds.
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(viii) You shall have received accrued and unpaid interest on the
Original Senior Notes to the date of issuance of the Senior Notes.
(ix) You shall have received the Senior Notes executed by a duly
authorized officer of the Company and a cross-receipt evidencing
delivery thereof.
(x) You shall have received a copy of the fiscal 1996 operating
budget and cash flow budget of the Company and its Subsidiaries,
accompanied by a certificate of a Responsible Officer to the effect
that such projections have been prepared on the basis of sound
financial planning practice and that such officer has no reason to
believe they are incorrect or misleading in any material respect.
(xi) You shall have received from Richards Layton & Finger,
special Delaware counsel to the Company, a favorable opinion
satisfactory to you concerning the Company's grants of security
interests under the Security and Financing Documents.
4. PREPAYMENTS. The entire outstanding principal amount of the
Senior Notes is due on December 31, 1997. The Senior Notes shall be subject to
required prepayment as set forth in paragraphs 4A, 4D and 4E of this Agreement
and shall be subject to prepayment, at the option of the Company, as set forth
in paragraph 4B of this Agreement.
4A. REQUIRED PREPAYMENT. Until the Senior Notes shall be paid in full,
the Company shall be obligated to prepay an amount equal to one half of the
outstanding principal amount of the Senior Notes on October 1, 1996 in four
equal principal payments (the "MINIMUM PREPAYMENT AMOUNTS") on the following
dates: January 2, 1997, March 31, 1997, June 30, 1997 and September 30, 1997.
Each Minimum Prepayment Amount shall be applied to the payment of principal of
the Senior Notes, plus interest thereon to the prepayment date and the
Yield-Maintenance Amount (subject to deferral and subordination as provided in
paragraph 4J hereof), if any, with respect to such Senior Notes. Subject to
paragraph 4J hereof, the Minimum Prepayment Amounts shall become due and payable
on such prepayment dates. The remaining unpaid principal amount of the Senior
Notes, together with interest accrued thereon and the Yield Maintenance Amount,
if any, with respect to the Senior Notes, shall become due on the maturity date
of the Senior Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. Subject to
paragraph 4J hereof, the Notes shall be subject to prepayment, in whole at any
time
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or from time to time in part (in integral multiples of Five Hundred Thousand
Dollars ($500,000), at the option of the Company, at one hundred percent (100%)
of the principal amount so prepaid plus interest thereon to the prepayment date
and the Yield-Maintenance Amount, if any, with respect to each Senior Note.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder
of each Note irrevocable written notice of any prepayment to be made pursuant to
paragraph 4B of this Agreement not less than two (2) Business Days prior to the
prepayment date, specifying such prepayment date and the principal amount of the
Notes, and of the Notes held by such holder, to be prepaid on such date and
stating that such prepayment is to be made pursuant to paragraph 4B of this
Agreement. Notice of prepayment having been given as aforesaid, the principal
amount of the Notes specified in such notice, together with interest thereon to
the prepayment date and together with, in the case of any Senior Note, the
Yield-Maintenance Amount, if any, shall become due and payable on such
prepayment date. So long as you shall hold any Note, the Company shall, on or
before the day on which it gives written notice of any prepayment pursuant to
paragraph 4B of this Agreement, advise the investment professional designated by
you on Annex 1 hereto by telephone of the principal amount of the Notes to be
prepaid and the prepayment date.
4D. MANDATORY PREPAYMENTS. In the event that the Company receives any
of the proceeds listed in clauses (i) through (iv) of this Section 4D (the
"SHARED PROCEEDS"), such Shared Proceeds shall be paid and applied in accordance
with the last paragraph of this paragraph 4D. Subject to paragraph 4J hereof,
the Allocable Note Holder Portion of the following amounts shall be applied by
you to prepay principal of the Notes plus interest thereon to the prepayment
date and the Yield-Maintenance Amount (subject to deferral and subordination as
provided in paragraph 4J hereof), if any, on the Senior Notes:
(i) 100% of the Net Cash Proceeds from the issuance, sale or
incurrence by the Company of debt securities or instruments of the
Company or any of its Subsidiaries other than debt securities or
instruments issued or indebtedness permitted by paragraph 6B (i)
through (v) of this Agreement;
(ii) 100% (or 75% after $50,000,000 of mandatory prepayments of
principal (including amounts paid to the Collateral Agent as cash
collateral in respect of outstanding letters of credit) under the
Credit Agreement and the Notes less the Holdback Amount have been paid
by the Company to the Banks and Note Holders) of the Net Cash Proceeds
from (a) the issuance or sale of the common equity securities of the
Company or any of its Subsidiaries by the Company or any of its
Subsidiaries (other than the equity securities of
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Cerion Technologies, Inc. as set forth in the proviso set forth in this
clause (ii) and other than the issuance of equity to senior employees
after the Closing Date in an aggregate amount not in excess of
$1,000,000 in connection with management incentive programs) or (b)
payments of principal received by the Company or any of its
Subsidiaries on the Cerion Note; provided, however, that in the case of
any issuance or sale of equity securities of Cerion Technologies, Inc.
on terms and conditions satisfactory to the Required Holders, "Net Cash
Proceeds" for the purposes of this clause (ii) shall mean the Net Cash
Proceeds from the sale of such equity securities by Nashua Precision
Technologies, Inc. (and not the net proceeds from the issuance of
equity securities by Cerion Technologies, Inc.);
(iii) 100% (or 75% after $50,000,000 of mandatory prepayments of
principal (including amounts paid to the Collateral Agent as cash
collateral in respect of outstanding letters of credit) under the
Credit Agreement and the Notes less the Holdback Amount have been paid
by the Company to the Banks and the Note Holders) of the Net Cash
Proceeds received by the Company or any of its Subsidiaries from the
sale or other disposition of assets (other than sales of assets
permitted by paragraph 6F of this Agreement) which is in excess of
$500,000 on an individual asset basis or $1,000,000 on a cumulative
asset basis;
(iv) within 45 days of the end of fiscal year 1996, 100% (or 75%
after $50,000,000 of mandatory prepayments of principal (including
amounts paid to the Collateral Agent as cash collateral in respect of
outstanding letters of credit) under the Credit Agreement and the Notes
less the Holdback Amount have been paid by the Company to the Banks and
the Note Holders) of the Excess Cash Flow for such fiscal year.
Any and all monies received by the Company in respect of the Shared
Proceeds described in clauses (i) through (iv) above shall be paid to the
Collateral Agent for distribution in accordance with the priorities set forth
in, and subject to the terms and conditions of, the Collateral Agency and
Intercreditor Agreement. All amounts to be paid to the Note Holders pursuant to
the foregoing sentence constitute the "ALLOCABLE NOTE HOLDER PORTION" of Shared
Proceeds.
4E. SPECIAL MANDATORY PREPAYMENTS. In the event any amendment or
modification shall be made to the Credit Agreement after the date hereof the
effect of which shall be to accelerate the scheduled amortization of principal
installments with respect to Loans under the Credit Agreement, prepayments on
the Senior Notes shall be similarly accelerated and proportionally increased
such that at all times the
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outstanding principal of the Senior Notes maintains the same proportional
relationship to the sum of Aggregate Outstanding Extensions of Credit and the
outstanding principal of the Senior Notes as exists on the date of this
Agreement. Any such prepayment shall be with accrued interest to the prepayment
date and with payment, subject to paragraph 4J hereof, of the Yield-Maintenance
Amount, if any, which becomes payable as a result of such prepayment with
respect to such Senior Notes.
4F. NOTICE OF MANDATORY PREPAYMENT. The Company shall give the holder
of each Note irrevocable written notice of any prepayment to be made pursuant to
paragraphs 4D and 4E of this Agreement not less than two (2) Business Days prior
to the prepayment date, specifying such prepayment date, the principal amount of
the Notes, and the principal amount of Notes held by such holder to be prepaid
on such date and stating that such prepayment is to be made pursuant to
paragraph 4D or 4E of this Agreement, as the case may be. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and together,
in the case of the Senior Notes, with the Yield-Maintenance Amount, if any,
which becomes payable as a result of such prepayment shall become due and
payable on such prepayment date. So long as you shall hold any Note, the Company
shall, on or before the day on which it gives written notice of any prepayment
pursuant to paragraphs 4D or 4E of this Agreement, advise the investment
professional designated by you on Annex 1 hereto by telephone of the principal
amount of the Notes to be prepaid and the prepayment date.
4G. APPLICATION OF PREPAYMENTS; PARTIAL PAYMENTS PRO RATA.
(i) APPLICATION OF MANDATORY PREPAYMENTS. Any prepayment of Notes
pursuant to paragraphs 4B, 4D or 4E of this Agreement shall be applied
to the Notes in the inverse order of maturity thereof.
(ii) PREPAYMENTS ALLOCATED PRO RATA. Upon any partial prepayment
of Notes pursuant to paragraphs 4A, 4B, 4D or 4E, the principal amount
so prepaid shall be allocated to all Notes at the time outstanding in
proportion to the respective aggregate principal amounts of the Notes
then outstanding.
4H. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of the Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraphs 4A, 4B, 4D or 4E of this Agreement or upon acceleration of such
final maturity pursuant to paragraph 7A of this Agreement), or purchase, or
otherwise acquire, directly or indirectly, Notes held by any Person, unless:
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(i) the Company or such Subsidiary or Affiliate shall have offered
to acquire (regardless of whether such offer shall be accepted) 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,
conditions and consideration; and
(ii) such acquisition is not directly or indirectly conditioned
upon the holder of any Note or Notes giving consent to any amendment,
supplement or waiver to any provision of this Agreement or the Notes,
and no such consent is otherwise given, directly or indirectly, in
connection with any such acquisition.
Any Notes prepaid, retired, purchased or otherwise acquired by the Company or
any of the Subsidiaries or Affiliates shall not be deemed to be outstanding for
any purpose under this Agreement (including, without limitation, any
determination of the "REQUIRED HOLDERS").
4I. LIMITATIONS ON PAYMENTS AND PREPAYMENTS. Except as specifically
set forth in this Agreement and the Notes, the Notes shall not be subject to
prepayment.
4J. DEFERRAL OF YIELD-MAINTENANCE AMOUNT. In the event the Company
shall have an obligation to the Note Holders in respect of the Yield-Maintenance
Amount, the Note Holders hereby agree that the payment of such obligation shall
be deferred and subordinated as provided herein and in the Collateral Agency and
Intercreditor Agreement. Any Yield-Maintenance Amount accruing prior to the
earliest to occur of: (i) a Bankruptcy Event, (ii) an Acceleration Event, or
(iii) December 31, 1997 shall be deferred and be subordinate and junior in right
of payment to the other Secured Obligations. Upon any such permitted deferral,
the Company shall issue its promissory notes to the Note Holders, and each such
promissory note (each, a "YMA NOTE") shall: (i) be substantially in the form
attached hereto as Exhibit A-2, (ii) bear interest from the date of issue
thereof at a rate equal to 11.85% per annum, with such interest deferred and
payable on the maturity date thereof, (iii) have a principal amount equal to the
Yield-Maintenance Amount being deferred, (iv) have no required prepayments of
principal prior to its stated maturity date and (v) be stated to mature on the
earliest to occur of (a) the stated maturity date of the Senior Notes and (b)
the date on which all Secured Obligations have been paid in full, upon which
date the then outstanding principal amount of such YMA Note shall be due and
payable together with accrued and unpaid interest thereon; provided, however,
that such YMA Notes shall be subordinated in payment to the obligations owing to
the Banks under the Credit Agreement and to the Note Holders under the
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Senior Notes to the extent set forth in the Collateral Agency and Intercreditor
Agreement.
4K. FACILITY FEES.
(i) If the Company has not paid to the Banks and the Note Holders
mandatory prepayments of principal of Loans (including amounts paid to
the Collateral Agent as cash collateral in respect of outstanding
letters of credit) and principal of the Notes in an aggregate amount at
least equal to $20,000,000 less the Holdback Amount on or prior to June
30, 1996, then the Company shall pay to the Note Holders, ratably, on
July 1, 1996, a facility fee in an aggregate amount equal to 1% of the
average outstanding principal amount of the Senior Notes during the
period commencing on the Closing Date and ending on June 30, 1996.
(ii) If the Company has not paid to the Banks and the Note Holders
mandatory prepayments of principal of Loans (including amounts paid to
the Collateral Agent as cash collateral in respect of outstanding
letters of credit) and principal of the Notes in an aggregate amount at
least equal to $50,000,000 less the Holdback Amount on or prior to
September 30, 1996, then the Company shall pay to the Note Holders,
ratably, on October 1, 1996 a further facility fee in an aggregate
amount equal to 1% of the average outstanding principal amount of the
Senior Notes during the period commencing on the Closing Date and
ending on September 30, 1996.
5. AFFIRMATIVE COVENANTS.
Until all obligations under this Agreement, the Senior Notes, any YMA
Note and all Secured Obligations have been paid in full:
5A. FINANCIAL STATEMENTS AND OTHER MATTERS. The Company will deliver
to each Significant Holder in quadruplicate:
(i) as soon as available and in any event within twelve (12)
Business Days after the end of each calendar month (other than the last
quarterly period) in each fiscal year,
(a) consolidated statements of income of the Company and its
consolidated Subsidiaries and consolidating statements of income
by Major Line of Business of the Company and its consolidated
Subsidiaries for such calendar month and for the period from the
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beginning of the current fiscal year to the end of such calendar
month and consolidated balance sheets of the Company and its
consolidated Subsidiaries and consolidating balance sheets by
Major Line of Business of the Company and its consolidated
Subsidiaries as at the end of such calendar month and
(b) statements of income and schedules of capital
expenditures by operating unit of the Company and its
consolidated Subsidiaries for such calendar month and for the
period from the beginning of the current fiscal year to the end
of such calendar;
(ii) as soon as available and in any event within forty-five (45)
days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year,
(a) consolidated statements of income and cash flows of the
Company and its consolidated Subsidiaries and consolidating
statements of income by Major Line of Business of the Company and
its consolidated Subsidiaries for such quarterly period and for
the period from the beginning of the current fiscal year to the
end of such quarterly period and consolidated and consolidating
balance sheets of the Company and its consolidated Subsidiaries
and consolidating balance sheets by Major Line of Business of the
Company and its consolidated Subsidiaries as at the end of such
quarterly period and
(b) statements of income and schedules of capital
expenditures by Major Line of Business of the Company and its
consolidated Subsidiaries for such quarterly period and for the
period from the beginning of the current fiscal year to the end
of such quarterly period;
setting forth in each case in comparative form figures for the
corresponding periods in the preceding fiscal year, all in reasonable
detail and certified by a Responsible Officer of the Company, subject
to changes resulting from year-end adjustments;
(iii) as soon as available and in any event within ninety (90)
days after the end of each fiscal year,
(a) consolidated statements of income and cash flows and
consolidating statements of income of the Company and its
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consolidated Subsidiaries and consolidating statements of income
by Major Line of Business of the Company and its consolidated
Subsidiaries for such year and consolidated and consolidating
balance sheets of the Company and its consolidated Subsidiaries
and consolidating balance sheets by Major Line of Business of the
Company and its consolidated Subsidiaries as at the end of such
year and
(b) consolidating statements of income and schedules of
capital expenditures, depreciation and amortization by Major Line
of Business of the Company and its consolidated Subsidiaries for
such year,
setting forth in the case of such consolidated and consolidating
statements, in comparative form, corresponding consolidated figures
from the preceding annual audit, all in reasonable detail and
satisfactory in scope to the Required Holders and, as to the
consolidated statements, certified to the Company by independent public
accountants of recognized standing selected by the Company without
qualification or with qualifications other than qualifications relating
to going concern, scope of audit or limitations imposed by the Company
(collectively, "MATERIAL QUALIFICATIONS"; it being understood that any
certification of independent public accountants containing a Material
Qualification must be in scope and substance reasonably satisfactory to
the Required Holders), and setting forth in the case of such
consolidating statements, in comparative form, corresponding
consolidating figures from the preceding year, all in reasonable detail
and satisfactory in scope to the Required Holders and, as to the
consolidating statements, certified by a Responsible Officer of the
Company;
(iv) not later than the first day of each fiscal year of the
Company, a copy of the projections by the Company of the operating
budget and cash flow budget of the Company and its Subsidiaries for
such fiscal year, such projections to be accompanied by a certificate
of a Responsible Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice and that
such officer has no reason to believe they are incorrect or misleading
in any material respect;
(v) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it sends
to its public stockholders and copies of all registration statements
(without exhibits) and all reports that it files with the Securities
and Exchange Commission (or any
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governmental body or agency succeeding to the functions of the
Securities and Exchange Commission);
(vi) promptly upon receipt thereof, a description of each other
report submitted to the board of directors of the Company or to the
audit or any other committee thereof by independent accountants in
connection with any annual, interim or special audit made by them of
the books of the Company or any Subsidiary;
(vii) promptly upon release thereof, a copy of each material press
release issued by or on behalf of the Company or any Subsidiary;
(viii) promptly upon the request of any holder of Notes, any
information required to be delivered (to the extent not already
delivered to such holder pursuant to the other requirements of this
paragraph 5A) to any transferee of Notes by Rule 144A (17 C.F.R.
[Section]230.144A) under the Securities Act (or any successor
provision) as a condition to the transfer of any Note pursuant to
such Rule;
(ix) immediately upon becoming aware of the occurrence of any
(a) material "REPORTABLE EVENT" (as such term is defined in
Section 4043 of ERISA), or
(b) "PROHIBITED TRANSACTIONS" (as such term is defined in
Section 406 or Section 4975 of the IRC);
in connection with any Pension Plan or any trust created thereunder, a
certificate of a Responsible Officer specifying the nature thereof,
what action the Company is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;
(x) prompt written notice and a description of
(a) any failure to make a contribution to a Pension Plan if
such failure has given rise to a Lien pursuant to Section
302(f)(1) of ERISA, or
(b) any request pursuant to Section 303 of ERISA or Section
412 of the IRC for, or notice of the granting pursuant to said
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Section 303 or Section 412 of, a waiver in respect of all or part
of the minimum funding standing set forth in ERISA or the IRC, as
the case may be, of any Pension Plan, and, in connection with the
granting of any such waiver, the amount of any waived funding
deficiency (as such term is defined in said Section 303 or said
Section 412) and the terms of such waiver;
(xi) prompt written notice of and, where applicable, a
description of
(a) any notice from the PBGC in respect of the commencement
of any proceedings pursuant to Section 4042 of ERISA to terminate
any Pension Plan or for the appointment of a trustee to
administer any Pension Plan,
(b) any distress termination notice delivered to the PBGC
under Section 4041 of ERISA in respect of any Pension Plan, and
any determination of the PBGC in respect thereof,
(c) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
(d) any Multiemployer Plan becoming "INSOLVENT" (as such
term is defined in Section 4245 of ERISA under Title IV of
ERISA),
(e) the whole or partial withdrawal of the Company or any
ERISA Affiliate from any Multiemployer Plan and the withdrawal
liability incurred in connection therewith, and
(f) the withdrawal of the Company or any ERISA Affiliate
from any Pension Plan with respect to which it is a "SUBSTANTIAL
EMPLOYER" under, and as defined in, ERISA and the withdrawal
liability under ERISA incurred in connection therewith;
(xii) forthwith upon a Responsible Officer obtaining knowledge of
an Event of Default or Default, a certificate of a Responsible Officer
specifying the nature and period of existence thereof and what action
the Company proposes to take with respect thereto; and
(xiii) with reasonable promptness, such other financial data and
other information as such Significant Holder may reasonably request
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(including, without limitation, the reports described in the
descriptions delivered to the holders of the Notes pursuant to clause
(vi) of this paragraph 5A, any other reports of accountants for the
Company or any Subsidiary delivered to the board of directors of the
Company or any committee thereof and any information or reports
concerning the collateral securing the Notes).
Together with each delivery of financial statements required by clauses (i),
(ii) and (iii) above, the Company will deliver to each Significant Holder a
certificate of a Responsible Officer demonstrating (with computations in
reasonable detail) compliance by the Company and the Subsidiaries with the
provisions of paragraphs 6A, 6B, 6C, 6D(x), 6E, 6F and 6H(viii) 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 proposes to take with respect to this Agreement. The Company
shall also deliver concurrently with the delivery of the financial statements
referred to in clause (iii) of paragraph 5A, a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of an
Event of Default or Default under paragraphs 6A, 6O, 6Q and 6U hereof.
5B. INSPECTION OF PROPERTY. The Company will permit any Person
designated by any Significant Holder in writing, at such Significant Holder's
expense (unless an Event of Default shall be continuing, in which event, at the
Company's expense), to visit and inspect any of the Properties of the Company
and the Subsidiaries, to examine the corporate books and financial records of
the Company and the Subsidiaries and make copies thereof or extracts therefrom
and to discuss the affairs, finances and accounts of any of such corporations
with the principal officers of the Company and its independent public
accountants, all at such reasonable times and as often as such Significant
Holder may reasonably request.
5C. COVENANT TO SECURE SENIOR NOTES EQUALLY. If the Company or any
Subsidiary creates or assumes any Lien upon any of its Property, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
paragraph 6D of this Agreement (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C of this
Agreement), the Company will make or cause to be made pursuant to such
agreements and instruments as shall be approved by the Required Holders
effective provision whereby the Senior Notes will be secured by such Lien
equally and ratably with any and all other Debt thereby secured (other than (i)
Yield-Maintenance Amounts, which shall accrue, but shall be subject to deferral
and subordination as provided in paragraph 4J hereof and (ii) Debt
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under the Credit Agreement representing Loans in excess of $56,018,000, which
shall be secured as provided in the Security and Financing Documents).
5D. PAYMENT OF TAXES AND CLAIMS. The Company will, and will cause
each Subsidiary to, pay before they become delinquent
(i) all taxes, assessments and governmental charges or levies
imposed upon it or its Property and
(ii) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that, if unpaid, might
result in the creation of a Lien upon its property.
provided that items of the foregoing description need not be paid while being
contested in good faith and by appropriate proceedings as long as adequate book
reserves have been established and maintained and exist with respect thereto and
provided further that the contesting Person's title to, and its right to use,
its Property is not materially adversely affected thereby.
5E. MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE. The Company
will, and will cause each Subsidiary to,
(i) PROPERTY -- maintain its Property in good condition and make
all necessary renewals, replacements, additions, betterments and
improvements thereto;
(ii) INSURANCE -- maintain, with financially sound and reputable
insurers, insurance with respect to its Property and business against
such casualties and contingencies, of such types (including, without
limitation, loss or damage, public liability, business interruption,
larceny, embezzlement or other criminal misappropriation) and in such
amounts as is customary in the case of corporations of established
reputations engaged in the same or a similar business and similarly
situated;
(iii) FINANCIAL RECORDS -- maintain sound accounting policies and
an adequate and effective system of accounts and internal accounting
control that will safeguard assets, properly record income, expenses
and liabilities, and assure the production of proper financial
statements in accordance with GAAP;
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(iv) CORPORATE EXISTENCE AND RIGHTS -- except for the liquidation
of any Subsidiary, do or cause to be done all things necessary
(a) to preserve and keep in full force and effect its
existence, rights and franchises and
(b) to maintain each Subsidiary as a Subsidiary, except as
otherwise permitted by paragraphs 6E, 6F and 6G of this
Agreement;
(v) COMPLIANCE WITH LAW -- comply with all laws, ordinances and
governmental rules and regulations to which it is subject (including,
without limitation, all Environmental Protection Laws) and obtain all
licenses, permits, franchises and other governmental authorizations
necessary to the ownership of its Properties or to the conduct of its
business, except for violations or failures to obtain that could not
result in any material adverse change in the business, condition or
operations of the Company and the Subsidiaries taken as a whole.
5F. ERISA COMPLIANCE. The Company will, and will cause each ERISA
Affiliate to, at all times
(i) with respect to each Pension Plan, make timely payments of
contributions required to meet the minimum funding standard set forth
in ERISA or the IRC with respect thereto and, with respect to each
Multiemployer Plan, make timely payment of contributions required to be
paid thereto as provided by Section 515 of ERISA and
(ii) comply with all other provisions of ERISA,
except for such failures to make contributions and failures to comply as would
not have a material adverse effect on the business, prospects, profits,
Properties or financial condition of the Company and the Subsidiaries taken as a
whole.
5G. ENVIRONMENTAL LAWS.
(i) Comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Protection Laws
and obtain and comply in all material respects with and maintain, and
ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable
Environmental Protection Laws except to the extent
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that failure to do so could not be reasonably expected to have a
material adverse effect on the business, conditions, or operations
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole;
(ii) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Protection Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the
pendency of such proceedings could not be reasonably expected to have a
material adverse effect on the business, conditions, or operations
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole;
5H. MODIFICATIONS TO SECURITY AND FINANCING DOCUMENTS.
(i) The Company agrees promptly to provide to you an executed copy
of any amendment, supplement or modification to the Credit Agreement or
the other Security and Financing Documents and to notify you in writing
prior to executing any such amendment, supplement or modification;
provided, that with respect to any material economic term (including,
without limitation, interest rates, fees, amortizations, prepayments
and reductions or increases in the lending commitments of the Banks not
provided for in the Credit Agreement on the date hereof) of the Credit
Agreement or the other Security and Financing Documents, no amendment,
supplement or modification thereof shall become effective without the
express written consent of the Required Holders. This paragraph 5H
shall not prohibit changes in the borrowing base definition (including
changes in definitions of component parts of the borrowing base and
changes in advance rates) or the operation or applicability of the
borrowing base limitations contained in the Credit Agreement.
(ii) If the Credit Agreement is hereafter amended such that any
material terms thereof (including without limitation, pricing,
affirmative covenants, negative covenants, amortizations, events of
default and mandatory prepayments) are more favorable to the Banks than
the terms hereof (giving due account to the terms existing on the date
hereof) are to you (as determined by you in your sole discretion), the
Company shall, simultaneously with such amendment to the Credit
Agreement, enter into an amendment of this Agreement in order to
incorporate herein such favorable terms, if you so request.
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5I. 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.
5J. FURTHER ASSURANCES. Upon your request, the Company agrees to
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other legal requirement which are necessary or
advisable to maintain in favor of you, Liens on the Collateral that are duly
perfected in accordance with all applicable legal requirements.
5K. NOTICES. The Company agrees to promptly give notice to you of:
(i) any (a) default or event of default under any material
contractual obligation of the Company or any of its Subsidiaries or (b)
litigation, investigation or proceeding which may exist at any time
between the Company or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
material adverse effect on the business, condition or operations
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole.
(ii) any litigation or proceeding affecting the Company or any of
its Subsidiaries in which the amount involved is $1,000,000 or more and
not covered by insurance or in which injunctive or similar relief is
sought;
(iii) any development or event which could reasonably be expected
to have a material adverse effect on the business, condition or
operations (financial or otherwise) of the Company and its Subsidiaries
taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take with
respect thereto.
5L. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE. The Company will
punctually pay, or cause to be paid, the principal and interest (and subject to
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paragraph 4J hereof, premium, if any) to become due in respect of the Notes
according to the terms thereof and will maintain an office at the address of the
Company set forth in paragraph 11I of this Agreement where notices,
presentations and demands in respect of this Agreement or the Notes may be made
upon it. Such office will be maintained at such address until such time as the
Company will notify the holders of the Notes in writing of any change of
location of such office, which will in any event be located in the United States
of America.
5M. ADDITIONAL COLLATERAL. (i) With respect to any assets acquired
after the Closing Date by the Company or any of its domestic Subsidiaries that
are intended to be subject to the Lien created by any of the Security and
Financing Documents but which are not so subject (other than any assets
described in paragraph (ii), (iii) or (iv) of this subsection), the Company
agrees to promptly (and in any event within 30 days after the acquisition
thereof): (a) execute and deliver to the Collateral Agent such amendments to the
relevant Security and Financing Documents or such other documents as the
Collateral Agent or the Required Holders shall deem necessary or advisable to
grant to the Collateral Agent, for the benefit of the Banks and the Note
Holders, a Lien on such assets, (b) take all actions requested by the Collateral
Agent or the Required Holders to cause such Lien to be duly perfected in
accordance with all applicable legal requirements, including, without
limitation, the filing of financing statements in such jurisdictions as may be
requested by the Collateral Agent or the Required Holders, and (c) if requested
by the Collateral Agent or the Required Holders, deliver to the Collateral Agent
legal opinions relating to the matters described in clauses (a) and (b)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Collateral Agent or the Required
Holders.
(ii) At the Company's next annual shareholders' meeting, which shall
occur on or before August 1, 1996, the Company will use its best efforts to
obtain all necessary consents from its shareholders to amend its organizational
documents such that the Company is permitted to pledge or grant a security
interest to the Collateral Agent for the benefit of the Banks and the Note
Holders in all of its assets not subject to the Lien of the Security and
Financing Documents. Within ten (10) Business Days of obtaining such consents,
the Company will enter into such documents and execute such instruments in form
and substance reasonably satisfactory to the Collateral Agent and the Required
Holders for the purposes of pledging or granting a security interest in such
assets to the Collateral Agent.
(iii) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary (other than a foreign Subsidiary), the Company shall
promptly notify the Collateral Agent and the Significant Holders and promptly
upon the request
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of the Collateral Agent or the Required Holders: (a) execute and deliver to the
Collateral Agent, for the benefit of the Banks and the Note Holders, a new
pledge agreement or such amendments or supplements to the relevant Pledge
Agreement as the Agent or the Required Holders shall reasonably deem necessary
or advisable to grant to the Collateral Agent, for the benefit of the Banks and
the Note Holders, a Lien on the capital stock of such Subsidiary which is owned
by the Company or any of its Subsidiaries, (b) deliver to the Collateral Agent
the certificates representing such capital stock, together with undated stock
powers executed and delivered in blank by a duly authorized officer of the
Company or such Subsidiaries, as the case may be, (c) cause such new
Subsidiaries (I) to become a party to the Subsidiaries Guarantee, the
Subsidiaries Security Agreement and the Collateral Agency and Intercreditor
Agreement, in each case pursuant to documentation which is in form and substance
reasonably satisfactory to the Collateral Agent, and (II) to take all actions
necessary or advisable to cause the Lien created by the Subsidiaries Security
Agreement to be duly perfected in accordance with all applicable legal
requirements, including, without limitation, the filing of financing statements
in such jurisdictions as may be requested by the Collateral Agent and (d) if
requested by the Collateral Agent, deliver to the Collateral Agent legal
opinions relating to the matters described in clauses (a), (b) and (c)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Collateral Agent.
(iv) With respect to any Person that, subsequent to the Closing Date,
becomes a foreign Subsidiary, the Company shall promptly notify the Collateral
Agent and promptly upon the request of the Note Holders: (a) execute and deliver
to the Collateral Agent a new pledge agreement or such amendments or supplements
to the relevant Pledge Agreement as the Collateral Agent or the Required Holders
shall reasonably deem necessary or advisable to grant to the Collateral Agent,
for the benefit of the Banks and the Note Holders, a Lien on the capital stock
of such Subsidiary which is owned by the Company or any of its Subsidiaries
(provided that in no event shall more than 65% of the capital stock of any such
Subsidiary be so pledged if the Collateral Agent reasonably determines that
pledge of more than 65% would have adverse tax consequences), (b) deliver to the
Collateral Agent any certificates representing such capital stock, together with
undated stock powers executed and delivered in blank by a duly authorized
officer of the Company or such Subsidiary, as the case may be, and take or cause
to be taken all such other actions under the law of the jurisdiction of
organization of such foreign subsidiary as may be necessary or advisable to
perfect such Lien on such capital stock and (c) if requested by the Collateral
Agent or the Required Holders, deliver to the Collateral Agent legal opinions
relating to the matters described in clauses (a) and (b) immediately preceding,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Collateral Agent and the Required Holders.
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5N. AMENDMENT TO FINANCIAL COVENANTS. By January 1, 1997 (the
"AMENDMENT DATE"), the Company and the Required Holders shall commence
negotiations in good faith, based on the Company's business plan for 1997, in
order to enter into an amendment to this Agreement for the purpose of continuing
the financial covenants contained in paragraph 6A(i) of this Agreement through
the maturity date of the Notes. If after thirty days after the Amendment Date,
the Company and the Required Holders have not agreed on appropriate levels for
such financial covenants through such maturity date, the Required Holders in
their reasonable judgment shall set such levels and the Company and the Required
Holders shall execute an amendment to this Agreement on the 31st day after the
Amendment Date for the purposes of including the levels with respect to such
financial covenants set by the Required Holders as part of this Agreement for
the period through the maturity date of the Notes.
During the ten Business Day period after any mandatory prepayment in
excess of $15,000,000 is made pursuant to paragraph 4D of this Agreement, the
Company and the Required Holders shall negotiate in good faith in order to enter
into an amendment to this Agreement for the purpose of resetting the financial
covenants contained in paragraphs 6A and 6Q herein. If after ten Business Days
of such mandatory prepayment, the Company and the Required Holders have not
agreed on appropriate levels for such financial covenants, the Required Holders
in their reasonable judgment shall set such levels and the Company and the
Required Holders shall execute an amendment to this Agreement on the eleventh
Business Day after the Amendment Date for the purposes of including the levels
with respect to such financial covenants. The Company and the Required Holders
shall execute such amendment for the purposes of incorporating such levels, as
set by the Required Holders, into this Agreement.
6. NEGATIVE COVENANTS.
Until all obligation under this Agreement, the Senior Notes, any YMA
Notes and all Secured Obligations have been paid in full:
6A. FINANCIAL CONDITION COVENANTS.
(i) Maintenance of EBITDA. The Company will not permit EBITDA of
the Company and its Subsidiaries, measured on a cumulative basis for
any test period set forth below, as at the last day of such test
period, to be less than the amount set forth opposite such test period
below:
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Quarter Amount
------- ------
January 1, 1996 - March 31, 1996 $ 1,640,000
January 1, 1996 - June 30, 1996 $ 7,800,000
January 1, 1996 - September 30, 1996 $19,150,000
January 1, 1996 - December 31, 1996 $27,300,000
(ii) Maintenance of EBITDA Ratio. The Company will not permit, in
the aggregate for the Company and its Subsidiaries, the ratio of (i)
EBITDA plus Consolidated Lease Expense to (ii) Consolidated Fixed
Charges, measured on a cumulative basis for any test period set forth
below, as at the last day of such test period to be less than the ratio
set forth below opposite such test period:
Quarter Ratio
------- -----
January 1, 1996 - March 31, 1996 .97:1
January 1, 1996 - June 30, 1996 1.89:1
January 1, 1996 - September 30, 1996 2.91:1
January 1, 1996 - December 31, 1996 3.09:1
and thereafter on a rolling four-quarter basis
(iii) Maintenance of Tangible Net Worth. The Company will not
permit Consolidated Tangible Net Worth at any time during any period
set forth below to be less than the amount set forth opposite such
period below:
Quarter Amount
------- ------
Fourth Quarter 1995 $38,000,000
First Quarter 1996 $35,400,000
Second Quarter 1996 $36,000,000
Third Quarter 1996 $39,700,000
Fourth Quarter 1996 and thereafter $41,600,000
6B. LIMITATION ON COVENANT DEBT. The Company will not, nor will it
permit any Subsidiary to, create, incur, assume or suffer to exist any
Covenant Debt, except:
(i) Covenant Debt of the Company under this Agreement;
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(ii) Covenant Debt of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary;
(iii) Covenant Debt of the Company and any of its Subsidiaries
incurred to finance the acquisition or construction of fixed or capital
assets (whether pursuant to a loan, a Capitalized Lease Obligation or
otherwise) in an aggregate principal amount not exceeding as to the
Company and its Subsidiaries $3,000,000 at any time outstanding;
(iv) Covenant Debt outstanding on the date hereof and listed on
Annex 2 hereof (and any extensions, renewals or refinancing of such
Covenant Debt without any increase in the principal amount thereof);
(v) Covenant Debt of a Person which becomes a Subsidiary after the
date hereof, provided that (a) such indebtedness existed at the time
such Person became a Subsidiary and was not created in anticipation
thereof and (b) immediately after giving effect to the acquisition of
such Person by the Company or a Subsidiary no Default or Event of
Default shall have occurred and be continuing;
(vi) the incurrence of any other Covenant Debt with the prior
written consent of the Required Holders, provided that the Net Cash
Proceeds thereof are applied to the mandatory prepayment of the Loans
in accordance with paragraph 4D hereof; and
(vii) Covenant Debt of any foreign Subsidiary to the Company or to
any domestic Subsidiary not otherwise permitted in the foregoing
clauses (i) through (vi) in an aggregate amount not in excess of
$2,000,000 at any time outstanding.
6C. LIMITATION ON GUARANTY OBLIGATIONS. The Company will not, nor
will it permit any Subsidiary to, create, incur, assume or suffer to exist any
Guaranty obligation except:
(i) Guaranty obligations in existence on the date hereof and
listed on Annex 2 to this Agreement;
(ii) the Subsidiaries Guarantee; and
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(iii) guarantees made in the ordinary course of business by the
Company or any of its Subsidiaries of Covenant Debt permitted by this
Agreement of the Company or any such Subsidiary, as the case may be.
6D. LIENS. The Company will not, nor will it permit any Subsidiary to,
create, assume or suffer to exist any Lien upon any of its Property, whether now
owned or hereafter acquired (whether or not provision is made for the equal and
ratable securing of the Notes in accordance with the provisions of paragraph 5C
of this Agreement), except:
(i) Liens in existence on the Closing Date and described on Annex
2 to this Agreement;
(ii) Liens for taxes, assessments or other governmental charges
not yet due or that are being actively contested in good faith by
appropriate proceedings;
(iii) Liens incurred or deposits made in the ordinary course of
business (other than Liens arising under any provision of ERISA),
(a) in connection with workers' compensation, unemployment
insurance, social security and other like laws,
(b) to secure the performance of letters of credit, bids,
tenders, sales contracts, surety and performance bonds (of a type
other than set forth in clause (iv) of this paragraph 6D) and
other similar obligations not incurred in connection with the
borrowing of money, the obtaining of loans or advances or the
payment of the deferred purchase price of Property, and
(c) in respect of leases, statutory obligations or claims or
demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons,
provided in each case that
(1) the obligations secured by such Liens shall not be
due and payable or, if due and payable, shall be actively
contested in good faith by appropriate proceedings,
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(2) such obligations shall not have arisen in connection
with the borrowing of money, the obtaining of loans or
advances or the payment of the deferred purchase price of
Property, and
(3) such Liens shall not in the aggregate materially
detract from the value of the Property encumbered thereby or
materially interfere with the use of such Property in the
ordinary conduct of the owning Person's business or with the
operation of such Person's business;
(iv) Liens, arising in connection with court proceedings,
(a) consisting of or relating to attachments, remedies and
judgments, provided that the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby
are being actively contested in good faith and by appropriate
proceedings and provided further that the aggregate amount so
secured, together with the aggregate amount secured pursuant to
clause (iv)(b) of this paragraph 6D, shall not exceed Five
Hundred Thousand Dollars ($500,000), and
(b) securing appeal bonds and supersedeas bonds, and other
similar Liens arising in connection with court proceedings
(including, without limitation, surety bonds and letters of
credit) or any other instrument serving a similar purpose,
provided that the aggregate amount so secured, together with the
aggregate amount secured pursuant to clause (iv)(a) of this
paragraph 6D shall not at any time exceed Five Hundred Thousand
Dollars ($500,000);
(v) Liens on Property of a Subsidiary to secure obligations of
such Subsidiary to the Company or another Subsidiary;
(vi) reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions and other similar
title exceptions or encumbrances affecting real property, provided they
do not in the aggregate materially detract from the value of said
Properties or materially interfere with their use in the ordinary
conduct of the owning Person's business or with the operation of such
Person's business;
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(vii) any Lien existing on any Property of any corporation at the
time it becomes a Subsidiary, or existing prior to the time of
acquisition upon any Property acquired by the Company or any Subsidiary
through purchase, merger or consolidation or otherwise, whether or not
assumed by the Company or such Subsidiary, or placed upon Property at
the time of acquisition or construction by the Company or any
Subsidiary to secure all or a portion of (or to secure Debt incurred to
pay all or a portion of) the purchase price or construction cost
thereof (including, without limitation, Liens created in connection
with Capitalized Lease Obligations), provided that
(a) such Property is not or shall not thereby become
encumbered in an amount in excess of the lesser of the cost
thereof or the Fair Market Value thereof at the time such
corporation becomes a Subsidiary or at the time of such
acquisition or the completion of such construction, as the case
may be (as determined in good faith by the Board of Directors of
the Company or of the acquiring or constructing Person),
(b) any such Lien shall not encumber any other Property of
the Company or any Person which is a Subsidiary (after such
Person shall become and so long as it shall remain a Subsidiary),
and
(c) no Event of Default or Default (including, without
limitation, any Event of Default arising out of a breach of
paragraph 6C of this Agreement) shall have occurred and be
continuing at the time such corporation becomes a Subsidiary or
at the time of such acquisition or the completion of such
construction, as the case may be;
(viii) any Lien permitted by either of clauses (i) or (vii) of
this paragraph 6D securing Debt that is being renewed or extended,
provided that
(a) the principal amount of such Debt is not increased in
excess of the amount thereof outstanding at the time of such
renewal or extension;
(b) the Weighted Average Life to Maturity of such Debt is
not reduced;
(c) such Lien is not extended to any other Property not
theretofore encumbered thereby; and
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(d) no Event of Default or Default shall have occurred and
be continuing at the time of such renewal or extension;
(ix) bankers' Liens or rights of setoff against deposits (but only
to the extent that such deposits are not prohibited by paragraph 6L of
this Agreement) held in banks or other financial institutions; or
(x) any Lien not otherwise permitted by this paragraph 6D securing
obligations not incurred in connection with the borrowing of money, the
obtaining of loans or advances or the payment of the deferred purchase
price of Property so long as (a) such Liens shall be discharged within
thirty (30) days after the incurrence thereof and (b) the aggregate
amount of the obligations so secured shall not at any time exceed 2% of
Consolidated Tangible Net Worth; or
(xi) any Lien granted to the Collateral Agent on behalf of the
Banks and the Note Holders pursuant to the Security and Financing
Documents.
6E. DISPOSITION OF DEBT AND STOCK OF SUBSIDIARIES. Except with respect
to the capital stock of Cerion, the Company will not, nor will it permit any
Subsidiary to, sell, assign, pledge or otherwise dispose of any Debt of, or any
shares of stock of or other equity interests in (or any warrants, rights or
options to acquire, or other Securities exchangeable for or convertible into,
such stock or equity interests) (such stock, equity interests, warrants, rights,
options and other Securities herein called "SUBSIDIARY STOCK"), any Subsidiary,
nor will it permit any Subsidiary to issue or sell its own Subsidiary Stock,
except:
(i) to the Company or any Subsidiary; and
(ii) for directors' qualifying shares.
6F. DISPOSITION OF ASSETS. The Company will not, nor will it permit
any Subsidiary to, sell, lease as lessor, transfer or otherwise dispose of any
Property (collectively, "TRANSFERS"), except:
(i) Transfers of inventory in the ordinary course of business;
(ii) Transfers relating to the collection of accounts receivables
in the ordinary course of business as conducted by the Company on the
date hereof;
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(iii) Transfers to the Company;
(iv) Transfers from a Subsidiary to another Subsidiary;
(v) Transfers that (a) constitute dispositions of cash or cash
equivalents not prohibited by this Agreement, (b) constitute
Investments that are Permitted Investments or (c) constitute the
liquidation of any Permitted Investment;
(vi) Transfers relating to the sale or other disposition of
obsolete or worn out or no longer useful property in the ordinary
course of business; provided that the Net Cash Proceeds of each such
transaction are used to acquire like replacement property within nine
(9) months;
(vii) Transfers relating to the sale or other disposition by the
Company or any of its Subsidiaries of any assets (except for the sale
of inventory or obsolete, worn out or not longer useful assets in the
ordinary course of business and except as otherwise permitted by this
Agreement) in an amount not to exceed $500,000 on an individual basis
and $1,000,000 on a cumulative basis over the term of the Notes and
(viii) the sale of any other assets or property with the prior
written consent of the Required Holders, provided that Net Cash
Proceeds are applied to the mandatory prepayment of the Notes in
accordance with paragraph 4D.
6G. MERGER/CONSOLIDATION. The Company will not, nor will it permit any
Subsidiary to, merge into or consolidate with any other Person or permit any
other Person to merge into or consolidate with it; provided that:
(i) a Subsidiary (other than Cerion) may be merged into or
consolidated with the Company if the Company shall be the continuing or
surviving corporation;
(ii) a Subsidiary (other than Cerion) may be merged into or
consolidated with any other Subsidiary; and
(iii) any other corporation may be merged into or consolidated
with the Company or any Subsidiary if the Company or such Subsidiary
shall be the continuing or surviving corporation (and, in the case of a
merger into or consolidation with the Subsidiary, such Subsidiary
shall, immediately after giving effect to such transaction, remain a
Subsidiary);
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if, in each case, immediately prior to, and immediately after the consummation
of the transaction, and after giving effect thereto, no Event of Default or
Default exists or would exist under any provision of this Agreement.
6H. RESTRICTED INVESTMENTS. Except for certain existing investments as
set forth on Annex 2 hereof, the Company will not, nor will it permit any
Subsidiary to, purchase or make investments in, purchase stock or Securities of,
or make loans or advances to, or make other investments in, any other Person
(including investments in or loans or advances to any corporation proposed to be
acquired in a stock transaction or created as a Subsidiary) (all of the
foregoing referred to as "INVESTMENTS", and all of the below-listed Investments
referred to as "PERMITTED INVESTMENTS") except:
(i) Investments in or to the Company or Subsidiaries and
Investments in or to companies that simultaneously with such
Investments become Subsidiaries;
(ii) Investments received by the Company or the Subsidiaries
(including any trade credit) from customers or others in settlement of
obligations created in the ordinary course of business;
(iii) Investments in
(a) commercial paper issued by any Person organized under
the laws of the United States or any state thereof and rated
"P-1" or higher by Moody's Investors Service, Inc. or "A-1" or
higher by Standard & Poor's Corporation;
(b) certificates of deposit issued by any bank (1) organized
under the laws of the United States or any state thereof, (2) the
deposits of which are insured by the Federal Deposit Insurance
Corporation and (3) having combined capital and surplus
aggregating in excess of Five Hundred Million Dollars
($500,000,000); and
(c) marketable direct obligations of, or obligations
unconditionally guaranteed by, the United States government or
any agency thereof;
provided, in each case, that such Investments are payable in the United
States in United States dollars and mature within one (1) year from the
date of issuance thereof;
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(iv) Investments by Foreign Subsidiaries in certificates of
deposit (a) issued by any bank (1) not organized under the laws of the
United States or any state thereof and (2) having combined capital and
surplus aggregating in excess of the equivalent of Five Hundred Million
United States Dollars (US$500,000,000) and (b) that mature within one
(1) year from the date of issuance thereof;
(v) Investments consisting of travel advances, employee relocation
loans, and other employee loans and advances for the payment of
expenses incurred in the ordinary course of business;
(vi) Investments in operating deposit accounts maintained in the
ordinary course of business for operating fund purposes and in any
account subject to a Lock-Box Agreement or Agency Agreement (as such
terms are defined in the Collateral Agency and Intercreditor
Agreement);
(vii) Investments under Hedge Agreements which are permitted under
paragraph 6X hereof; and
(viii) Investments not otherwise permitted by the provisions of
this paragraph 6H if, on the date of the making of any such Investment,
and after giving effect thereto,
(a) the aggregate cost of all Investments outstanding on
such date made pursuant to this paragraph 6H(viii), minus
(b) the net return of capital received by the Company and
the Subsidiaries on or prior to such date from all Investments
made pursuant to this paragraph 6H(viii) during the period
commencing on the Closing Date and ending on such date,
would not exceed 5% of Consolidated Tangible Net Worth determined as of
the end of the fiscal quarter of the Company most recently ended as of
such date.
6I. SUBSIDIARIES. The Company will not:
(i) have any consolidated subsidiaries that are not Subsidiaries;
or
(ii) permit any Subsidiary to enter into or be a party or
otherwise subject to any contract, agreement, charter document or other
corporate
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document that imposes any restriction on such Subsidiary's ability to
pay dividends.
6J. DISCOUNT OF RECEIVABLES. The Company will not, nor will it permit
any Subsidiary to, discount (except for de minimis, discounts for early payment
made in the ordinary course of business), pledge, sell with recourse or
otherwise sell for less than the face value thereof any of its notes receivable
or accounts receivable, except in the ordinary course of business consistent
with the Company's business practices on the date hereof in connection with the
collection thereof.
6K. LETTERS OF CREDIT, SURETY CONTRACTS, ETC. The Company will not, nor
will it permit any Subsidiary to, become or remain liable, directly or
indirectly, as account party, guarantor or other surety with respect to any
letter of credit, surety contract or like instrument, except:
(i) for purposes of acquiring inventory in the ordinary course of
business;
(ii) in connection with letters of credit issued for insurance
purposes pursuant to the Credit Agreement, provided that the aggregate
reimbursement obligations of the Company and the Subsidiaries in
respect thereof do not at any time exceed $5,000,000 less the stated
amount of any letters of credit issued under clause (iii) below; and
(iii) letters of credit in an aggregate stated amount not to
exceed $250,000 issued under the Credit Agreement for purposes other
than insurance.
provided, in each case, that such obligations are not incurred in connection
with the borrowing of money, the obtaining of loans or advances or the payment
of the deferred purchase price of Property.
6L. BANK INVESTMENTS AND DEPOSIT ACCOUNTS. The Company will not, nor
will it permit any Subsidiary to, or make any written or oral commitment,
directly or indirectly, to, make any Investment in, or maintain any deposit or
other accounts with, any bank or financial institution to which the Company or
any Subsidiary owes Debt unless such bank or financial institution is a party to
the Collateral Agency and Intercreditor Agreement; provided that the Company and
the Subsidiaries may maintain such deposit or other accounts with any such bank
or financial institution so long as the aggregate amount on deposit with all
such banks and financial institutions does not exceed One Million Dollars
($1,000,000) for any period or more than five
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(5) consecutive Business Days; provided, further, that this paragraph 6K shall
not apply to operating deposit accounts maintained in the ordinary course of
business for operating fund purposes.
6M. PRIVATE OFFERING. The Company will not, nor will it permit any
Person acting on its behalf to, offer the Notes or any part thereof or any
similar Securities for issue or sale to or solicit any offer to acquire any of
the same from, any Person so as to require registration of the Notes under
Section 5 of the Securities Act.
6N. GENERAL RELEASE. Each of the Company and its Subsidiaries, on
behalf of itself and its predecessors, successors and assigns, together with its
past, present and future officers, directors, agents, representatives, partners,
joint venturers, affiliates and the successors and assigns of any and all of
them, in connection with this Agreement, and for good and sufficient
consideration, the receipt and sufficiency of which are hereby acknowledged, do
hereby forever release and discharge the Note Holders and their officers,
directors, employees, agents, representatives, successors and assigns (the "NOTE
HOLDER RELEASEE"), from any and all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims, and demands whatsoever, in law,
admiralty, or equity, which against the Note Holder Releasee, or any of them, it
ever had, now has, or hereafter can, shall or may have for, upon, or by reason
of any matter, cause or thing whatsoever arising from or relating to the
Original Note Agreement (or related documents) or the transactions contemplated
thereby from the beginning of the world to the Closing Date, whether known or
unknown, asserted or unasserted (the "RELEASED OBLIGOR CLAIMS"), and hereby
further irrevocably agrees not to commence or join any suit, action or
proceeding, at law or equity, in respect of the Released Obligor Claims
6O. LIMITATION ON LEASES. The Company will not, and will not permit
any Subsidiary to, allow Consolidated Lease Expense for any fiscal year of the
Company to exceed $3,000,000.
6P. LIMITATION ON DIVIDENDS. The Company will not, and will not permit
any Subsidiary to, declare or pay any dividend (other than dividends payable
solely in common stock of the Company) on, or make any payment on account of, or
set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of capital stock of the Company or any warrants or options to purchase any
such stock, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Company
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or any Subsidiary, except (i) any Subsidiary of the Company may pay cash
dividends to the Company and any Subsidiary of the Company may be paid cash
dividends by any of its Subsidiaries and (ii) repurchase of stock from employees
or former employees in an aggregate amount not to exceed $50,000 per year.
6Q. LIMITATION ON CAPITAL EXPENDITURES. The Company will not, and will
not permit any Subsidiary to, make any expenditure in respect of the purchase or
other acquisition of fixed or capital assets (excluding any such asset acquired
in connection with normal replacement and maintenance programs properly charged
to current operations) except for expenditures in the ordinary course of
business not exceeding, in the aggregate for the Company and its Subsidiaries
during any of the fiscal years of the Company set forth below, the amount set
forth opposite such fiscal year below:
Fiscal Year Amount
----------- ------
1995 $17,200,000
1996 $17,000,000
1997 $17,000,000
provided, that up to 100% of any such amount if not so expended in the fiscal
year for which it is permitted above, may be carried over for expenditure in the
next following fiscal year.
6R. LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS. The Company will not, and will not permit any Subsidiary to (a)
make any optional payment or prepayment on or redemption or purchase of any Debt
(other than the Notes and other than any Revolving Credit Loans under the Credit
Agreement and Debt with a principal amount outstanding not in excess of
$3,000,000) or (b) amend, modify or change, or consent or agree to any material
amendment, modification or change to any of the terms of any instrument relating
to or evidencing any such Debt (other than the Loans) in excess of $3,000,000.
6S. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not,
and will not permit any Subsidiary to enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of the
Company's or such Subsidiary's business and (c) upon fair and reasonable terms
no less favorable to the Company or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person which is not
an Affiliate; provided, however, the foregoing
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shall not prohibit (i) transactions between the Company and its Subsidiaries or
among the Company's Subsidiaries, (ii) Permitted Investments and payments
permitted by paragraph 6P, (iii) employment agreements, severance arrangements,
employee incentive arrangements and stock incentive arrangements entered into in
the ordinary course of business and (iv) intercompany arrangements approved by
the Required Holders between the Company and Cerion described in the
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on March 21, 1996 and summarized on Annex 2 hereto, for the
registration of common stock of Cerion.
6T. LIMITATION ON SALES AND LEASEBACKS. The Company will not, and will
not permit any Subsidiary to enter into any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Company or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Company or such Subsidiary.
6U. LIMITATION ON CHANGES IN FISCAL YEAR. The Company will not permit
the fiscal year of the Company to end on a day other than December 31.
6V. LIMITATION ON NEGATIVE PLEDGE CLAUSES. The Company will not, and
will not permit any Subsidiary to, enter into with any Person any agreement,
other than (a) this Agreement, (b) the organizational documents of the Company
and its Subsidiaries, (c) the Credit Agreement, (d) any industrial revenue
bonds, purchase money debt instruments or Capitalized Lease Obligations
permitted by this Agreement (in which cases, any prohibition or limitation shall
only be effective against the assets financed thereby), and (e) the overdraft
facility of Nashua Photo Limited with Midland Bank not in excess of 2,000,000
pounds sterling, or any refinancing or replacement thereof not in excess of such
amount, provided that any prohibition or limitation shall be effective only
against the assets of Nashua Photo Limited, which prohibits or limits the
ability of the Company or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
6W. LIMITATION ON LINES OF BUSINESS. The Company will not, and will not
permit any Subsidiary to, enter into any business, either directly or through
any Subsidiary, except for those businesses in which the Company and its
Subsidiaries are engaged on the date of this Agreement and any business
substantially related thereto.
6X. HEDGE AGREEMENTS. The Company will not, and will not permit any
Subsidiary to, enter into any Hedge Agreement other than spot and forward
foreign
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exchange contracts (not to exceed six months in duration) in an aggregate
notional principal amount for all such contracts (including contracts existing
on the date hereof) not to exceed $4,000,000 and only in the following
currencies: Belgian Francs, Canadian Dollars, British Pounds and Dutch Gilders.
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
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
premium on any Note when the same shall become due, either by the terms
thereof or otherwise as provided in this Agreement; or
(ii) the Company defaults in the payment of any interest on any
Note for more than five (5) Business Days after the date due;
(iii) any representation or warranty made by the Company in this
Agreement, the Security and Financing Documents or in any writing
furnished in connection with or pursuant to this Agreement or the
Security and Financing Documents, shall have been false in any material
respect as of the date made; or
(iv) the Company fails to perform or observe any agreement
contained in paragraph 5A(xiii), paragraph 5C or paragraph 6 of this
Agreement, Section 5 of the Pledge Agreements, Section 5 of the
Borrower Security Agreement or Section 4 of the Subsidiaries Security
Agreement; or
(v) (a) the Company fails to perform or observe any other
agreement, term or condition contained in this Agreement or the
Collateral Agency and Intercreditor Agreement or (b) the Collateral
Agent or any of the Banks fail to perform or observe any agreement,
term or condition in any material respect contained in the Collateral
Agency and Intercreditor Agreement, and such failure shall not be
remedied within thirty (30) days after any officer of the Company
obtains actual knowledge or notice thereof; or
(vi) the Company or any Subsidiary defaults in any payment of
principal of or interest on any other obligation for money borrowed (or
any
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Capitalized Lease Obligation, any obligation under a conditional sale
or other title retention agreement, any obligation 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, the Company or any Subsidiary defaults
in the payment of any Guaranty beyond any period of grace 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 prior to any
originally stated maturity, or to be repurchased by the Company or any
Subsidiary; provided, however, that the aggregate principal amount of
all obligations as to which such a payment default, or as to which such
a failure or other event causing or permitting acceleration or
repurchase, shall occur and be continuing exceeds $250,000; or
(vii) the Company or any Significant 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 Significant 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 (the "BANKRUPTCY LAW"), of any jurisdiction; or
(ix) the Company or any Significant Subsidiary petitions or
applies to any tribunal for, or consents to, the appointment of, or the
taking of possession by, a trustee, receiver, custodian, liquidator or
similar official of the Company or any Significant Subsidiary, or of
any Substantial Part of the Property of the company or any Significant
Subsidiary, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings (other than proceedings for
voluntary liquidation and dissolution of a Subsidiary) relating to the
Company or any Significant Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any petition or application referred to in subparagraph (ix)
of this paragraph 7A is filed, or any such proceedings are commenced,
against
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the Company or any Significant Subsidiary and the Company or such
Significant 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 sixty (60) days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than
sixty (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 that requires the divestiture of assets
representing a Substantial Part, or the divestiture of the stock of a
Subsidiary whose assets represent a Substantial Part, of the
consolidated assets of the Company and the Subsidiaries (determined in
accordance with GAAP) or that requires the divestiture of assets, or
stock of a Subsidiary, that shall have contributed a Substantial Part
of Consolidated Net Income for any of the three (3) fiscal years then
most recently ended, and such order, judgment or decree remains
unstayed and in effect for more than sixty (60) days; or
(xiii) a final judgment in an amount in excess of Five Hundred
Thousand Dollars ($500,000) is rendered against the Company or any
Subsidiary and, within sixty (60) days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal,
or within sixty (60) days after the expiration of any such stay, such
judgment is not discharged;
(xiv) (a) any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Pension Plan, (b) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Pension Plan or any Lien in favor of the PBGC
or a Pension Plan shall arise on the assets of the Company or any
commonly controlled entity, (c) a reportable event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
single employer plan, which reportable event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Holders, likely to result in the termination of such
Pension Plan for purposes of Title IV of ERISA, (d) any single
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employer plan shall terminate for purposes of Title IV of ERISA, (e)
the Company or any commonly controlled entity shall, or in the
reasonable opinion of the Required Holders is likely to, incur any
liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (f) any other event or
condition shall occur or exist with respect to a Pension Plan; and in
each case in clauses (a) through (f) above, such event or condition,
together with all other such events or conditions, if any, could
reasonably be expected to have a material adverse effect on the
business, condition or operations (financial or otherwise) of the
Company and its Subsidiaries; or
(xv) any of the Security and Financing Documents shall cease, for
any reason, to be in full force and effect, or the Company or any other
party to any of the Security and Financing Documents shall so assert or
(ii) the Lien created by any of the Security and Financing Documents
shall cease to be enforceable and of the same effect and priority
purported to be created thereby; or
(xvi) any Person or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) (A) shall
have acquired beneficial ownership of 25% or more of any outstanding
class of capital stock having ordinary voting power in the election of
directors of the Company or (B) shall obtain the power (whether or not
exercised) to elect a majority of the Company's directors or (ii) the
Board of Directors of the Company shall not consist of a majority of
Continuing Directors; "CONTINUING DIRECTORS" shall mean the directors
of the Company on the Closing Date and each other director, if such
other director's nomination for election to the Board of Directors of
the Company is recommended by a majority of the then Continuing
Directors;
then:
(a) if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to the
Company, all of the Notes at the time outstanding shall
automatically become immediately due and payable at par together
with interest accrued thereon; and
(b) if such event is any other Event of Default, the
Required Holders may at its or their option, by notice in writing
to the Company,
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declare all of the Notes to be, and all of such Notes shall thereupon
be and become, immediately due and payable together with interest
accrued thereon;
and, with respect to clauses (a) and (b), together with the Yield-Maintenance
Amount, if any, with respect to each Senior Note, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company.
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 Holders of such Notes may, by notice in writing to the Company,
rescind and annul such declaration and its consequences as to all Notes if:
(i) the Company shall have paid all overdue interest on the Notes,
the principal of, and Yield-Maintenance Amount, if any, payable with
respect to any Senior Notes which have become due otherwise than by
reason of such declaration, and interest on such overdue interest and
overdue principal and Yield-Maintenance Amount, in the case of Senior
Notes, at the rate specified in the Notes,
(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, 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
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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. In the event an Event of Default shall have
occurred and be continuing, the holder or holders of Notes shall have the right
to engage an independent financial consultant selected by such holder or
holders, at the Company's expense, to assist in the analysis regarding the
performance and operations of the Company and its Subsidiaries. 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 in this
Agreement or now or hereafter existing at law or in equity or by statute or
otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
The Company represents, covenants and warrants as follows:
8A. ORGANIZATION, ETC. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Delaware, each
Subsidiary is duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated, and each of the Company and the
Subsidiaries has the corporate power to own its respective Property and to carry
on its respective business as now being conducted. There are no subsidiaries of
the Company that are not Subsidiaries. The Company has the corporate power to
authorize, execute, deliver and perform its obligations under this Agreement and
the Notes and to deliver the Notes on the terms and conditions set forth herein.
No consent or authorization of, filing with (other than U.C. filings and United
States Patent and Trademark Office filings and United States Copyright Office
filings required under the Security and Financing Documents), notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required for the validity or enforceability of this Agreement other than those
of which have already been obtained or made and are in full force and effect.
This Agreement has been duly executed and delivered on behalf of the Company.
This Agreement constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
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8B. FINANCIAL STATEMENTS. The Company has furnished you with the
following financial statements, identified by a principal financial officer of
the Company, a consolidated balance sheet of the Company and the Subsidiaries as
at December 31 in each of the years 1994 to 1995, inclusive, and consolidated
statements of income and cash flows of the Company and the Subsidiaries for each
such year all certified by Price Waterhouse. Such financial statements
(including any related schedules and notes) are true and correct in all material
respects and have been prepared in accordance with GAAP consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and the Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
the Subsidiaries as at the dates thereof, and the statements of income and cash
flows fairly present the results of the operations of the Company and the
Subsidiaries for the periods indicated. During the period from December 31, 1995
to and including the Closing Date, there has been no material adverse change in
the business, condition or operations (financial or otherwise) of the Company
and the Subsidiaries taken as a whole. Since December 31, 1995 there has been no
development or event which has had or could reasonably be expected to have a
material adverse effect on the business, condition or operations (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, and during the
period from December 31, 1995 to and including the date hereof no dividends or
other distributions have been declared, paid or made upon the capital stock of
the Company nor has any of the capital stock of the Company in a material amount
been redeemed, retired, purchased or otherwise acquired for value by the Company
or any of its Subsidiaries.
8C. NO LEGAL BAR. The execution, delivery and performance of this
Agreement, the borrowings hereunder and the use of the proceeds thereof will not
violate any material contractual obligation of the Company or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such material contractual obligation (other than pursuant to the Security
and Financing Documents).
8D. NO DEFAULT. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any of its material contractual obligations in
any respect which could reasonably be expected to have a material adverse effect
on the business, conditions or operations (financial or otherwise) of the
Company and its Subsidiaries taken as a whole. No Default or Event of Default
has occurred and is continuing.
8E. ACTIONS PENDING. Except as may be set forth in Annex 2 to this
Agreement, there is no action, suit, investigation or proceeding pending or, to
the
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knowledge of the Company, threatened against the Company or any of the
Subsidiaries, or any Properties or rights of the Company or any of the
Subsidiaries, by or before any court, arbitrator or administrative or
governmental body that might result in any material adverse change in the
business, condition or operations of the Company and the Subsidiaries taken as a
whole.
8F. OUTSTANDING DEBT. Neither the Company nor any of the Subsidiaries
has outstanding any Debt except as permitted by paragraphs 6B or 6C of this
Agreement.
8G. TITLE TO PROPERTIES; PATENTS AND COPYRIGHTS.
(i) TITLE TO PROPERTIES. Except as may be set forth on Annex 2 of
this Agreement, each of the Company and each of the Subsidiaries has
good and indefeasible title to its respective real Properties (other
than Properties that it leases) and good title to all of its other
respective Properties, including the Properties reflected in the
balance sheet as at December 31, 1995 referred to in paragraph B of
this Agreement (other than Properties disposed of in the ordinary
course of business), subject to no Lien of any kind except Liens
permitted by paragraph 6D of this Agreement. All leases necessary in
any material respect for the conduct of the respective businesses of
the Company and the Subsidiaries are valid and subsisting and are in
full force and effect.
(ii) PATENTS AND COPYRIGHTS. Except as may be set forth on Annex 2
of this Agreement, each of the Company and the Subsidiaries owns or
possesses all of the patents, trademarks, service marks, trade names,
copyrights, licenses, and rights with respect thereto necessary for the
present and presently planned future conduct of its business, without
any known conflict with the rights of others, except where such
conflicts, in the aggregate, would not have a material adverse effect
on the business, prospects, Properties or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole, or on
the ability of the Company to perform its obligations set forth in this
Agreement and the Notes.
8H. TAXES. Except as may be set forth in Annex 2 to this Agreement,
each of the Company and the Subsidiaries has filed all federal, state and other
income tax returns that, to the best knowledge of the officers of the Company,
are required to be filed, 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, except such taxes as are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP; no tax Lien has been filed, and, to
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the knowledge of the Company and its Subsidiaries, no claim is being asserted,
with respect to any such tax, fee or other charge.
8I. CONFLICTING AGREEMENTS AND OTHER MATTERS.
(i) RESTRICTIVE AGREEMENTS. Neither the Company nor any of the
Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction that materially and adversely
affects its business, Property or financial condition.
(ii) CONFLICTING AGREEMENTS. Neither the execution nor delivery of
this Agreement or the Notes, nor the issuance and exchange of the
Notes, nor fulfillment of nor compliance with the terms and provisions
of this Agreement 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 except as contemplated
by the Security and Financing Documents, result in the creation of any
Lien upon any of the Properties of the Company or any of the
Subsidiaries pursuant to, the charter or bylaws of the Company or any
of the Subsidiaries, 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 of the Subsidiaries is a party or to which any of their
respective Properties is subject.
(iii) LIMITATIONS ON DEBT. Neither the Company nor any of the
Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of the Company or
such Subsidiary, any agreement relating to this Agreement or any other
contract or agreement (including its charter) that 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 and the Credit
Agreement except as may be set forth in the agreements listed in Annex
2 attached to this Agreement.
8J. OFFERING OF NOTES. The Company has not, 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 to this Agreement with,
any Person other than you, and the Company has not taken and will not take any
action that would subject the issuance and exchange of the Notes to the
provisions of Section 5 of the Securities Act or to the registration or
qualification provisions of any securities or "blue sky" law of any applicable
jurisdiction. The Company has not, directly or indirectly,
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employed or retained any Person (other than officers and employees of the
Company in the course of their employment) as its agent or representative or
otherwise on its behalf in connection with the offering or solicitation of
offers to purchase the Notes or any similar security of the Company. 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.
8K. REGULATION G, ETC. Neither the Company nor any Subsidiary owns or
has any present intention of acquiring any "margin stock" as defined in
Regulation G (12 C.F.R. Part 207) of the Board of Governors of the Federal
Reserve System ("MARGIN STOCK"). The proceeds of sale of the Original Senior
Notes were used for general corporate purposes. None of such proceeds 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, reducing or retiring any indebtedness that was originally incurred
to purchase or carry any stock that is currently a Margin Stock or for any other
purpose that 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 or will take any action that 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 Securities Exchange
Act of 1934, as amended, in each case as in effect now or as the same may
hereafter be in effect.
8L. ERISA. No accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the IRC), whether or not waived, exists with respect
to any Pension Plan. No liability to the PBGC has been or is expected by the
Company to be incurred with respect to any Pension Plan by the Company or any of
the Subsidiaries that is or would be materially adverse to the Company and the
Subsidiaries taken as a whole. Neither the Company nor any of the Subsidiaries
has incurred or presently expects to incur any withdrawal liability under Title
IV of ERISA with respect to any Multiemployer Plan that is or would be
materially adverse to the Company and the Subsidiaries taken as a whole. The
execution and delivery of this Agreement and the issuance and delivery of the
Notes will not involve any transaction that is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax could be imposed pursuant
to Section 4975 of the IRC. 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 9 of this Agreement as to the source of the funds
used to pay the purchase price of the Original Senior Notes purchased by you.
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8M. ENVIRONMENTAL COMPLIANCE.
(i) COMPLIANCE. Each of the Company and the Subsidiaries has been,
since its incorporation, complying with, and, on the Closing Date will
be in compliance with, all Environmental Protection Laws in effect in
each jurisdiction where it is presently doing business except any
violations of any such Environmental Protection Law which would not
have a material adverse effect on the business, profits, Properties or
condition (financial or otherwise) of the Company and the Subsidiaries
taken as a whole, or on the ability of the Company to perform its
obligations under this Agreement and the Notes.
(ii) LIABILITY. Neither the Company nor any of the Subsidiaries is
subject to any liability under any Environmental Protection Laws that,
in the aggregate, would have a material adverse effect on the business,
profits, Properties or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole, or on the ability of the
Company to perform its obligations under this Agreement and the Notes.
(iii) Neither the Company nor any of its Subsidiaries has received
any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance
with Environmental Protection Laws with regard to any of the Properties
or its business, nor does the Company have knowledge or reason to
believe that any such notice will be received or is being threatened
except insofar as such notice or threatened notice, or any aggregation
thereof, does not involve a matter or matters that is or are reasonably
likely to have a materially adverse effect on the business, profits,
Properties or conditions (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
(iv) Hazardous Substances have not been transported or disposed of
from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Protection Law, nor disposed of at, on or under any of
the Properties in violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable Environmental
Protection Law except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not
reasonably likely to have a materially adverse effect on the business,
profits, Properties or conditions (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
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(v) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Company, threatened,
under any Environmental Protection Law to which the Company or any
Subsidiary is or will be named as a party with respect to the
Properties or its business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Protection Law with respect to the Properties or its
business except insofar as such proceeding, action, decree, order or
other requirement, or any aggregation thereof, is not reasonably likely
to have a materially adverse effect on the business, profits,
Properties or conditions (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
(vi) There has been no release or threat of release of Hazardous
Substances at or from the Properties, or arising from or related to the
operations of the Company or any Subsidiary in connection with the
Properties or otherwise in connection with its business, in violation
of or in amounts or in a manner that could reasonably give rise to
liability under Environmental Protection Laws except insofar as any
such violation or liability referred to in this paragraph, or any
aggregation thereof, is not reasonably likely to have a materially
adverse effect on the business, profits, Properties or conditions
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole.
8N. GOVERNMENTAL CONSENT. 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 issuance, delivery or exchange 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 routine filings after the Closing Date with the
Securities and Exchange Commission and state "blue sky" authorities) in
connection with the execution and delivery of this Agreement, the issuance,
delivery or exchange of the Notes or fulfillment of or compliance with the terms
and provisions of this Agreement or of the Notes.
8O. 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 in
this Agreement and such documents, certificates and statements not misleading.
There is no fact peculiar to the Company or any of the Subsidiaries that
materially adversely affects or in the future
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may (so far as the Company can now foresee) materially adversely affect the
business, Property or financial condition of the Company and the Subsidiaries,
taken as a whole, and that has not been set forth in this Agreement or in the
other documents, certificates, reports and statements furnished to you by or on
behalf of the Company prior to the date of this Agreement in connection with the
transactions contemplated hereby.
8P. CERTAIN LAWS.
(i) INVESTMENT COMPANY ACT. The Company is not, and is not
directly or indirectly controlled by, or acting on behalf of any Person
which is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(ii) ABSENCE OF FOREIGN OR ENEMY STATUS. The Company is not an
"enemy" or an "ally of the enemy" within the meaning of Section 2 of
the Trading with the Enemy Act, as amended. The Company is not in
violation of, and neither the issue, delivery and exchange of the Notes
by the Company as contemplated by this Agreement will violate, the
Trading with the Enemy Act, as amended or any executive orders,
proclamations or regulations issued or promulgated pursuant thereto,
including, without limitation, regulations administered by the Office
of Foreign Asset Control of the Department of the Treasury (31 C.F.R.
Chapter V).
(iii) HOLDING COMPANY STATUS. The Company is not a "holding
company" or an "affiliate" of a "holding company", or a "subsidiary
company" of a "holding company", or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
9. REPRESENTATIONS OF THE PURCHASER.
You represent, and in making the delivery of the Senior Notes and any
YMA Notes to you it is specifically understood and agreed, that you are not
acquiring such Notes under this Agreement 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. You also represent that no part of the funds that
were used by you to pay the purchase price of the Original Senior Notes
purchased by you on the Original Closing Date constitutes assets allocated to
any separate account maintained by you. For the
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purpose of this paragraph 9, the term "separate account" has the meaning
specified in Section 3 of ERISA.
10. DEFINITIONS.
The following terms shall have the meanings specified with respect to
this Agreement below:
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Senior Note,
the principal of such Note that is to be prepaid pursuant to paragraphs
4A, 4B, 4D or 4E of this Agreement (any partial prepayment for purposes
of calculating Yield-Maintenance Amount being applied to all Senior
Notes at the time outstanding in proportion to the respective aggregate
principal amounts of the Senior Notes then outstanding and being
applied ratably in satisfaction of each of the Original Scheduled
Payments) or is declared to be immediately due and payable pursuant to
paragraph 7A of this Agreement, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Senior Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal from
their respective scheduled due dates (assuming scheduled due dates for
the Original Scheduled Payments) to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on a semiannual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"ORIGINAL MATURITY DATE" shall mean March 20, 2001.
"ORIGINAL SCHEDULED PAYMENTS" shall mean the original scheduled
principal payments required under the Original Note Agreement
(including the Original Maturity Date).
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Senior Note, the yield to maturity implied by either
(i) the yields reported, as of 10:00 A.M. (New York City time) on the
Business Day next preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page 678" on the
Telerate Service (or such other
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display as may replace Page 678 on the Telerate Service) 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 if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, then (ii)
the Treasury Constant Maturity Series yields reported, for the latest
day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15(519) (or
any 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, plus 0.50% in
either case. 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 reported yields.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Senior 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 (1/12) year) that will elapse between the
Settlement Date with respect to such Called Principal and
the Remaining Scheduled Payments.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Senior 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 assuming (i) no
payment of such Called Principal were made prior to its scheduled due
date (ii) such scheduled due dates were based on the Original Scheduled
Payments, and (iii) such interest was calculated at a notional rate per
annum of 9.67%.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal
of any Senior Note, the date on which such Called Principal is to be
prepaid
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pursuant to paragraphs 4A, 4B, 4D or 4E of this Agreement or is
declared to be immediately due and payable pursuant to paragraph 7A of
this Agreement, as the context requires.
"YIELD MAINTENANCE AMOUNT" shall mean, with respect to any Senior
Note or payment of the principal thereof hereunder, an additional
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 subsequent to the most recent
scheduled interest payment date to and including the Settlement
Date with respect to such Called Principal.
The Yield-Maintenance Amount shall in no event be less than zero (0).
10B. OTHER TERMS.
"ACCELERATION EVENT" has the meaning assigned to such term in the
Collateral Agency and Intercreditor Agreement.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control another Person if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise; without limiting
the foregoing, a Person shall be deemed to have such power with respect to
another Person if such Person beneficially owns or holds ten percent (10%) or
more of any class of the voting securities of such other Person or if ten
percent (10%) or more of the voting securities (or in the case of a Person that
is not a corporation, ten percent (10%) or more of the equity interest) of such
Person is beneficially owned or held by such other Person.
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT" has the meaning assigned
to such term in the Credit Agreement.
"AGENT" means Chemical Bank, as agent under the Credit Agreement.
"ALLOCABLE NOTE HOLDER PORTION" has the meaning assigned to such term
in the last sentence of paragraph 4D of this Agreement.
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"ANNUAL DISPOSITION MEASUREMENT PERIOD" has the meaning assigned to
such term in paragraph 6F of this Agreement.
"ASSET DISPOSITION DATE" has the meaning assigned to such term in
paragraph 6F of this Agreement.
"AVAILABLE COMMITMENTS" has the meaning assigned to such term in the
Credit Agreement.
"BANKRUPTCY EVENT" has the meaning assigned to such term in the
Collateral Agency and Intercreditor Agreement.
"BANKRUPTCY LAW" has the meaning specified in clause (viii) of
paragraph 7A of this Agreement.
"BANKS" means the banks party to the Credit Agreement.
"BOARD OF DIRECTORS" means, at any time, the board of directors of the
Company or a Subsidiary, as the case may be, or any committee of such board of
directors that, in the instance, shall have the lawful power to exercise the
power and authority of such board of directors.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"CAPITALIZED LEASE OBLIGATIONS" means all rental obligations that,
under GAAP, are or will be required to be capitalized on the books of the
Company or any Subsidiary, in each case taken at the amount thereof accounted
for as indebtedness (net of interest expense) in accordance with GAAP.
"CERION" means Cerion Technologies, Inc.
"CERION NOTE" means the $10,000,000 promissory note dated March 1, 1996
issued by Cerion and payable to the Company, as the same may be amended,
supplemented or otherwise modified from time to time.
"CLOSING DATE" has the meaning assigned to such term in paragraph 2 of
this Agreement.
"COLLATERAL AGENT" means Chemical Bank, as collateral agent under the
Collateral Agency and Intercreditor Agreement.
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"COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT" means the Collateral
Agency and Intercreditor Agreement, dated as of April 5, 1996, by and among
Chemical Bank, as Collateral Agent, The Prudential Insurance Company of America,
as Note Holder, the Banks party thereto and the Company and its Subsidiaries
attached hereto as Exhibit C.
"COMPANY" has the meaning assigned to such term in the introductory
sentence of this Agreement.
"CONSOLIDATED CURRENT ASSETS" means, at any date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Company and its Subsidiaries at such date.
"CONSOLIDATED CURRENT LIABILITIES" means, at a particular date, all
amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet of the Company and its Subsidiaries
as at such date.
"CONSOLIDATED FIXED CHARGES" means, for any period the sum, without
duplication, of: (i) Consolidated Interest Expense; (ii) required scheduled
amortization of Covenant Debt (excluding any mandatory prepayments), determined
on a consolidated basis in accordance with GAAP, for the period involved and
discount or premium (other than Yield-Maintenance Amount) payable during such
period relating to any such Covenant Debt for any period involved, whether
expensed or capitalized; and (iii) Consolidated Lease Expense, in each case of
the Company and its Subsidiaries.
"CONSOLIDATED INTANGIBLES" means, at a particular date, all assets of
the Borrower and its Subsidiaries, determined on a consolidated basis at such
date, that would be classified as intangible assets in accordance with GAAP, but
in any event including, without limitation, unamortized debt discount and
expense, unamortized organization and reorganization expense, patents, trade or
service marks, franchises, trade names, goodwill.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the amount
which, in conformity with GAAP, would be set forth opposite the caption
"interest expense" or any like caption on the consolidated income statement of
the Company and its Subsidiaries for such period.
"CONSOLIDATED LEASE EXPENSE" means for any period, the aggregate
amount of fixed and contingent rentals payable by the Company and its
Subsidiaries,
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determined on a consolidated basis in accordance with GAAP, for such period with
respect to operating leases of real and personal property.
"CONSOLIDATED NET INCOME" means, for any period, the consolidated net
income of the Company and its Subsidiaries for such period determined in
accordance with GAAP.
"CONSOLIDATED NET WORTH" means, at a particular date, all items which
in conformity with GAAP would be included under shareholders' equity on a
consolidated balance sheet of the Company and its Subsidiaries at such date
(computed without regard to cumulative translation adjustments relating to
foreign currencies after December 31, 1995).
"CONSOLIDATED OPERATING WORKING CAPITAL" means, as of the date of
determination, Consolidated Current Assets of the Company and its Subsidiaries
at such date, determined on a consolidated basis in conformity with GAAP (other
than cash and cash equivalents and current tax assets), minus Consolidated
Current Liabilities of the Company and its Subsidiaries at such date, determined
on a consolidated basis in conformity with GAAP (other than Covenant Debt and
income taxes payable).
"CONSOLIDATED TANGIBLE NET WORTH" means, at a particular date, the
excess, if any, of Consolidated Net Worth over Consolidated Intangibles as at
such date.
"COVENANT DEBT" means, of any Person at any date, Debt of such Person
excluding (i) Guaranties of such Person and (ii) all reimbursement obligations
of such Person in respect of letters of credit.
"CREDIT AGREEMENT" means the Amended and Restated Credit Agreement,
dated as of April 5, 1996, among the Company, certain banks party thereto and
Chemical Bank, as agent for such banks, as the same may be amended, supplemented
or otherwise modified from time to time as permitted herein and therein.
"DEBT" means, of any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Capitalized Lease
Obligations, (d) all obligations of such Person in respect of acceptances issued
or created for the account of such Person, (e) all liabilities secured by any
Lien on any property owned by such Person even though
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such Person has not assumed or otherwise become liable for the payment thereof
(for the purposes of this clause (e), the amount of any such Debt shall be equal
to the lower of the amount of liability in respect thereof or the fair market
value of the property subject to the Lien in respect thereof), (f) all
Guaranties of such Person, and (g) all reimbursement obligations in respect of
letters of credit.
"EBITDA" of any Person, for any period, the Consolidated Net Income of
such Person for such period adjusted to exclude the following items of income or
expense to the extent that such items are included in the calculation of such
Consolidated Net Income: (a) Consolidated Interest Expense, (b) any non-cash
expenses and charges, (c) total income tax expense, (d) depreciation expense,
(e) the expense associated with amortization of intangible and other assets, (f)
non-cash provisions for reserves for discontinued operations or restructuring of
operations, (g) any extraordinary, unusual or non-recurring gains or credits,
(h) any gain or loss associated with the sale of assets, (i) any income or loss
accounted for by the equity method of accounting (except in the case of income
to the extent of the amount of cash dividends or cash distributions paid to the
Borrower or any Subsidiary by the entity accounted for by the equity method of
accounting); and (j) expenses in connection with the Company's restructuring on
or prior to the date hereof of its material Covenant Debt.
"ENVIRONMENTAL PROTECTION LAW" means any federal, foreign, state,
provincial, county, regional or local law, statute, or regulation (including,
without limitation, CERCLA, RCRA and SARA) enacted in connection with or
relating to the protection or regulation of the environment, including, without
limitation, those laws, statutes, and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing, or
transporting of Hazardous Substances, and any regulations, issued or promulgated
in connection with such statutes by any Governmental Authority and any orders,
decrees or judgments issued by any court of competent jurisdiction in connection
with any of the foregoing.
As used in this definition:
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time
(by SARA or otherwise), and all rules and regulations promulgated in
connection therewith;
"GOVERNMENTAL AUTHORITY" means the government of the United States
of America or any foreign government, any state, province or other
political subdivision thereof and any entity exercising executive,
legislative,
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judicial, regulatory or administrative functions of or pertaining to
any such government;
"HAZARDOUS SUBSTANCES" has the meaning assigned to such term in 42
U.S.C. Section 9601(14), as amended from time to time;
"RCRA" means the Resource Conservation and Recovery Act of 1976,
as amended, and any rules and regulations issued in connection
therewith; and
"SARA" means the Superfund Amendments and Reauthorization Act of
1986, as amended from time to time, and all rules and regulations
promulgated in connection therewith.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any corporation or trade or business that
(i) is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the IRC) as the Company or
(ii) is under common control (within the meaning of Section 414(c)
of the IRC) with the Company.
"EVENT OF DEFAULT" means any of the events specified in paragraph 7A of
this Agreement, 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" means any of
such events, whether or not any such requirement has been satisfied.
"EXCESS CASH FLOW" of the Company and its Subsidiaries for any fiscal
period, means an amount equal to the excess of (a) the sum of (i) Consolidated
Net Income for such fiscal period, (ii) depreciation and amortization expense,
and all other non-cash charges which were deducted in determining Consolidated
Net Income, (iii) any decrease in Consolidated Operating Working Capital during
such period (computed by comparing Consolidated Operating Working Capital on the
first day of such period with Consolidated Operating Working Capital on the last
day of such period), (iv) any losses during such fiscal period in respect of the
sale or other disposition of any asset which were subtracted in determining
Consolidated Net Income, (v) all income taxes deducted in determining
Consolidated Net Income
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during such period over (b) the sum of (i) capital expenditures during such
fiscal period, but only to the extent permitted pursuant to paragraph 6Q of this
Agreement, (ii) any gains during such fiscal period in respect of the sale or
other disposition of any asset which were added in determining Consolidated Net
Income, (iii) all income taxes actually paid in cash during such fiscal period,
plus (iv) all other non-cash credits which were added in determining
Consolidated Net Income, plus (v) all scheduled mandatory payments of principal
of the Term Loans pursuant to subsection 2.5(b) of the Credit Agreement during
such fiscal period, all optional prepayments of principal of the Term Loans
during such fiscal period, all optional prepayments of principal of the
Revolving Credit Loans (as such term is defined in the Credit Agreement)
pursuant to subsection 2.7 of the Credit Agreement during such fiscal period
(provided that there is a corresponding simultaneous permanent reduction of the
Revolving Credit Commitments) (as such term is defined in the Credit Agreement)
and all scheduled mandatory or optional payments of principal and premium on the
Notes during such fiscal period, plus (vi) all payments of principal of other
Debt (other than in respect of the Loans and the Notes) during such period,
provided there is a simultaneous permanent reduction of the lending commitment,
if any, in respect of such Debt, plus (vii) any increase in Consolidated
Operating Working Capital during such period (computed by comparing Consolidated
Operating Working Capital on the first day of such period with Consolidated
Working Capital on the last day of such period), in each case of the Company and
its Subsidiaries. Excess Cash Flow shall exclude in any event any income or loss
accounted for by the equity method of accounting (except in the case of income
to the extent of the amount of cash dividends or cash distributions paid to the
Company or any Subsidiary by the entity accounted for by the equity method of
accounting).
"FAIR MARKET VALUE" means, at any time, with respect to any Property,
the sale value of such 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.
"FOREIGN SUBSIDIARY" means any Subsidiary that is not incorporated or
organized in the United States of America or any state thereof.
"GAAP" means, at any time with respect to the determination of the
character or amount of any asset or liability or item of income or expense, or
any consolidation or other accounting computation, generally accepted accounting
principles as in effect in the United States of America on the date of, or at
the end of the period covered by, the financial statements from which such
asset, liability, item of income, or item of expenses, is derived, or, in the
case of any such computation, as in effect on the date when such computation is
required to be determined.
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"GUARANTY" means, with respect to any Person,
(i) any contract by such Person providing for the making of loans,
advances or capital contributions to any Specially Restricted Person,
or for the purchase of any Property from any Specially Restricted
Person, in each case in order to enable such Specially Restricted
Person to maintain working capital, net worth or any other balance
sheet condition or to pay debts, dividends or expenses;
(ii) any contract by such Person for the purchase of materials,
supplies or other Property or services from any Specially Restricted
Person if such contract (or any related document or agreement) requires
that payment for such materials, supplies or other Property or services
shall be made regardless of whether or not delivery of such materials,
supplies or other Property or services is ever made or tendered;
(iii) any contract by such Person to rent or lease (as lessee) any
Property from any Specially Restricted Person if such contract (or any
related document or agreement) provides that the obligation to make
payments thereunder is absolute and unconditional under conditions not
customarily found in commercial leases then in general use or requires
that the lessee purchase or otherwise acquire securities or obligations
of any Specially Restricted Person;
(iv) any contract by such Person for the sale or use of materials,
supplies or other Property, or the rendering of services, to or by any
Specially Restricted Person if such contract (or any related document
or agreement) requires that payment by such Specially Restricted Person
for such materials, supplies or other Property, or the use thereof, or
payment by such Specially Restricted Person for such services, shall be
subordinated to any indebtedness of the purchaser or user of such
materials, supplies or other Property or the Person entitled to the
benefit of such services;
(v) Contingent Severance Pay Obligations of such Person; or
(vi) any guarantee (or other contract that, in economic effect, is
substantially equivalent to a guarantee) or endorsement (other than
endorsements of negotiable instruments for collection in the ordinary
course of business) by such Person, whether direct or indirect, of or
in connection with the Debt, other obligations (other than performance
obligations unrelated to indebtedness), stock or dividends of any other
Person;
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in each case, regardless of whether the indebtedness or other obligations that
are the subject of any such guaranty or other contract are required, under GAAP,
to be shown on a balance sheet of such Person as a liability. For purposes of
computing the amount of any obligation specified in the foregoing clauses (i)
through (vi), inclusive, it shall be assumed that the indebtedness or other
obligations that are the subject of any such guarantee or other contract are
direct obligations of the obligor on such guarantee or other contract (but not
in an amount in excess of the maximum liability of such obligor) and, therefore,
are of the nature and type of, and bear interest at the rate applicable to, such
indebtedness or other obligations. Notwithstanding anything else in this
definition to the contrary, "GUARANTIES" shall not at any time include
Contingent Severance Pay Obligations except to the extent, if any, that the
aggregate amount of Contingent Severance Pay Obligations of the Company and the
Subsidiaries at such time, determined on a consolidated basis, exceeds the
lesser of (A) Twenty Million Dollars ($20,000,000) or (B) fifteen percent (15%)
of Consolidated Tangible Net Worth. As used in this definition:
"SPECIALLY RESTRICTED PERSON" means (i) NCPC at any time at which
it is not a Wholly-Owned Subsidiary and (ii) any Affiliate; and
"CONTINGENT SEVERANCE PAY OBLIGATIONS" means, with respect to any
Person, obligations of such Person to employees of such Person, payable
by such Person upon or in connection with the termination of the
employment arrangements with such employees (but not including (i) any
such obligations to the extent that funds designated for the payment
thereof have been irrevocably deposited in trust or (ii) any pension
obligations).
"HEDGE AGREEMENT(S)" has the meaning assigned to such term in the
Collateral Agency and Intercreditor Agreement.
"HOLDBACK AMOUNT" means, with respect to any mandatory prepayment
relating to any asset sale or equity issuance or other sale described in
paragraph 4D hereof with Net Cash Proceeds in excess of $15,000,000 and at any
time before the Revolving Credit Commitments (as such term is defined in the
Credit Agreement) of all lenders under the Credit Agreement have been
permanently reduced to an amount less than or equal to $10,000,000, an amount
equal to the excess, if any, of (i) $3,000,000 over (ii) the aggregate amount of
Revolving Credit Loans (as such term is defined in the Credit Agreement) of all
lenders under the Credit Agreement outstanding on the date of such mandatory
prepayment in excess of $5,000,000.
"INVESTMENT" has the meaning assigned to such term in paragraph 6H of
this Agreement.
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"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and all rules and regulations promulgated thereunder.
"LIEN" means any mortgage, pledge, hypothecation, collateral
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
or other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement and any Capitalized Lease Obligation having substantially the same
economic effect as any of the foregoing).
"LOANS" has the meaning assigned to such term in the Credit Agreement.
"MAJORITY LENDERS" has the meaning assigned to such term in the Credit
Agreement.
"MAJOR LINE OF BUSINESS" means each of the photofinishing, commercial
products group, and precision technologies businesses of the Company and the
Subsidiaries and any other line of business of similar importance to the
consolidated financial condition and results of operations of the Company and
the Subsidiaries in which the Company or any Subsidiary may be engaged at any
time after the date hereof.
"MARGIN STOCK" has the meaning assigned to such term in paragraph 8I of
this Agreement.
"MATERIAL QUALIFICATION" has the meaning assigned to such term in
paragraph 5A(ii) of this Agreement.
"MULTIEMPLOYER PLAN" means any "multiemployer plan" (as such term is
defined in ERISA) in respect of which the Company or any ERISA Affiliate is an
"employer" (as such term is defined in ERISA).
"NET CASH PROCEEDS" means, in connection with:
(a) any asset sale, the proceeds thereof in the form of cash
and cash equivalents (including any such proceeds received by way of
deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise, but
only as and when received), net of attorneys' fees, accountants' fees,
investment banking fees, amounts required to be applied to the
repayment of Debt secured by a Lien permitted hereunder on any asset
which is the subject of such asset sale (other than any
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Lien in favor of the Collateral Agent) and other fees and expenses
actually incurred in connection therewith and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and any tax
sharing arrangements); and
(b) any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the cash proceeds
received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to
be payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements).
"NOTE HOLDERS" means any holder or beneficial owner of Notes entitled
to the benefits of this Agreement.
"NOTES" has the meaning assigned to such term in the introductory
sentence of this Agreement.
"OPERATING PROFIT" means, for any period, Consolidated Net Income for
such period plus the net amount deducted in the determination thereof for (i)
federal, state and local income taxes, (ii) depreciation, (iii) amortization and
(iv) interest expense.
"OPERATING PROFIT CONTRIBUTION" means, as determined on any Asset
Disposition Date in respect of any Property being Transferred, the greatest
amount (expressed as a percentage, as provided below) of Operating Profit fairly
attributed to such Property during any one (1) of the three (3) fiscal years of
the Company immediately preceding such Asset Disposition Date, expressed as a
percentage of total Operating Profit during such fiscal year.
"ORIGINAL CLOSING DATE" has the meaning assigned to such term in the
introductory sentence of this Agreement.
"ORIGINAL SENIOR NOTES" has the meaning assigned to such term in the
introductory sentence of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, and its
successors and assigns.
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"PENSION PLAN" means any "employee pension benefit plan" (as such term
is defined in ERISA) maintained by the Company or any ERISA Affiliate for
employees of the Company or such ERISA Affiliate, excluding any Multiemployer
Plan, but including, without limitation, any Multiple Employer Pension Plan.
As used in this definition:
"MULTIPLE EMPLOYER PENSION PLAN" means any employee benefit
plan within the meaning of Section 3(3) of ERISA (other than a
Multiemployer Plan), subject to Title IV of ERISA, to which the Company
or any ERISA Affiliate and an employer (as such term is defined in
Section 3 of ERISA) other than an ERISA Affiliate or the Company,
contribute.
"PERMITTED INVESTMENT" has the meaning assigned to such term in
paragraph 6H of this Agreement.
"PERSON" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an estate, an unincorporated
organization, or a government or political subdivision or agency or
instrumentality thereof.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible. Any reference in
this Agreement to "asset" shall be construed as a reference to "PROPERTY", as
defined in this definition.
"PURCHASER SCHEDULE" has the meaning assigned to such term in paragraph
2 of this Agreement.
"REQUIRED HOLDERS" means, at any time, the holder or holders of greater
than fifty percent (50%) of the aggregate principal amount of the Notes
outstanding at such time.
"RESPONSIBLE OFFICER" means each of the Chairman of the Board of
Directors, the President, any Vice President and the Treasurer of the Company.
"REVOLVING CREDIT LOANS" has the meaning assigned to such term in the
Credit Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" has the meaning specified in Section 2(1) of the Securities
Act.
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"SECURED OBLIGATIONS" has the meaning assigned to such term in the
Collateral Agency and Intercreditor Agreement.
"SECURITY AND FINANCING DOCUMENTS" means:
(i) the Collateral Agency and Intercreditor Agreement;
(ii) the Credit Agreement,
(iii) the Borrower Security Agreement, dated as of April 5,
1996, made by the Company in favor of the Collateral
Agent for the benefit of the Banks and the Note
Holders;
(iv) the Subsidiaries Security Agreement, dated as of
April 5, 1996, made by each of the domestic
Subsidiaries of the Company in favor of the
Collateral Agent for the benefit of the Banks and the
Note Holders;
(v) the Subsidiaries Guarantee, dated as of April 5,
1996, made by each of the domestic Subsidiaries of
the Company and certain foreign Subsidiaries of the
Company in favor of the Collateral Agent for the
benefit of the Banks and the Note Holders;
(vi) the Subsidiaries Pledge Agreements, each dated as of
April 5, 1996, made by Nashua Photo Inc., Cerion
Holdings Inc., Nashua Photo European Investments,
Inc. and Nashua Photo International Investments, Inc.
in favor of the Collateral Agent;
(vii) the Foreign Pledge Agreements, each dated as of April
5, 1996, made by certain of the foreign Subsidiaries
of the Company in favor of the Collateral Agent;
(viii) the Lockbox Agreements, each dated as of April 5,
1996, among the Company, the Subsidiaries of the
Company identified in such agreement, the lockbox
banks specified therein, and the Collateral Agent;
and
(ix) the Agency Agreements, each dated as of April 5, 1996
among the Company, the Subsidiaries named therein,
the
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depository banks party thereto and Chemical Bank, as
Collateral Agent.
"SHARED PROCEEDS" has the meaning assigned to such term in paragraph 4D
of this Agreement.
"SIGNIFICANT HOLDER" means
(i) you, so long as you shall hold any Note, or
(ii) any other holder of at least five percent (5%) of the
aggregate principal amount of the Notes from time to time outstanding.
"SIGNIFICANT SUBSIDIARY" means, at any time, collectively, Subsidiaries
owning tangible assets having an aggregate value equal to or greater than one
percent (1%) of Consolidated Tangible Net Worth.
"SUBSIDIARY" means any corporation one hundred percent (100%) of the
capital stock of every class of which (other than directors' qualifying shares)
shall, at the time as of which any determination is being made, be owned by the
Company either directly or through other Subsidiaries.
"SUBSIDIARY STOCK" has the meaning assigned to such term in paragraph
6E of this Agreement.
"SUBSTANTIAL PART" means, when used with respect to assets at any time,
more than ten percent (10%) of consolidated assets of the Company and the
Subsidiaries at such time, and, when used with respect to Consolidated Net
Income in respect of any period, more than ten percent (10%) of Consolidated Net
Income for such period.
"TERM LOAN" has the meaning assigned to such term in the Credit
Agreement.
"TRANSFER" has the meaning assigned to such term in paragraph 6F of
this Agreement.
"TRANSFEREE" means any direct or indirect transferee of all or any part
of any Note purchased by you under this Agreement.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, at any time, with respect to
the principal amount of any indebtedness, the number of years obtained by
dividing the then Remaining Dollar-Years of such principal amount of
indebtedness by the then
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outstanding principal amount of such indebtedness. "REMAINING DOLLAR-YEARS"
means, at any time, with respect to the principal amount of any indebtedness,
the result obtained by
(i) multiplying
(a) an amount equal to each of the then remaining required
principal payments (including repayment of principal at final
maturity) payable in respect of such principal amount of
indebtedness, unpaid immediately prior to such time, by
(b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such time and the date each
such required principal payment is due, and
(ii) calculating the sum of each of the products obtained in the
preceding subclause (i).
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary described in clause (i) of
the definition of Subsidiary.
"YMA NOTE" has the meaning assigned to such term in paragraph 4J of
this Agreement.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as you shall hold
any Note, it will make payments of principal thereof and premium, if any, and
interest thereon, by wire transfer of immediately available funds for credit to
your account or accounts as specified in the Purchaser Schedule attached to this
Agreement, or such other account or accounts in the United States as you may
designate in writing, notwithstanding any contrary provision in this Agreement
or in any Note with respect to the place of payment. You agree that, before
disposing of any Note, you will make a notation thereon (or on a schedule
attached to this Agreement) of all 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 that 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 on the Closing Date, to pay, and save
you
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and any Transferee harmless against liability for the payment of, all out-of-
pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees
and expenses of any special counsel engaged by you or any Transferee in
connection with this Agreement, the transactions contemplated hereby
and any subsequent proposed modification of, amendment of, or proposed
consent under, this Agreement, whether or not such proposed
modification shall be effected or proposed consent granted,
(ii) all costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the
other Security and Financing Documents, including, without limitation,
the fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to the Note Holders,
(iii) to pay, indemnify, and hold each Note Holder harmless from,
any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, exercise and
other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent
under or in respect of, this Agreement, and
(iv) the costs and expenses, including attorneys' fees, incurred
by you or any Transferee in enforcing any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process
issued in connection with this Agreement 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.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action prohibited in this Agreement, or omit to perform any
act required in this Agreement to be performed by it, if the Company shall
obtain the written consent to such amendment, action or omission to act, of the
Required Holders 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 the maturity
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of any Note, or change the principal of, or the rate or time of payment of
interest of any premium payable with respect to any Note, or affect the time,
amount or allocation of any required prepayments, or reduce the proportion of
the principal amount of the Notes required with respect to any consent. 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. As used in this Agreement and in the Notes, the term "THIS AGREEMENT" and
references to this Agreement mean this Agreement as it may from time to time be
amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
(i) FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES. The Notes are
issuable as registered notes without coupons in denominations of at least One
Million Dollars ($1,000,000), except as may be necessary to reflect any
principal amount not evenly divisible by One Million Dollars ($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 of transfers of 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 that the holder making the 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 that 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.
(ii) LOST NOTES. 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
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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 may 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 and premium, if any, and interest on 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 all or any part of such Note to any Person 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 in this Agreement 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 of this Agreement.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of either of the parties to this Agreement
shall bind and inure to the benefit of the respective successors and assigns of
the parties to this Agreement (including, without limitation, any Transferee)
whether so expressed or not.
11H. DISCLOSURE TO OTHER PERSONS. The Company acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents 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 to:
(i) such holder's directors, officers, employees, agents and
professional consultants,
(ii) any other holder of any Note,
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(iii) any Person to which such holder offers to sell such Note or
any part thereof so long as such Person shall agree to be bound by the
provisions of 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 so long as such Person
shall agree to be bound by the provisions of this paragraph 11H,
(v) any federal or state regulatory authority having jurisdiction
over such holder,
(vi) the National Association of Insurance Commissioners or any
similar organization, or
(vii) any other Person to which such delivery or disclosure may be
necessary or 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,
(c) in connection with any litigation to which such holder
is a party, or
(d) in order to protect such holder's investment in such
Note.
11I. NOTICES. All written communications provided for under this
Agreement 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 to this Agreement, 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
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last holder of such Note that shall have so specified an address to the
Company, and
(iii) if to the Company, addressed to it at 44 Franklin Street,
Nashua, New Hampshire 03061, Attention: Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of
each Note in writing; provided, that any such communication to the
Company may also, at the option of the holder of any Note, be delivered
by any other means either to the Company at its address specified above
or to any officer of the Company.
Any notice hereunder shall be deemed to have been given on the third (3rd) day
after having been deposited in the mail (postage prepaid), on the next Business
Day if sent by nationwide overnight delivery service, and when delivered to the
addressee if delivered by any other means.
11J. 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.
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 Holders, the determination
of such satisfaction shall be made by you or the Required Holders, as the case
may be, in the sole and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.
11L. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
11M. INDEMNIFICATION. The Company shall indemnify, pay and hold
harmless each holder of Notes and their respective directors, offices, employees
and agents, against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgements, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement and the Security and Financing
Documents; provided, that the Company shall have no obligation hereunder to any
Note Holder with respect to indemnified liabilities arising from the gross
negligence or willful
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misconduct of such Note Holder. The agreements in this paragraph shall survive
repayment of all obligations under this Agreement and all other amounts payable
hereunder.
11N. NO NOVATION. The parties hereto have entered into this Agreement
and the Security and Financing Documents solely to amend, restate and
restructure the terms of, and obligations owing under and in connection with,
the Original Note Agreement. The parties do not intend this Agreement or the
Security and Financing Documents nor the transactions contemplated hereby or
thereby to be, and this Agreement and the Security and Financing Documents and
the transactions contemplated hereby or thereby shall not be, construed to be a
novation of any of the obligations owing by the Company under or in connection
with the Original Senior Notes.
11O. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
[Remainder of page intentionally blank. Next page is signature page.]
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If you are in agreement with 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 you and
the Company.
Very truly yours,
NASHUA CORPORATION
By /s/ Daniel M. Junius
-----------------------------------
Name: Daniel M. Junius
Title: Chief Financial Officer
The foregoing Agreement is hereby
accepted as of the date first above
written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Richard T. Greenwood
--------------------------------
Name: Richard T. Greenwood
Title: Vice President